THE AMERICAN PLANNING ASSOCIATION

Before the

HOUSE JUDICIARY SUBCOMMITTEE ON THE CONSTITUTION

IMPACT OF HUD GUIDELINES ON SMALL BUSINESSES & PROPERTY RIGHTS

March 7, 2002

Good morning Chairman Chabot, Ranking Member Nadler, and members of the subcommittee, I am Robert Manley, partner with the law firm Manley, Burke, Fischer and Lipton. I appear before you today on behalf of the American Planning Association, and I am accompanied today by Stuart Meck, FAICP, principal author and investigator of the Growing Smart project.

The American Planning Association represents 32,000 professional planners, planning commissioners, land use professionals, and citizen activists interested in shaping the vision for the future of their communities. APA’s members are involved in formulating planning policies and land-use provisions at all levels of government. APA has a long history of promoting public policies to improve quality of life in the nation’s communities and neighborhoods through better planning.

In addition to being a long-time member of the American Planning Association, I am an attorney in private practice dealing with a large number of matters on real estate development, land use, local government law, and environmental law. I have had the opportunity to represent developers, communities, and citizens alike in the course of my years of practice and in doing so I have developed a deep understanding of the issues and complexities that arise in conjunction with planning and development.

It was my experience in dealing with outdated state planning statutes and inadequate local planning that led me to participate in the original APA task force that designed the project under discussion this morning, Growing Smart.

Mr. Chairman and Ranking Member Nadler, I appreciate the opportunity to offer testimony at this important hearing. Growing Smart is a landmark research project that promises to be an invaluable tool for improving our communities’ economic vitality and quality of life enjoyed by their residents. I hope my appearance here this morning will help dispel many of the myths and misinformation regarding Growing Smart, as well as outline the vital importance of planning reform initiatives.

Growing Smart is the American Planning Association’s (APA) seven-year project to draft the next generation of model planning and zoning legislation. The project has involved a wide variety of partners and advisors and has produced multiple research and education products related to the revision of state enabling legislation for planning and land use.

APA chose to focus such a high level of attention and resources on the reform of planning enabling legislation because, quite simply, our planning tools date from another era. These laws form the foundation of how planning occurs in communities. State statutes delegate power to local governments to prepare comprehensive plans, zone land, regulate subdivisions, require the installation of public facilities, and redevelop older areas. Thus, they affect the well being of all citizens because they shape both the built and natural environments in our urban and rural areas.

Despite this vital role, planning in most states continues to be guided by model statutes drafted by then-Commerce Secretary Herbert Hoover in the 1920s. These models, the Standard City Planning and Zoning Enabling Acts, were designed to support the rise of zoning and were almost universally adopted. When these acts were drafted, the nation was a different place. Growth was largely confined to central cities and the few suburbs served by commuter trains. In the 1920s, we saw land principally as a commodity, something to be bought and sold, whose value needed protection based on zoning. After World War II, a variety of factors shifted development outward from central cities to the vast rural areas beyond.

Today, we view land as a resource for which there are competing social uses. The planning process is the best means for communities to make decisions about those uses. Approaches that worked in the 1920s are plainly inadequate for today. Citizens are demanding new choices concerning land use, housing, employment, transportation, and the environment. These demands are reflected in the broad and growing public movement coalescing around the concept of smart growth.

Smart growth is a set of public policies designed not to stifle growth, as some critics would have it, but to promote development in ways that create communities of balance, consumer choice, and lasting value. Smart growth is planning, designing, developing, and revitalizing communities to promote a sense of place, preserve natural and cultural resources, minimize public outlays, and equitably distribute the costs and benefits of development. Smart growth can be the basis for promoting economic development and preserving property values, not the antithesis. Updated planning statutes are essential to empowering communities to pursue a smart growth vision consistent with their local vision and values.

Ohio, for decades, had been a leader in sound planning. The first Comprehensive Master Plan of any city in North America was done in 1925 for the City of Cincinnati. Euclid v. Amber Reality, 272 U.S. 279 (1926), the case where the Supreme Court of the United States upheld the power of governments to engage in regulation of land through zoning arose through Ohio. The Ohio Planning Conference is the oldest organization of citizens and professional planners in the United States having been founded in 1917.

