Containment Policies for Urban Sprawl, Mason Gaffney

Cities exist to bring people together.

Policy should thus not encourage more spreading out than what would happen in a pure market, i.e. with purely voluntary activity.

Cities are have increasing returns to scale but negative returns to more space. Double the radius and you square the area.

Problems: loss of good crop land and wilderness

Waste of resources serving a wider urban radius.

Urban sprawl extends to the countryside.

Horticulturalists fleeing the city bring a new high standard of intensity to the areas where they alight,

and a higher standard of land values which tends to drive less intensive agriculture before them, just as they have been driven.

And, as with the city, the problem is exacerbated by sprawl,

for we can see a sort of citrus sprawl and apricot sprawl

in the scattered and capricious develpoment of new areas.

Citrus drives out deciduous (leaf shedding plants), deciduous drives out vines, vines drive out cotton and alfalfa, these drive out barley, and so on clear to the bottom of the pecking order.

Thus urban sprawl sends out shock waves into the countryside which travel through the entire hierarchy of land uses.

There is not one acre of land between San Francisco and Los Angeles whose price has not been inflated by urban sprawl.

When a suburban farmer sells out, the tax code lets him defer his capital gains tax indefinitely if he buys another farm within a year. That has sent buyers swarming over the countryside seeking out farms for sale, bidding up prices even more.

The result is a tendency towards premature intensification of many lands, in a scattered pattern that tends to develop excess capacity.

The most valuable natural resource?

80% of the land value in the USA is in cities.

The most valuable natural resource is the small fraction of of land surface best fitted by location to bring men together for cooperation, exchange, and fraternization.

An efficient city is one that maximizes ease of contact among individuals, giving people, both as consumers and producers, the widest choice among alternative contacts with the least difficulty. Efficiency requires sharing the cost of common facilities.

Sprawl creates greater costs of distribution.

With many utilities, distribution costs exceed production costs.

Consider water distribution.

If demand doubles within a fixed service area by doubling density, we need simply expand all pipe diameters by the square root of 2.

Cross sections increase with the square of the radius.

But if demand doubles by doubling the service area, at constant density, we must (a) double our pipe milage; (b) double the cross section of our old system at its base, and more than double it elsewhere, to transmit the extra load through to the new extension; (c) increase pressure at the system load center to maintain it at the fringes; and (d) upgrade our pipe joints to hold the extra pressure.

Negative containment policy

Subdivision control. This restricts the visible active agent of sprawl, the leapfrogging subdivider and the errant builder, rather than the holdouts over whom they have leaped.

Low Density Zoning.

Large-lot zoning has been a popular way to minimize land carrying costs while awaiting that intensification which the onrushing tide of population makes inevitable.

All city zoning is a negative policy in restraining rather than encouraging or mandating. Zoning is only a nay-sayer.

Zoning is effective only when it undershoots the market.

Assessment discrimination.

The tax assessment of lands by their use rather than by their potential capacity. This is illegal, but common.

This practice minimizes the carrying costs of speculators and holdouts.

Cities tend to fall most strongly under the sway of those who stand to gain or lose most by municipal decisions.

The major special interests tend to be those whose assets are irrevocably committed to the city, namely the big landowners.

Negative containment harmonizes with the interests of a dominant landed class. But from the viewpoint of social welfare, negative contaimment is an instrument of monopoly exploitation.

The worst problem of negative containment is that it does not really contain.

Negative containment has also failed at the national level.

King George III tried it when he proclaimed after 1763 that Americans may not cross the Applalachians.

The result was the American Revolution.

The Southern States tried to contain western expansion, especially to non-slave areas, and they reaped the Civil War.

Manifest Destiny has always prevailed.

You cannot fence in the American people.

The forces of negative containment have, however, imposed on settlement an uneconomic scatter and sprawl.

They have held back the logical areas for continuous expansion and settlement and forced pioneers and developers to move around and beyond these logical economical areas.

Our modern city greenbelts and exclusive agricultural zones around cities are similar to King George's Proclamation line.

