Financial effects of land use planning: Not a laughing matter
by Brian Schmidt

A classic episode from the television cartoon show, The Simpsons, has the hapless Homer Simpson accidentally traveling back in time. Petrified of changing the future, he attempts to do nothing, but when Homer sneezes on a dinosaur he causes an instantaneous chain reaction of dinosaur extinctions. "This is gonna cost me," Homer laments.

Even Homer Simpson recognized that intentional and unintentional changes to the environment may have tremendous costs. With our state and local budget crises, the public has very timely reasons to consider what effects current land use planning will have on future budgets for Bay Area counties and cities. Looking back, we all can ask whether the right decisions were made in past decades and whether we should make different ones for the future.

Environmentalists argue that "smart growth" gives the best fiscal results to counties and cities. At first blush, however, one might expect the wealthy, hillside sprawl that the Committee for Green Foothills typically opposes would provide plenty of tax revenue and make little demand on services. This fiscal appearance is deceiving, though, because residential development rarely pays its own way in taxes. The tax structure in California de-emphasizes property taxes, placing much more emphasis on sales and other taxes. For good or ill, Proposition 13 has achieved its desired effect of holding down property taxes.

While Prop 13 limits property tax revenue, the costs of providing services to new residential development have increased. While rich "McMansion" owners may not be going to county health clinics, they may have plenty of hired help who are often not paid well and do need more governmental services (as well as their own places to live). Even the services that McMansion owners do use are not cheap. It costs money to send a fire truck with several firefighters out for an hour-long drive into the hills to check out a false alarm. And while there is often some attempt to recover the costs of extending utilities out to remote developments, maintenance and other costs can add to financial burdens.

The bottom line shows up in a "study of studies" by the American Farmland Trust, called "Cost of Community Services Studies". Working farm land and open land brought in more governmental revenue than it caused to be spent, while residential development did the opposite.

Another deceptive issue involves open space as a loss of revenue. While it may seem that open space does not generate revenue, people thriving from tourism developed by the "open space" in Yosemite National Park and elsewhere will stoutly defend the economic value of preservation. The tourist industry that occurs where open space has been preserved can be a significant revenue booster for local governments. Taxes on hotel occupancies and expensive restaurant meals often come from relatively wealthy travelers and cause little hardship for local residents, so the tourist industry is especially desirable. The Bay Area, with its strong attraction for tourists, makes open space preservation an attractive financial option.

Preserving open space necessarily channels development closer to cities where governmental services are easier to provide. By making better use of land, utilities and transportation, governments can decrease costs significantly. Santa Clara County, for example, has expressly taken itself out of the "development business," telling developers that they should bring their proposals within city limits instead of targeting unincorporated county lands. The Committee for Green Foothills has long supported this decision and works to help hold the County to its word. There is no doubt that the current Santa Clara County budget crisis would have been still worse without this decision to restrict development outside of cities, where governmental expenses are highest.

Last but hardly the least in importance is the relationship between environmental benefits and economic benefits. A recent White House study found that the benefits of clean air regulation far outweigh its costs. We see this locally: in Santa Clara and San Mateo Counties, preservation of hillside lands has stopped developments whose increased traffic would have caused air pollution and asthma, thus slowing the drain on government-provided health systems.

Similarly, stopping sprawl's effects on water quality through poisoning runoff and inadequate septic systems has direct health benefits and indirect cost-reduction benefits for governments. Most dramatically, sprawl worsens flooding, and responding to flooding - or paying to prevent it - can be very expensive for governments.

We lack Homer Simpson's ability to return in time to erase past mistakes, but we emphatically possess his ability to dramatically shape the future. The current fiscal crisis will inevitably pass, leaving us with the question of how to prevent or reduce fiscal problems in the future. Open space protection is a necessary component of the right fiscal policy, and a policy that the Committee for Green Foothills will support as strongly as it can.