December 20, 2002
SMART GROWTH INITIATIVES IN OTHER STATES
By: Kevin E. McCarthy, Principal Analyst
You asked for a description of smart growth initiatives in Maryland and other states.
Maryland is generally regarded as having the most comprehensive smart growth initiatives in the country. Its initiatives are designed to (1) save the state's most valuable remaining natural resources, (2) support existing communities and neighborhoods by targeting state resources to support development in areas where the infrastructure is already in place or planned, and (3) save taxpayers from unnecessary costs in building the infrastructure required to support sprawl. A key initiative is the Priority Areas Funding program, which limits most state infrastructure funding, and economic development, housing and other program grants to smart growth areas designated by local governments. Other initiatives include a program to encourage people to buy homes near where they work, a corporation tax credit for job creation in areas targeted for growth, a brownfields (historically industrial areas with contaminated soil or related problems) redevelopment program, and funding for rural land conservation.
This memo also describes smart growth initiatives in Georgia, New Jersey, Washington, and Wisconsin, which are among the most active states in this area according to the American Planning Association. It focuses on initiatives that go beyond those implemented in Connecticut, e.g., programs to purchase open space and farmland development rights and to rehabilitate brownfields. Among the more common types of initiatives are (1) planning requirements, such as requirements that state agency activities be consistent with state policies and local plans be consistent with state plans; (2) incentive programs providing grants and tax benefits, and (3) regulatory requirements, such as development impact fees.
There is no single, commonly accepted definition of smart growth, which can include a wide array of land use policies and programs. One of the over-arching goals of smart growth initiatives is to limit sprawl, which is seen as causing a wide range of environmental and economic problems. In some states, notably Georgia, transportation is the central focus of smart growth initiatives.
The Environmental Protection Agency has promoted ten specific smart growth measures that are often reflected in state initiatives. They are to:
1. mix land uses;
2. take advantage of compact building design;
3. create a range of housing opportunities and choices;
4. create walkable neighborhoods;
5. foster distinctive, attractive communities with a strong sense of place;
6. preserve open space, farmland, natural beauty, and critical environmental areas;
7. strengthen and direct development towards existing communities;
8. provide a variety of transportation choices;
9. make development decisions predictable, fair, and cost effective; and
10. encourage community and stakeholder collaboration in development decisions.
Most states, including Connecticut, have adopted initiatives that include these measures. A 2002 American Planning Association website, http://www.planning.org/growingsmart/pdf/stateTOCExecSumm.pdf, describes initiatives in all of the states. A National Conference of State Legislatures website, http://www.ncsl.org/programs/esnr/growthdata.htm, describes smart growth incentive programs in all of the states. In addition, many counties and municipalities have promoted smart growth. Finally, the Environmental Protection Agency and several other federal agencies have supported state and local smart growth initiatives.
Maryland's smart growth initiatives were established through the adoption of legislation in the 1990s. In addition to the programs described here, the state has major rural preservation and brownfields redevelopment programs that are similar to existing programs in Connecticut. Further information on all of Maryland's programs is available from the Office of Smart Growth's website, http://www.op.state.md.us/smartgrowth/smartwhat.htm.
The Office of Smart Growth advises the governor on smart growth policies and coordinates the activities of state agencies to ensure that smart growth objectives are met. It also works with the legislature, the private sector, and the public to ensure that smart growth objectives are satisfied. The Smart Growth Subcabinet consists of the directors of various state agencies, who seek to promote interdepartmental coordination of smart growth policies.
The Office of Smart Growth also administers the Priority Funding Areas Program. The program designates the types of existing areas, primarily urban centers and areas proposed for revitalization, that are eligible for state economic development funds. Under the program, counties can designate priority funding areas that meet local guidelines for intended use and have sufficient infrastructure in place to make development viable. The state cannot fund a growth related project unless it is located in a priority funding area. To receive funding, a local government must certify to the state Office of Smart Growth that the project is within a designated area. Additional information on this program is available from the Office of Smart growth website, http://www.op.state.md.us/smartgrowth/smartpfa.htm.
An individual who donates a conservation easement to the Maryland Environmental Trust or the Maryland Agricultural Land Preservation Foundation to preserve open space, agricultural lands and other natural lands is entitled to a credit against the income tax. The credit equals the difference between the fair market value of the land before the conservation easement and its fair market value afterwards.
The credit may not exceed the lesser of the individual's tax liability or $5,000, but any unused amount may be carried forward for 15 years. In addition, a county or municipality may grant a credit against its property tax for property that is subject to a perpetual conservation easement donated to a qualified land trust.
