Land Development, Urban Growth, and Transportation

We live in a free-market society based on individual property rights.  For hundreds of years, landowners have enjoyed the ability to sell their property to the highest bidder, or develop it to its “highest and best use”, a phrase that is common in real estate law.  Beginning with the industrialization of our economy (but most especially following World War II), America’s urban centers have grown and expanded at a very high rate.  One of the unintended consequences has been that urban infrastructure – including transportation, sanitary sewer, potable water, and electricity – has struggled to keep up with the expanding footprint of cities.  Generally speaking, when we live close together in compact urban centers, city services can be provided more efficiently than if we spread ourselves out.  Urban sprawl increases the cost to build and maintain infrastructure, and those costs are typically the responsibility of the public through taxation.  These forces create a certain tension between the rights of individual land owners to sell or develop their property as the free-market allows versus the need for cities to control their growth and provide cost-effective public infrastructure and services like police and fire protection.

Consider a simple example.  Imagine that you own 1,000 acres of agricultural land a half-mile from the edge of a large urban area.  High quality crop land is worth about $10,000 an acre.  But one day, a developer knocks on your front door and offers to pay you $100,000 per acre – ten times its value as farmland – so that he can subdivide it into 1/3-acre lots and builds new homes on it.  It would be a tempting offer for almost anyone, so pretend that you agree to take his offer.  The developer then successfully petitions the city to extend its boundary to include his new subdivision with the promise of expanding the city’s tax base – another tempting offer.  He then builds the houses.  Three thousand new homes will generate about 30,000 vehicle trips per day, far more than the existing rural roads can handle, so the city will need to pave some roads and probably widen and upgrade a few to handle the new traffic.  Urban arterials cost about $2,000,000 per lane mile to construct.  New traffic signals – at $450,000 per intersection – will also need to be installed.  The developer will construct the sanitary sewers within the development, but the city will need to pay to extend the trunk line to the new subdivision and it may need to expand the processing plant to handle the additional needs.  The same is true for drinking water.  The local fire department has set a performance goal for itself such that no area of the city is more than 10 minutes away from the nearest fire station.  As a result, a new fire station will need to be built to cover the new subdivision.  The police department will need to hire new officers and buy new squad cars to protect the new subdivision.  Existing highways may need to be expanded and the transit system will need to extend itself into the new subdivision.  This new development is starting to cost the taxpayers a lot of money.  The city wants to make the new homes affordable, so they try keep property taxes as low as possible, which ironically also minimizes the city’s return on investment.  All of these new costs and burdens can be multiplied when your neighbor decides to sell his farmland to the developer as well.  Note that in this simple example, everyone at each stage has made the decision the free-market expects – to maximize profits.  Yet, somehow, the city collectively could still be financially worse off.  Similar events occur in almost every city year-after-year.  The Oahu Regional Transportation Plan contains a diagram illustrating this cycle:


Urban Growth Boundaries

In response to what seemed like “uncontrollable” and inefficient growth, some urban areas have created Urban Growth Boundaries (UGBs) – imaginary lines beyond which development is not allowed to occur.  UGBs are essentially an attempt to better balance the rights of the individual property owners to sell and develop their land against the needs of the community to better control how, when, and where the city expands.

Perhaps the most successful UGB surrounds the urban area of Portland, Oregon, pictured below.


Some of the impacts of the Portland UGB are:

  • Urban infill development and redevelopment has been encouraged because there is no guarantee of developing new land at the urban edge.
  • More compact, higher density neighborhoods have been created because there is not a limitless supply of new land.
  • Higher densities combined with mixed-uses have reduced automobile dependence, traffic, and pollution.
  • Big box retailers have been unable to dominate the local economy because they cannot assemble large tracts of land.
  • Because land is scarce, land values inside the UGB have risen sharply.  Between 1990 and 2000, the price of single-family homes rose over 50%, even though population increased by only 21% during the same period.
  • Affordable housing (strictly in terms of housing and rent prices) is becoming a problem for low-income workers and the poor.

The UGB can be expanded, but it is (intentionally) difficult to do.  A regional governing body reviews all applications for UGB expansion.  Since the late 1970’s the UGB has been expanded about three dozen times, usually to include very small additions – 20 acres or less.

Let us be clear: a UGB attempts to short-circuit the free-market forces that have traditionally driven urban sprawl.  Thinking back to the previous example, if a UGB were established and your farm land lay outside of it, you would not be allowed to develop your property or sell your property for the purposes of development.  Some see this as the government limiting their liberty, so UGBs are not without controversy.  This short video illustrates the two sides in the Portland debate:

What About Us?

The City & County of Honolulu has also established a UGB on Oahu.  Not only is it intended to help control growth, but it has the added advantage of helping to protect important farmland, which is critical since our island home is 2,500 miles (one week on a container ship) from the nearest food supply.

When OahuMPO staff receives comments and input from the public, one of the most often heard phrases is that growth is killing that which makes Hawaii special.  We hear heartfelt pleas to protect the special, inspiring, and beautiful nature of the island.  People often ask, “why can’t you just stop the growth?”  The answer is complex, but a few important points are: 1) OahuMPO as an agency has no authority over land use decisions.  Our role is transportation planning.  Obviously, as illustrated in the example above, there is a close relationship between land use and transportation, but land use decisions are made by other departments.  2) We live on an island that people all over the world want to live on.  That demand pushes up the value of the land, making it more attractive for development.  3) In a free-market society based on private property rights, land owners have the right to develop their land.  4) The UGB does help limit the sprawl of the urban area, but property within the UGB can be re-developed to higher densities within certain density and building height limits.  5) If it were possible to stop all growth, providing affordable housing would become an even bigger challenge than it already is.  In short, stopping all growth is not possible, and, even if it were, it would result in many unintended consequences, both good and bad.  Future growth is coming.  The best that can be done is to manage the growth in a way that makes sense for the community as a whole.