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V. ELEMENTS OF MARKET-ORIENTED PLANNING

How can these principles be implemented in a practical way? Recognizing that Market-Oriented Planning attempts to capture the dynamic, evolutionary nature of property development, the following recommendations can be incorporated into local planning practice:

Presumption in Favor of Property Owners

Property development should be permitted as of right unless explicit action is taken by the planning board or local legislative body to evaluate the application. This can be coupled with maximum time limits for review by staff, planning commissions, or local legislative bodies.

Since MOP also explicitly incorporates market impacts and the pursuit of non-market amenities as a justification for public intervention in land development, developers can be required to notify neighbors and others directly impacted by their proposed project. Project proposals should be subjected to public hearings only if city staff, council members, planning commission members, or parties directly affected by the project identify tangible impacts on their interests (see "Objections" below).

Home Rule

State and regional planning authorities are less likely to have the knowledge or forecasting ability to more accurately or reliably predict land use trends on the local level. They are also more displaced from community interests and desires. Therefore, intervention from regional or state planning agencies or authorities should occur only when a clear public interest or need is identified, or spillover effects are identified and not addressed in the proposed plan.

Local planning decisions should thus be protected from regional or state planning mandates, including consistency requirements to meet state designated goals. The extent to which local development projects have negative impacts on communities and neighbors or create nuisances is best evaluated at the local level since decentralized governance allows public policies to match citizen preferences. Thus, diversity in local government accommodates diversity among and within communities (see Staley 1992, 20-3).

This view is supported by studies on regional governance which show that consolidations have an unimpressive record in relieving traffic congestion, supplying affordable housing, and so on (Fischel 1989; Husock 1998). Moreover, other research demonstrates that presumed economies of scale in provision of most urban services do not exist (Staley 1992, 16-7; Husock 1998). Indeed, regional governance appears to result in some efficiency losses in service delivery. Moreover, lower levels of government are more likely to restrain spending than are consolidated governments (Boyne 1992).

Objections Limited to Tangible Impacts

Developers should be expected to modify projects to minimize the negative impacts of their proposed development, but these impacts should be tangible and measurable. Groundwater run-off or traffic congestion, for example, are identifiable and measurable impacts that can be assessed objectively. Developers should be expected to consider the external costs imposed by their development on neighbors and the community.

In general, planning and zoning approval should not control development for aesthetic reasons, or concerns over layout and density unless the project is located in a district with a clear purpose, intent, and identity (e.g., historic districts or other special districts). Specialized districts, however, should be restricted to geographically targeted areas with clear, identifiable characteristics that warrant exception. Empirically, the impacts of negative externalities tend to be very localized, affecting close neighbors rather than entire neighborhoods or communities (Pogodzinski and Sass 1991). Thus broad, citywide applications of site-specific development controls should be avoided.

Adopt Broadly Defined and Mixed-Use Zoning Districts

Planning boards should minimize the likelihood that projects will be delayed through a legislative approval process. This can be achieved by eliminating zoning districts (with a nuisance based system in place), or if that option is not feasible, adopting broadly defined zoning districts that accommodate a large number of uses. Rezonings are often prompted by poor forecasting by local planners and/or out-of-date master plans. A parcel of property, for example, may be zoned for strip retail even though market signals indicate a better use is professional office or multifamily housing. In many communities, a development plan incorporating professional office or multifamily housing would constitute a change in use and be subjected to a two-stage approval process. The first stage would consider rezoning the property to a land-use designation consistent with the proposed use (for example, retail to professional office or multifamily residential). The second stage would consider the proposed development plan for the site. (In most cases, the rezoning approval would also include evaluation of a preliminary site plan.)

