Press Release

Flex growth offers smarter options for N.C. state, local governments

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RALEIGH — A system based on “flex growth” makes more sense than so-called “smart growth” as North Carolina and its local governments set their development and transportation policies. That’s the conclusion in a new John Locke Foundation Policy Report.

“Smart growth represents a backward-looking model for economic development that attempts to turn North Carolina’s calendar back to the 19th century,” said report author Michael Lowrey, JLF economics and regulatory policy analyst. “But the densely built, rail transit-dependent cities promoted by smart growth do not represent how most people want to live. In contrast, ‘flex growth’ is based on the idea that people — not government bureaucrats and planners — know what’s best for themselves.”

Lowrey’s report outlines nine key aspects of flex growth. Together those elements offer smarter options for North Carolina’s future than smart growth, he said.

“Smart growth seeks more concentrated urban growth by increasing government regulation of development, housing, and transportation,” Lowrey explained. “Its policies restrict or eliminate development in new areas, thus driving up the cost of land. Smart growth increases government power and bureaucratic discretion. It ignores consumer preferences. All in all, there’s nothing smart about smart growth.”

Only a relatively small and constant percentage of Americans like the type of communities promoted by smart growth policies, Lowrey said. “Most Americans still prefer single-family detached houses with yards,” he said. “This is true even among a large plurality of Millennials, one of the top targets of smart growth advocates.”

Flex growth’s market-based principles look to the future, not the past, Lowrey said. “First and foremost, flex growth requires that growth pay for itself.”

“For example, the true cost of connecting a specific new development to water mains should be the basis for a hookup fee, rather than the average cost,” Lowrey explained. “In other words, the price will reflect existing water capacity, labor markets, and expected future demand. The principle should be that the user, as much as possible, should bear the costs of services.”

A second key element of flex growth calls for governments to avoid impact fees for public schools, Lowrey said. “Schools are different from public utilities, and school use bears no direct relationship to the construction of a new home,” he said. “It’s both inequitable and inefficient to charge either impact fees or real-estate transfer fees to fund schools.”

Third, flex growth involves zoning reform. “Zoning based on smart growth often focuses on preservation or restricting new residents from moving into an area,” Lowrey said. “Instead, public policy should offer communities flexibility to adapt and change to new demands.”

“Focus on the actual impacts of development, not land uses,” he added. “Restrict detailed planning to public infrastructure investments. Abandon comprehensive zoning, which creates a political environment impeding change and subordinating property rights to political pull.”

Speaking of private property rights, the fourth basic tenet of flex growth involves strengthening those rights, Lowrey said. “Property-rights protections are not as strong as they could be in North Carolina,” he said. “The state could provide a stronger safeguard by giving voters the chance to amend the state constitution to protect against eminent domain abuse. North Carolina is the only state that does not address eminent domain in its constitution.”

Fifth, flex growth policies let the market provide open space, Lowrey said. “Individuals place a different value upon the communal open space favored by smart growth, as opposed to privately owned open space — otherwise known as the back yard,” he said. “Developers recognize these different preferences and respond to people’s desires accordingly.”

A sixth key element of flex growth focuses on economic policy. “Policymakers should aim for strict neutrality in their economic development and industrial recruitment efforts,” Lowrey said. “This means avoiding incentives targeted toward a particular business or industry. It also means scrapping smart growth policies that restrict growth.”

Neutrality in economic policy also means cities and towns should avoid getting into the utility business, Lowrey said. “City-owned power systems offer 30 years of evidence of problems linked to municipal involvement in utilities, and the recent experience of municipal broadband services doesn’t look much better.”

Seventh, local governments should avoid tax increment financing — TIF — to borrow money for economic development projects without voter approval. “Projects built with a TIF can be self-financing only if the development lives up to expectations,” Lowrey said. “The Randy Parton Theatre debacle in Roanoke Rapids highlights the danger of this risky scheme.”

Flex growth requires government to focus on an adequate highway system and to fund transit intelligently, Lowrey said. “These last two related flex growth principles recognize that transportation funding is a scarce resource,” he said. “Limited available dollars should be put to the best possible use. In practice, congestion relief should be the key measure of any transportation project funded with tax dollars.”

Flex growth offers a clear break from smart growth ideas, Lowrey said. “Smart growth is flawed, with a rigid emphasis on limiting the size of urban areas via government restrictions,” he said. “What North Carolina needs instead is a flexible approach to growth.”

Michael Lowrey’s Policy Report, “Flex Growth: A Smarter Option for North Carolina Communities,” is available at the JLF website. For more information, please contact Lowrey at (704) 569-4269 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].

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About John Locke Foundation

We are North Carolina’s Most Trusted and Influential Source of Common Sense. The John Locke Foundation was created in 1990 as an independent, nonprofit think tank that would work “for truth, for freedom, and for the future of North Carolina.” The Foundation is named for John Locke (1632-1704), an English philosopher whose writings inspired Thomas Jefferson and the other Founders.

The John Locke Foundation is a 501(c)(3) research institute and is funded solely from voluntary contributions from individuals, corporations, and charitable foundations.