Introduction

It is easy to ask "What are the impacts of Smart Growth upon a region=s prospects for economic development?" But answering that question sensibly is complicated for two reasons. First, there is not--and cannot be--any one widely accepted definition of Smart Growth. To get a single coherent answer, it is necessary to focus on only one of several possible definitions and ignore others that are just as widely supported. Second, the answer can vary greatly depending upon the particular conditions prevalent in the region being considered. These conditions include how fast the region's population is growing, its topography, and the kinds of people who are moving into it and thereby generating its growth. This variability of specific situations generates a whole spectrum of answers to the initial question, rather than just one. Nevertheless, some tentative and useful answers can be generated by careful consideration of these issues.

What Is Smart Growth?

In the most general sense, Smart Growth is a set of policies designed to help a fast-growing metropolitan region cope with its expansion in ways that will avoid some major problems historically associated with low-density "suburban sprawl" development. Those problems as catalogued by the enemies of sprawl include rising traffic congestion, intensifying air pollution, absorption of large amounts of open space by new development, leap-frog development that leaves large tracts of vacant land inside the periphery of the developed area, lack of mobility for people who cannot drive cars, long commuting times, underutilization of older in-close infrastructures while building costly new ones far out, and deterioration of older inner-city areas. In theory, Smart Growth is a means of either slowing or accommodating future population growth without generating these ills.

These growth-related problems do not form a single, coherent, integrated set of processes or activities. Rather, they are partly-related and partly-disjointed activities or behaviors associated with the past dominance of U.S. metropolitan growth by "suburban sprawl." Advocates of Smart Growth have developed a set of elements in response to these problems, which different advocacy groups cluster together in different configurations or sets. Each such set also does not form a single, coherent, integrated strategy of tightly interlocked policies, but rather a loose bundle of partly-related and partly disparate policies and responses. These policies and responses will be referred to herein as elements.

An analysis of different definitions of Smart Growth across the nation reveals that most contain some or most of the following eight basic elements:

• Placing limits on the outward extension of further growth. These include urban growth boundaries, utility service districts, or local growth controls. Such limits are designed to reduce infrastructure costs, shorten distances between new suburban jobs and unemployed city workers, shorten future commuting times, preserve vacant land and open space, and create higher densities.
  
  
• Preserving large amounts of open space and protecting the quality of the environment. Environmentalists want to set aside large fringe areas where development is prohibited. The real estate community supports preserving open space as long as plenty of other fringe land is available for development.
  
  
• Promoting compact, mixed-used development in the form of higher-than-prevailing residential densities and permission to mix non-residential uses--especially retail and services--in primarily residential neighborhoods.
  
  
• Reducing transportation dependency upon private automotive vehicles--especially one-person cars. The usual tactics advocated are requiring higher-density future development, clustering high density around transit stops, raising gas taxes, shifting money from road building to more transit, creating pedestrian-friendly communities, and building light-rail systems. Anti- or slow-growth advocates strongly favor these policies; pro-growth advocates usually support them much less enthusiastically and also want a lot more road-building, which anti- or slow-growth advocates oppose.
  
  
• Redeveloping inner-core areas and developing in-fill sites with new and renovated structures to make such areas more attractive to middle- and upper-income households, and to improve the quality of life for existing low-income residents. This includes shifting a lot of new development from fringe areas to in-fill sites throughout the region, cleaning up polluted "brownfield" sites so they can be redeveloped, and locating most new public offices and other facilities in developed areas rather than on urban fringes.
  
  
• Removing barriers to urban design innovation in both cities and new suburban areas. A non-controversial part of this element would permit "New Urbanist" developers to use grid street patterns, alleys, porches, mixed-used structures, etc. Other changes in zoning and subdivision codes would ease restrictions on less costly new housing, allow more multi-family housing, and permit higher densities.
  
  
• Deciding who should pay for the infrastructures needed to deal with growth. Most anti- or slow-growth advocates and inner-city advocates propose loading such costs onto new developments via user fees and exactions. Pro-growth advocates propose sharing these costs with existing citizens.
  
  
• Deciding what form of governance over land-use decisions should exist. In most regions, all major advocacy groups support leaving full control over land uses in the hands of local governments. In some regions, anti- or slow-growth advocates support some form of regional coordination of local government plans.

Several additional elements are found in just a few regions. They include regional tax-base sharing, promoting affordable housing, and speeding up development processing. But the eight elements set forth above are the most common.

However, each of these elements is susceptible to conflicting interpretations by different interest groups. For example, most environmentalists and slow-growth advocates want the outward spread of growth severely limited; whereas real estate developers and land owners oppose growth limits. In most regions, these four specific advocacy groups can be identified:

• Anti- or slow-growth advocates and environmentalists.
  
