Redirecting Development
and Taming Sprawl

Edward J. Dodson

[Comments submitted to Peter Kasabach, Executive Director
of New Jersey Future, August, 2010]

A colleague of mine forwarded the link of this article to me for comment, as my professional work in the United States has been in community revitalization and the development of quality affordable housing.

What I came to understand midway in my career was that land markets are made dysfunctional by law that favors the landed over those who develop and utilize locations. There are many issues causing sprawling development patterns, but one of the most consistent is the struggle to gain control over land that allows for profitable development. And, of course, developers are not concerned with the infrastructure costs of bringing roadways; water, sewer and other utilities, hospitals, libraries, schools, and other public goods and services to newly-created subdivisions. These costs are passed on to property owners, working people and businesses.

There is only one measure that will redirect development inward, leaving more distant land available for agriculture, recreation and habitat for other species. This is for government to fully collect the annual rental value of every location within its geographical boundaries, while exempting improvement made thereon from the tax/revenue base. What this change in policy will do is easy to see.

First, profit from speculating in the hoarding of land will disappear. Thus, investors will acquire control over land only when profitable development is possible.

Second, existing owners of land parcels will not be able to continue to ignore land they hold because the cost of doing so will (particularly if the and parcels are centrally-located) make this costly. They will either develop land based on highest, best use or sell the land to someone who will.

Third, the cost of property assessment will fall dramatically once property improvements are removed from the tax base.

Fourth, removing speculation and hoarding of land will bring down the price (but not the annual rental value) of land parcels. This will make it far less costly for public agencies to acquire land for needed public buildings and (if still required given household incomes) to construct decent, affordable housing units for the housing-deprived.

In summary, what will curtail sprawl is public policy that encourages the renovation of existing structures and in-fill construction of new buildings where infrastructure already exists, while at the same time requiring land owners to compensate the community for the value that comes to locations because of public goods and services.