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MRSC has joined with Phil Olbrechts, Attorney, Ogden Murphy Wallace, Pat Dugan, Dugan Consulting Services, Arthur Sullivan, Program Manager of ARCH (A Regional Coalition for Housing), and Anindita Mitra, founder of CREÄ Affiliates, LLC, to bring you the "Planning Advisor" article series on planning and growth management issue affecting Washington Local Governments. The "Planning Advisor" will feature a new article each month with timely information and advice you can use.*
Costs of Sprawl and Related Conundrums
October 2008
Pat Dugan
Dugan Consulting Services
Introduction
A frequently heard question in many debates on new growth is "How much does it cost to support new development?" A closely related question is, "Does the way development occurs affect the costs of development?" Unfortunately, the answer to these questions is not immediately clear.
The topic of how much it costs to support development at varying intensities has been extensively researched and debated in the planning literature without much resolution. This article will briefly describe the outlines of that debate in the literature. The article will then offer some perspective from my experience in planning and public finance in how to evaluate the cost required to serve development in a variety of communities, ranging from rural communities to moderate sized suburbs in three states.
Costs of Sprawl
Most planners (including me) tend to accept, almost as a matter of faith, that compact development and smart growth significantly reduce the cost of providing public facilities and services. Our belief in this proposition gathered momentum with the study Costs of Sprawl published by the Real Estate Research Corporation in 1974.1 This study examined how much it would cost to develop the same number of units in several potential theoretical configurations of land use, ranging from "low-density sprawl" to "high density planned" on the same hypothetical site. The hypothetical site would be raw, vacant, open land without significant development constraints; land that today we would describe as "greenfields." The study looked at the full range of internal costs of the development, both private and public. The study concluded that there were substantial cost savings for every type of public or private cost (except for schools and open space) as density and compactness of development increased. Low-density development was the most costly type of development on a per unit basis.
The Costs of Sprawl study exerted a powerful influence on planning, ultimately leading to many of the concepts now embodied in smart growth. This study has also stimulated critics of planning to test these findings in real developments, often leading to studies that concluded that these cost savings were either not present or were exaggerated. Some studies even suggest the opposite - that higher densities increase the costs of services.2
The differences of opinion on the subject can be illustrated by two relatively recent studies. A study by the Wendel Cox and Joshua Utt of the Heritage Foundation, Costs of Sprawl Reconsidered: What the Data Really Show, argued that, from their empirical research, there is no relationship between smart growth policies encouraging higher densities and public service costs. Another study by Todd Litman of the Victoria Transport Institute, Understanding Smart Growth Savings, argues the reverse, that these policies result in cost savings. Both of these studies seem to rely on appropriate research techniques to reach these contrasting conclusions. Many other studies over the years have reached similar opposing conclusions regarding these factors.
What’s occurring here? Who is right? While the philosophical leanings of various organizations may account for some of this difference, the studies do tend to be based on reasonable research methods.
The Debate
In spite of this controversy, the basic findings of the original Cost of Sprawl study seem obvious: all other things being equal, higher density, well-planned development should cost less than uncoordinated sprawling development. However, empirical studies on the costs of actual developments do not always seem to confirm this proposition.
The key is the caveat "all other things being equal." Since it is not possible to rebuild the same site repeatedly with different development scenarios to compare costs, empirical studies must compare development on different sites. Since all other things are never "equal" between different sites, other factors associated with costs of public services may make it challenging to compare directly costs between sites and areas. When different studies with different methodologies look at different sites (and often, different cost issues), it is not surprising that they may reach different conclusions.
The Wendel Cox study was particularly susceptible to varying conditions because it compared the costs to serve different patterns of development over the entire nation. Not only do important factors like the costs of development, costs of public services, growth rates, etc., vary widely across the country, but the fiscal structures of local government are dramatically different between states. As Wendel Cox correctly concludes, when examined at this scale, other factors may determine costs more than patterns of development. However, this tends to miss the point since, within any particular area, where these potential differences are much less, more compact, planned development might still be more cost effective than sprawl.
Nonetheless, studies such as the Cox study do make an important point. It cannot be automatically assumed that higher density development will always be less costly than lower density development even in the same general area. For example, a few high density developments spread out over a large area (what some observers have called "high density sprawl") is likely to be more expensive to support than a uniform pattern of traditional moderate density subdivisions. This is because the higher density sprawl may require construction of higher capacity systems over a much wider area. Another common example of costly higher density development occurs when an established area becomes more densely or intensely developed and the existing infrastructure must be rebuilt to support the higher densities and intensities. This can be very expensive compared to the development costs associated with standard subdivisions on greenfields.
Much of the literature seems to seek an answer to an underlying question - does higher density developments cost less to support with infrastructure or not? There seldom are such underlying truths in real life; the world is too complex. There is no "uniform field theory" that we can rely on to quickly determine what the cost impacts of a development might be. While planning concepts, such as those found in the Costs of Sprawl, are useful in understanding relationships and issues, they should always be applied with care in real life. What works in some places, in some circumstances, may not work in your community.