  
• Pro-growth advocates, including most of the real estate industry.
  
  
• Inner-city advocates, such as big-city mayors and politicians.
  
  
• Better-growth advocates who want to accommodate reasonable growth but want to reduce some of its more negative aspects.

Each of these groups defines Smart Growth in the manner most consistent with its own goals and interests. However, the most vigorous proponents of Smart Growth as an alternative to the sprawl prevalent in the U.S. for the past half-century are anti- or slow-growth advocates and environmentalists. So this article will define Smart Growth in the manner most consonant with their usual preferences, and for purposes of simplicity ignore the definitions favored by the other groups.

Slow-growth advocates and environmentalists generally envision Smart Growth as containing the first six elements set forth above, and they usually define the last two elements as (1) loading the costs of new infrastructures needed to accommodate growth mainly upon newcomers and (2) leaving land-use policy controls entirely in the hands of local governments. Hence those eight elements will be used as the definition of Smart Growth in the remainder of this analysis--even though other advocate groups would almost certainly not entirely agree with this view.

Other Key Factors Influencing the Impacts of Smart Growth

Several other factors enormously affect how these elements of Smart Growth would, if adopted, impact specific regions. For one thing, each region's overall population growth rate is mainly determined by factors largely beyond the control of local governments. Those determinants include the region's climate, its topography, its geographic position in the nation, its existing demography, the size and nature of past investments made therein by firms and governments, and its total size. None of these factors can be significantly influenced by laws passed by individual local governments--or even by sets of such governments acting together.

This imperviousness of overall regional growth to local policies means that if a particular locality limits future growth within its own boundaries, that merely diverts the region's growth to other areas nearby--usually areas on the edges of the region. Thus, individual localities may limit growth for themselves, but their doing so tends to aggravate the region's overall sprawl by moving new developments farther out.

Another crucial factor is the rate at which the region as a whole is growing. Between 1990 and 2000, the United States population as a whole grew at a compound annual growth rate of 1.242 percent (based on the actual Census 2000 count). About 0.6 percent per year consisted of net natural increase (the excess of births over deaths); the remaining 0.642 percent resulted from net immigration from abroad. Any metropolitan region that grew at a compound annual rate of 1.5 percent or more could be considered a fast-growth area (only 8 of the 22 largest metropolitan areas grew that fast in the 1990s). Obviously, fast-growing metropolitan areas are much more likely to encounter the growth-related problems enumerated above than slower-growing areas. Hence the former are the areas most likely to be interested in considering Smart Growth policies.

Economic Development Goals

Before the impacts of Smart Growth policies upon economic development can be analyzed, it is necessary to identify the goals of regional economic development. From my analysis of the literature on such development, I derived the following ten widely-recognized goals:

• Retaining existing jobs in the region and capturing the growth of firms already there.
• Attracting new jobs into the region.
• Creating more affordable housing.
• Improving the quality of education and schools in the region.
• Providing more open space and other amenities.
• Improving major infrastructures.
• Revitalizing and improving inner-city and other depressed areas.
• Providing economic incentives for growth by means of low taxes on businesses and households.
• Helping new entrants pay for the infrastructures needed to accommodate them.
• Reducing government obstacles to operating businesses and households.

Other economic development goals could be added to this list, such as improving the quality of the region's air and water and raising local incomes. But for purposes of simplicity, this analysis will deal only with the ten goals listed above.

It is clear from these goals that economic development itself is inherently expansionist in nature. That is, it is always conceived of as involving more jobs, higher incomes, more business activities, more real estate development, and more of other aspects of expansion or growth. Therefore, regional economic development is basically inconsistent with attempts to limit the future growth of economic activities of all types within a region. Insofar as Smart Growth is construed by some of its advocates to involve slowing or limiting future growth, it is bound to create conflicts with at least some of the goals of economic development.

Relating Economic Development Goals to Smart Growth Policies

Relating ten economic development goals to eight different Smart Growth policies or elements requires a rather complex analytic approach. It can best be visualized as a matrix with the eight Smart Growth elements as rows down the side, and the ten economic development goals as columns across the top. This matrix is shown in three accompanying charts (they really comprise one large matrix broken down into three sections for ease of presentation). Each cell of the matrix contains a short description of how that particular Smart Growth element affects achievement of that specific economic development goal. For example, in Chart 1, the Smart Growth element of "Promoting compact, mixed-use development" in row three of the matrix intersects the economic development goal of "Improving inner-city and depressed areas" (column two--the Smart Growth elements themselves are column one) in the square that says: "Diverts more housing demand into older areas, thus helping to improve quality of life there." This outcome is a positive one from the perspective of achieving the economic development goal of "Improving inner-city and depressed areas." Clearly, the small space encompassed by each cell limits the amount of description of interaction between these two ingredients to an oversimplified account. Nevertheless, that account is usually sufficient to decide whether the results are either (1) beneficial to attainment of the economic development goal (cells colored light blue), (2) detrimental to attainment of that goal (cells colored orange), (3) ambivalent because some effects are positive and others are negative (cells colored yellow), or (4) without any significant impact upon the economic development goal (cells colored white in background).

