Colorado Sprawl Action Center's
Growth Management Toolkit

Table of Contents | Introduction | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11

Directing Growth Through Incentives:
Problem | Solution | Applications | Internet Resources

Sprawling developments unnecessarily consume vast amounts of open space. At the same time, there are often reasonable alternatives that use land more efficiently, such as using vacant land within developed areas or redeveloping areas that have previously been developed such as “brownfields.” Developers may not utilize these alternatives because the community offers no incentive to build in those areas. Worse, some local regulations may even create incentives to develop open areas or “greenfields.”

Often, building in existing developed areas presents greater obstacles than developing in greenfields. Many developments are created using a repetitious plan of look-alike buildings, thereby cutting planning costs. Many of these developments also fail to take into account local open space and environmental concerns. Development proposals in areas contiguous to or within existing developed areas may encounter more regulatory barriers than proposals in greenfields. As a result, when communities fail to offer incentives or establish requirements for developers to redevelop existing areas or develop more efficiently, developers often disregard these options and instead develop on open lands as their preferred alternative.

Some local regulations may even inadvertently encourage the development of open spaces and agricultural lands. For example, the manner in which property taxes are levied may encourage landowners to sell their land to developers. Currently, many local governments levy property taxes based on the assessed value of the property. That means that property is taxed on the highest potential use of the land. Unfortunately, property assessments deem the “highest potential” use as residential and commercial use. Therefore, when developers become interested in acquiring open spaces for development, the demand may create higher property tax burdens that result in the sale and development of farmland and open space.

Open space and agricultural lands can be protected by creating a climate in which it becomes more attractive to develop in areas where communities want to encourage new development. For instance, a community may want to direct new development to areas contiguous to existing developed areas or to vacant lots within developed areas rather than to greenfields. State and local governments may establish regulatory requirements to achieve this end, create incentives, or utilize a combination of the two strategies.

Incentives may take a variety of forms including the removal or reduction of regulatory barriers in order to level the playing field between greenfield development opportunities and more efficient development alternatives, and the creation of financial incentives to develop in targeted areas. For example, a community may want to speed up the permitting process or establish specific timelines for review of applications for development proposals in areas that a community has targeted for new development or neighborhood revitalization projects. Similarly, communities may choose to give priority to development applications in specified locations. Other options include reducing parking requirements, establishing more flexible zoning, allowing increased density, or otherwise adjusting regulatory requirements in areas that communities want to develop. Removing regulatory barriers to building in or near existing developed areas creates a scenario where those locations become more attractive to developers. In this way communities can direct new development into the areas where they want growth to occur.

Another option is for communities to use financial incentives, such as low interest loans, adjusted property taxes, and reduced or waived development fees, to encourage development in specified areas. Governments often have the ability to finance low-interest loans to “seed” appropriate development proposals in targeted areas. The tax structure may be adjusted such that property taxes in identified “incentive zones” are lower than those for developments in open space, agricultural lands, or areas far from existing developed areas. Local governments may also reduce fees associated with new developments in specified areas, such as tap fees or impact fees. In short, development can be directed into specified areas by making it more economically attractive to develop in those areas and relatively less attractive to develop in greenfields.

Local:
Communities should create a plan that identifies where the community plans to grow or wants to direct new development. They should then determine the cause of sprawl in the locality or the failure to attract development to areas where growth is desired. Once they have established the factors that lead to sprawling developments or the lack of development proposals in areas targeted for development, they can evaluate potential incentives designed to counteract those factors.

For instance, a community may wish to protect open spaces and agricultural lands along its perimeter while directing growth into vacant lands within its existing developed area. However, if open spaces outside the community are being developed due to regulatory barriers within its existing developed areas then those regulations should be evaluated. The community can then make an assessment regarding whether to adopt policies to help direct growth into the target areas and protect the valued open space and agricultural lands. Some of the options may include prioritizing development applications in the target areas, establishing timelines for the review of applications in the target area, allowing increased density, or creating more flexible zoning.

If, on the other hand, the community determines that financial factors are resulting in the lack of development applications in the target area, the community may decide that financial incentives will best attract development to the areas where it is desired. In this case some of the available options include reducing development fees, impact fees, or tap fees; providing low-interest loans; or reducing property taxes in specified areas.

State:
At the state level, the legislature could enact legislation promoting the enactment of incentive-based policies by local governments. Such legislation could include the promotion of incentives such as increased density allowances for efficient developments or developments in target areas, tax structures that protect open spaces and make specified locations or target areas more financially attractive, benefits for linking transportation corridors to efficient development, the use of transferable development rights to increase density in specified areas while permanently protecting open space and agricultural lands in others, or any number of other incentives.


Redevelopment of this area included 331 residences-rental and owner-occupied-built around parks and reconstituted streets. The revived neighborhood is racially mixed and equally divided between market-rate and affordable homes. Crawford Square, Pittsburgh, Pennsylvania. Photographs courtesy of Urban Design Associates.

www.cfed.org/main/econDev/bi/main/research/sprawl.htm
Business Incentive Reform Clearinghouse, excellent information on subsides and incentives

www.epa.gov/region5/sprawl/downtowns.htm
Federal government programs that can be used at a local level as incentives to revitalize downtowns

www.epa.gov/region5/sprawl/infill.htm
Federal government programs that can be used to provide incentives at a local level for infill developments

www.greenbelt.org/about_us/program_infill.html
Greenbelt Alliance’s Infill Development Rebuilding Our Cities for a Sustainable Future

www.sprawlwatch.org
Sprawl Watch Clearinghouse, information on tax and grant incentives

Table of Contents | Introduction | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11