British Columbia is big. It’s really big. It’s bigger than Texas. It’s 40 percent bigger than Texas. And while Texas has four major urban areas with a combined population of more than 15 million people, British Columbia has only one major urban area with fewer than 2.3 million people.
So, naturally, Vancouver regional planners fear that urban sprawl might overrun the entire province. The plans and regulations they have written to preserve British Columbia’s supposedly scarce open space have made Vancouver the least-affordable housing market in North America, according to Wendell Cox’s latest review of housing prices. In the rest of the English-speaking world, only Hong Kong is more expensive.
In 2007, the Fraser Institute asked me to visit Vancouver to review its regional plan–or plans, actually, since the first one was written in the 1960s and later, more-restrictive plans were written periodically after that. I spent several days in the offices of the Greater Vancouver Regional District (now known as Metro Vancouver), which were located not in Vancouver but in the suburb of Burnaby.
Although I had spent most of my time since 1995 working on transportation issues, urban-growth boundaries and other growth-management restrictions were far more detrimental to the nation’s and the world economy. For one thing, increased housing prices were costing homebuyers and renters far more that the amount of money cities were spending building rail transit lines. For another thing, light rail didn’t cause a financial meltdown, but the increased volatility in housing prices caused by growth management was the fundamental cause of the 2008 banking crisis.
When I first looked at Oregon’s land-use laws in 1995, I quickly realized they were absurd. All of the land inside of the state’s urban-growth boundaries at that time covered only 1.25 percent of the state. As recently as 2010, the Census Bureau found that all urban areas covered just 1.15 percent of the state. The idea that the remaining 98.75 to 98.85 percent of the state was somehow at risk of being paved over was ridiculous.
In 2001, the Willamette Valley Livability Forum–a front group for 1000 Friends of Oregon that had been funded by the Environmental Protection Agency as a part of its anti-automobile campaigns–sent out an eight-page, newspaper-sized flyer to hundreds of thousands of Oregon households. The flyer included numerous scare-stories about how urbanization was threatening farms, forests, and open space in the Willamette Valley, home to two-thirds of Oregon residents. The underlying data, however, told a different story.
The forum had hired EcoNorthwest–the economics consulting firm founded by my one-time urban economics professor, Ed Whitelaw–to predict what would happen to the Willamette Valley under Oregon’s current land-use rules, stricter rules, and an elimination of all rules. EcoNorthwest found that 5.92 percent of the valley was currently urbanized and predicted that, under the current rules, this would increase to 6.6 percent by 2050. The stricter rules proposed by the Livability Forum actually allowed 6.64 percent to be developed. The other alternative, which was described as “let private property rights and short-term market forces call the shots,” would allow all of 7.64 percent of the valley to be developed.
In other words, Portland and other Willamette Valley cities were suffering a doubling of housing prices solely to protect 1 percent of the Willamette Valley from being developed. What insanity! Of course, those percentages weren’t in the flyer, which instead talked about how many thousands of football fields would be developed under each plan. I didn’t know Oregon had so many football fields or that they were somehow endangered.
When I charged that Oregon’s land-use laws were making housing expensive, 1000 Friends’ director Robert Liberty responded that housing in Oregon was a lot more affordable than in California even though California didn’t have any state land-use law, so it couldn’t be the growth boundaries making housing unaffordable. In fact, California did have a state land-use law, but it was so obscure that even most Californians had never heard of it.
I figured this out when San Jose resident Lowell Grattan asked me to look at Silicon Valley’s land-use rules. A native of the area, Lowell related to me the story of A.P. Hamann, a General Motors executive who somehow persuaded the San Jose city council to make him the city manager in 1950. At the time, San Jose was a town of 95,000 people compared with 775,000 in San Francisco and 385,000 in Oakland, but Hamann vowed to make San Jose the biggest city in the Bay Area.
The tool he used was an aggressive annexation campaign. Before Hamann took office, the city had made 42 annexations in its entire history. During Hamann’s eighteen-year reign, it did 1,377 of them. He didn’t care whether the areas being annexed were physically adjacent to San Jose; sometimes he connected them by annexing the street between them; sometimes he just annexed unconnected plots of land. Once he even annexed another city. By 1968, San Jose had surpassed Oakland’s population and was catching up to San Francisco, whose population was slowly declining.
In 1969, a no-growth political movement took over the city council and Hamann resigned. Eight years later, he and his wife would die in the worst aviation disaster in history. Meanwhile, despite the efforts of the no-growth people, San Jose continued to grow and surpassed San Francisco’s population during the 1990s.
So much Lowell was able to tell me. Doing research on my own, I discovered that Hamann’s annexation policies had led other cities in Santa Clara County to complain to the California legislature that San Jose was annexing land that they thought should belong to them. The legislature responded by passing a law requiring every county in the state to create a Local Area Formation Commission (LAFCO) that would approve annexations, the incorporation of new cities, and the creation of special service districts such as sewer or water districts. Each LAFCO consisted of representatives of cities in the county plus the county itself.
