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Local Policy Analyses: Oregon Urban Growth Boundary Policy SB 100 PA 449 Katelyn VanStrien 13 March, 2014

Executive Summary: City and land use planning began with the birth of Portland, Oregon in the late 19th Century and continued to develop through World War II as the shipbuilding industry boomed and a desperate need for housing appeared. Since the modern era began in the 1960s, Oregons Urban Growth Boundary (UGB) policies have paved the way for urban and community development across America for the last 40 years. As cities in Oregon have grown, the state has sought to grow with its population while still protecting and preserving Oregons natural beauty, wildlife, and agricultural industry from urban sprawl. Since the start of this policy in 1973, Oregon has been a national leader for the controlled development of land and preservation of agricultural interests. UGBs are boundaries drawn by local governments, and then approved by the state of Oregon for the purpose of controlling private and business development of land. The benefits of UGBs include consistent development and growth inside UGBs, dense housing patterns, a streamlined legal process, and the preservation of rural land for agricultural use. There are various stakeholders involved with UGB policy largely consisting of the following: state and local administrators and policy writers, private home and land owners, environmentalists, the agricultural industry, the tourism industry, travelers, housing developers, and private businesses. Interest groups involved with this policy area includes citizens pushing for private land ownership, agricultural development, wildlife preservation, and cost effective living, housing and transportation. Contrarily, there are as many interest groups who oppose increased private land ownership, agricultural development and preserving wildlife. Together, these groups have a large say in what policies are enacted and/or enforced. A cost effectiveness ratio and a benefit cost ratio assists in determining whether or not

the total benefits of Oregons UGB policy are worth the total costs. Here, a discussion on tangible and intangible benefits, as well as direct and indirect costs additionally describes the consequences of this policy for all involved. There have been many proposed changes to this policy area by critics over the past four decades. Three of them include an expansion of UGB policy called Smart Growth, the implementation of an education program for local governments and citizens to increase public awareness, and the removal of UGBs altogether from Oregons cities and rural areas. Introduction and Problem Statement: Oregons Urban Growth Boundary (UGB) model has been nationally acclaimed for its effective urban planning. Instead of land development being driven solely by profit and private interests, Oregon has made strides in developing land that serves both public and private interests. In addition, Oregon has developed densely built communities where public services can be easily provided and has been planning proactively over the last forty years to protect rural areas and establish cities as densely populated spaces (Abbott, n.d.). In the 1960s, Oregons residents raised concern over urban sprawl and the resulting loss of resources and natural beauty in their state. Valuable farmland and natural beauty was being destroyed by unregulated land development and undirected building. Then Governor, Tom McCall and Senator Hector Macpherson created a plan to prevent the loss of Oregons resources by signing SB 10 into law (Abbott, n.d.). SB 10 required Oregons counties and cities to create land development and urbanization plans. SB 10 however, failed to create methods of evaluation for their policy, especially at the local level. Many localities created land use plans as a formality instead of a policy to be followed and little changed. By 1973, Oregons residents saw a continuation of what had happened in 1969 and called

for reform to strengthen SB 10. In 1973, SB 100 was signed, creating a formal system for land use and future planning. This bill created the Department of Land Conservation and Development (DLCD). Within the DLCD was a group of seven members known as the Land Conservation and Development Commission (LCDC). The LCDC was placed in charge of overseeing the consent of local planning within state goals, remedying SB 10s short comings. First, the LCDC rewrote the state goals for land planning in Oregon. SB 10 originally offered 10 goals. The LCDC set out to clarify and expand upon those goals to improve effectiveness. The resulting document contains 19 state-wide goals for all urban areas of Oregon. Under the policy, each city is required to submit their plan for land development to the LCDC in order to demonstrate how, as a city, they are protecting agricultural space and developing dense, highquality urban areas for its citizens. To summarize, the writers of SB 100 sought to create more transparency and accountability between local and state governments when it came to land use (History, n.d.) Today, each county in Oregon is required to define and create an Urban Growth Boundary (UGB.) Urban development such as housing, commercial centers and other building tracts are not to cross lines established by the UBG. Outside a UGB, strict regulations apply based on soil and other rural standards as to whether changes to that land may occur. Inside a UGB, local governments must specify their industrial, commercial and residential needs for the next twenty years. In addition to identifying developmental needs, local governments are also required to justify their estimated needs and comply with the regulations already set in place. Stakeholders have varying opinions. For example, citizens looking to build outside of UGBs find that the price of land and the requirements for acquiring that land make building there much more difficult than building inside a UGB. Many citizens on this side of the issue also feel