Ohio has fallen from a position of leadership to a position of backwardness and ineffectiveness, largely because Ohio has not rethought issues around land use regulation since the 1920s. In those days, urban settlements were surrounded by many miles of farmland. Ever since suburbia began to develop the farmland around major cities has been replaced by independent urban settlements. Each community has its own zoning without focusing on the relation between the community and the region in which it exists. All across the state, unites of local government have zoning without any comprehensive planning document that is reasonably up to date. As a result, many zoning decisions are made based upon cronyism prejudice and political popularity.

This is very costly to the communities and it is very costly to developers. Communities suffer because without a current comprehensive master plan, they make zoning decisions without any guidelines. Developers and property owners suffer because there is no predictability. When they walk into a zoning hearing, they have no idea what the outcome will be. They also have no basis on which to develop investment-backed expectations when they buy real estate.

If Ohio rethinks the land use regulation policies, the state and local governments will look for a way to develop regional plans through cooperation among several local governments and foster conformity between zoning decisions and these regional plans.

The reality is that different municipalities in the same region are not competing with each other. It is the region that is competing with the Toronto region, the Munich region, the Barcelona region, and various regions within the United States. At the present time, land use policies and zoning policies in Ohio are as Balkanized as historically public affairs have been Balkanized in Yugoslavia.

Earlier this week I was speaking before a number of citizen planners on planning commissions from southwestern Ohio. One of them asked how to get Ohio back into a position of leadership. I was happy to be able to point to American Planning Association’s Growing Smart Legislative Guide Book as a menu of options that can be selected to fit the special needs of different regions within the state.

The status of land use regulation does great harm to property owners and developers. This is manifested by the reality that any group of Nimbys (Not in My Back Yard) can keep any development tied up in the courts any where from four to seven years. If the state of Ohio were to encourage the local governments to develop comprehensive regional plans and to administer zoning in compliance with those plans, developers and property owners would have reasonable predictability and would be less vulnerable to protracted delays caused by vexatious zoning litigation initiated by Nimbys.

Not only does the present chaotic situation damage developers and property owners, it damages the public good because wrong decisions are made for the wrong reasons on a regular basis. These wrong decisions damage not only the property owners, but also their neighbors.

When a property owner buys real estate, the property owner should be able to look at the existing comprehensive plan for the area and the zoning and have a reasonable understanding of the uses that are going to be available to the property owner. That is rarely true in Ohio today.

I have had enough experience in other parts of the United States to say that is rarely true throughout most of the United States. This is largely for the same reason, that is, local and state officials have not rethought the issues since the 1920s.

The Growing Smart Legislative Guide Book is similar to an encyclopedia of factors to be considered that offers a diversified menu of approaches that state and local governments can apply to themselves and to their regions.

The idea for Growing Smart originated from two sources at about the same time. The concept of a new generation of model planning and zoning enabling legislation was first recommended by the Advisory Commission on Regulatory Barriers to Affordable Housing, which was created during the administration of President George Bush and Secretary Jack Kemp at HUD. The Commission, in its 1991 report, "Not in My Back Yard" Removing Barriers to Affordable Housing, recommended that:

“HUD assume a leadership role and work with government and private-industry groups, such as the American Bar Association, the American Planning Association, National Association of Home Builders, National Governors' Association, League of Cities, State community affairs agencies, and others to develop consensus-based model codes and statutes for use by State and local governments. Specifically, the Commission sees a need for a new model State zoning enabling act with a fair-share component, model impact-fee standards, and a model land-development and subdivision-control ordinance.”

I would like to note that all of the recommendations in the Commission's report were subsequently included in APA’s Growing Smart^SM Legislative Guidebook, including state and local barrier removal plans, state zoning reform, conflict resolution or mediation, streamlining state regulatory responsibility, time limits on processing and approvals, and state impact fee standards.

Also in 1991, the Chapter Presidents Council of the American Planning Association asked the APA Board of Directors to direct the Research Department to investigate the development of new model planning and zoning enabling legislation to replace the two model acts from the 1920s . The council believed that APA should provide leadership in the reform of the nation’s planning statutes to meet the needs of the next century. APA created a task force to develop an approach to draft the model legislation. The task force of planners and attorneys met in Chicago in March 1991. I was honored to be part of that original task force. I knew and respected the professional experience of most of the task force members. We worked very hard, but there seemed a certain obvious courses of action that emerged from the collegial deliberation of the highly experienced persons who worked intensively together. The report of that task force ultimately led to the submission of a proposal to the U.S. Department of Housing and Urban Development and the Henry M. Jackson Foundation in 1993, and funding of the proposal in 1994.

