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Henry George’s Land Value Tax: An Idea Whose Time Has Come?

This view of cities and its corresponding view of human nature will no doubt strike some readers as quaint. But lest we dismiss it hastily, consider some problematic conditions of present-day cities and their adjacent suburban and rural landscapes. Consider also the mostly young people who bear the brunt of these problematic conditions, symptoms of two interrelated and problematic phenomena. One is the seventy-year experiment to physically reorganize human settlements around the automobile—a cultural aspiration and legal regime known as suburban sprawl.2 The other, beginning in the 1980s, is the rise of global cities,3 characterized as such by their attraction to and dependence upon a “creative class” of people with expertise in accounting, advertising, banking, information technology, and law, qualifications making them especially well suited to participate and flourish in, and to enable, the new and growing global economy.

The aesthetic, economic, environmental, and social failures of sprawl are well elucidated in the writings of neo-traditional urbanism advocates, such as Strong Towns and the Congress for the New Urbanism (CNU). But what has become most striking about the rise of certain global cities is the growing importance of location and a corresponding boom in the value of urban land. Urban land is a finite commodity, and the rise in land value has made these increasingly elite cities unaffordable not only for the poor, but also for the middle class. Indeed, it is one of the causes of a shrinking urban middle class. This explosion in urban land value is even more important than the “end of distance” that some anticipated social media would enable.

This urgency has prompted renewed interest in Henry George, the nineteenth-century political economist and land reformer, and specifically in the idea and merits of land value taxation and some possible forms in which a land value tax (LVT) might be implemented. One of these forms entails a marriage between an LVT and a New Urbanist idea called transect-based zoning. Though I hope to indicate the possible fecundity of that union, such an approach to an LVT is neither the most common nor the most obvious. I intend to describe other possible approaches as well, all with both the modesty that follows from not being a member of the economists’ guild, and the impertinence of one who thinks some subjects are of sufficient import that they should not be left uncritically to experts. Because consideration of land use in so much of the modern world occurs in the legal and cultural context of suburban sprawl and hypermodernist urbanism,4 I want to begin with the idea of transect-based zoning before moving on to Henry George and the land value tax.

Transect-Based Zoning

Transect-based zoning (aka form-based codes or FBCs) is a New Urbanist idea conceived as an alternative to currently normative use-based zoning, which first emerged in the United States in the early part of the twentieth century. Use-based zoning came into being for reasons good and bad. In part it responded to the early effects of the industrial revolution on premodern cities: large factories, noxious emissions, rapid population growth, physically overtaxed road, water, and sewer infrastructure, and so forth. On the other hand, it was a naïve application of modern utilitarian rationality (“form follows function”) and also partly used as an agent of social control—a tool for powerful interests to keep “undesirable elements,” usually black people, in their “proper place” by means of exclusionary zoning of lot sizes and housing types.

Use-based zoning’s characteristic effect, however, especially as it developed in post-1945 automobile suburbs, is indicated by its name. Various activities of quotidian human life—home, work, school, shopping, worship, recreation—were organized into separate zones, typically accessible only by car.

As New Urbanists5 began studying in earnest the pre-1945 town and city neighborhoods that antedate suburban sprawl, they began to notice and document several distinguishing features of traditional urban form:

  • A mix of daily and weekly activities within pedestrian proximity (typically a 5–10 minute walk);
  • Durable buildings, the uses of which would often change over time (consider typical pre-1945 residential and commercial buildings that have been put to a wide variety of uses since their original construction);
  • A spatial environment of public streets and squares defined by an ordered arrangement of buildings sited on or relatively close to their front property lines;
  • A building hierarchy divided roughly between plentiful and common residential and commercial background building types, and singular and more monumental civic and religious foreground building types;
  • The use of streets for parking, and a rarity of town and neighborhood surface parking lots; and
  • A gradient of urban building and population densities.

However, when New Urbanists set out in the 1980s and ’90s to work with residential real estate developers on walkable, mixed-use settlements, it quickly became apparent that existing zoning ordinances—indeed, existing sprawl culture, including bank lending practices, federal housing programs, state Department of Transportation regulations, and a host of other institutional conventions—would not allow it. And so New Urbanists set out to change these institutional practices, beginning with changing use-based zoning ordinances in order to level the legal playing field for developers wanting to make walkable, mixed-use settlements. The new zoning ordinance type that New Urbanists invented was the transect-based code.

The idea of a transect is derived from late nineteenth-century geographers, who first employed it to depict gradients in a natural environment. The New Urbanist insight was to extend the idea of a natural transect to depict a rural-to-urbangradient, and to recognize its potential as the basis for a different kind of zoning ordinance. A common New Urbanist transect diagram pragmatically divides an ideal world (i.e., one with no suburban sprawl) into realms of rural and urban, and then depicts a gradation of urban transect zones, ranging from less dense to more dense. The diagram itself then becomes the basis for a different kind of zoning code that zones not on the basis of building use (where what is not permitted is forbidden), but rather on the basis of building type and density (where what is not forbidden is permitted).

New Urbanists have had significant success in getting transect-based codes adopted, not only for greenfield site developments prior to the 2008 housing crash, but also as exclusive or overlay codes in some major U.S. cities, including Denver, Miami, Cincinnati, and Nashville. The results of all this New Urbanist effort, particularly the greenfield projects, is sometimes dismissed as “just a prettier form of sprawl.” But New Urbanist greenfield developments have always existed side by side with less well-publicized urban infill efforts, which have increased in both number and emphasis since 2008. Further, the alternative to a mixed-use New Urbanist greenfield development is generally a single-use sprawl development occupying considerably more rural land. And if the adoption of transect-based codes by major cities has not (yet) led to an urban renaissance, there is the deeper problem that the culture of traditional urbanism and architecture was lost for at least two generations over the course of the twentieth century. A renaissance of good urban building and good urban culture is a slow boring of hard boards, and likely a long-term cultural project.

There is at least one conspicuous aporia, however, in common New Urbanist polemics, and it has to do with land valueand its implications. New Urbanists market themselves to both developers and public officials with the true claim that good urban design creates economic value. Moreover, the Charter of the New Urbanism professes that the traditional towns and city neighborhoods they champion should be just and economically diverse environments, with housing affordability across class lines; and that this goal can be achieved by promoting a variety of urban housing types in addition to the single-family detached house. These might include the granny flat or coach house ancillary dwelling unit, the apartment above the store, the attached single-family row house, the bungalow court, the duplex, the two-flat, the triple-decker, the six-flat, the corner lot twelve-flat, and the U-court apartment building. New Urbanists have come to characterize these housing types as “missing middle housing, by which they mean older urban housing types now generally absent from a spectrum that once included the detached single family house at one end and the mid-rise urban apartment building at the other. The New Urbanist argument has been that provision of missing middle housing in quantity can be facilitated by transect-based zoning that makes such housing legal as of right; and that this increased housing diversity and quantity will increase both affordability and the population density needed to support pedestrian proximity to urban advantages, like neighborhood schools, parks, storefronts, and public transit.