that UGBs conflict with ones right to own private property. Conversely, citizens already owning homes inside a UGB may find that the value of their home begins to rise as a result of the artificial land shortage created by the UGB boundary. Critics such as Oates (n.d.) note that there are costs to SB 100, such as a system that imposes upon private property rights and increases house prices. Alternatives to UGBs include an entirely new system for updating UGBs called Smart Growth (SG), the introduction of a program aimed at educating local governments and their citizens about UGBs to lessen resistance and lastly, the removal of UGBs altogether. Levels of policymaking and administration: The major stakeholders currently involved in Oregons Urban Growth Boundary Policy includes but is not limited to actors writing public policy, local governments, interest groups, citizens living in urbanized and suburbanized areas, housing developers, the agricultural industry and environmentalists. These stakeholders are interested in UGB policy because of the large impact these laws can have economically, politically, and legislatively. To expand, policy writers at the state level have an impact on UGB development in all localities. Through legislation, they have the ability to monitor and enforce land use regardless of how a local government wishes to develop their land. However, legislation and policy writers are only as effective as the enforcement of their laws. For example, Damascus, Oregon was one of the last cities to be incorporated into the UGB system in 2004. According to Manning and Kilby (2014) of Oregon Public Broadcasting, the city has yet to agree upon a comprehensive plan for growth. A rare situation, Damascus requires a majority vote to decide on a plan for land use. On January 10, 2014, because of Damascus inability to comply with UGB requirements, it was

determined that Damascus failed to meet criteria needed to receive funds from two state grants totaling $300,000. In turn, Damascus proposed to delay enforcement until May when voters can decide upon three comprehensive plans. Regardless of whether or not state legislators can control situations at the local level, they are always interested in how the laws they write are carried out. An additional stakeholder at the state level is Oregons Task Force on Land Use Planning, established by Oregons SB 82 in 2005. This ten member group is charged with making recommendations on current and future land needs, respective roles and responsibilities for state and local governments, as well as surveying citizens and developing legislation (Senate, 2005.) Local governments are interested in the UGB policies for a number of reasons. While many localities follow these plans, some local governments ignore the UGBs set in place by the state such as the situation in Damascus. In cases such as this, localities preform do their own cost-benefit analysis to determine if suffering the consequences for not following UGB laws is worth the benefits of developing land their own way. Secondly, UGB laws have an economic impact on cities in Oregon. Housing markets, business development and the agricultural industry are greatly impacted by legislation that controls who can do business where in Oregon. Often local governments arent compensated for the financial loss they, citizens included, will pay because of development legislation. For example, local governments are concerned about how UGBs impact their constituents quality of life. Issues such as the paradox of intensification, safety concerns and affordable housing options impact quality of life in Oregon. Citizens have different concerns about UGBs. Primarily, citizens are being told where they can and cannot live. Someone desiring to build a home in an area that is primarily agricultural may not be allowed to. Further, many are concerned that UGB policy will lead to an increase in land and housing prices, or a loss on property and home value. Availability of

affordable housing is also a concern. UBG policies also allow alternative methods of transportation when development is increasingly concentrated. Because of this, reliance on personal vehicles can be reduced as well as transportation costs to citizens. Housing developers have a huge interest in UGBs. Similar to citizens, these businesses are being told by the state where they can and cannot build homes. While these policies aim to conserve land, they limit the options available to developers by creating artificial land shortages. When developers cannot build in cost effective areas, they often face a loss in profits with no compensation because of land development legislation. For example, the Homebuilders Association of Metro Portland supported a regional construction excise tax (.12% of new constructions improvement value) in 2006, for planning of new development. In 2009, Metro decided to extend the tax five more years and spend the funds on development inside the UGB. The Homebuilders Association sued, and will receive some of the funds. Ideally, the Association would like to remove the tax and see a new source of funding. However, some funds are better than none (Njus, 2012.) In summary, housing associations and builders are constantly at a disadvantage and face financial losses when dealing with UGBs. Farmers and ranchers have an interest in UGB policy as well. UGBs give farmers and those in the agriculture industry a chance at preserving their land and avoiding the encroachment of housing development. UGB policy gives farmers a chance to save the best land for agricultural development instead of selling for housing development. According to Oregon State University (2008), cattle production is a leading industry in Oregon earning over $600 million in annual farm gate sales. Oregons dairy industry is also ranked fifth in value production among the nation. The farming and agricultural industry stays in the state of Oregon when the land needed to do so is preserved. Lastly, environmentalists have a vested interest in UGB policy.

