Report on flaws in GMA and HUD's Legislative Guidebook

107th Congress

U.S. House of Representatives

Judiciary Subcommittee on the Constitution

"HUD’s Legislative Guidebook

and Its Potential Impact on Property Rights

and Small Businesses, Including Minority-Owned Businesses"

Thursday, March 7, 2002

10:00 am - 12:00 noon

Rayburn House Office Building

Room 2141

Testimony of Geoffrey William Hymans before the House Subcommittee on the Constitution:

My name is Geoffrey William Hymans. I am Senior Counsel to the Republican Caucus of the Washington State House of Representatives. My principal duties include advising the caucus on land use and transportation issues. Prior to joining the legislature, I was an attorney with the large Seattle-based law firm of Williams, Kastner, and Gibbs, specializing in land use issues. In Washington State this means specializing in the deceptively named Growth Management Act and the local comprehensive plans and development regulations adopted under the act.

I come before you today on behalf of the citizens, businesspeople, and property owners of Washington State to express serious concerns regarding the American Planning Association (APA) Legislative Guidebook (Guidebook), and to urge you to deny any funding to state and local governments to implement the misguided schemes contained within the HUD/APA Guidebook.

The State of Washington has had ten years of experience under a state-mandated "growth management" regime. The results of this experiment have been dramatic:

            1) increased congestion in our urban areas;

2) increased housing costs, particularly in our urban areas;

3) decreased economic development in our rural areas ;

4) a shift in development and prosperity from the rural parts of the state to the urban areas;

5) an ever-increasing amount of regulation by both the state and local governments, not to mention the huge expenditures required by such regulation. 

The state of Washington has had twelve years of experience with "smartgrowth" and "growth management" regimes. Next to the states of Oregon and Florida, Washington has the longest experience with these land use controls in the nation. And, unfortunately, Washington’s version of growth management ranks second only to Oregon in terms of the restrictive nature of its state-mandated land use controls.

Washington first adopted the Growth Management Act, or "GMA" for short, in 1990. Although Washington state had been growing at a fairly robust pace, adding roughly a million people during the 1970s and 700,000 during the 1980s, the growth rate was still roughly linear. The precipitating act for the adoption of the Growth Management Act was the filing of Initiative 547, which proposed highly restrictive growth controls.

Washington is an initiative state, as are all West Coast states. The people can propose legislation by collecting a qualifying number of signatures, at which point the initiative is placed on the ballot. According to the "old hands" at the Washington state legislature, this ballot initiative spurred a group of urban legislators to "do something" about "controlling growth" in Washington. The legislature passed SHB 2929 on July 1, 1990. Ironically, in November of that same year the voters rejected Initiative 547 by a vote of 986,505 to 327,339 -- a 3 to 1 margin.

In July of 1991, Washington state passed the second half of the GMA, ESHB 1025. While the act has been amended virtually every year since, it has remained substantially similar to its 1991 provisions.

If I were to give you a detailed explanation of everything the act does, I would be testifying till next Thursday. And since Washington’s legislative session ends next week, I am needed at home. But I will give you a very quick overview of the provisions of the act, with the hope that these highlights demonstrate the high costs, the increase in state government control over traditionally local processes, and the potential for misuse of the expanded planning and permitting processes that have accompanied the GMA in Washington.

There are thirteen planning goals in the GMA. These include promoting affordable housing, encouraging efficient transportation systems, encouraging development in urban areas, encouraging economic development, protecting natural resources, and ensuring that public facilities are in place to serve development. In the abstract, no one could disagree with the goals of the act. But the implementation scheme is drastically flawed.

Counties and cities within counties that reach certain thresholds in either population or population growth are required to adopt comprehensive plans consistent with the state act, and to adopt development regulations (such as zoning, subdivision, critical areas and concurrency ordinances) consistent with their comprehensive plans. Twenty-nine of Washington’s 39 counties, containing 95% of the state’s population, currently meet these requirements and plan under the act.