The Job Creation Tax Credit Program encourages small and mid-sized businesses to invest in smart growth areas around the state. The program is designed to encourage small business development and job growth in areas accessible to available labor pools, and to make more efficient use of the state's existing infrastructure. The program provides income tax credits to business owners who create at least 25 jobs in priority funding areas. The jobs must be full-time, permanent, and pay at least 150% of the minimum wage. Positions must be newly created in a single Maryland location. The program is currently scheduled to run through January 1, 2007. In addition to the tax credit, businesses seeking to locate in economically distressed counties may be eligible for low interest loans from the Smart Growth Economic Development Infrastructure Fund.
The Live Near Your Work pilot program provides cash to workers buying homes in certain older neighborhoods. The goal of this initiative is to stabilize the neighborhoods surrounding the state's major employers by stimulating home ownership in targeted communities. In addition to providing funding, the state is participating in the program as a major employer. The program provides a minimum $3,000 to homebuyers moving to designated neighborhoods. The local government designates eligible areas with the concurrence of the Department of Housing and Community Development and administers the program within its jurisdiction. To qualify, the employee must purchase a home in a designated area, and live there for at least three years. The Connecticut Housing Finance Authority administers a similar program here.
Legislation passed in 1999 created the Georgia Regional Transportation Authority (GRTA) and gave it broad powers. The agency's mission is to provide residents in the greater Atlanta region with transportation choices, improved air quality, and better land use to improve their quality of life and promote sustainable development. The agency can require any of the 13 counties in the region that do not meet federal air-quality standards to develop a transit system if it does not already have one. In addition, GRTA is participating in the development of a regional transportation plan and is responsible for reviewing proposed transportation projects. If it disapproves a project, GRTA can block all state and federal transportation funds for it.
GRTA also has jurisdiction over “developments of regional impact” such as large shopping malls and subdivisions. The developer of such a project must provide GRTA with detailed information, including (1) a description of the proposed development, including a site plan; (2) a description of the area affected by the development, (3) information on the number of jobs, numbers and value of housing units, and existing land use in the area; (4) an analysis of the transportation impacts of the development, including impacts near the development; and (5) transportation services and access improvements that are required to serve the development that may require federal or state funding. (In Connecticut, the State Traffic Commission has more limited jurisdiction over large malls and certain other developments under CGS § 14-311 et seq.) Further information about GRTA can be found on its web site, http://www.grta.org/
Incentives and Other Provisions
In the November 2002 election, voters approved constitutional amendments that allow (1) tax incentives to encourage the redevelopment of blighted property; (2) different tax rates for properties contaminated with hazardous waste, to encourage cleanups; and (3) separate valuations for qualified affordable residential developments.
Any municipality or county that has prepared a comprehensive plan containing a capital improvements element may require developers to pay a development impact fee to get their proposed development approved. The fee may not exceed a proportionate share of the cost of system improvements. It must be based on the levels of service for public facilities applicable to existing development and new growth. The resulting revenue must be spent for the system improvements for which the fee was collected in the area where the project is located. Before adopting the ordinance requiring the fee, a municipality or county must establish an advisory committee, with at least 40% of its members representing development interests.
The Smart Growth Policy Council consists of cabinet members and senior state officials. It seeks to ensure that state agency efforts, grants and other economic incentives, along with transportation and infrastructure funds and school construction initiatives, advance the state plan and principles of smart growth. The council also seeks to streamline state redevelopment initiatives, especially regarding brownfields; help resolve development-related conflicts; find ways to assist local governments and communities in achieving smart growth; and review state water resource capacity.
In addition, the state's Office of Smart Growth staffs the state planning commission and the brownfields redevelopment task force. It prepares the state development and redevelopment plan to improve the efficiency and reduce the costs of land development and infrastructure in New Jersey by encouraging coordination and cooperation among state and local agencies. The office's website is http://www.state.nj.us/osp/.
The state provides grants to municipalities, counties, and regional organizations to develop plans that lead to more livable and sustainable communities. The grants are intended to promote comprehensive planning that focuses on redevelopment sensitive to local community needs, promotes efficient investment in the use of public infrastructure, provides for affordable housing, preserves farmland, and protects environmental, natural, historic and cultural resources. The goals of the program are to revitalize cities and towns by encouraging redevelopment and infill, while discouraging sprawl in suburban and rural areas through more compact development. To date, the state has provided more than $5 million in grants.
One of New Jersey's major smart growth initiatives is its Rehabilitation Subcode, which was adopted in 1998 with guidance from an advisory committee. The committee was composed of building code and fire officials, architects, historic preservationists, advocates for people with disabilities, and government representatives.
The subcode reflects a change in building code philosophy. Previously, if an owner substantially renovated his building, he had to make the building meet the code for new structures. The mandated improvements were expensive and often provided limited benefits in terms of occupant safety. This approach also disregarded the positive effect of investments to improve existing buildings even when not specifically earmarked for code compliance. The cost of complying with the code often discouraged building owners from renovating their buildings.