UGB policy aids in preserving natural wildlife that would otherwise be developed. Locally, there are numerous interest groups. These include, but are not limited to, local land developers, housing associations, realtors, and hobby farmers. These groups have varying opinions regarding UGB policies. Housing associations and their residents have strong opinions regarding safety, the locations of business and services, private land ownership, and other quality of life concerns. Farmers and environmentalists push for the preservation and defense of agriculturally valuable land. A large interest group at the state level is policy administrators and legislators. Ultimately, legislators are deciding state plans and goals for urban planning. If enforced, localities are greatly impacted by these decisions. An additional interest group at the state level is the nonprofit, 1000 Friends of Oregon. This nonprofit seeks to work with Oregonians to enhance our quality of life by building livable urban and rural communities, protecting family farms and forests, and conserving natural areas (1000, n.d.). National interests groups include the American Land Rights Association and environmental groups such as the American Forest and Paper Association, the American Wilderness Coalition, and the American Lands Alliance. These groups push for policy that furthers their goals whether those goals are private land ownership or wilderness conservation. Groups seeking private land ownership see UGBs as in infringement on personal rights while environmentalists are in favor of UGBs that create additional protections for natural wildlife. Cost/benefit Analysis Cost/Benefit Analyses help decision makers in public policy to made educated choices, especially when legislative outcomes are difficult to define such as quality of life, outdoor

enjoyment, or learning. However, there are measurable outcomes from SB 100 such as the financial investment by the state over the last 40 years per city, and the number of forest acres preserved form UGB policy. According to Nelson (1992), a conservative estimate proposes that $100 million has been spent by the state of Oregon alone on the implementation of UGBs in the last 40 years (1973 until 2013.) Dividing $100 million by 40 years, we determine that Oregon has roughly spent $2.5 million per year on UGBs. Assuming that each of Oregons 241 cities has at least 1 UGB, we can determine the cost effectiveness ratio to be $2.5 million/476 = $10,373 (spent to implement urban growth boundaries per city, per year.) This kind of analysis would be helpful for comparing the state of Oregon, or cities in Oregon with other states and cities to compare what they are spending on UGBs per city. This is also a starting point in determining if the benefits UGBs are bringing to Oregon are worth the $10,373 spent each year. Policy makers appreciate this analysis because it is simple to calculate with very few variables. However, this analysis is problematic because it assumes the existence of exactly 241 cities in Oregon, that Oregon is consistently spending exactly $2.5 million every year, that each city only maintains one UGB, and that these numbers have remained constant for the last 40 years. Additionally, this kind of analysis is not helpful when comparing it with other programs with different outcomes. If UGBs are to continue in Oregon, the tangible benefits include the measurable population growth inside UGBs and the absence of growth outside of UGBs, an increase in dense housing, measurable land preservation or conservation in acres, and a decrease in distance between residential areas and services. These benefits can easily be translated into dollar amounts. Intangible benefits are more difficult to convert into dollar amounts. However, a few are the enjoyment of wildlife or wilderness and increased quality of life in Oregon. Additionally,

evaluators of the UGB policy state that this policy is better than the old way of uncertainty and unpredictable planning (Nelson, 1992.) This could also be regarded as an intangible benefit. Next, we can use a benefit cost ratio to determine the ratio between total value of gross benefits to total costs of UGB policies. This will tell us the total value of gross benefits of UGBs per dollar spent on UGB implementation. For example, we know the cost of implementing UGBs statewide is $2.5 million per year. One benefit of this is the preservation of acres for agricultural use. According to the Oregon Department of Forestry, Oregon maintains 28 million acres of forest land. Almost 60% of this is under federal ownership with 20% industrially owned and 15% privately owned (Oregon Department, n.d.) This leaves 5% owned by the state, or 1.4 million acres of land. The benefit cost ratio is determined by dividing (total value of benefits) 1.4 million acres saved by (total costs) $2.5 million. This amounts to $6.72 generated in benefits for protect lands for every dollar spent on UGB boundaries in one year. Similar to the cost effectiveness ratio, this example assumes that 1.4 million acres are being protected by the state and that $2.5 million is being spent on UGB implementation. However, with accurate and more complete data, these ratios could be easily calculated. If we could possibly know all the net benefits, all of the total costs, and all of the possible outcomes and impacts, we could calculate the return on investment from implementing UGBs in Oregon. Direct costs are directly attributed, or easily traced back to Oregons UGB policy. These costs include the time, resources, finances, and overhead required to implement and evaluate UGBs over long periods of time. More specifically, this involves salaries, supplies and facilities needed. Indirect costs to the UGB system can be fixed or variable. These kinds of costs often include personnel and administration costs. Examples of indirect fixed costs to this policy


