In Toronto we have something known as Development Charges. In the US, they are more commonly referred to as Development Impact Fees, which in my view, lends a certain precision to their intent.
The idea behind these fees is that they account for some or all of the off-site public costs required to serve a new development. Initially this meant utilities, but today these fees usually include everything from transit and parks to child care and pedestrian infrastructure.
According to Wikipedia, the first impact fees were implemented in Hinsdale, Illinois in 1947. By the 1980s, impact fees had become a universally accepted mechanism for funding the costs associated with growth.
Not surprisingly, there’s substantial case law around impact fees. One of the concepts that comes up a lot is this idea of essential or rational nexus. That is, can the fee(s) be rationally linked to the impacts of a particular development?
One well known example is Nollan v. California Coastal Commission (1987).
The Nollans proposed to build a 2-storey house within the exact same footprint of their current 1-storey house. As an approval condition, the Coastal Commission wanted a public easement across the beach in front of their house.
The U.S. Supreme Court sided with the Nollans and held that the development exaction (public easement) was not adequately related to their new development (additional storey). A “rational nexus” did not exist.
If you’re interested in this topic, the American Planning Association has a policy guide on impact fees available on their website.
Texas suburb. by Ron Chapple on 500px
When you rezone a property to build something new, pretty much every city will ask you to provide reports and studies that assess the potential impacts of that something new.
They’ll ask you to look at the impact on traffic, the impact on storm water, the impact on shadows in the area, and the list goes. This, of course, is fair and reasonable. It makes sense to measure the impact of the proposed changes to see if it will work in the given context.
But those are not the only impacts to consider. I think that many of us underestimate the flip side, which is the impact of doing nothing, or in this case, building nothing. Here’s a recent quote from an excellent interview with urban economist Edward Glaeser:
Personally, I believe there are always huge costs to saying “no” to people who want to create space for new families that want to live in the city; who want to make the city more affordable. There are always costs – I believe that very, very strongly – but, sure, there are also benefits to saying “no” at certain times.
Glaeser is, of course, not saying that we should allow unfettered development. He is saying that there are costs (or impacts) to building and costs to not building. The challenge is that we assume, often incorrectly, that saying “no” simply means the status quo will prevail. And we do not consider the impacts.
So what does that mean? Here’s an example.
The Neptis Foundation, which is a nonpartisan and charitable urban research group, just published an interesting report called, Growing Pains: Understanding the new reality of population and dwelling patterns in the Toronto and Vancouver regions.
What the report did was compare growth and settlement patterns in both the Greater Toronto (and Hamilton) Area and Metro Vancouver between 2001 and 2011. And what they found was two different stories.
Of the one million people that moved to the Toronto region between this period, roughly 80% of them settled in new greenfield housing subdivisions at the urban edge. And only 18% of people moved to areas that were well serviced by public transit.
By contrast, only 31% of Metro Vancouver’s population growth went to greenfield areas and 69% went to urban intensification areas. Nearly half of these new residents ended up settling next to high frequency transit.
From an environmental standpoint, Vancouver’s settlement pattern is obviously preferable. But it takes hard work to achieve that. The barriers to infill development are more formidable than the barriers to greenfield development. This is despite the fact that there are well documented social, economic, and environmental costs associated with urban sprawl.
My point with this example is that growth and demand will find somewhere to settle. Some locations make more sense than others, but sometimes there’s no choice when we have decided to say “no.” So what we ought to be doing is measuring both the impact of building, as well as the impact of not building.