August 30, 1999

RALEIGH — Policies associated with the “Smart Growth” movement would be disastrous for North Carolina communities, according to a new report released today by the John Locke Foundation.

Smart Growth proponents often favor more strict regulation of development, impact fees on new homes to fund schools, and increased spending on mass transit instead of roads and highways, state Jonathan Jordan and Michael Lowrey, coauthors of Flex Growth: A Market-Friendly Development Policy for North Carolina’s Growing Communities.

But, they contend, these policies would be counterproductive — reducing home affordability, increasing traffic congestion, hiking the tax burden, and diminishing the economic opportunities and quality of life for most residents. “Smart Growth is more of a slogan than a serious effort at fixing serious problems,” Jordan and Lowrey write.

Raleigh Mayor Tom Fetzer, who heads the Locke Foundation’s new Center for Local Innovation, spoke at a press conference today where the report was released. “Smart Growth is a misleading name for an old policy: heavy-handed government control of the marketplace,” Fetzer said. “Smart Growth isn’t a smart way to help homeowners, workers, commuters, or businesses grapple with the challenges of the modern city.”

The Locke report includes a first-of-its-kind statistical analysis of the impact of so-called “urban sprawl” on tax burdens in North Carolina. The authors constructed a model of city and county development patterns and found that, contrary to Smart Growth mythology, low-density development is associated with lower rather than higher tax burdens for North Carolina citizens.

The report also found evidence that land-use rules setting urban growth boundaries or otherwise restricting residential development tend to increase average home prices and reduce homeownership rates, harming young families and minority residents the most. At the same time, spending scarce transportation dollars on new rail or bus transit, rather than maintaining and expanding local streets and highways, will increase traffic congestion and the air and noise pollution associated with it, the authors report. Laws requiring high-density development will also increase traffic congestion, as a larger number of automobiles attempt to leave or enter a smaller commercial or residential area.

Making growth “pay for itself” is the right goal to serve the interests of taxpayers, but imposing impact fees for school construction is the wrong way to reach the goal, they write. Taxpayers will benefit most from local efforts to deliver government services more efficiently and to spread the cost of “entitlement” programs such as education over a broad taxpayer base. On the other hand, government-run utilities such as water and sewer services should charge fees that cover the complete cost of adding new developments to the system.

Perhaps the most costly Smart Growth mistake would be further investment in mass transit, which would cost taxpayers dearly in annual subsidies without making a noticeable dent in commuting patterns or automobile usage. “There is little hope that a government-run [transit] system can do anything but lose a great deal of money every year,” the authors write. “At the same time, transit has done a poor job of doing most of the major tasks asked of it.”

As an alternative to Smart Growth, Jordan and Lowrey present a nine-part strategy called “Flex Growth” for addressing the challenges of urban development without heavy-handed government interference:

1) Pursue Economic Policy Neutrality
Rather than subsidize one industry at the expense of another, governmental policies should allow the free market and consumer choice to determine the course of economic growth.

2) Let Growth Pay for Itself
Local governments should adopt marginal-cost pricing for services to avoid distortions of development decisions and enable growth to pay for itself, being neither subsidized nor penalized.

3) Reform Zoning to Accommodate Market Trends

4) Use Flexible, Voluntary Programs to Protect Open Space

5) Strengthen Private-Property Rights

6) Adopt Nuisance-Based Standards for Land-Use Regulation

7) Facilitate Change and Community Evolution

8) Ensure Adequate Street and Highway Access

Far from causing growth-related woes, an adequate and well-maintained highway system alleviates congestion and promotes efficient growth.

9) Eliminate Political Gerrymandering

If elected officials come from a place with boundaries that all the voters inside it understand, then citizens will be more likely to pay attention to the political arena.

For more information about the “Flex Growth” report, the Center for Local Innovation or the John Locke Foundation, call 919-828-3876 or visit on the World Wide Web.