Smart Growth Element Matrix

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I have filled in the 80 cells in this matrix as best I could, given the limitations of space and of resources available to me to analyze the relevant interactions. My evaluations of these interactions are admittedly subjective and reflect my own values; other observers might arrive at quite different descriptions with results of different colors.

Deriving Conclusions About the Overall Impacts of Particular Smart Growth Elements

One way to derive summary conclusions about the overall impacts of each Smart Growth element upon the economic development goals is to look across the entire row formed by that element in all three charts laid side by side. For example, the Smart Growth element "Preserving open space" has no direct relationship to five economic development goals, a positive relationship to three, a negative relationship to one, and an ambivalent relationship to one. An extremely simple method of comparing the impacts of all eight Smart Growth elements is to array similar "scores" for all eight elements across all ten goals, and then to award points for positive, negative, ambivalent, and no relationships. If every positive relationship is scored as 10 points, every negative one as -10 points, and every ambivalent or non-existing one as zero points, the results are as shown in the following table:

How Elements of Smart Growth May Affect Economic Development Goals -- Chart 1

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How Elements of Smart Growth May Affect Economic Development Goals -- Chart 2

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How Elements of Smart Growth May Affect Economic Development Goals -- Chart 3

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This approach indicates that "Removing barriers to design innovation" has an unalloyed positive impact upon economic development, with no real adverse effects. The second highest-scoring element is "Promoting compact, mixed-used development," which also has no adverse effects, though it has two null relationships to development goals. The third highest-ranking element is "Reducing auto dependency," but it would be very difficult to achieve in practice, as will be discussed later. At the opposite end of the desirability spectrum are "Using fragmented land-use governance" and "Loading infrastructure costs onto newcomers," each of which has several negative impacts upon economic development goals. This outcome in part reflects my own belief that fragmented land-use governance cannot solve regional growth-related problems because most of them are basically regional in nature, not local.

No doubt, the drawbacks of this simple approach are significant. First, it weights all economic development goals equally; whereas some (such as attracting and retaining jobs) are surely more important than others (such as helping newcomers pay for infrastructure costs). Second, the point scores assigned for each outcome are arbitrary, yet they influence the totals of each element. Third, the judgments made in each cell are subjective, as noted above. Therefore, this approach provides only preliminary indications of how Smart Growth might affect economic development goals.

Looking at the Effects of Each Smart Growth Element Individually

An alternative approach is examining the effects of each Smart Growth element individually across the entire row it occupies, and trying to weigh its positive effects against its negative or ambivalent ones. This approach still relies on subjective judgments, but it is more reliable than the point scoring system described above. In the remainder of this section, this second approach will be used.

Placing limits on outward physical growth. Many observers of Portland, Oregon's use of a regional urban growth boundary have argued that this device raises land and housing prices within the boundary, since it limits the amount of land available for new construction. If true, that would clearly be undesirable from the viewpoint of economic development. However, a separate study I carried out concerning housing prices in Portland and elsewhere concluded that, between 1980--shortly after Portland adopted such a boundary--and 2000, housing prices rose faster in Portland than elsewhere only from 1990 to 1994. Housing prices rose more slowly in Portland than in many other places during all other parts of that longer period. Therefore, I do not believe that regional growth boundaries necessarily raise housing prices. If that conclusion is correct, then limiting outward growth has several beneficial impacts upon economic development. It preserves open space outside the boundary, reduces the costs of future infrastructure trunk lines, and raises housing densities inside the boundary. Higher densities also reduce infrastructure costs. Demands for housing shift toward inner-city areas, which causes revitalization there but which also may lead to some gentrification and displacement of low-income households. The only probable negative impact of this element is that it prevents developers from building some new housing on the least expensive possible land in far-out locations. That might reduce the supply of the least costly housing, even if it does not affect the overall housing price level in the region.