However good this seems in theory, anyone paying attention knows that the rent for a four-hundred-square-foot coach house in San Francisco (or even in Seaside, Florida) is and for the foreseeable future will be well beyond the reach of most middle-class Americans. And here the New Urbanist narrative fails to account for how much the affordability of housing depends upon the value of the unimproved land on which it sits. Furthermore, under our current property tax regime, housing affordability itself is undermined by the value that New Urbanist designs create insofar as good urban design encourages speculation in land. Thus, ironically, New Urbanists too are complicit in long-standing American practices that resulted first in suburban sprawl and subsequently in the affordability crisis of contemporary global cities. Land value plays an increasingly central role in the financial speculation connected to these crises. Hence the growing recognition that to get genuine housing diversity at more affordable prices in desirable towns and cities—and to encourage better urbanism in less popular towns and cities—it is necessary to take land speculation out of the development equation. And this is the source of today’s renewed interest in Henry George and the land value tax.

Land Value Taxation

Land value taxation is an idea with practical roots in English common law,6 but the origins of land value tax theory can be found in the classical economists Adam Smith, David Ricardo, and John Stuart Mill.7 Today, however, the land value tax is commonly associated with the late nineteenth-century American social theorist Henry George. Renowned in his day, George was later overshadowed both by his British predecessors and by twentieth-century economists, including such rock stars as John Maynard Keynes and F. A. Hayek. Henry George was thus largely forgotten over the course of the twentieth century. Indeed, he became something of a cult figure, and his land value tax policy prescriptions (also known as the single tax theory) correspondingly marginalized.

Nevertheless, Georgist theory was quite popular in the late nineteenth century. George’s 1879 book Progress and Poverty sold three million copies, and in 1886, he narrowly missed being elected mayor of New York. More than one hundred thousand people paid respects at his funeral in 1897.

Variations of a land value tax have been successfully adopted for various periods of time in several parts of the world, including Singapore, Hong Kong, Japan, South Korea, Taiwan, Denmark, Estonia, Pittsburgh and Harrisburg, Pennsylvania, and (in the immediate aftermath of the 1906 earthquake) San Francisco. And Georgism has remained popular among some important social theorists and economists of strikingly different political persuasions—from Winston Churchill, William F. Buckley Jr., and Milton Friedman on the right to Bertrand Russell, John Dewey, Paul Krugman, and Michael Kinsley on the left. Today, systemic wealth inequality and its social disruptions are growing more similar to the late nineteenth-century inequalities that originally inspired his single tax theory. Contemporary progressives like the land value tax because it effectively socializes land. Contemporary fiscal conservatives like the LVT because it eliminates (or at least reduces) other taxes, and because it both incentivizes and rewards productive economic activity. The difficulties with the LVT both then and now seem always to be with the politics and scale of its implementation.8

The basic assumptions and features of a land value tax begin from the Georgist definition of land and unimproved land value, which I present below, along with a table differentiating a conventional property tax (levied on both land and buildings) from a land value tax (levied upon land alone).

Land refers to the entire material universe outside of human beings and the things human beings produce. In addition to the ground itself, land includes all natural resources, materials, airwaves, air, soil, minerals, and water. All things freely supplied by nature and not made by man can be categorized as land.9

Unimproved land value is the dollar-amount-worth of a piece of ground and/or its land without any buildings or improvements on it. Value is typically calculated based on its location and comparable vacant land sales.

The primary difference between a conventional property tax and a land value tax is shown in the following table, which depicts two different methods of raising $5,000 of tax revenue from a block divided into two parcels of land. The top section illustrates an example of how taxes are collected on property evaluated as the sum of the value of the land plus the value of any buildings. A vacant parcel is assessed at $100,000, and the owner is taxed $1,000 (or 1 percent of the assessed property value); a parcel with buildings on it is assessed at $400,000 ($100,000 for land and $300,000 for buildings), and the owner is taxed $4,000, or the same 1 percent tax rate on assessed property value, raising a total of $5,000 in tax revenue from the two parcels.

The bottom section illustrates an example of how taxes would be collected on the unimproved land value of each parcel irrespective of any buildings on it. Both parcels (vacant and/or occupied) are assessed land values of $100,000 each, and their owners are taxed $2,500 each, or a tax rate of 2.5 percent of the assessed unimproved land value. In this way, the same total of $5,000 in tax revenue is raised from the two parcels.

This table indicates some of the mechanics that differentiate a conventional property tax on land and buildings from a tax on the unimproved value of land alone; and in this example, both methods raise the same amount of tax revenue. Their implications and possible consequences for good differ significantly, however.

Georgism and the Value of Land

The two basic tenets of the Georgist single tax theory are (1) that virtually all revenues required to fund governmental programs and services can and should be raised by a tax on the unimproved value of land; and (2) that this tax should replace most, if not all, other taxes, including taxes on personal income, sales, business profits, inheritance, buildings, and any other improvements to land. According to its proponents, the implementation of a single (land value) tax regime would arrest speculation in land (in the form of land banking) and consequently mitigate real estate boom-and-bust cycles; justly reward the work of both labor and capital; stabilize modern economies; result in more affordable and (in the long run) higher quality housing; remove major obstacles to the economic ascent of the poor (notably unaffordable housing and regressive taxes on income and consumer purchases); help restore (and expand) the middle class; and usher in a broad and sustainable reign of economic prosperity. So goes the Georgist narrative. What observations and assumptions inform it? Here are three:

(1) Land is properly differentiated from private property. Human beings have rights of ownership to what we produce and improve and exchange (i.e., private property). But we do not have rights of ownership to natural resources that no human being produced, resources that come from nature and are, in fact, common goods (e.g., air, water, land, mineral resources—the resources on which all human life and society depend). Therefore, though one may properly hold exclusive title to use land, this is not to be confused with ownership of land. Rather, it is an exclusive entitlement to a common patrimony authorizing the titleholder’s private and profitable use—with the proviso that the use of such a common good is properly subject to a user fee paid to the community in the form of a tax on the unimproved value of the land. Some land may be valuable as a source of precious finite minerals and taxed accordingly. For example, oil has been taxed to create both the Alaska Permanent Fund and the cash dividends distributed to its residents. And some land may be valuable and taxed accordingly by reason of beauties bestowed by nature (as owners of beachfront property will attest).10 In most instances, however, the value of land is directly related to its proximity to social goods (i.e., to value created by other people). The Georgist argument is that such increases in the value of land—and in the value of land alone—are both properly subject to taxation and are the most just, rational, and efficient source of public revenues. That this is true follows from a second observation.