Counties planning under GMA must adopt Urban Growth Areas (UGAs) and Urban Growth Boundaries (UGBs). These areas are supposed to be sufficient to accommodate projected population growth for 20 years. Outside these boundaries, "urban" levels of growth - which are only vaguely defined by the state act as growth requiring "urban services" and at undefined "urban densities" - are banned. These density levels have been set by the Growth Management Hearings Boards. For example, one board set the "bright line" density at one house per five acres. This means that on one side of the UGB zoning of one house every 4 acres is considered too "urban," while on the other side zoning of one house every 5 acres is considered too "rural."

Unelected state Growth Management Hearings Boards, and there are three serving separate geographic areas in Washington, hear appeals and decide whether the local plans and development regulations are "consistent" with the GMA. These growth boards, in addition to deciding the density question discussed above, have ordered municipalities to redraw their urban growth boundaries, have ordered increased "no-touch" buffers around certain fish-bearing streams to be set in place by local governments, and have limited the kinds of businesses that can locate in areas that have been designated as "rural." Further, these growth boards have given great deference to state agency "guidance" documents and state "model" growth management ordinances, leading to de facto state control over local decisions even when the act itself was designed to work from the bottom-up.

he GMA is, in the parlance of the APA’s legislative guidebook, both vertically and horizontally integrated. Local plans must conform to the state act, and local plans must conform to the plans of adjoining municipalities. County-wide planning policies (CWPPs) trump local plans where they conflict. And while this mandated coordination can result in an easier time locating essential facilities, it also can result in rather harsh top-down planning decisions. Just last year Washington was on the verge of a revolt by many counties when sex-predator transition and housing facilities were declared essential public facilities and the state planned to force counties to allocate such housing on an equal basis among themselves and their cities, using the CWPP process.

All of these regulations -- on both the state and local levels -- breed further regulations. A perfect example of this is "concurrency" requirements, currently contained in Washington’s GMA with regards to transportation facilities and recommended in the APA Legislative Guidebook for most infrastructure. These prescriptions require local governments to deny development where local facilities do not meet some predetermined "level of service." However, it is precisely the "density" requirements embodied by these so-called "smartgrowth" policies that create the congestion in the first place (which will be further discussed below). The answer by state and local governments? Further regulation, such as "transportation demand management" ordinances and mandated "transit-oriented development," development moratoriums, and making development contingent on the payment of huge "impact" fees exacted to expand roads overburdened by the increased density. An ever increasing cycle of control over individual’s use of their property, without a hint of compensation provided to affected landowners.

These planning requirements, local legislative implementation, administrative appeals, and agency programs and assistance have not been cheap. By way of example, Jefferson County, a small county of 25,000 population, has spent $3 million (and counting) on its GMA implementation. The amount spent statewide at both the state and local level is easily in the high tens of millions, and probably in the low hundreds of millions. If Congress is considering grants to implement these policies nationwide, it will not be cheap.

And this doesn’t even count the costs to private citizens. The increased costs to move a business which is now nonconforming, the increased housing costs which will be discussed below, the increased costs from urban congestion worsened by increased densities, the increased process costs, and the increased costs associated with multiple land use appeals made possible by the redundant levels of planning and implementation.

Here is one example from my own personal experience when I was a land use lawyer in private practice. An individual wanted to rezone property that was across the street from dense residential (apartments) to put up his own apartment building. Bordering the back of his property was single-home residential. This is the classic case where a local government balances the community interests and makes a decision. Given the discretion granted to local governments, these cases prior to GMA usually involved one appeal from the administrative decision to superior court, and that was it.