Preserving open space. This element increases the amenity attraction of the region for firms and households considering possible locations elsewhere, and directly serves the economic development goal of creating more open space. On the negative side, the more such land is made exempt from possible future development, the less land--especially low-cost far-out land--is available on which developers can build low-cost housing units. (My own studies of the relationship between housing costs and distance from a region's center indicate that median housing prices fall more than one percent per additional mile from the center, on the average--with considerable variation among regions.) However, if a region has plenty of vacant land around its edges, preservation of large amount of open space there could take place without cutting the availability of relatively low-cost land significantly, at least in the near future. Under such circumstances, this Smart Growth element would be an unalloyed benefit to economic development goals.

Promoting compact, mixed-use development. The effects of this element upon economic development goals are almost identical with those of "Preserving open space," as discussed above. However, compact development has no clearly negative effects upon any economic development goals. Though it may reduce the supply of cheap, far-out land, it also encourages development of more moderate-density multi-family housing, which is the most affordable type of housing that can be built.

Reducing auto-dependency. Although this element appears in theory (and in the matrix) to serve many economic development goals positively, it is extremely difficult to achieve in practice because of (1) the reluctance of the vast majority of Americans to switch from private automotive vehicles to public transit and (2) the overwhelming predominance in most U.S. metropolitan areas of low-density settlement patterns that cannot be efficiently served by public transit. Thus, the problem with this element is figuring out how to carry it out in the face of these obstacles, not determining whether it would be good for economic development.

Redeveloping core and in-fill areas. This element helps attract and retain jobs by providing more affordable housing for low- and moderate-income workers, and improving the quality of life in older neighborhoods. It may even improve education by attracting more middle-class households into areas where schools are now performing badly. Focusing resources on older areas also upgrades existing infrastructures there. However, such revitalization requires large public subsidies, which most local governments cannot pay without raising taxes to politically unpopular levels. And repairing and up-grading older existing infrastructures may divert funds from building new ones on the periphery to handle new growth there. Even so, this element is surely a net positive for economic development. That is one reason why all four major advocacy groups described earlier include this element in their widely-varying descriptions of what Smart Growth means to them.

Removing barriers to design innovation. This element has by far the highest score in the simple point system set forth above, partly because it has no negative drawbacks in relation to any economic development goals, and at least slightly positive effects concerning all but one. Moreover, this element is the least upsetting to achieve in terms of requiring existing citizens to change their behavior patterns or beliefs. One potential drawback making somewhat higher-density development possible in communities that now oppose even moderately-high densities as a means of keeping low-income households out of their territories. For example, one innovation would be permitting owners of single-family homes to build accessory apartments onto, or within, their homes as a matter of right. This would permit many elderly and other households with extra room to add to the supply of low-cost rental housing without added expense to the public sector. Yet this policy is opposed by many suburban governments that fear it might slow down the increases in home values desired by their residents.

Loading new infrastructure costs mainly onto newcomers. This element raises the costs of all new development--especially that located on the region's periphery--while protecting existing residents from added tax burdens for new infrastructures. It therefore penalizes new development generally, and discourages newcomers from entering the region, while making it harder to expand the supply of affordable housing. The main advantage of this element is that it enables residents of older core areas to have more funds--through taxes or private spending--to up-grade their own neighborhoods, since they are not bearing much of the burden of new infrastructures serving growth. Hence this element is probably more acceptable in older, slowly-growing regions where the number of newcomers is relatively small, and the development industry is too--so neither have much political power.

Retaining highly fragmented governance over land-use decisions instead of using regional arrangements. My scoring of this element is mostly negative, with some ambivalences too. Fragmented land-use governance allows many suburbs to engage in exclusionary zoning and other regulations that raise housing costs, create suburban shortages of affordable housing, force low-income households to endure long commutes, and contribute to the concentration of very poor households in older city areas--leading to and sustaining low-quality schools there. Firms considering entering the region can play off one locality against another to gain tax benefits at the expense of local residents. Since local governments are motivated to adopt policies that benefit only their own residents, and push possible costs onto other communities, no one has the welfare of the entire region in mind, and it does not become well-served.

Conclusions

The Smart Growth strategy advocated by slow-growth advocates and environmentalists--like similar strategies advocated by other groups--consists of a loose bundle of only partly-related elements, not a single, cohesive, well-integrated plan with each of its parts reinforcing the others. This is true because Smart Growth itself is a set of reactions to a variety of different problems that arise from rapid growth--problems that are not all closely related or tied to each other. Those problems are the perceived negative results of "suburban sprawl," which it itself a disjointed concept made up of many diverse processes and behaviors. For example, the absorption of open space through peripheral development is not inherently related to the destructive impact of strip commercial development upon outlying suburban downtowns, though both are widely considered to be effects of sprawl.