In passing this law, the legislature unwittingly created a conflict of interest. Cities want to have taxpaying entities locate within their boundaries. New cities or service districts would allow major new developments to locate somewhere else. Allowing one city to annex land would give that city an advantage in attracting new development over the other cities in the county. As a result the LAFCOs effectively became no-growth land-use czars working to increase the density within existing cities but preventing development outside.
During the 1970s, Santa Clara and many other California counties drew urban-growth boundaries outside of which new development was strictly limited. Lowell had a personal stake in this because he owned a large chunk of land right outside the San Jose growth boundary. He or a buyer of the property might be able to put one house on it–and even that was uncertain–but for sure they couldn’t subdivide it for 50 or 100 homes. The county claimed his land was too steep to build on even though it was in rolling hills that weren’t nearly as steep as much of San Francisco.
More outrageous was Coyote Valley, a completely flat area of land that Hamann had annexed into San Jose, but was excluded from the San Jose growth boundary by the city’s no-growth council. Under the California Environmental Quality Act, state courts had ruled that a change in a growth boundary required a detailed environmental impact report, and writing such a report cost millions of dollars. Developers who wanted to subdivide Coyote Valley spent $15 million on a draft report but never paid for a final because it was clear that the county would not expand the boundary.
Even in counties that didn’t have growth boundaries, the LAFCOs were a major obstacle to development. Irvine is one of the largest master-planned communities in the United States, currently housing nearly 300,000 people and numerous universities and commercial areas. It was formed in the 1960s before cities discovered the power that LAFCOs gave them. It would be almost impossible to do even a much smaller master-planned community in a rural part of California today. One result is that 95 percent of California’s population is confined to the already-urbanized areas that cover just 5.5 percent of the state.
I wrote up my findings in a Cato paper about San Jose. I noted that, in both San Jose and Portland, residents said they wanted land-use planning in order to save their regions from becoming like Los Angeles. In fact, Los Angeles is the densest urban area in the United States, and the policies these regions adopted will make them look more like Los Angeles than anywhere else. Today, the San Jose urban area is the third densest in the country after L.A. and San Francisco-Oakland. All three are dense, and their housing expensive, because of state land-use laws. Yet, as I suggested, most Californians have never heard of LAFCOs.
Prior to 2007, my main experience with Vancouver’s growth-management plan was when I was invited to speak to a joint conference of the Washington chapter of the American Planning Association and the British Columbia Planning Institute. The conference was held at the Hotel Vancouver and I flew in from a trip to Washington, DC.
I quickly observed that Vancouverites were a lot different from Washingtonians. When pedestrians in DC wanted to cross the street, they did so even if they were in the middle of a block or if the walk-wait signs said “wait.” When pedestrians in Vancouver wanted to cross a street, they meekly waited at a corner for the sign to say “walk,” even if there were no cars around. They never tried to cross a street in the middle of a block. I concluded that the parliamentary system had made Canadians into sheep.
I wasn’t the only one to notice this. The keynote speaker at the conference was introduced as the author of Washington’s growth-management act, which the legislature passed in 1990. “I respect British Columbians for their willingness to be governed,” he said. “They accept regulation, and I wish we had more of this south of the border.” I’m glad we don’t, but it hasn’t saved major cities in California, Hawaii, Oregon, and Washington from being economically distorted by strict land-use laws.
In 2007, the Greater Vancouver Regional District courteously opened their files for me, allowing me to review not just the plans themselves but many of the background documents that went into the plans. It probably didn’t have to do this, but it probably also realized that even if I found some smoking guns they wouldn’t enable the Fraser Institute to overturn the plan.
The first plan I reviewed was a 1966 Official Regional Plan, written by something called the Lower Mainland Regional Planning Board, which had the ultimate planning authority over all cities in the region. This plan was the first to restrict the amount of land available for housing in the Vancouver area. The year after it was written, the Lower Mainland board was replaced by the Greater Vancouver Regional District. In addition to land-use planning, this district was soon given authority over water, sewers, parks, social housing, and air pollution, among other things, in the region.
In 1983, a conservative provincial government stripped the agency of its legal ability to impose its plans on cities. But in 1995, a more liberal government not only restored that authority but gave it a mandate to stop urban sprawl and minimize the use of automobiles. The agency responded by approving a highly restrictive plan, known as the Livable Region Strategic Plan, in 1996. (It has been working on this plan for several years even though it didn’t gain the authority to impose it until 1995.) The plan had four basic policies: protect open space, complete communities, compact development, and increased transportation choices.
Although this 1996 plan was the one Fraser had asked me to review, the most interesting documents I had found in the files were a series of memos written in 1973 by a planner named Hans Blumenfeld. Born in Germany in 1892, Blumenfeld was a communist who had lived in the Soviet Union in the 1930s until he was expelled from the party in one of its purges. He then moved to the United States where he worked for a time for the Philadelphia planning commission. However, his past Communist Party affiliation led the State Department to revoke his passport, so he moved to Canada, where he helped Toronto and Montreal write city plans.