(2) When you tax something, you generally get less of it. Economists recognize that taxes create externalities, which can be good or bad, intended or unintended. Most of us understand intuitively that this is true, because we understand that some taxes are designed and imposed precisely to decrease certain behaviors. Such taxes include not only Pigovian taxes (after the early twentieth-century British economist Arthur Pigou) levied to recover the social cost of some private activity (e.g., environmental pollution), but even an LVT itself, which can be understood in part as a tax on unearned wealth, imposed to decrease it. There are also plain old “sin taxes” imposed to discourage things of which at least some people would like there to be less: on tobacco and sugary drinks; or, say, concrete frame construction and glass curtain walls. Our most visible taxes, however, have externalities largely hidden from public understanding. Taxes on the productive activities associated with both labor and capital all have the presumably unintended consequence of decreasing the productive effects of each—e.g., taxes on sales, on business profits and investment income, on buildings and improvements associated with property taxes, on capital gains and inheritances, even graduated taxes on income. And this leads to a third (and critical) Georgist point.

(3) A tax on land cannot diminish the quantity of land. For most of the twentieth century up to the present, neoclassical economists have regarded land as simply another form of capital. But this was not true of the eighteenth- and nineteenth-century classical economists, who recognized that land differs from both labor and capital due to its temporal and material priority, its fixed supply, and its immobility.11 Land also differs from other assets (e.g., buildings) in that it does not depreciate in value, but rather grows as the community invests in its shared infrastructure. G. K. Chesterton once quipped that, whereas God can make something from nothing, man is the being who can make something from anything. That “anything” in the first instance is land. Unimproved land is humanity’s most basic material resource, the foundation of all material wealth, required directly or indirectly for the human production of all goods and services. One can’t make any more of it; one can’t hide it in a Swiss bank account; and one can’t move it to the Cayman Islands. Labor receives wages for work, capital receives interest for investment, and land receives rent for the exclusive (monopoly) use of a location. For several reasons, then, Georgists argue that taxes on labor and capital should be eliminated in favor of a single tax on the value of unimproved land (i.e., an LVT) as the primary source of public revenues. Taxes on labor and capital diminish both, but a tax on unimproved land does not diminish the underlying resource. Meanwhile, a tax on land returns to the community either the value of some shared natural resource or the value of the land which the community itself has created; and a tax on land is an efficient and transparent method of taxation.

But is land not a form of wealth? And if a land titleholder is to be taxed for the full rental value of his or her land, what is the benefit of holding title to land? Here again, consider that, strictly speaking, land is not wealth. Rather, land—all natural resources independent of human production, which belong to everyone—is the precondition of wealth, and is to be taxed for human use; whereas wealth—the material and intellectual products of human labor, which by right belong to the laborer—is not to be taxed at all.

Why then, under a single tax regime, would anyone want to hold title to land? One would seek title to land to use it, and only to use it: to live on it, farm it, sell things on it, manufacture things on it, mine things from it, and so forth. Land speculation would be impossible because only the use of land would have economic value. In turn, though, an LVT would also benefit land titleholders who would not pay tax on improvements to their land or productive activities undertaken thereon. And why would anyone sell land? One would not sell land to make a profit from the sale (which would not be possible), but rather to relieve oneself of a tax liability. That which one cannot or will not use one cannot own save for a fee. “Ownership” of land extends no further than an entitlement to the use of land, and that which an “owner” cannot use he must pay for or “sell” to someone else. “Buying” and “selling” land under a single tax regime therefore assume slightly different meanings than in ordinary discourse because what is really transferred is a land liability equal to land value—a liability virtually no one would accept if they did not plan to use the land.12

Georgism and Modern Economics

I mentioned earlier that economists familiar with Georgist theory (which is far from all) generally do not disagree with the Georgist analysis, regardless of their political dispositions, and they acknowledge the effectiveness, simplicity, clarity, and fairness of a land value tax. Their disagreements are rather about issues such as (1) whether it is possible to adopt an LVT as a single tax on a national scale; (2) if not, whether a modified and partial LVT is desirable and possible, either for its own sake or as a transition to a single tax regime; and then finally (3) if a partial LVT is desirable, two related and properly political issues remain: the size and scope of government services, and how much tax should be levied on the value of land.

Opposition from land speculators and owners of large amounts of land has always been a predictable response to Georgist theory; and in spite of its popularity across ideological lines, sustained LVT implementation has always posed a challenge. How then, and to what extent, might some version of an LVT be implemented? And how much revenue can an LVT raise? With a proviso that I enter these waters with caution, here I offer, across a variety of scales and on behalf of agendas short-term and long, four different versions of an LVT and how each might be effectively adopted:

(1) The Full Henry George (for example, as advocated by John Médaille and Fred Foldvary13): a single tax to be paid annually, applied at the scale of the nation-state, but collected locally, replacing most if not all other taxes at federal, state, and local levels, at close-to-full taxation of the ground rent of unimproved land as set by the market. Henry George himself recommended collecting about 95 percent of the full market ground rent, with the balance remaining with the land titleholder as a kind of profit or management fee. The rental value of any particular parcel of land would be determined by comparable vacant land sales in the immediate vicinity, or by comparisons to similar parcels occupied by similar buildings in different but broadly proximate locations. Land value reassessments could occur annually, biannually, or triannually, but with the development of contemporary digital mapping tools, such as ARC-View, ARC-GIS, and more recently GAMA, land value assessment from an office desk is becoming an easier task than determining the value of land plus buildings for present-day property tax assessments.14 Also, there can be little doubt that long-distance, absentee landlords and other land speculators are themselves employing these tools for their own land-banking purposes.

Some Georgists argue that land value tax revenues would be sufficient to fund all government programs (including health care and public education), sometimes even with a surplus returned to citizens as a direct cash payment (like the Alaska Permanent Fund), and could be the basis for a de facto guaranteed national income. In thinking about an LVT in and at the scale of the United States, John Médaille estimates that the revenues from such a tax could easily replace all federal, state, and local taxes, except income transfers (welfare, Section 8 vouchers, Medicare, Social Security, etc.). The gap could be filled by some small flat or progressive income tax in the range of 5–15 percent. Médaille also suggests that because the LVT is assessed and collected locally and distributed upward to various levels of government, it would incentivize state and local decision-making.15

(2) A Halfway Covenant, so called because even though it imagines essentially the same dynamics of assessment, collection, funding of public services, and elimination of other taxes as the “Full George” above (and at the same scale), it would nevertheless collect only a portion rather than the entire rental value of land—just enough to fund the specific government services desired, a larger or smaller sum depending upon the proclivities of the electorate and the political party in power. Even if the Halfway Covenant yields sufficient funds, however, the problem remains that, by leaving some substantial portion of the rental value of land in the hands of the titleholder, it might not end land speculation, the practice of land banking, and the negative consequences that follow therefrom. A more doctrinal Georgist would probably prefer to tax closer to the full value of the land and distribute any surplus funds back to the public in the form of a cash dividend (again, like the Alaska Permanent Fund).