Therefore, the impacts of each element in this Smart Growth strategy upon each economic development goal differ from the impacts of most other elements on the same goal. These impacts are often either non-reinforcing, wholly unrelated, or even offsetting. Thus, this particular strategy could easily be changed by altering one or two of its elements without affecting the overall efficacy of the entire bundle very greatly.

Consequently, Smart Growth in itself has no clearly-defined OVERALL effect upon economic development, since Smart Growth is really not a coherent policy or idea, but a bundle of disparate policies. It is the particular impacts of those separate policies that affect economic development, not the integrated, combined effect of the overall bundle.

Economic development itself is essentially an expansionary idea, since it inherently calls for more jobs, more economic activity, and therefore more development of all types. It is therefore most congruent with those Smart Growth elements that do not block expansion or growth in themselves. The most obvious example is "Removing barriers to design innovation," which is completely neutral about how much growth might occur, but expands the possible ways in which it might be carried out without clearly adding to costs. True, economic development can also involve improvements in the quality of life and of the environment without growth, as in improving schools and education. Nevertheless, the very concept of "development" involves expanded capabilities and activities.

Therefore, insofar as a particular Smart Growth strategy is basically aimed at slowing down or limiting a region's future growth altogether, it is at least partly inimical to economic development there, since such development is inherently expansionary. However, most advocates of Smart Growth no longer openly promote a reduction of future expansion in a region. Rather, they claim they want to manage future expansion in ways that do not generate so many problems as have arisen in the recent past. That is certainly a legitimate goal. Whether it is all they really have in mind varies from place to place and from group to group.

Those Smart Growth elements that are the most divisive, exclusionary, or cost-raising are the least favorable to most economic development goals. For example, loading the costs of the new infrastructures needed to accommodate growth mainly upon newcomers is a socially divisive and conflict-generating policy, since it benefits existing residents at the expense of newcomers. It also reduces the possibility of creating more affordable housing, thereby discouraging newcomer households or firms.

Those Smart Growth elements that expand opportunities without greatly raising costs are the most favorable to most economic development goals. "Promoting compact, mixed-use development" is an example, though it can be controversial if it involves trying to raise the densities of existing areas significantly.

Concerning many Smart Growth elements, their theoretical advantages are not nearly as relevant to their true effects upon economic development as the practical difficulties of actually carrying them out. The most outstanding example is "Reducing auto dependency," as explained earlier. No matter how appealing this goal is in theory, no U.S. region outside New York City has succeeded in carrying it out to any very great extent. That is particularly true of regions that have grown up mainly in the modern automobile era, as have most metropolitan areas in the West and many in the South.

References

1. Burchell, Robert W., David Listokin, and Catherine C. Galley, "Smart Growth: More than a Ghost of Urban Policy Past, Less than a Bold New Horizon," in Fannie Mae Foundation, Legacy of the 1949 Housing Act (Washington D.C.: Fannie Mae Foundation, 1999), pp. 1-49.

2. Downs, Anthony, "What Does 'Smart Growth' Really Mean?" Planning, Volume 67, No. 4 (April 2001).

3. Moe, Richard, Growing Smarter: Fighting Sprawl and Restoring Community in America, Address Presented at San Joaquin Valley Town Hall, Fresno, California, November 20, 1996 (Washington D.C.: National Trust for Historic Preservation, 1996).

4. National Association of Home Builders, Smart Growth: Building Better Places to Live, Work and Play (Washington D.C.: National Association of Home Builders, 1999).

5. National Association of Industrial and Office Properties, Growing to Greatness (Herndon, Virginia: National Association of Industrial and Office Properties, 1999).

6. National Association of Realtors, On Common Ground: REALTORS and Smart Growth, Winter 2001.

7. Nelson, Arthur C., "Smart Growth or Business-As-Usual? Which Is Better At Improving Quality of Life and Central City Vitality?" Unpublished Manuscript, 2000.

8. Orski, C. Kenneth, "Maryland's Smart Growth Policy," Innovation Briefs, Volume 9, Number 6 (November-December 1998).

9. Petersen, David C., "Smart Growth for Center Cities," (New York: Price Waterhouse Coopers, May 1998).

10. Porter, Douglas, "Introduction," Chapter 1 in Collaborative Partnering for Smart Growth, unpublished manuscript, 2000.

11. State of Maryland, Smart Growth and Neighborhood Conservation Initiatives (Baltimore, Maryland Office of State Planning, 1999).

12. Urban Land Institute, ULI on the Future: Smart Growth (Washington D.C.: ULI--The Urban Land Institute, 1998).

13. Urban Land Institute, Smart Growth: Myth and Fact. (Washington DC: ULI--The Urban Land Institute, 1999).