More broadly defined and mixed-used zoning districts could accommodate a variety of different uses and densities, depending on market conditions. Moreover, reducing the number of districts while broadening the number of uses permissible would reduce processing and approval time, consolidating two steps into one. A current urban planning trend that would benefit from this approach to land-use regulation would be neotraditional planning. Neotraditional urban architects Andres Duany and Elizabeth Plater-Zyberk found that local planning and zoning codes were impediments to innovative urban design. "Regulatory codes lies at the heart of Duany and Plater-Zyberk’s work," observes William Lennertz. "Early in their work they realized that existing zoning ordinances -- more than economics or planning and design philosophies -- were impediments to achieving more urbane communities." (Lennertz 1991, 96) "The traditional pattern of walkable, mixed-use neighborhoods has been inadvertently proscribed by these ordinances." (102)

MOP would facilitate land-use changes that meet changing and evolving community needs by allowing diverse types of development as of right. Mixed-use districts are an excellent mechanism for promoting diversity within communities. An alternative would be broadly defined land-use districts that allow a variety of uses. For example, commercial districts could allow a wide range of commercial uses, from retail to professional office to hospitals to universities.

Administrative Site Plan Review

Once land is rezoned, site plans should be reviewed as quickly and efficiently as possible. This goal, in most cases, means adopting an administrative review process with clearly defined criteria for what is acceptable by local planning standards. Administrative site plan approval can also be coupled with performance bonuses to encourage the inclusion of certain characteristics. For example, under its flexible-zoning system (no longer used), Fort Collins, Colorado allowed higher densities if developers incorporated certain features (for example, landscaped buffers between roads and buildings) into their development plan (Eggers 1990). The critical element of the Fort Collins model was flexibility, so that developers could make trade-offs about their site based on market conditions and trends.

Developer Payment For Infrastructure Needs

Property owners and developers should bear the full costs of property development. Local communities should not be expected to subsidize property development by extending sewers, roads, and other infrastructure to the site.

Impact fees are one way to accomplish this goal. Delaney (1993), for example, found that development agreements that used impact fees and exactions tended to reduce uncertainties in the development approval process while ensuring revenues exist to provide infrastructure when it is needed (Nelson, Frank and Nicholas 1992).

Impact fees, however, also have a political dimension. Ross and Thorpe (1992) identified more then 22 categories of facilities and activities that can legally be financed through impact fees. Most reflect political goals -- public art, low income housing, mass transit, historical preservation, day-care facilities -- rather than facilities and traditional public goods such as roads, sewers, public schools (see also Dresch and Sheffrin 1997, 10-13). In addition, impact fees and exactions tend to pose significant equity questions. "Exactions tend to redistribute wealth from younger to older and from poorer to more affluent households," note Altshuler and Gomez-Ibanez in their review of their equity impacts on housing prices and public services (1993, 110).

A more appropriate mechanism would simply require private developers to pay the full financial burden of extending these features to their property using materials and technology consistent with the existing infrastructure and with their own development needs.

A developer-pay approach needs to be accompanied by flexible design criteria, so that individual developers can determine what level of infrastructure and what construction standards make sense for the intended users of that infrastructure. While many communities increasingly require developers to pay for infrastructure, they give developers little latitude in determining what kind of infrastructure is appropriate. The result is often high-cost infrastructure that exceeds the development-site needs. For example:

  • Local governments sometimes specify roads with lane-widths (12-feet) appropriate for interstate highways--such lane-widths impose higher costs but are unnecessary for safety or smooth traffic flow on residential streets.
  • Storm drainage piping is sometimes required to accommodate flows that are many times greater than any calculated necessary capacity.
  • Many communities also require site landscaping according to prescriptive rules rather than allowing site developers to landscape according to what is prudent and aesthetically attractive to potential buyers and tenants.
  • Subdivision regulations in many regions of the country require that roads have concave crowns (roads bow upward) to force stormwater to drain to pipes on both sides of the road even though new technology and materials permit lower-cost convex crowns toward the center line where one pipe drains stormwater.

A complete "developer-pay" approach runs the risk of underbuilding. Some property developers and builders might under-invest in roads, sewers, water systems etc., eventually shifting infrastructure up-grades to the public sector. This problem could emerge from attempts to minimize infrastructure costs or miscalculations about the willingness of new residents to pay for new infrastructure. Future subsidization can be mitigated by ensuring that the cost of future upgrades is borne by the residents most effected by the upgrades. This process is greatly facilitated in the residential market through homeowner associations.