(3) A Local Building Tax/Land Tax Reversal: This third approach more thoroughly modifies Georgism by simply changing the conventional property tax (that assesses both land and buildings, but emphasizes the buildings) such that land is taxed at a significantly higher rate than buildings. In the United States, the most prominent example of this type of taxation is in Pittsburgh, where it has been employed off and on for over a hundred years, most recently in 1978 when land was taxed at a rate six times higher than buildings.16 The results at the time were impressive, and some of its effects remain so. Conventional property taxes penalize owners for improving their buildings by causing their taxes to rise, thus rewarding land banking and inflating real estate prices. But Pittsburgh and other places have demonstrated that when you implement an LVT, you get not a real estate price boom, but rather stable land values and a construction boom. Moreover, even after a construction boom saturates market demand, under an LVT, what remains thereafter are stable land values and more affordable housing in which the home and its activities rather than the land are the genuine source of personal wealth.

Because the land values that elsewhere fuel rising housing costs have been stabilized, when they rise, they do so only gradually, without boom and bust. Nevertheless, Pittsburgh’s embrace of this modified LVT has been fitful; that’s probably because in this approach, an LVT is not a replacement for other taxes, and is therefore more vulnerable to sabotage from land speculators and their political allies, who are naturally inclined to oppose an LVT. This indicates a problem that follows from not using an LVT to replace at least some other taxes and also some problems that follow from attempting to apply an LVT at a local rather than regional level. In order to work most effectively, an LVT requires implementation at a certain minimum scale: small enough for local oversight, but big enough to curb local land banking and speculation. An LVT would thus seem not to be most effectively applied as a kind of spot-zoning or spot-taxing experiment. As a merely local LVT takes effect, its benefits simultaneously create value on the land immediately adjacent to the LVT zone, while bringing unearned income to the owners of that adjacent land.17 This suggests that an LVT jurisdiction must be extensive enough to discourage land speculation at its immediately adjacent borders, which in turn suggests that it might work well for an island nation (as it has in places like Singapore and Taiwan); or, as I will suggest below, at the scale of a metropolitan region with abundant natural or agricultural land at its perimeter. And this brings me to my final hypothetical way of implementing an LVT:

(4) A Revenue-Neutral Regional LVT across a Transect: Returning to the idea of a rural-to-urban transect, I conclude with this last example, not to suggest it as the best arrangement everywhere, but rather as a thought experiment to address current difficulties.18 The full benefits of an LVT seem to require its application at a certain scale, and an LVT will be inefficient if the scale is too small. Unlike transect-based zoning, an LVT can’t be introduced as a “pilot project” for a small area or even a city because the success of the LVT will raise the value of adjacent (non-LVT) land, and land banking will just move to properties located “across the street,” as it were. The minimal optimal scale at which to adopt an LVT is likely at the scale of a metropolitan region that also includes a natural or agricultural landscape at its perimeter. Even though the details of land use relating to local zoning and development should arguably be under municipal or even neighborhood jurisdiction, there are some issues best administered at a regional level due to their externalities: energy policy, big-picture land use policies (related to human settlements), agricultural production, landscape preserves, major regional roads, public transportation, equitably financed public education, water treatment, and so on.

The late nineteenth-century, pre-sprawl heyday of Henry George was hardly without flaw. Nevertheless, a relatively healthy culture of land use, building, and urban design could be presumed, and therefore (perhaps) a warranted bias against the land use restrictions inhering in the nascent zoning efforts of that era. But Henry George’s historical moment is not ours. Today’s sprawl suburbs are in part a product of modern zoning. Worse than that, sprawl suburbs now embody an institutionally entrenched and enabled cultural habit, making the overthrow and replacement of single-use, sprawl zoning a necessary though insufficient condition for a renewed culture of city making. It is thus important to distinguish the purpose of transect-based zoning from the purpose of use-based zoning. Transect-based zoning is simply a tool that legalizes the lost art of town planning and urban design—neither prohibiting nor impeding, and sometimes helping—the long recovery and development of that now lost art. In contrast (and in hindsight), use-based zoning appears at best a mistake, and at worst a monumental act of hubris: that more than two generations have imagined we could radically alter the way human beings have occupied and lived on the landscape for millennia without adverse consequence to ourselves and to others.19

Effects of the Land Value Tax

What would be some immediate and predictable effects of a new LVT regime?

(1) An LVT would very quickly stabilize land values and effectively end land banking, either definitively by capturing 95–100 percent of a land parcel’s ground rent as a tax paid to the community, or virtually through the incentives created by whatever tax is charged on either the use or the sale of underused urban land.

(2) An LVT often prompts a construction boom because it incentivizes development of underused land, by means of both stick (the tax on the rental value of the land) and carrot (the absence of tax on improvements to and productive activities on the land), rewarding both the construction of new buildings and the renovation of old ones. Vacant lots acquire new buildings; shabby buildings become renovated buildings; towns and city neighborhoods get tidied up, and become more vibrant and desirable. Although these new and renovated buildings are economic assets in themselves and, over time, raise the ground rental value of the land on which they sit, that value grows only gradually, mostly on the basis of the construction quality or the renovation of the land’s occupying buildings. This is because the rental value of the land, the rapid rise of which is so devastating on young people especially, has been taken out of the building and development equation by the LVT and is now going to the community.

(3) Under an LVT, after a construction boom ends, the price of housing remains stable. Boom-and-bust housing cycles are minimized because, again, boom-and-bust housing cycles are due to the land speculation that is necessarily absent under an LVT. Likewise, when there is a demand for new construction, ground rents will rise slowly in accordance with the value of everything being built. This is because the ground rent is being taxed, and thereby taken out of the development equation.

Winners and Losers

From a political standpoint, if an LVT causes total taxes to go up for the average renter and homeowner, the LVT is dead in the water. The revenue-neutral regional LVT across a transect proposal must be particularly conscious of this problem (because of the four scenarios considered it is the one most completely designed). We are not without actual examples to consider here, however. Pittsburgh’s most recent LVT, which began in 1978, required landowners to transition from paying a standard property tax to paying a split tax that assessed the value of land at six times the value of buildings. According to Dan Sullivan, “most homeowners paid far less [in taxes] under a Land Value Tax, absentee owners tended to pay more, the very richest neighborhoods paid more, the corporate property paid more. The skyscrapers paid less, but the [owners of the lots next to them] paid more.” Every tax regime produces winners and losers, so who wins and who loses under an LVT scenario?