The work of the Growing Smart project during the intervening years culminated recently in the publication of the Growing Smart Legislative Guidebook: Model Statutes for Planning and the Management of Change, 2002 Edition. The Guidebook is essentially a compendium and analysis of options for planning statutory reform. The Guidebook presents an overview of key issues, sample statutes from states addressing these issues, and commentary on various approaches.

The development of the Guidebook was guided by several basic principles. Most importantly, that, unlike the 1920s model ordinances, there is can be no “one-size-fits-all” approach. Instead, the Guidebook provides a range of alternatives, with commentary on the pros and cons of each approach, out of the recognition that states should select or adapt the approach that best fits the local context. Some critics maintain that the Guidebook is a single prescription that states are being urged to adopt. This is simply not the case.

The Guidebook does not make specific recommendations for each state. States can pick and choose from the proposals for enabling legislation in the Guidebook. The Guidebook is reference book, not a policy prescription. Because it is a compendium of options, with commentary, it cannot be “adopted.” Further, because enabling legislation “enables,” local governments can decide themselves whether or not they wish to use certain powers granted to them.

Further, the project from the outset only considered including models based on existing statutes whose impact and effectiveness could be objectively evaluated. The Guidebook does not contain or recommend new, untried statutes. Again, some critics have erroneously claimed that the Guidebook contains prescriptions for radical change. The reality is that the Guidebook contains nothing that is not already on the books, with a track record. The product is invaluable for modernization efforts because it carefully details the implications and impacts of statutes from across the nation with commentary on how these might be adapted or modified for particular circumstances.

Another cornerstone of Growing Smart was broad-based participation and review. From its inception, an advisory council consisting of national organizations and representatives of an array of constituencies. HUD insisted on the creation of an advisory board to help provide feedback on initial drafts of the Guidebook. This body, called the Growing Smart Directorate, was comprised of all the leading national associations representing public officials: the National League of Cities; U.S. Conference of Mayors, National Association of Counties; National Conference of State Legislatures; National Association of Towns and Townships, Council of State Community Development Agencies, National Association of Regional Councils, and the American Planning Association. It was later expanded at HUD’s request to include three members-at-large-one each for the built environment, the natural environment, and municipal law. The 18-member Directorate met twice each year for the duration of the project, hammering out consensus on all but the most contentious issues.

Each member of the Directorate was afforded the opportunity to write dissenting opinions on unresolved issues about which he or she felt strongly. The final Guidebook contains two such opinions, one written by Jim McElfish (member-at-large for the natural environment) and the other written by Paul Barru (member-at-large for the built environment). In addition to this formal advisorybody, APA continuously conducted outreach regarding Growing Smart with all manner of organizations and interest groups. In early 1995, we announced the Growing Smart^sm project by mailing a cover letter, a 4-page project summary, and an "Invitation for Involvement" questionnaire to the CEOs of 161 national and regional interest groups. The questionnaire asked respondents to define for themselves the type of involvement that best fit their organization.

From 1995 to the present, APA has maintained a very robust outreach program. In addition to working with the advisory directorate, project staff mailed a semi-annual project newsletter to a list of over 800. We maintained a heavily visited project web site with all past newsletters, working papers, and published materials. As evidence of the project’s openness to comment from all quarters, APA received over 320 pages of comments in just the last year of the project. Environmental groups, smart growth advocates, and organizations representing builders and developers all offered recommendations. Each comment was carefully considered. APA’s approach to responding to each comment was carefully documented in a series of “change memos.” By our estimate, over 85 percent of the suggestions made in these comment letters were accommodated in the Guidebook. The project was presented and discussed at conferences and workshops across the country as well. Growing Smart was certainly not conducted behind closed doors.

The Growing Smart project was undertaken through a cooperative agreement between the U.S. Department of Housing and Urban Development and APA. HUD also served as the lead agency for five other Federal agencies, including the Federal Highway Administration and the Federal Transit Administration in the U.S. Department of Transportation, the U.S. Department of Agriculture Rural Economic and Community Development Administration, the U.S. Environmental Protection Agency, and the Federal Emergency Management Agency.

Cooperative agreements, as opposed to outright grants, require that the parties to the agreement share in the costs of the project. Over the project's seven years, about 28 percent of the total project cost of $2.47 million was paid for by private sources, comprised of APA, two foundations, and a corporation. The remaining 72 percent, or $1.78 million, was paid for by the six federal agencies. Private funding came from APA, the Henry M. Jackson Foundation of Seattle, Washington, and the Annie E. Casey Foundation of Baltimore, Maryland. The Siemens Corporation of Washington, D.C. provided a grant for the development of model statutes on state and local telecommunications planning.