Developers, for example, sometimes receive waivers from local zoning codes (usually under Planned Unit Development provisions) to build private roads. Private roads are often narrower or built to different specifications than provided in subdivision regulations and maintained by the local homeowner’s association. Homeowner associations sometimes approach the local municipality to convert the private road to public streets (often because the association wants to avoid the transaction costs associated with maintaining a limited number of roads). If the local government agrees, the private road is converted to a public street and the costs of the upgrade are assessed against the homeowners’ association or residents on the affected street.

Standing in Public Hearings Limited to Parties Clearly and Directly Affected by Proposed Development

An important feature of MOP is correcting for "third-party" impacts of property development. Intensive development of a property may tangibly impact neighbors who might now be subjected to more traffic congestion, noise pollution, or other tangible impacts. Public hearings should be used primarily as a mechanism to disclose these tangible, measurable impacts so they can be addressed in the project proposal. Developers should address these concerns by modifying their projects. Alternatively, if agreement between developers and property owners cannot be reached, third parties such as conflict-management teams or local courts can mediate and adjudicate disputes.

Process-driven Planning

Development approval should be based on a process--a set of clearly defined rules--rather than an end-state vision of what the community should look like 10 or 20 years down the road. This recommendation accepts recent empirical evidence that, in practice, zoning decisions tend to follow market trends rather than vice versa (McMillen and McDonald 1991; Pogodzinski and Sass 1994). This is in contrast to top-down approaches, such as the Portland model, where cities are designated as growth poles by regional planners and new development is guided or steered to those areas. Process driven planning allows real estate markets to determine land-use patterns. Certain thresholds of development or performance criteria (e.g., traffic counts or density requirements) might trigger certain types of public investment (e.g., road expansion or modifications), but the object of planning would not be to direct or manipulate private investment to achieve a pre-defined architectural vision for the city.

Streamlining the local planning system

Several changes could also be made to existing local planning systems to streamline the approval process.

Supermajority requirement to modify planning board decisions

Planning board decisions and deliberations are important mechanisms for refining development plans. They also serve a mediating function between developers and neighboring property owners. While local communities should provide an appeal process, local planning systems should presume that recommendations of planning boards are fair and accurate. A supermajority requirement would build certainty into the planning process, strengthen the ability of planning boards to mediate between affected parties, and provide a local appeal process.

Mandatory pre-application meetings with planning staff, consultants, and planning boards

Pre-application meetings with staff and planning boards can be effective ways to identify externalities and market impacts before significant resources have been invested in a project. Modifications to development proposals and site plans are more efficiently incorporated at the early stages of the design process. Modifications at advanced stages of site development, however, can significantly increase costs. Mandatory pre-application meetings can minimize some of these costs and lay the groundwork for a working relationship between developers, planners, and other public officials. These types of meetings are preliminary to formal commitments to move forward on development projects.

One-stop permit processing

One-stop permit processing streamlines the permit application and approval process, particularly for small and less-experienced developers. This approach could significantly reduce the transaction costs associated with development permission and approval once projects have been committed to.

Mandatory public-sector planning

Ironically, current planning practice regulates private property development without imposing the same restrictions on the public sector. This is particularly troublesome given the wide range and variety of long-term investments in infrastructure made by state and local governments.

State, local, and regional governments should be required to plan the location of infrastructure and secure the necessary rights of way and easements before development takes place. This does not imply that the public agencies begin constructing infrastructure immediately. On the contrary, public agencies might lay out clearly where they expect to place key infrastructure such as roads, bridges, interchanges, sewers, and water lines. Actual construction, however, would be triggered by actual development patterns and can be tied to certain performance measures. This provides certainty for private developers but does not obligate the public sector to infrastructure development until land-use patterns are well established through market processes. This also gives public (or private) infrastructure agencies flexibility: they could construct a two-lane road at early stages of development, expand to a center-lane road later in the development phase, and eventually develop the roadway into a four-lane highway.

If public agencies were subject to mandatory planning requirements, and were required to buy rights of way early in the process, many of the objections to traffic congestion and other nuisance effects of development might disappear, reducing the politicized nature of the zoning and planning process.

Note that this recommendation is not the same as end state planning as it is currently practiced. Concurrency, for example, requires infrastructure to be in place in anticipation of future development. In Portland, an end-state vision of what Portland should look like is used to guide public investment in rail transit, and private investment is directed by the regional plan to fit the plan’s vision, not consumer markets.

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