The new subcode instead establishes specific requirements appropriate to existing buildings. It establishes five sets of specific requirements for each category of work (plumbing, electrical, etc.). These are: (1) required and prohibited practices and products, (2) requirements as to materials and methods, (3) building features, such as doors, that must conform to new building standards, (4) requirements for such things as exit signs, which only apply to the area being renovated, and (5) supplemental requirements for large buildings.
In addition to the subcode, New Jersey allows its municipalities to adopt an ordinance requiring a developer to pay the pro-rata share of the costs of providing reasonable and necessary street improvements and water, sewer and drainage facilities, that are located outside the development boundaries but necessitated by construction within the development boundaries. This impact fee may be assessed as a condition for approval of a subdivision or site plan.
Washington enacted its Growth Management Act, one of the most comprehensive planning statutes in the country, in 1990. The act was amended in 2001 to require local governments to establish time periods for actions on specific, land-use project permit applications including timely and predictable procedures to determine whether a completed application meets development requirements.
The act contains goals and substantive and procedural requirements. The law seeks to slow sprawl and guide growth out of rural areas and into urban growth areas. The act requires most counties and municipalities to adopt comprehensive growth management plans for a 20-year period. The plans must include specific elements, including housing, transportation, economic vitality, livable communities, and open space, among other things. Every five years starting in 2002 municipalities must review and take action to revise, if needed, their plans and regulations to be consistent with the act, including amendments. They must also consider new state population data. Six urban counties and the cities within them must do a more intensive five-year review that includes data on buildable lands, urban densities, and land use activities including infrastructure developments.
Ten counties and their municipalities, representing about 5% of the state's population, are not required to meet the full set of planning requirements, but must designate natural resource lands as appropriate and designate and protect critical areas.
A county or municipality with a comprehensive growth management plan may impose an impact fee on a development activity to finance public facilities, if there is a balance between the impact fee and other sources of funding for the public facilities. The fee must be reasonably related to the proposed development, not exceed a proportionate share of the costs of system improvements that are related to the proposed development, and be used to benefit the proposed development. An impact fee may be assessed only for public facilities that are identified in the capital facilities plan of a local government's comprehensive growth management plan, and must be contained in an ordinance adopted by the local government. Eligible public facilities include roads, parks, open space and recreational facilities, schools, and fire protection facilities.
The Smart Growth Initiative enacted in the 1999-2001 state budget seeks to encourage sound land use planning by local communities, curb sprawl, and promote better land use planning. It creates financial incentives for municipalities to devise and follow land use plans that meet state guidelines.
Communities with populations of 12,500 or more had until January 1, 2002, to adopt a model zoning ordinance to provide for traditional, compact neighborhoods. Rural areas were required to encourage conservation with subdivisions having compact lots and common open space. The state has provided $3.5 million in funds to help local governments develop these land-use plans.
The law also requires all counties and municipalities to devise and start implementing comprehensive land use plans by 2010. In doing so, the counties and municipalities must consider:
1. conservation of farm land and natural resources, including groundwater, forests, floodplains, wetlands, wildlife habitat, parks and recreational resources;
2. future development of utilities and community facilities, including parks, health care, police and fire services, libraries and schools;
3. future transportation needs and how they will relate to regional and state transportation plans;
4. existing housing stock and programs to promote development of a range of housing choices;
5. economic development goals, including the attraction and retention of businesses and provisions for promoting brownfield redevelopment; and
6. a 20-year projection for future development and redevelopment of public and private land.
Starting in 2010, any local government action that affects land use must be consistent with its comprehensive plan. This requirement applies to zoning actions, subdivision control, annexations, and impact fee ordinances, among other things.
The original legislation authorized $3.5 million in grants to help local governments pay for developing the comprehensive land use plan. (The governor has proposed reducing funding for this program in light of the state's budget deficit.) Under the law, preference for the grants is given to communities that (1) address the interests of neighboring communities, (2) identify “Smart Growth” areas where development or redevelopment can occur adjacent to existing development, and (3) provide opportunities for public participation throughout the planning process.
Starting in 2005 an as-yet undefined Smart Growth Dividend will be made available from the state. Municipalities and counties that adopt plans meeting state standards, and that enact zoning and subdivision ordinances consistent with the plan, will qualify for the dividend. The program also will reward communities that increase compact development and moderately-priced housing within their borders.
A provision in the FY 2001-2003, budget allows small businesses that take over vacant storefronts in rural downtowns to be eligible for loans up to $750,000 from the Wisconsin Housing and Economic Development Authority. Another item in the budget bill created the Milwaukee Development Opportunity Zone. Part of a $32-million revitalization package for the city's downtown, any corporation conducting economic activity in the designated zone will receive a package of tax and investment credits and incentives. The special zone will remain in existence for seven years.