Restrictions on Physically Developable Land

Description of Technique
This technique consists of classifying certain parcels of vacant land that are physically capable of supporting normal urban development as not legally developable. These parcels are set aside in several possible categories for which all urban development is prohibited.

Examples of Applying this Technique

• Some land can be designated as permanent open space usable only for agricultural purposes, or perhaps only for recreational purposes. Unless left in the hands of farmers, this land is normally purchased by local or regional authorities and put into parks or conservation districts.

• Some land may be owned by the federal or state government and convertible into normal urban development only through time-consuming and costly permission processes. This is true of a great deal of land around the city of Las Vegas, which is owned by the U.S. Department of Interior, Bureau of Land Management. It is also true of much land in Hawaii owned by the state government.

• Some land may be owned by Indian tribes whose rights are governed by special federal legislation different from normal state laws covering the territories involved. Development of such land requires dealing with these tribes economically, politically and legally. This is true of a lot of land around Phoenix, Arizona, and Palm Springs, California.

• Some land is set aside as a watershed for reservoirs serving the region, so that the run-off can fill those reservoirs for the use of local citizens. This is true of large parcels of land along Interstate 280 south of San Francisco.

• Some land may be deliberately zoned as residential but only for very large minimum lot sizes, such as 200 acres, so as to prevent normal urban development from occurring there. This is true of much of the northern and eastern portions of Montgomery County, Maryland, quite close to Washington, D.C.

Potential Benefits of Technique From General Public Point of View
There is no particular benefit of this technique from the viewpoint of society as a whole unless certain sites near an urbanized region have great environmental or other value, and therefore should not be developed with normal urban uses. Then restricting development on those sites protects such areas from having their unique attributes destroyed. Examples are the Everglades in Florida, the Willamette River Valley in Oregon, and the Wisconsin Dells. Under such circumstances, restricting the development of such valuable and sensitive sites through regulations protects their public benefits without incurring large costs for society, such as those required to buy those sites. However, the U.S. Supreme Court has ruled that owners of such sites must be compensated for the prohibition of normal urban development on them if there are no alternative uses from which the owners could gain economic benefits.

Potential Drawbacks of Technique from General Public Point of View
If large amounts of land around the periphery of an urbanized area are restricted from normal urban development, this may cause the following problems:

• By generating higher prices for the land which is developable, these restrictions make it less economically feasible to locate many types of activities on that land, or at least less profitable to do so.

• By causing development on sites where it is permitted to occur at higher densities than would have otherwise occurred, such restrictions may prevent households and firms from adopting their preferred settlement patterns, which would involve lower densities. Higher densities may also lead to more traffic and other congestion than would have occurred without these restrictions.

• By blocking the “normal” outward movement of growth along existing transportation corridors in the region, such restrictions may require an economically less efficient over- all development pattern for the region as a whole than would have emerged if no such restrictions existed. Such inefficiencies may include preventing creation of circumferential “beltway” roads.

Strategic Considerations for NAIOP Members Faced with Technique
Any restrictions of land uses are harmful to those seeking to acquire additional sites for development in the area concerned, and beneficial to those who already possess sites on which normal development can take place. The restrictions raise the costs of land there, thus increasing acquisition costs but providing windfall gains for those who already own land. Restrictions may also create quasi-monopolistic market power for owners of existing developed or developable sites by limiting alternative sites on which competitive facilities can be created.

In the long run, most NAIOP members will be in the group harmed by such restrictions because they will want to expand their operations or undertake new ones in the future. Therefore, they would benefit from the flexibility of being able to operate without extraordinary restrictions on the availability of land for development.

Advantages from NAIOP’s Perspective
Such restrictions are advantageous only to those NAIOP members already possessing developed or developable sites within the area affected, for the reasons stated above.

Disadvantages from NAIOP’s Perspective
Such restrictions are harmful to those NAIOP members who are seeking to acquire or expand developable sites within the area affected, for the reasons stated above.

Sources of Further Information
U.S. Department of Agriculture, Bureau of Land Management web site provides data on the total amount of land owned by the federal government in each state. That land is currently not available for private development unless traded for other land.

The Montgomery County, Maryland web site provides information on the County’s programs for preserving agricultural land from urban uses.