The open land zones fail to contain. Builders leapfrog over and beyond them. The net result is the opposite of what containment advocates intend. Sprawl is made worse as settlement spreads out farther and faster than it would have of its own accord.

So negative containment is an exercize in futility and self-annulment. It does not work, and we would not like it if it did work.

Neutral containment.

Neutral containment is simply desisting from subsidizing expansion.

Subsidies to sprawl.

Americans have accepted the notion that every resident has a civic right to certain basic transportation and utility services no matter where one chooses to locate.

People want to pay for utilities on the same terms as if they lived right next to the power station, the water plant, gas tanks, and other sources of utilities.

We seem to believe that those to build in the backwoods and edges of cities have a right to government-funded roads regarless of cost. Rural residents essentially want the city to subsidize them.

Within cities, outlying landowners who are located within the city limits are entitled to water, sewerage, and streets.

They require capacity in the trunk and mains, in the whole street system, from their remote sites all the way to the center of the system. The true relative costs can be grasped by envisioning each house connected directly to the water plant with its own separate one-inch pipe - one inch all the way to the center.

The interior capacity is generally financially carried by the interior lands and supplied at a huge subsidy to outlanders who simply hook on to the end of an established system.

If that system has a short-run excess capacity, we assume that the social cost is zero, even though the long-run cost is very large.

We have postage-stamp pricing with all urban utilities. People pay the same rate of postage in high-density cities where the cost of delivery is low as in the countryside where the cost is high.

Utilities make a profit in high-density central areas, which are often near their load centers, and lose money serving low-density fringe lands.

Typically, utilities such as gas, electricty, water, and local telephone service, are regulated to earn some fixed return such as six percent. Their far-flung money-losing networks add to the cost base on which they earn their six percent bo soaking the high-density areas.

The political forces favoring this system include the central business district landowners as well as the outer landowners.

They are aided by the fact that postage-stamp pricing is the simplest of all formulas to understand.

Poltics is often dominated by the superficially simplest solution.

Economic Graduation of Rates.

How would we levy an economically sound charge for urban utilities?

Consider again the model of each lot being connected directly to the central water works, with its individual one-inch pipe.

There used to be surcharges on pumping water uphill, so charging according to cost is not a new idea.

Its costs are a direct function of the distance to the center.

Water rates should be graduated accordingly.

Center lots would pay a low rate, and the outer ones a high rate.

More accurately, the rates paid at the fringes should be more than the pure distance function, since the outer lands require relatively more small piping, which is costlier.

What if the outlanders are not willing to pay the higher costs?

That is precisely the desired outcome of cost-based policy.

If it is too expensive to pay for water in some far-out area, it will not and should not be developed.

The incentive will be to instead develop more intensely the inner areas. We will have ceased to subsidize random lateral expansion.

That is the policy of the neutral or passive contaiment of sprawl.

A rational and economical street policy only builds street extensions where they too pay their own way from increased rent.

The current practice of street expansion ignores cost-benefit analysis. It is less wasteful and more productive to make the urban margins pay their own way. This can include future rent revenues, but discounted at market rates of interest.

This would deflate the demand for extensions.

Objections to neutral containment.

A system of graduated pricing for utilities would be complex, especially when there are multiple centers, like we have in the Bay Area. But our sophisticated computer system should be able to handle this once the programming is done.

Positive containment.

Positive containment makes the central city more attractive to live and invest in. It is already the best location for commerce.

The heart of positive containment policy is a tax on the land value of the city. It would tax a percentage of the land rent or value. The tax puts land to its most productive market use, because landowners pay it regardless of how intensely they use the land.

The current property tax is on buildings as well as land. That penalizes the improvement of buildings, and new construction. Vertical transit - elevators - are privately built and penalized with taxes, while horizontal transit - automobiles - are subsidized, mostly implicitly. This squashes cities out horizontally. A tax on the land rent has no excess burden and actually improves productivity and therefore increases wages.

Professor Mason Gaffney's poem:

O, Thou, who didst with windfall and with waste

Beset the streets where buildings may be placed.

Thou wilt not with predestined choice propel

Me outwards, then impute my sprawl to "taste!"!