(1) Renters win. Renters under most LVT regimes will pay few if any taxes beyond sin taxes. Moreover, the LVT is likely to spur construction of better, more affordable, and more stable rental housing because these are the features that will give landlords advantage in the rental housing market.

(2) Most homeowners win. The majority of land-titled homeowners whose home is their major asset should expect to see their total tax liability go down, though owners of homes on larger tracts of land might see a rise in their taxes (cf. Pittsburgh). Homeowners will not profit as much (or at all) from the sale of their home beyond the value they have added to it themselves, though the upside is that, should they wish to sell and move up or down, they will find housing prices more stable everywhere under an LVT regime. And under most LVT regimes, the LVT will replace some, if not all, other taxes.

(3) Land-titled entrepreneurs, especially small ones, win big. Contrary to the Pittsburgh model cited above, land-titled entrepreneurs in an LVT regime are likely to see their total taxes go down significantly: possibly on the land itself if there are height restrictions, and if they are already using their land well; this is almost certainly a result of having to pay taxes on neither business profits, nor productive activity of any kind, nor any improvements they make to their land.

(4) Land speculators lose. Under an LVT, the taxes of landowners who are land banking, waiting to sell or develop only after adjacent parcels have been developed by others, will go up significantly. An LVT will give them a strong incentive either to develop their property or sell it to someone who will. As with everyone else under an LVT, they can profit from their labor and their capital investments; and their other taxes will diminish or disappear, but not the taxes they will pay on their (underused) land.

(5) The community wins big. Finally, the community gains a stable and durable source of revenue. Land, moreover, when taken out of the speculative market, will appreciate more gradually over time, while landowners who now will have strong incentives to build more and better buildings will not be penalized for doing so.

Making the Leap

In most cities in the United States today, housing inflation and deflation is land value inflation and deflation. Today’s prohibitively expensive global city housing and economically stressed low-density automobile suburbs are two sides of the same coin. Land banking in cities creates artificial scarcity that drives development to less expensive rural land made affordable by federally subsidized but economically unsustainable sprawl infrastructure. When land is considered capital rather than a common resource to be used, the full development potential of land is neither paid for nor rewarded. The result is what we have now: a rise in unaffordable cities and a multiplication of failing automobile exurbs.

Is a land value tax too complex to implement? Compared to what? Our current opaque system of disincentives to work and invest? Of invitations to chicanery? Of distributing unearned wealth to the land-titled, while gutting the middle class and erecting nearly insurmountable obstacles to the economic advancement of the young and the poor?

The question is not whether beautiful, convenient, and affordable cities and towns, under a simple, clear, and fair LVT regime, are impossible dreams. The question is whether we have the cultural capital, political acumen, and artistic skills to once again make such places. To be sure, important LVT details remain: “grandfather clauses” temporarily exempting elderly homeowners on fixed incomes; how best to transition from a property tax to an LVT; and the role of LVT-exempt institutions in civil society. But such details are not unresolvable.

Given my biblical view of human nature, as fallen but with the possibility of—and a trajectory toward—redemption, my hopes for a land value tax and a revival of classical humanist urbanism are genuine and substantive, though modest. Neither Georgism nor good architecture and urbanism are salvific, nor do they warrant cultish devotion. But compared to our current tax system and the social and economic distortions it engenders, an LVT would be a simpler, more transparent, more easily administered, and above all more just tax. Walkable, mixed-use towns and city neighborhoods comprising durable and beautiful buildings would realize human flourishing much better than our ubiquitous sprawl suburbs.

Perhaps the rearrangement and recovery of fundamental things, such as fairer taxes, more beautiful and well-tended landscapes, and good urbanism can only occur in the aftermath of catastrophe. Many already regard both sprawl and our current economic arrangements as catastrophic. Nevertheless, it would be a welcome development even now for New Urbanists, both political parties, and all interested citizens to embrace land value taxation as an essential nonpartisan component of good urban economy, based upon the truth of what land is. The promotion of walkable, mixed-use human settlements across a rural-to-urban transect should also be a bipartisan effort. The problems these policies can solve concern many Americans, perhaps a majority, across political lines. The solutions await their political champions.

This article originally appeared in American Affairs Volume II, Number 1 (Spring 2018): 56–75
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Interesting model

Project seeks one-stop shopping for ADUs

PSU ‘s Institute for Sustainable Solutions using Solarize model to make it easier to add backyard homes

Folks at Portland State University are taking the city’s wildly successful Solarize model and applying it to “granny flats.”The idea is to make it easier and cheaper for Portlanders of various income levels to build the small homes, officially known as Accessory Dwelling Units or ADUs, alongside or behind their houses.

Portlanders took out nearly as many permits to build ADUs last year as regular single-family homes, and all signs point to a continuing boom in new units, which are far cheaper to build than regular homes and enable people to live in closer-in neighborhoods near their friends and families.

The Small Backyard Home Project is being spearheaded by PSU’s Institute for Sustainable Solutions, led by former Metro Councilor Robert Liberty.

“If you have a small house you use less stuff,” Liberty says. Small houses also are cheaper to heat and cool, and thus have lower carbon footprints.

They also can help ease the city’s housing shortage and prevent people from being forced out of their neighborhoods, he says.

But taking on a construction project is not for the faint of heart, and many barriers remain. The Small Backyard Home Project, launched last fall, is identifying those and devising ways around them.

Solarizing

The Solarize program, started in 2009 in Southeast Portland, provided a one-stop process making it simpler and cheaper to install rooftop solar panels on homes. Citizens attended workshops where all the steps were explained, and they met one solar panel installer chosen to serve them all. That cut installation costs for the installers, who also obtained bulk discounts on panels and other gear that were shared with participating residents.

The process was replicated in other Portland neighborhoods, resulting in hundreds of new solar installations. The Solarize model ultimately went national.

Now PSU hopes to do the same for ADUs, guiding people through the process, perhaps with a “concierge” to help them, Liberty says. He hopes the project eventually can cut per-unit costs by $20,000 to $40,000.

Plenty of available sites

For starters, PSU created maps showing where more than 70,000 ADUs could be built on residential lots in the city. That’s far more than the potential for regular single-family homes, because ADUs can be added at lots where houses already exist.

Students at PSU’s Center for Public Interest Design, directed by Sergio Palleroni, are creating some model ADU designs, so that residents might be able to pick from among a menu of templates. That would lower construction costs and make it simpler and faster to get city permits, Liberty says.

The goal is to design and build a few prototypes by year’s end.

There’s also discussions about developing kits, so that some units could be assembled on site from prepackaged materials. That could save the most money for kitchens and bathrooms, typically the most expensive parts of homes, Liberty says.

Center for Public Design faculty member Margarette Leite is exploring the idea of re-recycling and reusing building materials for ADUs, Liberty says.