Stages of Development
One of the "real world" things that may affect the impact of new development on the cost of services is the stages of development that areas evolve through. The cost of providing the public services can vary significantly by these stages.
A typical urban area progresses through different patterns of development, as it transitions from an undeveloped area to a city. Many communities start out as an agricultural area. Gradually, other uses become established to serve the agricultural area. This brings people to provide those services, usually with these people residing in low-density residential areas. The growing area then attracts other uses that provide more employment, leading to more residential settlement. At first, this residential settlement may be quite sparse, gradually filling in as the area grows. Eventually the area evolves into an urban environment with an intensive mix of commercial, industrial, public and residential uses. For the sake of discussion I will simplify these complex patterns into three groupings; rural, urbanizing and urban. The requirements of new development for water, sewer and street services vary substantially at these different intensities of uses, or stages of development and, for discussion purposes, I will focus on these services.3
Low-density rural development requires a minimum of facilities, often just consisting of a basic county two-lane road and not much more. Since water may be obtained from private individual wells and sewage disposal is accomplished by private septic tanks, there is little need for public financing of these services.
In contrast, urban uses need to be supported by a full array of public services and facilities. The street network needs to be fully developed with collectors and high capacity arterials (all with curbs, gutters, and sidewalks). Private well and septic tanks are replaced with fully developed public water and sewer systems.
Where urbanization is occurring, there is a diverse range of development intensities within an area. Often this urbanization occurs in uncoordinated, sporadic developments (commonly known as urban sprawl). Facilities tend to be extended to meet the needs of these developments in response to individual demands for service. Because of the uncoordinated character of this development and supporting facilities, additional facilities frequently are needed in several places at once. Additional facilities may be needed later to fill in gaps.
Costs of Facilities for Each Stage of Development
The costs of providing facilities to support new development at the rural, urbanizing, and urban stages of development vary. These costs can range from zero to very high.
In the rural environment, often many additional houses may be built on the sparsely settled rural roads without affecting the quality of the service those roads provide, and without requiring water or sewer services. Consequently, no new public investment is needed to accommodate at least some new growth. In fact, since new development will pay additional taxes, the burden to maintain existing roads will be spread out over more taxpayers.
However, at some
point as the area urbanizes, more traffic from more homes will lead
to congestion and lower levels of service on the rural roads that
provide access to these homes. Rebuilding these roads to reduce this
congestion is expensive since entire stretches of road often must be
reconstructed to provide the added capacity. With more and more
development, more and more improvement to the entire road network is
needed. While the street system evolves, more development will
gradually require development of expensive water and sewer systems to
replace wells and septic tanks.
Gradually a basic network of street, water and sewer facilities gets developed. When this network of services is complete or nearly complete, new units may be built as in-fill (or in nearby areas) with very little new public investment since the basic services systems have already been installed. Again each new unit of development becomes relatively inexpensive to support, and may be even fiscally advantageous due to the increased taxes or utility fees the unit provides to support the existing systems.
Figure A may help to conceptualize these growth/cost relationships. The X-axis represents the number of units in an area through the stages of development. At the left side of the axis is the rural environment and at the right side a fully urban environment. Along the Y-axis is the cost of facilities needed to support the number of units represented along the X-axis. In the rural area, new units can be added without much increase in costs. However, as more units are added during urbanization, costs increase much faster than growth. Gradually, as development of the area approaches an urban level of development and most of the facilities are installed, in-fill development can add new units rather inexpensively. As shown, these relationships create an S curve. The part of curve with the sharpest slope will be referred to here as the "cost of growth gradient."
This curve would be different for each type of service. Since wells can only support very low densities, water service may be the first service which is affected by this cost relationship, followed by streets, and later sewer service. Since the need for public water and sewer is dependent on the quality of aquifers and soils, these curves will also vary significantly from place to place.
Managing the
Costs of Growth through Stages of Development
Figure B illustrates how the shape of the curve might change when development is phased into a rural area during urbanization rather than when it occurs in a sprawling fashion. It costs more to provide basic services if new higher intensity uses are located well away from existing higher capacity services than it costs to serve a new higher intensity development located near existing services. Street water and sewer lines will have to be extended over longer distances to serve the outlying development. If several outlying developments occur in different places at once (in a sprawling fashion), then these facilities must be extended in several directions at once, increasing the cost of serving any given amount of development. Consequently, the "cost of growth gradient" may be quite sharp in a sprawling development pattern (as illustrated by line A on Figure B).
In contrast, close-in development, added to another close-in development in sequence may be able to accommodate the same amount of growth at far less cost for the supporting facilities, because existing facilities could then be extended in an orderly and economical fashion. Such phasing of development should lower the slope of the cost of growth gradient significantly, resulting in a relatively moderate slope for this gradient, as might be illustrated with line B on Figure B. (I suspect that such phasing should reduce the total costs of facilities at the full urban stage as noted by point Y relative to point X but I’m not aware of any research related to this.)
