Government Affairs: Local Urban Growth (UGB)

Local Urban Growth (UGB)

Where Technique is Used/NAIOP Chapters	How Effective in Achieving Stated Goals	How Effective in Stopping or Slowing Growth	Impact of Technique on Real Estate Development
Florida, some North California cities.	Too early to evaluate [Little analysis]	Can restrict local growth sharply [Little analysis]	Would be unfavorable because it is at most always employed to slow development.

Description of Technique
This technique consists of an individual locality drawing an urban growth boundary (UGB) within its own borders, and constraining near-future development to within that boundary.

Potential Benefits of Technique From General Public Point of View The potential benefits of this technique are as follows:

Localities can influence the rate at which their total populations increase over time, and the rates at which new housing and other facilities are built within their boundaries. They can exert more such influence under a local UGB than they could if they simply permitted developers to build as fast as the market permitted, and local zoning allowed. Hence citizens who want to slow down or stop growth within the boundaries of their own local communities can use this technique. However, a local UGB will slow down local growth only if its rules and regulations are designed to do so; those rules and regulations could also be designed to permit growth to continue at the same pace as before.
This technique can create higher-density and less extensive new growth within a community that contains a large amount of vacant developable land than would occur if no such UGB were adopted. Hence it can result in a more compact community with more open space, at least in the short run.
Individual localities can influence the amount of growth occurring within their boundaries, and where it occurs, without their having to wait for the creation of some overarching regional land-use planning authority, and without their having to endure regulation by such an authority. In many metropolitan areas, it is almost impossible politically to get such a regional authority adopted; hence waiting for one to limit local growth may seem intolerable to many local residents.
This technique makes it easier for any locality to adjust the boundaries of a UGB that affects its own territory than adoption of a regional UGB. The locality can change the boundaries of its own UGB simply by local legislative action. In contrast, it may take major state legislation or metropolitan regulation changes to alter a regional UGB, even if that UGB directly affects development within a given locality. As a result, it is much easier for individual citizens or interest groups within the community to influence where the UGB is, and the terms regulating it, if the UGB is local rather than regional.
By raising land prices within the local UGB, this technique provides windfall gains for persons who own land within the UGB.
Potential Drawbacks of Technique from General Public Point of View Local UGBs have the following potential drawbacks:
When all the UGBs within a metropolitan region have been adopted only at the local level by individual communities, there is no guarantee that, taken together, they will provide a rational overall plan or pattern for future development of the region as a whole. There will be no mandatory coordination of these UGBs, and many communities within the region will not adopt any UGBs at all. Thus, to some extent, the growth management efforts undertaken by some communities may be offset or canceled by those undertaken by other communities, or by the absence of any such efforts in still other communities.
In fact, it is likely that those individual communities adopting local UGBs will be doing so in part to deflect future growth away from themselves to other nearby communities. This will increase growth pressures on those nearby communities that do not adopt UGBs or other growth-limiting measures. If a large number of localities within the region adopt local UGBs, the net result may be to deflect future growth to farther-out locations, thereby increasing sprawl and defeating the basic purpose of an urban growth boundary.
Developers who own or have optioned sites within the communities adopting local UGBs may find their prospects for development reduced by the regulations connected with those local UGBs.
By lowering land prices within those parts of the community that lie outside the local UGB, and are therefore not developable in the near future, this technique imposes unexpected losses on the persons who own such land.

Practical Lessons from Application of Technique
If the locality draws its urban growth boundary (UGB) so as to encompass only a relatively small amount of vacant, developable land, in relation to the amount of such land normally absorbed by new growth each year, that will raise the price of the developable land. It will do so by conferring monopolistic market advantages on the owners of that land. It will also deflect some growth that would formerly have occurred within the community to other communities in the same metropolitan region that do not have such stringent restrictions on developable land. This could have the effect of causing the builtup portions of the metropolitan region to extend farther out from the center than they otherwise would. In other words, it would increase suburban sprawl.

On the other hand, if the locality draws its UGB so as to encompass a relatively large amount of vacant, developable land, in relation to the amount of such land normally absorbed by new growth each year, that will not greatly affect the price of such land in the short run. As time passes, unless the community extends its original UGB, the price of developable land in that community will rise faster than it would in the absence of a UGB. Higher-priced land within the community than would exist without a UGB will have the following effects:

It will provide incentives for residential developers to build at higher densities. This will reduce average lot size for single-family homes and possibly increase the proportion of multi-family housing within the community (assuming local authorities permit developers to build more such housing).
It will raise the price of both new homes and existing homes within the community, thereby making it harder for low- and moderate-income households to live there. However, this will provide some windfall gain for homeowners who already owned homes in this community, and for other landowners therein. In many suburbs, homeowners greatly outnumber renters; so rising home prices will confer net benefits on existing residents, while penalizing renters and possible future residents.
It will provide incentives for commercial and industrial developers to build facilities at higher densities than they would without a UGB, assuming that the market for higher-density facilities will support their expansion in this area.
It will increase the revenues raised by the existing tax structure in the community, without any increase in tax rates, unless those revenues are constrained by state laws or constitutional limitations.
It is likely to slow down the rates at which the community’s population and jobs increase over time. That may have some effect on the prosperity of local merchants, unless the nearby localities that receive growth deflected from this community are conveniently close to the local merchants in this community.

Strategic Considerations for NAIOP Members Faced with Technique
It is not possible to probe the motivations of the leaders in communities that have adopted local UGBs. However, it seems reasonable to argue that local UGBs are usually intended to slow down a locality’s growth rate, rather than to change the nature of its growth without affecting its growth rate. Hence local UGBs can be initially regarded as a form of anti-growth measure.

Advantages from NAIOP’s Perspective Local UGBs potentially could benefit NAIOP members who already own sites within the boundaries that are zoned for commercial or industrial development. This is because the UGB limits the amount of land within an community on which competitive activities can be located. Adoption of local UGBs raises the market values of such sites, thereby adding to the wealth of their owners.

Disadvantages from NAIOP’s Perspective Local UGBs have the following detrimental effects:

The resulting higher land prices within communities that adopt local UGBs are a disadvantage to NAIOP members seeking to purchase sites within those communities for commercial or industrial projects.
Insofar as high land prices also lead to higher housing prices, that may make it difficult for potential workers in NAIOP members’ projects to live within convenient commuting range. This could reduce the attractiveness of such sites to potential tenants who need low- or moderate-income workers.
If many localities adopt local UGBs, but neither the UGBs nor the land uses within those localities are coordinated in any way, the overall land-use pattern in that region may be less efficient economically than it would have been if created from a plan that made rational use of the land from the perspective of the region as a whole.
Sources of Further Information
Ned Levine, “The Effects of Local Growth Controls on Regional Housing Production and Population Redistribution in California.” (Annandale, Virginia: Rough Draft dated November 17, 1998).
Elizabeth Deakin, “Growth Controls and Growth Management: A Summary and Review of Empirical Research,” and William Fischel, “What Do Economists Know About Growth Controls? A Research Review,” in David J. Brower, David R. Godschalk and Douglas R. Porter, editors, Understanding Growth Management (Washington, D.C.: The Urban Land Institute, 1989).