Now though, it is far more complex, with more avenues for parties opposed to the project to appeal. Because the zoning, or development regulation, must match the comprehensive plan, you need to get both a zoning change and a comprehensive plan change. The latter is not cheap, as one must hire consultants to demonstrate how the proposed change fits within the comprehensive plan and the act. While these are often processed together by the local government, the comprehensive plan change can be appealed to a growth management hearings board. That board will determine if the change complied with the act. This decision can be appealed on up through the court system. Meanwhile, this delay increases the carrying costs of the project. Finally, after the comprehensive plan amendment is approved, and if the development regulation is found to be consistent with the comprehensive plan, you can start to apply for the permits to actually build the project under the new land use scheme. Which can generate a whole new round of appeals. A simple project like this one can easily cost $20,000 dollars in legal fees, plus fees to planning consultants, traffic engineers (if traffic considerations play a part of the plan), etc. These costs put such projects out of the reach of mom-and-pop developers, leaving the housing market dominated by big developers who can afford to play this game. Of course, fans of the status quo, including no-growth groups, radical environmentalists who oppose development, and local "NIMBY" groups of concerned neighbors, are given far more avenues by which to oppose development.

Did Washington need this act? Certainly not. In 1990, the year GMA was adopted, just over 3% of Washington’s land was used for housing, industrial, and commercial purposes - broadly classified as "urban" purposes. 37.5% of Washington’s land was in agricultural production. This meant that 40.5% of Washington’s land was in "human use." Therefore, almost 60% of the land in Washington is still open space, largely owned by the federal government as national forest land, national parks, and other federal facilities. In 1990, before the GMA was adopted, 82.9% of Washington’s citizens lived in a metropolitan area. In 1996, after GMA had been fully implemented in most counties, 82.8% lived inside urban areas. And while completely updated figures aren’t yet available from the 2000 census, a current map of the "urban growth areas" in Washington produced by a state agency clearly shows how little of Washington is still "developed." (Attached.)

The Puget Sound region in Washington has developed some of the worst congestion in the country over the past ten years, the time period coinciding with Washington’ s growth management scheme. By now, a large body of research shows that growth management schemes, particularly those that use "urban growth boundaries" and related methods to increase density, also increase congestion.

This is not really surprising. We start with the fact that Washington, like many states around the nation, has almost reached a saturation point with almost one registered vehicle per licensed driver in the state. Therefore, the simple math of congestion goes like this: if you double density within a certain geographic area, but don’t either double road capacity or have a large shift from low capacity vehicles (such as single-occupant cars) to high capacity vehicles (such as buses), you will double congestion on the roads in that area.

Planning to increase congestion is also not surprising, since the same folks who advocate for growth controls usually advocate for "multimodal" - read transit - forms of transportation. The only problem is that the public won’t go along.

Even in the most dense urban areas of Washington around Seattle and Tacoma, transit usage fluctuates, depending on what figures you look at, between 10-30%. This means that 70-90% of those new people you have placed into a more dense area are going to be driving their single-occupancy vehicles on the roads. It is not surprising that congestion keeps increasing.

Further, the public won’t go along with the density scheme in another way that contributes to congestion. The American dream is to live in a single-family home with a bit of property. Far more of Washington’s citizens have voted with their pocketbooks for this lifestyle over living in apartments and condos inside urban areas. But if we are rezoning areas for increased density, and the public doesn’t want to live in these dense neighborhoods, then the public is willing to drive longer distances to commute between home and work. Their home conditions have, so far, outweighed the burdens of increased commute times (which have not increased by a huge margin anyway, according to Texas Transportation Institute and census data). So if more folks are driving between urban areas that contain their job sites because they don’t want to live in the dense neighborhoods that surround these areas, yet aren’t allowed to develop housing in the "rural" areas that separate the urban islands, you have yet another prescription for increased congestion.

Planners have an answer for this. Make the commute and the congestion so bad that folks will be forced to get out of their cars and take transit. Portland planners have admitted as much, but short of very coercive transportation and land use policies this simply won’t work.

