To me, many density bonus systems fall under this definition of extortion from Webster’s College Dictionary:
[O]btaining money or some other thing of value by abuse of one’s office or authority.
While I admit that they are currently legal, it does not make them any less of an extortion scheme. Demonstrating that a density bonus system is extortion seems to hinge on the intent to obtain "money or some other thing of value" and whether or not it is an abuse of an office or authority.
I think most reasonable people would agree that if planners rig the system by purposely setting the original density in order create a favorable bargaining situation that leads to obtaining public amenities from developers such as open space, affordable housing, etc., then they are abusing their authority to obtain something of value. Admittedly the thing of value goes to the city or county, not to individual planners.
Proving a density bonus system is a form of extortion is another matter, until now.
Raleigh hired the consulting firm Code Studio to write "Diagnostic & Approach Report" (Public Review Draft, 2/1/2010) in order to better prepare for writing a new Unified Development Ordinance.
In the section "Linking Density to Public Benefits" the Code Studio consultants advise Raleigh planners how to set up a density bonus system:
For a bonus density system to be effective, permitted base intensities must be artificially reduced below market demand in order to ensure there is an economic incentive to acquire additional density and therefore achieve the desired public amenities [open space, public art, affordable housing, etc.] (p. 15, emphasis added).
This seems clear to me. This statement instructs planners how to extort "money or some other thing of value" from developers. But if that is not clear enough, the consultants go on to advise:
Ongoing management is required to monitor the city’s needs over time. The city should also be careful that the "public amenity" requirements do not overburden the developer. An excessive burden, real or perceived, could cause developers to build within base entitlements, or simply build in other areas where requirements are not as stringent (p. 15).
In other words, don’t get too greedy with your extortion scheme because the victims have some options.
Obviously this extortion scheme is not operated for the direct benefit of the planners, but it is also obvious that planners who are more successful at using this technique will gain favor with political authorities, and it is likely that they will receive raises, larger planning department budgets, more personnel, or some combination of those. Elected officials are not likely to question the means because they are receiving the credit for providing public amenities with no cost to taxpayers.
Is this an abuse of "one’s office or authority"? One way to test this is to ask if the density bonus scheme violations the American Planning Association code of ethics, which states:
A. 1. a) We shall always be conscious of the rights of others. …
A. 1. d) We shall provide timely, adequate, clear, and accurate information on planning issues to all affected persons and to governmental decision makers. …
A. 1. h) We shall deal fairly with all participants in the planning process. Those of us who are public officials or employees shall also deal evenhandedly with all planning process participants. …
A. 3. a) We shall protect and enhance the integrity of our profession. …
B. 1. We shall not deliberately or with reckless indifference fail to provide adequate, timely, clear and accurate information on planning issues.
Are planners who follow the advice of the Code Studio consultants — manipulating the base density in order to provide an incentive for developers to provide public amenities — respecting the rights of others? Assuming that planners do not publicly announce their manipulation, are they providing accurate information to all affected parties? Are these planners dealing fairly with all participants? Are they protecting and enhancing the integrity of the profession?
Now it can legitimately argued that this discussion is based on the recommendation of one consultant. Planners might respond that they don’t follow that recommendation in their city or county when they develop their density bonus systems.
But let’s look at it this way. If planners set the base density at market demand, as they should, then there is no incentive to provide public amenities in exchange for an increase the base density. So by definition, density bonus systems are based on a decision by planners to set the base density below market demand.
Or look at it this way. If the base density accounts for all negative externalities produced by the development, and the developer wants a higher density that would create negative externalities, the appropriate response from planners is either to deny the increase or to ask the developer for mitigating actions, not negotiate over the inclusion of "public amenities" totally unrelated to the negative externalities.
So by definition, for a density bonus system that provides for public amenities to work, it must set the base density below the market level. If it does that, it can be considered an extortion scheme, and the only way to defend it is to argue that the end justifies the means. The end of obtaining public amenities paid by developers justifies the process of extorting funds from unwilling developers.
It should also be noted that the cost of these public amenities are not just borne by the developers. They share that cost with the other participants in the private development. For example, in the case of a housing development, the costs are distributed among the homebuilder who earns less, homebuyers who pay more, and the original landowners who receive less for their land.
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