Beyond Urban
As an urban area increases its density, it may encounter another S curve of costs. As noted below, once an urban level of service is developed, that level of service can often accommodate a significant amount of growth without significant additional costs. However, there will come a point where that infrastructure may need to be retrofitted at higher capacities in order to support further densification. A common example of this may be found in the older suburbs that were developed after World War Two. These areas have suburban densities and were once considered to be fully "built-out." Since these communities were considered built-out, public services were built and maintained to support those suburban densities. Now under growth management, higher densities may be desired but the existing facilities may not be capable of supporting those higher densities. For example, many of neighborhoods in these communities are built along streets without sidewalks. While these streets may be adequate for the current suburban densities, these streets should be rebuilt to support more intensive, and pedestrian oriented, urban densities.4 Similar situations are common where the existing sewer and water pipes may need to be replaced because they were not built to accommodate the higher densities. In established residential areas where higher density uses are planned, the cost gradient can become quite sharp. However, as in the case of the first S curve in figure A, once these services are rebuilt, they can support economically much more growth at relatively low incremental costs. These relationships are illustrated by Figure C.
Conclusion
The question of how much does it cost to support new development cannot be generically answered since it depends, among many factors, on how does the particular development fit into the overall pattern of uses and facilities in the area. However, knowledge of these relationships should assist in guiding new development in a way that minimizes the cost of new development.
Orderly development should be less costly than sprawl. Managing growth in coordination with facility development can avoid costs to extend services until areas served by existing services are fully filled in. The relationship between growth and the cost of public facilities is complex, but very important to both public finance officials and planners. The more we understand this relationship, the better we should be able to manage the development of new facilities to support new development as efficiently as possible.
It should also be remembered that costs are only part of what we need to keep in focus when planning. We also need to be concerned about the quality of life in the communities we are serving, conserving agricultural and forest resources, and protecting critical areas, to name just a few. As correctly suggested by Todd Litman in Understanding Smart Growth Savings, good planning (which he calls smart growth) involves far more than just high density vs. low density and the costs of development.
Footnotes
1. Can we really have been arguing about this for 30 years?
2. A good brief overview the literature may be found in the Puget Sound Regional Council's Information Paper on the Cost of Sprawl, December 19, 2005. A detailed discussion of issues related to the cost of sprawl can be found in Robert W. Burchell, et al., The Costs of Sprawl Revisited, Transportation Research Board, National Academy Press, Washington D.C., 1998.
3. Notably, this discussion does not include the cost of regional transportation facilities which add further complexity to the picture.
4. This retrofitting is not only expensive, it is often difficult to do in established neighborhoods.
Pat Dugan has a unique combination of experience in both planning and public finance, spanning 35 years. As a planner, he has been a planning director in two cities (Auburn and Burien), and two regional planning agencies in Oregon and Washington; and was a planning manager in Goleta, California. In public finance, Pat has served as the chief financial officer in four public agencies including the Cities of Auburn and Lynnwood, and the Snohomish County Public Works Department. He has written extensively on financing capital facility programs and on public finance for planners. Pat now offers planning and public finance consulting services and in his own firm, Dugan Consulting Services in Everett and can be reached at consult.dugan@verizon.net.
Anindita Mitra, AICP is the Founder of CREÄ Affiliates, LLC a planning and urban design consultancy that focuses on creating awareness of unsustainable practices, and offers a platform for affected parties to openly communicate and collaborate to arrive at creative sustainable solutions. She is also one of the Co-Chairs of the Climate and Sustainability Initiative of the Washington Chapter of the American Planning Association. Anindita's current interests include the development of sustainable master plans and streetscape designs; establishing sustainable community indicators and their integration into comprehensive plans and governance; identifying creative solutions directing communities towards energy-independence; preparing communities for the challenges potentially brought upon by the Climate Change phenomenon; and advancing the integration of transit and non-motorized travel solutions into community land use planning. She has worked throughout the United States for both the public and private sectors.
Phil Olbrechts is a member (similar to partner) and elected member of the board of directors of Ogden, Murphy, Wallace, LLC. Phil focuses his practice on land use law and currently represents seven municipalities as either City Attorney or Hearing Examiner. He has taught over a dozen credits of land use law at the University of Washington, has taught numerous land use continuing legal education courses and has made over 200 land use presentations to elected and appointed officials throughout Washington State. Phil has served on the Seattle Planning Commission and in the past served as the Planning Director for two municipalities.
Arthur Sullivan is the Program Manager of ARCH (A Regional Coalition for Housing). ARCH is a coalition of 16 public jurisdictions located in East King County. Its purpose is to facilitate efforts of public jurisdictions to create a full range of housing, with an emphasis on affordable housing. In 2004 ARCH was the winner of the inaugural Ash Institute / Fannie Mae Foundation Innovations in American Government Award in Affordable Housing. Previously Arthur was a Senior Manager at BRIDGE Housing and planner for Environmental Impact Planning. He holds a B.A. in Planning from the University of Washington, and a Master of Planning from UC, Berkeley.
*The Articles appearing in the "Planning Advisor" column represent the opinions of the authors and do not necessarily reflect those of the Municipal Research & Services Center.