include state employee salaries, transportation to UGB sites, utilities, and depreciation of equipment. Variable indirect costs are costs that vary in relation to the output of services provided from UGB policy. For example, an increase in state mandated policies for local governments may result in an increase in private price tag of legal dispute settlement such as the current incident with Damascus. An additional variable cost may include increases in taxes public transportation costs to the public as a local government develops a bus system or bike paths for dense living areas. Calculating these formulas is important for stakeholders and funders. These groups are constantly demanding accountability and reasons to fund your programs or policies. Being able to translate qualitative information into measurable data is necessary as you defend funding for your programs. Proposing Alternatives: As Oregon has had time to implement and evaluate SB 100, many agree that, overall, the system seems to be doing what it was meant to do. Changes and improvements to SB 100 have been more readily offered as opposed to dramatic alternatives. Proposed alternatives to the current system are smart growth, an increase in public awareness and removing UGBs altogether. According to Showley and Yeh (2013), smart growth (SG), is defined by developing mixed-use plans, developing plans for affordable housing, preserving environmentally sensitive areas, sustaining green space, and advocating for a variety of transportation methods. The intended consequences of this alternative are creating densely populated areas while still offering residents a spectrum of housing options, preservation of the agriculture industry as well as the

increased protection of wildlife and agricultural areas. Lastly, SG involves developing alternative methods of transportation as a big picture (not consecutively) that will reduce the number of miles driven and the reliance on automobiles, and the construction of complete streets (streets providing for all travelers, i.e. bikers, walkers, motorists) to encourage active lifestyles and increase safety (Complete, 2009.) Unintended consequences are slow housing and business growth that cause an absence of alternative housing options as well as an increase in housing prices due to an artificial land shortage. Additional unintended consequences include inflexible UGBs or pressure to build outside UGBs (sunk costs) and the paradox of intensification. According to Melia, Barton, and Parkhurst, (2011) this paradox proposes that an increase in noise, pollution and crime are unintended consequences been seen from implementing the SG model in other cities. There are a plethora of end users in SG. From the bottom-up, these users include citizens or residents, travelers and tourists, businesses, housing developers, local governments, public transport companies, and actors looking to sell or buy homes or property. The agencies responsible for implementing SG would involve the state government advocating for and writing laws that promote the intended consequences of SG. Primarily however, local governments would be working together with housing developers, street and utility planning agencies and the state government to ensure that SG is implemented properly in their locale. The second alternative is the implementation of a public awareness program. Efforts to communicate and educate the general public on SB 100 could possibly smooth over the processes involved in creating, maintaining, and enforcing UGBs. Intended consequences are an increase in public awareness and education about UGBs. Additionally, this alternative seeks to lessen the resistance felt at the state level from cities and groups strongly opposing UGBs. This

alternative initially concerns the state government and calls on this agency to create literature or information with which to educate local governments and then citizens on their UGB goals. After a period of time, it would be the responsibility of local governments to continue to educate their residents on the effects and benefits of UGBs. Unintended consequences of this alternative would be little to no results after investment. It is possible that an increase in public awareness does nothing to lessen the resistance, or only increases the trouble local governments present the state government with. The end users of this alternative would be the citizens of Oregon, local and state governments, and business and land use developers. The agencies responsible for implementing this alternative would primarily be local governments. However, if local governments wont comply, it would be the responsibility of the state to ensure that local governments are complying and promoting the education of Oregons UGB policies. The last alternative involves the removal of UBGs altogether. This alternative follows the examples of Colorado and Virginia. Local governments in these states are allowed to decide how land should be developed with little to no state input or enforcement. In Colorado, the state has virtually no requirements for cities and urban areas for development. Cities that have reached a certain population level are required to submit a plan, but afterward are only offered non-binding suggestions from the state that may or may not influence decision making during the planning process. This alternative places responsibility with the state government to initially implement this change legally, and then the responsibility of localities to decide on their own how they desire to proceed concerning land use. Intended consequences include an increase in housing and business development, a decrease in land use regulations, a decrease in legal land use concerns at the state level, and an increase in local autonomy concerning land use. Unintended consequences