PSU business students are working on financing issues for ADUs. That’s been one of the biggest barriers, because banks have been reluctant to provide construction loans, forcing homeowners to rely on home equity lines of credit — if they have enough equity in their homes. That limits options for lower-income or younger homeowners to add ADUs.

One idea is to provide a package deal including the services of an architect, contractor and building fees.

The Solarize model of buying materials in bulk to get discounts for multiple ADU owners also will be explored.

There also are talks with affordable housing providers who might devise programs to build ADUs on peoples’ properties and rent them out, Liberty says. The nonprofit essentially would take on landlord and managerial duties for the homeowner — and collecting the rent — with the promise that the homeowner would assume full ownership and control of the units after, say, a decade.

Multnomah County is creating a pilot project aimed at putting homeless people in tiny ADUs of roughly 200 square feet on private lots. The homes eventually would revert to ownership by the property owner.

The Institute for Sustainable Solutions wants to build prototypes in at least two parts of town, likely including the Cully neighborhood in Northeast Portland, where serious efforts are under way to prevent gentrification.

An informational meeting was held in Cully recently and about 25 people showed up, Liberty says.

If all goes according to plan, PSU eventually would move into a second phase to seek “a systems approach” to building ADUs, essentially trying to get large numbers built.

After a couple years, the Institute for Sustainable Solutions hopes the project can be self-sustaining, Liberty says. Then he hopes to move on to another project, perhaps encouraging more ADUs built as part of existing homes, such as in basements.

Ripe for development?

PSU has calculated ample opportunities to build Accessory Dwelling Units, or what it’s calling Small Backyard Homes, in Portland.

n There are about 70,863 lots considered prime for ADUs. A large share of these are in outer east neighborhoods where development hasn’t been as brisk.

n 29,363 of those lots are located within 500 feet of a transit stop. One proposal for the city’s infill development is to allow lots close to transit to have two ADUs, one built in the yard and one “internal” ADU built in a remodeled garage, attic or basement.

n 3,860 of those lots are located on alleys, which might allow for a clustering of units. The alley could be refashioned into a thoroughfare, as is done in Vancouver, British Columbia.

To stay abreast of the Institute for Sustainable Solutions’ Small Backyard Homes Project: enhabit.org/place/

Original article here

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Oregon Business Plan on land use

Make Land Quickly Available for High Wage Jobs


Why is it important?

In order to attract, retain and support the growth of industries from metals manufacturing to high tech manufacturing to solar and clean tech manufacturing, Oregon needs an inventory of competitive shovel ready industrial sites.    There is a broad consensus that the state is lacking in competitive sites due to a wide range of state, regional, and local issues. Some of the traded-sector business that Oregon wants are relatively large and require parcels sized and with services to accommodate them. In some places Oregon is critically low on land that is ready to go for such businesses.

Where We Stand Today

In 1973, the Oregon legislature enacted Senate Bill 100 establishing Oregon’s pioneering state land use system.  Through this system, Oregon has been widely recognized as a leader in creating a system to protect quality of life while providing land in support of economic development.

But much has changed since 1973.  In the 1970s, agriculture and forestry were the dominant industries in Oregon, and the land use sysetm appropriately was desigend to protect and preserve for agriculture and forestland.  Today, these industries remain critical to Oregon’s economic health.  The state has also diversified dramatically into high tech, clean tech, advanced manufacturing and other industries with land needs.  We must expand the focus from resource land protection to include the needs of high paying manufacturing industries in and near urban areas.    The current system is not parituclarly sensitive to those needs, as evidenced by the shortage of industrial land in many parts of the state.

Industrial land for traded sector industries was a key priority when the Oregon Business Plan launched in 2002.  Thanks to the leadership of Governor Kulongoski and economic developers across the state, Oregon developed a certified industrial lands program to identify and inventory “shovel ready” industrial lands.  Oregon launched the “Oregon Prospector,” an innovative online tool to help companies identify “shovel ready” lands.

The Governor’s early leadership on this issue should be appluaded and it has paid off in landing several large industrial developments–companies that are returning dividends for the state’s economy and tax revenues.  However, there is a growing consensus in Portland and around the state that the “low-hanging fruit” has been picked.   If the next Intel were to knock on Oregon’s door today, where would they set up shop?  What about the next Solar World? Unfortunately, the answer is somewhere else.  Oregon simply does not have the industrial land supply to meet the needs of these industries.

The problems with industrial land supply are multi-fold.  Here are a several:

  1. Insufficient coordination of economic development strategies among various levels of Government
  2. Absence, in most communities, of a short-term land needs analysis
  3. Lack, in most communities, of a competitive short-term supply of land.  Oregon’s land use laws make it very difficult to get enough land, and to make that land ready for employment uses. Oregon cities face years of expensive processes and appeals to make relatively modest amounts of land available for employment.
  4. Lack of mechanisms to protect key areas of industrial designated land.  Even where development constraints are not fatal, other land uses like commercial, housing, retail, schools, churches and open space and natural resource conservation compete with industrial uses for the existing zoned land and the conversion of industrial lands to other uses reduces the available industrial land supply.
  5. Lack of mechanisms to pay for the infrastructure upgrades required when developing industrial sites.

The Oregon Business Plan Strategy

The Business Plan recommends alleviating these problems by changes in policy, practice and attitude that increase (1) the supply of shovel-ready, large-lot, industrially-zoned land; (2), infrastructure funding, and (3) the speed of the entitlement (permitting) process.

 Priority Action Items

1. The Governor should set a clear “Tone at the Top” that economic development, industrial site availability and efficient permitting is a top priority.  A world class competitive business environment requires direction from the Governor and agency heads that economic development is a priority for every agency and that the timely resolution of regulatory issues and delivery of permits is essential for the state’s economic prosperity.

2. The legislagure should require jurisdictions to maintain a short term, five year rolling supply of development ready industrial sites that meet current and anticipated market needs. While jurisdictions may have a twenty-year supply of vacant industrial land in the aggregate, often the bulk of that land is not development ready. Expanding companies require development ready sites, not an aggregate supply of industrial land identified to meet land use planning regulations. Prospective and expanding Oregon companies will not wait until the last years of the planning period to find a place to build – their market will drive them elsewhere. The requirement for a twenty-year land supply helps jurisdictions do long-term planning and investment but does not ensure that the immediate needs of users and the market for readily developable land are met. A five-year land supply that is immediately developable is also needed to ensure the needs of specific companies and the market are being addressed.

3. The Governor should lead a process to identify and expedite permitting of statewide and regionally significant industrial sites. Investments in industrial development that provide above average wages and that employ a skilled work force are of such economic significance to the economic recovery of the state that they merit expedited siting. Such projects bolster the economies of their communities and contribute to the economic health of the state as a whole. Permitting for projects of statewide and regional significance should be expedited through a consolidated review and permit delivery process.