One of the best papers on this is by Genevieve Giuliano of the USC School of Policy, Planning, and Development. In "Land Use Policy and Transportation: Why we won’t get there from here," Professor Giuliano concludes that only drastic measures would actually decrease auto usage. Can any of you see adding a few dollars gas tax as politically viable? What about banning single-occupant auto use in urban areas?

In Washington, we have already adopted "transportation demand management programs" such as HOV (high occupancy vehicle) lanes, commute trip reduction programs mandating that large employers provide incentives for their employees not to commute by single-occupancy car, and intelligent traffic control measures - not to mention already having a very extensive transit system available.

Most people still drive solo. And the more dense you make an urban area, the more folks will want to use the limited road space. Unless there is a massive road infrastructure investment in dollar amounts that will dwarf even the expensive smartgrowth implementation costs discussed above, adopting these density-promoting policies guarantees more congested roads.

At the same time we have increased congestion, housing prices in the Puget Sound region have skyrocketed, in large part due to the limitations on supply that have accompanied growth management.

Seattle has been almost as famous for the past decade for its high cost of housing as for its congested roads. But this is not only a Seattle problem. Housing costs have been driven up state wide. While a lot of this is due to income growth, the question shouldn’t be whether smartgrowth schemes are the sole cause of unaffordable housing. One of the primary purposes of the GMA is to promote affordable housing, so if urban growth boundaries are contributing to increased housing costs then there is reason to question whether such laws should have been adopted in the first place.

Between 1990 and 2000 the median house price in Washington increased by 41.6% placing Washington 46th out of 50 states in terms of the change in affordability. A different measure, comparing the ratio of the median house price to median income, placed Washington 49th out of 51 (including DC) in terms of the change in affordability represented by the change in this ratio from 1990 to 2000.

While there have been relatively few studies that have looked at the contribution of growth management to decreased housing affordability, those that have have established a clear connection. And if we remember that the GMA has only been fully implemented for the past 6-8 years in the largest counties, and less than that in some smaller counties, we can continue to track the data to confirm the early findings.

Two of the Washington studies were conducted by the Washington State University’s Center for Real Estate Research. The first study, from March 28, 1997, was titled "Urban Growth Boundaries and Lot Price." This study examined the urban Clark County in southwest Washington. It found "a significant 35.5% increase in residential lot prices market-wide resulting from implementation of the Growth Management Act in Clark County. A similar 38.7% increase is shown for residential lots located within the urban growth area." (Wolveton, Purdie, and Crellin, pg. 9.) This data is very significant, as the imposition of the Clark County UGB represented the "closing" of the Portland metropolitan area, thereby giving a unique window into what happens when a formerly open pressure valve for growth shuts.

A second study of Clark County by the Center (Wolverton/Wolff 2001) looked specifically at Housing Affordability instead of at lot price. This study examined 12 quarters prior and subsequent to GMA implementation. It controlled for factors such as excess supply, construction costs, population growth, interest rates, and seasonal factors. The price index used in the study controlled for distance from the Vancouver central business district, distance to freeway interchange, bedroom and bathroom count, home age, lot size, outbuilding size, fireplaces, garage, central air conditioning, and home quality. The central finding was:

 "the study reveals a 15.97% adverse real price, resale home affordability effect in Clark County as of the end of 1997. This means that the typical resale home sold for $19,749 more than it would have in 1997 absent the measured GMA effect (measured in 1992 dollars.)" 

Finally, the most recent, and comprehensive, study was issued in December, 2001by the Reason Public Policy Institute. This extensive study made several findings, but the conclusion was that:

 "as much as 26 percent of the housing-price increases at the county level in Washington State may be attributed to the GMA. Overall, the GMA slowed progress in increased housing affordability statewide by as much as 5.1 percent, since housing prices increased at a faster rate than income during this period. The results suggest that population density has an important impact on housing prices as well. Thus, policies that encourage more compact development may contribute to a decline in housing affordability rather than an increase." 