APA’s contractual relationship with HUD was clear and unambiguous with regard to the project’s content. HUD was allowed, based on the agreement, the opportunity to reject final publication if the research was deemed faulty. HUD was also permitted to submit a dissenting opinion as part of the guidebook. The Department opted to forego both options.

However, critics of the project have misconstrued the import of these contract provisions and HUD’s final actions. At no time was the project intended to represent an official HUD policy statement. It was, and is, a contracted research project whose findings were, and are, part of the public domain. APA always retained final editorial license. In fact, virtually the first words in the Guidebook are notice to the reader that “the contents of this report are the views of the authors and do not necessarily reflect the views or policies of HUD, the U.S. Government, or any other project sponsor.”

While the Guidebook addresses the full array of planning-related policy concerns, today’s hearing centers around two specific issues: impacts on economic development, particularly minority business owners and entrepreneurs, and impacts on private property rights. Additionally, the specter of vast litigation over these provisions has been raised. When it comes to promoting vibrant local economies, producing new small businesses, and protecting private property rights, we share common cause with our critics.

However, we believe that the planning reform improvements discussed and analyzed in Growing Smart are important components of realizing these objectives. Our current planning and development patterns are too often hindering new business development and generating conflict over private property. Growing Smart offers vital assistance to states and communities struggling with the consequences of change, whether rapid development or economic decline, and promotes policies that can lead to innovative solutions to improving local quality of life through better planning and land use.

Planners represent the public interest and that includes small businesses. We strongly believe the existing pattern of sprawl does more to discourage small minority business than any other single thing. Reforming planning statutes would curb the flight of investment from urban neighborhoods. As Sam Staley of the Reason Public Policy Institute has shown in his “Giving a Leg Up to Bootstrap Entrepreneurship”, sprawl is the antithesis of reinvigorating central-city economies. Growing Smart encourages the streamlining of regulations and the removal of subsidies to favor greenfield development.

The impacts of sprawl under the current, out-dated system fall heavily on minority-owned businesses. For example, a 1998 study of Small Business Administration loan guarantees in the Chicago metropolitan region found that a disproportionate number went to higher-income, suburban fringe communities, which are also predominately white. Better planning would help promote reinvestment in minority neighborhoods and create development patterns with greater predictability and efficiency to spur, not inhibit, economic growth.

Reform envisioned and enabled by Growing Smart would provide improved predictability in the planning and development process. This kind of predictability does not aid only the development and construction industry, as important as they are. It also creates a better climate for all business investment, be it start-ups, expansions or relocations. Similarly, the kind of state and local planning processes espoused by all the optional statutory models contained in the Guidebook promotes efficiency in the investment of public funds in the location of government facilities and in transportation and utility infrastructure.

As in the business world, these public investments, if wisely and strategically made, can build upon and extend private investments, thereby lessening the need for new tax revenues. If poorly made - as often happens in places where the haphazard, low-density development called sprawl occurs - these public investments can be wasteful and fail to leverage private investment. So rather than constraining small business development or being inimical to it in any way, the Growing Smart Legislative Guidebook actually proposes options for a rational framework within which sound investments can be made.

Finally let me emphasize that there is no better defense of private property than a good plan, implemented. Property has little value in the marketplace absent access, utilities, and our system of laws and administration that protects individual rights. Good planning assures everyone, not just the moneyed or powerful, equal treatment in the development process. Plans ensure development decisions will not change at the whim of local politics and special interests, but will be carried out over time on behalf of the whole community and its diverse interests. Good planning assures schools, parks, streets, utilities, fire and police stations and emergency services will be there to support private investment. Time after time, poll after poll, places Americans most want to live or visit, with the strongest economies, are those places that have a clear vision, a sound plan and effective and fair implementation.

Thank you, Mr. Chairman, Mr. Ranking Member Nadler, for the opportunity to address some of the concerns raised regarding Growing Smart and to detail for the Subcommittee the value of this project. One prominent syndicated editorial writer described Growing Smart as a “gift to the nation - tools we need to cope with a tidal wave of development … not some single planning recipe … but a menu culled from statute books across the nation.” I certainly believe this project represents a landmark research product that helps improve communities and neighborhoods across the country through better planning.

This concludes my testimony, and I would be happy to answer any questions at the appropriate time.