Working with local government, private industry, and regional economic development organizations, the Business Development Department, the Department of Land Conservation & Development, and the Department of Transportation should cooperatively identify statewide and regionally-significant industrial areas and assess their level of readiness.

4. The legislature should protect statewide and regionally significant industrial sites from conversion to other uses or regulations that reduce development capacity. State authority is needed to discipline local jurisdictions from making zoning changes or regulatory overlays that reduce the supply of industrial land for other uses without replenishment. If a local jurisdiction converts a portion or all of a site to a non industrial use, or implements a regulation that reduces the acreage available for industrial development, the state should require the jurisdiction to replace that site or acreage with a site that has like characteristics, including proximity to infrastructure, land characteristics, and appropriate siting for the use in a time line that maintains a five year supply of immediately developable industrial land. This action would support a “no net lose jobs” policy, similar to the City of Portland’s no net loss housing policy that requires replacement of residentially zoned property.

5.  Through legislation and rule-making, amend the Transportation Planning Rule (TPR, state land-use Goal 12) to give more flexibility for development that creates new jobs and industry.  Integrating transportation and land use planning is a laudable goal and a critical component of Oregon’s land use system. However, it is clear that one Oregon land use goal (goal 12- transportation planning) is clearly trumping another (goal 9-economic development), in land use decision-making, leaving economic development opportunities unrealized. It is possible to reconcile transportation planning and economic development, but it will take a new approach. This could be done in several ways.

We recommend a revision of the TPR that balances the amount of investment required to meet the TPR with other goals. These goals should include job creation, how much the anticipated development will generate in state income tax revenue, etc. For example, the Purpose section of the TPR should be amended to require that the concurrency provisions of the TPR be balanced with the state’s economic development needs under Goal 9 and its related administrative rules, and that Section 0060 of the TPR should be amended to add a new subsection (d) to allow a local government to determine that a finding of significant affect may be mitigated by a concurrent finding of significant economic benefit to be derived from the proposed plan or land use regulation amendment.

Another solution involves metering the TPR assessment based on the incremental use of the site over time, rather than paying the fee on the maximum anticipated impact.

A third idea would be applying the TPR assessment to a corridor standard level of service, rather than the immediate impacted area.

The legislature recognized the problems with the TPR when it passed HB 3379 in 2009 to provide more flexibility on the TPR. Unfortunately, the bill was significantly watered down in the committee process and the subsequent agency implementation of it has not addressed the major problems with the rule as it is currently implemented.

6. The legislature should create mechanisms to pay for infrastructure and remediation. Oregon needs a source of funds to provide infrastructure to and help remediate development constraints on industrial lands. Potential solutions include a shared income tax revenue model by sequestering a portion of new revenues from jobs created in a new business location to help pay, in part, for infrastructure improvements. Also, a full review of other financing instruments should be considered (e.g. bonding, LID, TIF, SDC, local taxing districts, etc.).

7. State and local governments should create incentives to spark investment in and clean up of Brownfield sites. Many of the potentially developable sites are contaminated to the degree that new investors cannot take on the liability or cost of clean up. Solutions include financial incentives for voluntary clean up, tax credits and job creation bonuses. Creative revenue sharing solutions need to be devised that allow local jurisdictions, the private sector and the state to form partnerships to make clean up and redevelopment possible.

8. Oregon should adopt new approaches to wetlands mitigation. The theory behind UGBs is that there is lot of planning and analysis done up front on all the trade-offs, but once that is done, the land inside the UGB is supposed to be available for development. This has not always been the case, but recently we’re seeing DSL require ‘need’ analysis for wetlands inside the boundary on a project by project basis, when all that sort of study should be done at the planning (i.e. UGB) level, not at the permit counter.

Communities particularly affected by this include the mid-Willamette Valley and the Columbia Gorge. When wetlands are present on an industrial site, a potential developer faces the need to obtain permits from both the DSL and the ACOE. These permitting processes add time, effort, expense and uncertainty to the development process. There are opportunities to expedite the resolution of these issues that protect both environmental economic interests.

These include: the development of Regional General Permits for high priority industrial sites that have issues like wetlands mitigation that involve multiple agencies and jurisdictions. Another opportunity is to facilitate use of an ecosystem services approach, where developers can pay nearby landowners to provide the same equivalent ecosystem benefit that would be provided by keeping the site out of development.

9. Oregon should employ a patient developer to assemble and address constraints over time to prepare sites for development. Promote and enable ports and port-like development authority’s the financial and legal ability to assemble parcels, mitigate development constraints and hold sites over time to ensure there is an adequate five year rolling supply of industrial sites in each jurisdiction. Many parts of the state are underperforming due to a lack of such developers. Further, other issues like environmental mitigation, industry recruitment, and infrastructure development are facilitated and improved through professional land management and development.

10. The Governor and legislature should review and reform the appeals process to prevent unwarranted project delay. There is concern that excessive appeals by those with questionable standing or little “skin in the game” are slowing down permitting processes, not just in land use decisions but across business activities. Oregon should review its appeals process in order to identify and rectify sources of unwarranted project delay. Possible reforms include limitations on who has standing to file an appeal and/or the introduction of fees for filing appeals.

Oregon Business Plan

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The Path Not Taken

Current process overview

Rather than a mechanistic land need formula, statute and rule [2011] describe an informed local policy choice decision process to establish the need for employment land that in turn drives the size of the UGB. Cities are to examine influential trends, define needed site types, conduct an inventory and estimate a needed number of sites to meet community objectives. There are a number of suggestions that are strongly encouraged but not mandated.

The problems

The two most significant problems are discussed first; others follow in no particular order. First, cities that complete the process have plans that are subject to appeal. Statute and rule make economic development planning an informed policy choice. Almost all appeals challenge the local decision on substantial evidence. This is a manageable problem if the city intends to make no significant deviations from current circumstances and does not wish to radically alter their land supply to attract new opportunities. However, the point of employment land planning efforts often is exactly to deviate from current circumstances and establish a land supply to accommodate – even attract – new opportunities. Although retaining and expanding existing local business is critical and in many ways more important than competing for new recruitments, local governments have little authority and few tools to offer beyond annexation, zoning and infrastructure deployment. New aspirations are allowed but it is notoriously difficult to prove that you need them. The planning problem is who decides the final decision and when.

The second most significant problem has to do with the nature of planning itself: framework, data and decision. The Oregon land use system for urban areas is dominated by the residential planning model. Residential planning starts with an assigned control number, the coordinated population, and then proceeds by formula based on dwelling types and housing unit density. There are those who believe that a similar system should be imposed for employment planning. That system would establish an employment forecast, or derive one from the population forecast, and proceed by building type and employee density.1 It is simple and easy to understand. There is a case to be made for this system for local serving retail and office land needs, although industrial, larger retail and the corporate offices of traded sector industries provide compelling exceptions.

