by Donna Holt, Executive Director, VA Campaign for Liberty

Richmond, VA – February 7, 2011   On Friday, Delegate Riley Ingram, Chairman of the House Counties, Cities & Towns Committee, sided with the Home Builders Association to force some typically rural communities into establishing an area of high-density high-rise mixed-use urban development in the midst of a countryside setting.

If Ingram has his way, you’ll be forced to forfeit your land for the development of high-density ‘urban development areas’ also called ‘smart growth’.

A 2007 law mandating that every county with a population of 20,000 or more or a growth rate of 15% must zone an area for high-density urban planning. Public funds in the form of grants, subsidies, and tax incentives, will be used to promote the project to include rail, bike lanes, and other public transportation projects, reducing access to roads and without the benefit of alternative transportation to many communities. This will increase the cost of housing within the urban boundaries with a natural consequence of increased property taxes and will reduce the value of property outside urban boundaries.

This type of one-size-fits-all mentality fails to consider that many of the localities like Goochland, Powhatan, and Louisa County are required to establish zones for urban development but offer no alternative transportation for those communities. How are they expected to promote alternatives to personal automobiles in the absence of any alternative? Yet they will be forced to help fund alternative transportation projects for other communities that they won’t benefit from.

But grassroots activists of the tea party movement are fighting back in support of Delegate Bob Marshall’s HB1721 that would make UDAs optional rather than mandatory. The measure would allow local communities to decide if urban areas are appropriate for their locality. It further allows for input from the citizens in areas that currently use the predetermination techniques of the “consensus” process that dismisses any public input.

Delegate Pollard argued that without the UDA mandate, localities will continue leap-frogging practices and look to the state for funding of roads to accommodate sprawl. The argument simply doesn’t hold water. As a Representative of the Home Builders Association pointed out, the 2007 law does not prohibit development outside the UDAs.

It’s only natural that the Home Builders Association supports the UDA mandate. Ingram’s appreciation for their sizable contributions to his political campaign enables developers to sidestep the pressures of the market. Instead, certain contractors certified in the green principles of construction will benefit from the profits accruing for a mandate requiring up to twelve homes on a single acre lot as well as receive huge tax breaks for the new urbanism design. Government grants and subsidies offer greater assurance of the completion of the plans on the backs of the taxpayer.

Ultimately, the UDA mandate is nothing more than centralized government planning of private land use. By definition, it substitutes, by fiat, the priorities and values held by anti-sprawl interest groups and corporate developers for the priorities of individual property owners and those who enjoy the amenities of suburban living. In this sense, it is more about the legislating of personal aesthetics than the efficient use of land and resources.

As economists have known for decades, and the collapse of the former Soviet Union has proven, government planning of resource usage cannot be “smart.” The issue is not whether land use should be planned or not, but whether land use planning will be done by big government or by those who own the land.

Central planners, who operate outside of a market environment, i.e., who are not attentive to market pressures and are unmotivated by the prospect of profits and the fear of losses, would be utterly unable to obtain the information necessary to determine land use in the general public interest or to arrive at an economically efficient result.

The economic realities of building high-priced urban units in greater numbers than is justified by the demand is not considered in their policies, and their only answer to dealing with these realities is to provide additional public funds to provide incentives and subsidize the costs for lower-income residents.

One immediate consequence of this failure to consider the economic impact is the sharp increase in housing cost as a result of land rationing. Homes are considered affordable when the average home price of an area is no more than three times the average income for that area or what is called a median multiple of three. In states who have for decades participated in the smart growth experiment, housing costs have soared and pushed the median multiple to more than ten. The lesson learned here is that even with tax subsidies for low-cost housing, housing costs will force even much of the middle class out of the urban community. Consequently, areas of smart growth also have the highest rate of foreclosures.

Rather than allowing neighborhoods to grow and change over time in the free marketplace, people are forced out of their homes and businesses through abusive regulations to rapidly gentrify the community. The elderly on fixed incomes and low-income families will be the biggest losers as they can no longer afford to live in the area or pay the concomitant costs. What if the property owner is your 80-year-old grandmother who spent a lifetime saving to earn a small parcel of the American Dream? Why do we assume growth only inside the urban boundary must be promoted at any cost? How can “livability” and environmental protection benefit from a “build it and they will come” mentality?

The question that HB1721 brings to the forefront is should the principles of a free market determine the appropriateness of UDAs for a locality or should it be forced by big government on localities using taxpayer-funded incentives and disincentives to satisfy the desires of special interest groups?

History has taught us that government manipulation of the housing market results in more debt, higher prices, more foreclosures, more taxes, and fewer jobs.

Will Virginia lawmakers in the House vote for more economic failures of big government or free market solutions to prosperity?

Donna Holt, Executive Director, VA Campaign for Liberty