The cause of this are simple. Decrease the supply of buildable land, yet maintain or increase the demand for housing, and the cost will go up. Add to that factors such as increased process costs cited above and impact fees tacked on to housing prices stemming from concurrency requirements of the GMA, and one can quickly see how "smartgrowth" schemes can lead, ironically, to decreasing the supply of affordable housing.

This has some very interesting unintended consequences. As Matthew E. Kahn of Tufts University noted in his paper, "Does Sprawl reduce the Black/White Housing Consumption Gap," (Housing Policy Debate, Volume 12, Issue 1, Fannie Mae Foundation 2001), decreased housing affordability hinders the reduction of the black/white housing consumption gap, which has been steadily closing for 80 years.

What is the solution to this "smartgrowth" affordable housing dilemma? Well, the smart thing to do might be to open up the market by increasing the supply of buildable lands for housing, and removing land use controls to let local jurisdictions incorporate densities according to their needs. One could even imagine tax incentives for the development of low-income and affordable housing. But unfortunately, too many "smartgrowth" supporters in Washington would rather see direct subsidies to allow folks to live in areas that are otherwise unaffordable under the GMA. Of course, where do these subsidies come from? They are taxpayer dollars, taken by government to solve a problem created by government land use control mandates in the first place.

Finally, economic development in Washington’s rural areas has come to a virtual standstill. As the agriculture-based economies of such rural areas have suffered over the past few years, local communities have not been able to turn to other industries for jobs because of the development restrictions contained in the state’s "smartgrowth" statutes. This has caused a shift in wealth from the rural areas of Washington to urban areas. And since more of these urban areas are located in Western Washington than in Eastern Washington (convenient shorthand for the split along the Cascade mountains), this wealth shift is moving West.

If we look at data from the Northwest Income Indicators Project at Washington State University from the implementation of the GMA on the county level (roughly 1995), we find that virtually all economic indicators as a percentage of the statewide totals or as percentage of statewide averages have been falling in Eastern Washington counties and in nonmetropolitan Western Washington counties, but rising in Western Washington Metropolitan counties. This is true for employment, total industry earnings, average earnings per job, personal income, and per capita income. For now, all that we can note is the correlation between these economic measures and the implementation of GMA. But this wealth and opportunity shift deserves further exploration. It is exactly what one would expect when it is easier to develop in areas that are already much more urbanized, and therefore offer more development opportunities than areas that are largely rural, where urban growth boundaries will be more restrictive and opportunities to develop more limited.

Summary:

The Republican members of the Washington State House of Representatives did not believe that a Republican administration could be party to encouraging these destructive policies to be adopted by other states and local governments. This is why the Republican Caucus of the Washington State House of Representatives sent a letter to HUD Secretary Martinez urging HUD to reject the Guidebook.

It is not hard to fathom the APA’s interest in pursuing this guidebook. The APA will expand its membership as the number of planners expands exponentially with the implementation of this "smartgrowth" scheme. Further, under these very restrictive proposed local and state laws, the power of those who make a living by "planning" the lives of citizens will also radically increase.

For the most part, these planners are unelected, as are the state bureaucrats who oversee these "smartgrowth" programs. Such programs, when instituted, therefore constitute a massive shift of responsibility and accountability from the people and their elected local officials to labyrinth planning departments and state agencies.

We in Washington have lived with this nightmare for ten years, and despite bipartisan legislative efforts, two democratic Governors from the state’s most heavily urbanized area, Seattle, have vetoed reasonable reforms to Washington’s Growth Management Act. However, we would urge you, the members of the House, to avoid assisting those dedicated to increasing government’s scope, and their planning association and radical environmentalist allies, in spreading this "smartgrowth" disease across the country. We urge you to reject any funding requests to assist state and local governments in implementing the APA’s Legislative Guidebook. If the House is interested in addressing state and local planning methods, it should begin an inclusive process in which all interested parties might participate to develop a national consensus on this issue.

For more information about the effects of the GMA on property rights, click here.