The simple system breaks down in several fundamental ways when traded-sector industries are considered. By definition, a traded-sector industry brings new money into the area. Traded-sector opportunities are not derived from the provable need of the local population. Opportunities arise from so-called locational advantages having to do with proximity, access, infrastructure and workforce. These are things a business can use to make a profit. An available and ready land supply is a threshold condition, but does not by itself create opportunity. Raw land is even less important except to the extent it has reliable zoning is in place. The planning problem is to provide an attractive and ready land supply without overextending the cost of maintaining the right inventory.

It is common to talk about economic development in terms of employment head count. Planners like to think of it in the same context as residential uses, where increased density is presumed to be a good thing. Economic development professionals are often required to measure and report their work in terms of new jobs created. These constructs are not particularly useful and the professionals will say so privately. They are easy to understand and attractive in the same measure they are unsophisticated. The trend in business is to move from a labor intensive to a capital intensive toward a knowledge intensive model. Getting scale right is difficult and important. The plant floor gets bigger, more automated and supports fewer employees with better skills. The office building has fewer small cubes, more amenities and lots of open space for collaboration. Business models change rapidly; it is hard for Oregon planning to keep up. A system based on employment density has little offer but simplicity.

The land use system in Oregon is fairly described as a static map system. Every decade or so a city re-examines itself and adjusts its map. By contrast, business, especially traded-sector business, is dynamic. Its needs change rapidly. Its decision time-lines are tight for critical business reasons including competitive speed and cost to market. The planning problem is to quickly respond to unanticipated desirable opportunities with good sites, infrastructure and smooth process.

An effective statewide land use planning program has many potential and real benefits, but it faces the same challenges in terms of defining, providing and maintaining ‘good government’ that any other program faces. The Oregon land use system has evolved into a confusing sometimes contradictory body of prescriptive rules and prohibitions. Too little has been done to provide useful information to help local governments find their way and too little has been done to provide reliable and meaningful incentives to encourage preferred outcomes. State statutes and rules that guide local planning tend to treat everyone the same. Instead of using regulation to provide a few consistent standards of last resort the planning program has become a mixture of interacting suggestions and rules that no one truly understands. Decisions become more an exercise of power politics. A city’s resources are spent less on planning and more on litigation. It must be remembered that a city’s growth management decisions take place in the local context on a continuum that flexes with each election as it grows old, builds out, builds up and tries to survive. The organizational problem is to create a system that recognizes and honors local, regional and circumstantial differences.

There are thousands of acres of zoned employment land in Oregon. These lands may not be where or what the market is seeking. They may be constrained to such an extent they are not truly available for development. Much of the industrial land is left over from the legacy of formerly significant industries, including timber. Port operations may be constrained by encroachment, brownfields and other uncertainties. The Willamette Valley has some of the world’s best farmland. It also has the most workforce and infrastructure currently available. No one really knows the current amount and condition of the employment land supply, but we have a pretty reliable picture of the available capacity of certain expensive and irreplaceable infrastructure systems, especially transportation. New money for infrastructure is scarce, and if we are to support education and other general fund draws on state coffers, we are going to have to make a few difficult choices. To be blunt, we are going to have to give up farmland where existing infrastructure is available. The good and bad news is that there are only a few small opportunities to do this, so the real loss will be minimal. There will have to be an efficient and accountable way to make these important strategic decisions.

A framework for meaningful change must:

  • Manage incremental change with timely, efficient and final local decisions
  • Accommodate unanticipated opportunities of local, regional and state significance
  • Accommodate differences by region, size and trend
  • Provide a way to implement important strategic decisions amid conflicting values and policies
  • Define and manage useful standards and explain their practical value and application.

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Industrial land use reform kit

Some assembly required. Batteries not included.

Start with SB792 from the 2011 session

The proposed legislation would have allowed selected counties and cities within those counties to cooperatively determine the amount of needed industrial land and expedite its designation. It needed additional work then, and also needs to be updated to better authorize meaningful suitable site criteria, protect regional agreements on land supply from special interest group appeals, and apply the lessons learned in the so-called ‘grand bargain’. The main idea is that it prohibits conversion and requires both regional cooperation and a committed infrastructure funding mechanism (no raw land speculation).

Although it didn’t pass, it did light a fire under the Governor and LCDC to authorize a pilot project in Deschutes County (which drew a special interest group appeal) and a regional solutions project in Malheur County. It is time to allow the entire state to do what only a few can do now.

It could use some more sophisticated implementation authority language. It may be the HB2255 or its companions mentioned below could be helpful in that regard.

Add some restrictions on special interest group appeals

The Governor’s office and LCDC proposed restrictions in 2011 SB766 (as introduced) and 2013 HB2255. It was stripped out. SB766 eventually passed as amended; HB2255 got nowhere. The 2255 version is very workable; it limits appeals to showings of unconstitutionality or significant and material breach of the public process. Groups can’t tie economic development up in court just because they have other policy preferences.

Apply the lessons from the Metro reserves remand

The legislature protected a cooperative regional agreement from legal mischief. It can do more and there may be lots of pressure to get it to do so. The systemic problem needs a systemic solution available to everyone.

LCDC discovered that it has less authority than it attempted to practice – the court said only LUBA can reach into the content of the record to make its findings. Or another more pointed way of saying it – LCDC does not know how to do its job and write up its reports. This needs to be fixed – and any obstacles removed.

There is a disconnect between the way Metro does its planning, what the law now requires and the reality on the ground. For example, Metro treats any zoned industrial land as fully develop-able at zoned capacity regardless of facts on the ground. For example, even though the Metro region (not Metro the political beast) is often described as the engine of the entire Oregon economy, Metro the political beast can choke it off if it chooses to do so. For example, Metro does not consider itself subject to Goal 9 (economic development) under current land use interpretations by LCDC. Metro has no obligation to consider the economic interests of the entire state.

Apply the lessons learned from Newberg

Newberg identified the most sensible and likely to develop land for economic development. LCDC thinks that long range land planning must somehow peer into the future and predict the operational needs of individual end users. The point of suitable site criteria is to have a designated land supply of sites that will develop as intended to attract the jobs intended. Cities should not be forced to route truck traffic through neighborhoods or past schools.

Explain why this matters

The connection between a strategic industrial land supply and our ability to pay for schools needs to be illustrated. Competing values are all important to somebody. When and if we say that school funding is more important than farm land, what criteria will make us comfortable with that choice? Are Christmas trees, potted plants or grass seed more important that schools in your neighborhood?

This post will be edited as improvements become available. So… feel free to link.