include a decrease or eventual loss of Oregons agriculture industry, the loss of wildlife or green space, an increased dependency of vehicles, and urban sprawl. The end users to this alternative are citizens, businesses, housing and land use developers, and local and state governments. Initially, the state government would be responsible for removing the UGB policy legally. Afterwards, land use decisions would be left to local governments and housing or business developers. Choosing Alternative and Conclusion: The best alternative to Oregons SB 100 is an increase in public awareness. This policy change does not drastically change Oregons current UGB policy. The current system Oregon is using seems to have ironed out most of its earlier issues such as backed up legal processes and now provides consequences when policies are not followed at the local level. There has been little consensus among researchers as to whether or not the rise in housing prices is a direct result of UGBs, or a result of other variables such as rising incomes (Nelson, 2000.) This alternative minimizes risk and unintended consequences in a way the other alternatives do not. The implementation of this program would include some indirect costs such as personnel and their salaries to educate local government leaders and citizens. This could also function with volunteers, although a paid volunteer manager would be optimal (also an indirect cost.) As previously stated, this alternative would primarily fall to the state government to implement, and eventually local governments. A Smart Growth (SG) policy could involve an increase in sales taxes to fund public transportation, may or may not continue to slow housing and business growth, and decrease quality of life (intensification paradox.) These costs would undermine some of the progress

Oregon has already made through SB 100. With $100 million already invested, this alternative poses financial risks that could bring significant consequences to Oregons cities. The last alternative, removal of UGB policy altogether could have interesting results in Oregon. As seen in the state of Colorado, the price of housing is consistent with national averages and development has not ravaged natural beauty or forests to the point of no return. Additionally, this alternative would allow businesses, specifically housing developers, greater flexibility to grow financially and personnel-wise that may provide an increase in jobs. Citizens may also be at ease, being able to own private land with fewer restrictions. However, the progress Oregon has made thus far and the financial investment would be lost if this route were to be taken. To conclude, the field of urban planning has placed Oregons UGB policy in the spotlight and under scrutiny for many years. Other cities and states have learned much from Oregons example. As seen in the cost/benefit analysis, Oregon has invested a great deal of money into protecting its natural resources, but not without direct and indirect costs. The next 40 years will continue to reveal how Oregons SB 100 has changed life for the citizens who live there.


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Njus, E. (2012, June 29). Home Builders Association drops challenge of Metro construction excise tax. The Oregonian. Retrieved from http://www.oregonlive.com/frontporch/index.ssf/2012/06/home_builders_association_drop.html Oates, D. Urban Growth Boundary. Retrieved from http://www.oregonencyclopedia .org/entry/view/urban_growth_boundary/ Oregon Department of Land Conservation and Development. (n.d.) Forest Land Protection Program. Retrieved from http://www.oregon.gov/LCD/pages/forlandprot.aspx# Forest_Land_Protection_Program Oregon Department of Land Conservation and Development. (n.d.) History of Oregons Land Use Planning. [timeline]. Retrieved from http://www.oregon.gov/LCD/Pages/history.aspx# Historical_Documents Oregon State University. OSU College of Agricultural Sciences. (2008). Oregon Farm Gate Sales. [data set]. Retrieved from http://oregonexplorer.info/farm/FarmsandAgriculture Sullivan, E-J. Yeh, J. (2013). Smart Growth: state strategies in managing sprawl. The Urban Lawyer. 45.2. 349. Retrieved from http://go.galegroup.com/ps/i.do?action=interpret&id =GALE%7CA351787484&v=2.1&u=lom_gvalleysu&it=r&p=LT&sw=w&authCount=1 U.S. Census Bureau. (2010). Annual Estimates of the Resident Population. [Data set]. Retrieved from http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml? src=bkmk