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Local Government
Smart Growth & Transit

As communities across North Carolina cope with the challenges of rapid growth in population and economic activity — which are, it should be remembered, far less serious than the problems associated with a lack of such growth — some policymakers are embracing the idea of “Smart Growth.” Unfortunately, this new debate about growth controls, zoning, open space, and transportation in North Carolina reflects too little consideration of the details of Smart Growth policies and market-friendly alternatives.

The Truth About Smart Growth

Smart Growth is a national movement toward greater government control over development, housing, transportation, and consumer choice. It typically focuses on four activities: 1) restricting the size of urban areas through growth boundaries; 2) requiring denser development through zoning changes; 3) discouraging driving with higher taxes and less road construction; and 4) increasing funding for mass transit. Because the choices of actual families, most of whom prefer cars and less dense development, would be subverted, they have little to gain from the new agenda. And though there are government policies that have helped subsidize some forms of growth, Smart Growthers rarely stop at ending unwise state or local incentives. Instead, they seek to legislate their aesthetic and economic preferences at the expense of what most citizens desire.

Even if Smart Growth principles were applicable in some places, North Carolina wouldn’t be one of them. Its urban areas lack sufficient density to make transit a viable alternative to auto commuting — bus systems in the state mostly fulfill a public assistance, not a transportation, function — and its tradition of personal freedom clashes with the central planning thesis of Smart Growth. Also, the idea that growth is in danger of consuming the countryside is foolish; 90 percent of North Carolina acreage is open space and will likely remain so.

Attempts to increase significantly the ridership of transit will fail, primarily because commuters won’t save time and would have to sacrifice their current ability to run errands, transport children, and otherwise benefit from the car’s greater flexibility. Transit also costs far more per passenger mile travelled than highways do, imposing a larger burden on taxpayers for capital and operating subsidies. Taxpayers are wisely skeptical of government estimates of transit costs; a planned Charlotte system is now projected to cost six times as much as stated during a1998 campaign to convince voters to approve a tax hike to finance it. Initial cost estimates for the Triangle Transit Authority’s rail plan have also been revised upward, by more than 200 percent (so far).

Does “Sprawl” Hurt Taxpayers?

One of the assertions about consumer-led, lower-density growth (called “sprawl” by its critics) is that it is expensive for taxpayers. Smart Growth proponents argue that building new schools, roads, water and sewer lines imposes additional cost on communities beyond the revenue generated by such growth. But a JLF study of growth and taxes in North Carolina communities refutes this assertion. The 1999 report found that:

• North Carolina towns with newer homes, on average, have lower taxes than those with older homes. This result challenges the idea that growth raises taxes by increasing service needs faster than revenues.
• The higher the percentage of single-family homes, the lower the tax burden. The standard argument — that it is more expensive to provide government services to single-family housing — is not supported by existing data in North Carolina. Indeed, other studies suggest that the only kind of residential growth that does not “pay for itself” is high-density, multi-family development. Density increases law enforcement and sanitation costs, among others, thus offsetting infrastructure costs associated with lower-density development patterns.

The findings of the study demonstrate that, of the three possible measures of sprawl examined, two suggest that sprawl reduces rather than increases the local tax burden in North Carolina, a result that is confirmed by studies in such Smart Growth communities as Portland, Oregon. Similarly, another myth is that higher densities and greater reliance on transit will reduce commuting times and improve transportation access. As the table below reveals, a comparison of development patterns and measurements of commuting time and congestion reveals an entirely different conclusion: greater “sprawl,” or perhaps one might call it greater “urban freedom,” correlates with shorter average commutes to work and less-congested highways.

The “Flex Growth” Alternative

A market-oriented approach to growth management, which JLF analysts have termed “Flex Growth,” can help policymakers reconcile the conflicting desires of citizens not only to alleviate traffic congestion and other problems, but also to protect property rights and individual choice. Elements of the Flex Growth approach include: 1) pursuing neutrality by neither subsidizing nor penalizing growth; 2) letting growth pay for itself by adopting marginal-cost pricing for public services (such as connection fees for water and sewer that accurately reflect the full cost of providing service to a development); 3) using voluntary programs such as tax credits and land trusts to protect open space instead of rigid and costly regulations; and 4) strengthening private property rights so that prices can reflect the most valuable use of land in a local market.

Recommendations

1. 1. North Carolina leaders should embrace a market-friendly alternative to Smart Growth in which consumer choices and prices are given deference over bureaucratic planning and guesswork. Flex Growth tools such as marginal-cost pricing, voluntary open-space protection, and more flexible zoning codes that allow mixeduse developments are available without additional state legislation.
2. Local officials should press the state to fulfill its responsibility to provide adequate roads. Failure to maintain and expand the state highway system has led to unnecessary congestion, damaging potholes, unsafe bridges, and lost economic growth. Ending the diversion of highway-related taxes to transit and other nonhighway purposes can free up hundreds of millions of dollars annually to invest in more and better roads.
3. State and local policymakers should end wasteful rail transit projects in Charlotte and the Triangle and focus their efforts on improving the efficiency and service quality of existing city bus systems.

To view higher quality graphs, download Agenda 2004 [560KB Acrobat].