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Why Measure Smart Growth?

September 17, 2000

Op-Ed Piece Written by Stan Ross, Lusk Chairman of the Board

Smart Growth means many things to many people. While it's fine that this issue is viewed differently by those on various sides of the debate, there is a need for general agreement on what Smart Growth is, if only because once it is defined, it can be measured. And if it can be measured, then cities and regions can be evaluated as to their progress in creating, implementing, and adapting Smart Growth initiatives.

For example, they might receive points for creating growth corridors of concentrated commercial development and high-density housing adjacent to existing freeways, major highways, and mass transit and other infrastructure. Or for creating regional growth plans. This would be analogous to the "Best Cities" ratings developed by some publications and organizations, but it would be based on criteria specifically designed to measure smart growth in a community or region.

But why measure? First, communities themselves could learn from such a performance standard: what progress they have made, how they could improve, and how they can achieve balance. Second, residents would know how their communities compare with others on important issues like quality of life. Third, and equally important, such a performance standard would provide corporations with important information on which to base decisions about where to locate and how to attract and retain managers and employees.

Ten or 20 years ago, companies might have been automatically drawn to pro-growth cities and regions -- those with the lowest taxes, lowest wages, cheapest land, and so on. While these are still important, companies today are struggling with the tightest labor market in 30 years, and they are deeply concerned with meeting hiring needs.

Companies also need to operate in regions that have a high quality of life: affordable housing, good schools and a high level of public services. In other words, they need to be in smart-growth cities and regions: those that have struck the right balance between growth and quality of life. These are places that employees want to live.

Smart growth companies come at a price. States and cities must pay for infrastructure and services to support growth. This revenue comes from taxes or fees, bond financing, and other sources. But in addition to this, special incentives, and the money to pay for them- may be required to promote smart growth. For example: incentives for developers to build close to infrastructure (and penalties for not doing so), for commuters to car pool or take public transportation, or for communities to allow higher-density housing or create open space.

These incentives could be tied to previously discussed smart-growth scorecard: the higher the city or region scores, the more incentive or revenue it could receive. But governments at all levels will have to work in partnership with the private sector to develop such incentives. For example, regulators might allow private lenders to take a line-item deduction for specifically defined smart-growth investments.

Stan Ross is chairman of The Lusk Center for Real Estate at the University of Southern California, and former managing partner of E&Y Kenneth Leventhal Real Estate Group.