Blumenfeld’s faith in central planning and the Communist Party’s belief in subjugating the interests of individuals in favor of society as a whole would seem to make him a natural supporter of growth-management planning. But if the Greater Vancouver Regional District expected him to be a yes-man when it hired him as a consultant to review its plans, it was in for a shock. Blumenfeld’s memos blasted the plans for a variety of reasons.
First, Blumenfeld noted that concerns about urban sprawl were partly “motivated by fiscal considerations, forced on the municipalities by their almost complete dependence on the ‘real property’ tax.” As in California, by adopting policies that restricted development outside the cities, the cities were enhancing their own revenue bases. Further, since expensive homes paid more property taxes than inexpensive ones, Blumenfeld added that the cities had an incentive to approve expensive housing and discourage affordable housing, resulting in what he called “oligopolistic high land prices.” He noted that such high prices “are usually blamed on speculators and large-scale developers” but in fact were “created by municipal policies.”
The 1996 plan met its goal of protecting open space by setting aside 72 percent of the region as a “green zone.” Blumenfeld thought this was a waste. He point out that many other countries routinely farmed “land which in Canada is not considered for agriculture,” such as by terracing hillsides in Asia or reclaiming tidal flats in the Netherlands. He observed that farmland was not scarce in Canada or British Columbia, but even if it were, it would be less expensive to transform “an acre of class 3 or 4 farmland into class 1 or 2 by soil improvement, drainage, or irrigation” than it would be to impose higher housing costs on the region.
“It should be admitted that the main reason for the preservation of farmland in the GVRD and the Lower Mainland is not economic or even social,” Blumenfeld asserted, “but its value as scenery for the enjoyment of the urban population.” While this might be good for existing residents, in a couple of decades “80 percent of the population of the GVRD will consist of persons who are not yet here. They have no vote, but it is their living conditions which are determined now. Who speaks for these voteless people who are not yet here? Only the planner can perform this thankless task.” Instead, planners led the movement to impose huge costs on those future residents.
Blumenfeld also criticized the goal of trying to reduce driving. “Mobility is a very important objective,” he wrote, arguing that reducing mobility led to “lower productivity and production to the community.” He pointed out that, in addition to curbing sprawl, the GVRD had the additional goal of providing affordable housing for everyone, but it willingly traded off that goal in order to preserve the most abundant resource in British Columbia, its open space.
Of course, Blumenfeld’s memos were completely ignored by the district planners, as was my report to the Fraser Institute. When I presented my findings in a public meeting, two the district planners sat in a front row, heckling me and sneering at my conclusions that British Columbia had plenty of open space and that the plan had made housing unaffordable. I guess that’s what planners call “public involvement.”
A year after I reviewed the Vancouver plan, the California legislature passed a law requiring every major city to write a plan that would reduce greenhouse gas emissions and make housing more affordable. The legislators writing the law took it for granted that densification was the way to accomplish both these goals, so when the Association of Bay Area Governments (ABAG) and Metropolitan Transportation Commission (MTC) wrote Plan Bay Area, they proposed to give every incorporated city in the Bay Area population and density targets that they would be required to meet through rezoning.
My review of the draft plan found that it would require the demolition of nearly 170,000 single-family detached homes–one out of every nine in the region–and their replacement with multifamily housing. The plan admitted that only about 17 percent of the region had been developed, but it did not even consider the option of expanding urban-growth boundaries to allow more housing. Instead, the five alternatives considered in the plan differed only in how much densification would be required, which neighborhoods would be targeted for densification, and how much money would be spent increasing transit service.
Planners projected that building dense housing along transit corridors would increase per capita transit ridership by 50 percent and reduce per capita driving by 6 percent. This was optimistic considering that the region had already increased its density by more than 50 percent since 1980, during which time per capita ridership declined by a third and per capita driving grew by 30 percent. Even if the planners projections were right, they further predicted that these policies would reduce greenhouse gas emissions by only 1 percent. All of the other reductions in emissions projected by the plan came from technological improvements to automobiles.
As for making housing more affordable, planners were honest enough to admit that their plan wouldn’t do that. Not only that, it “moves in the wrong direction” by making housing even less affordable. No wonder: dense, multi-story housing costs far more, per square foot, than single-family housing. Moreover, the market for single-family housing is completely different from the one for multifamily housing, so destroying single-family housing to build expensive multifamily housing will drive up the average price of both.
I was invited to Marin County to debate the plan, with my friend (and Oakland resident) Tom Rubin on my side and representatives of ABAG and MTC on the other side. The debate took place in the sprawling Marin County Civic Center, which was designed by Frank Lloyd Wright, himself an advocate of sprawl, and the audience was definitely on our side. But the agencies approved the plan anyway.
Once urban-growth boundaries are put in place, challenging them seems to be hopeless since all existing homeowners have incentives to keep them to keep real estate prices up. The good news is that the Florida legislature repealed its growth-management act mandating that cities write and implement such plans. However, it didn’t repeal the authority for the cities to do so and most of them have kept the plans in place.
I later found what I thought was an opportunity to challenge plans in other states in a 2015 Supreme Court decision. I’ll describe this in next week’s chapter.
