Analysis of Maryland Development Issues:
The Future of “Smart Growth”
The answer to the problems of the cities, and the challenge of making the world livable, may lie in the concept of "Smart Growth." Maryland's outgoing governor, Paris Glendenning, has been a national leader in promoting smart growth in Maryland, and one hopes that his successor, governor-elect Robert Ehrlich, continues policies that Glendenning initiated.
Meanwhile, possible future candidate for governor Martin O'Malley led a roster of experts at an all day conference on “Growth,” held at the Renaissance Harbor Hotel on December 12. This fifth annual conference was sponsored by the Home Builders Association of Maryland (HBAM ), and was attended by an estimated 200 builders, developers, and professionals interested in learning about new strategies being employed to accommodate growth in a climate of many constraints.
Mayor O'Malley was there to explain Baltimore's program to place vacant properties back into service as productive, tax-paying assets.
Mike DeStefano, president of Sturbridge Homes and president of HBAM, introduced Mayor O'Malley to kick things off, and the Mayor delivered a lively and articulate promo for “Project 5000,” the name given to the city's effort to clear title to and reclaim 5,000 vacant properties by the end of 2003.
Most of these housing units have liens for tax delinquencies that exceed the market value of the property, and they present various challenges to the city. The mayor explained the dilemma that the city must "maintain" these properties without owning them. The properties must be boarded up and policed for squatters and use as illegal drug dens. When they present a danger to adjacent properties, they have to be demolished at city expense.
Project 5000's goal is to acquire these properties under expedited legal processes of foreclosure and eminent domain. Once they are owned with clear title, they will be offered to the development community so they can be rehabbed and put back on the tax rolls. There are approximately 14,000 such vacant properties in the city, as well as about 10,000 vacant lots which also need to be disposed of. In some cases, there are entire blocks without an occupied property, and Mayor O’Malley remarked that developers should find these especially attractive.
The Mayor spoke to the challenges of crime, drug use, poor schools and other indices of blight in city neighborhoods. Of 271 identifiable neighborhoods, 114 of them have vacant properties in need of disposition; however, 10 neighborhoods contain 71% of the problem units.
The Mayor spoke of progress being made on many fronts, and described Baltimore as a "comeback city." He said that drug admissions to city hospitals and violent crime is down by 10% over the prior year—better than New York City. The average market value of a home in the city has risen from $69,000 when he took office, to $101,000 today.
O'Malley referenced a book he has read recently, The Mystery of Capitalism, written by a Peruvian author, DeSota. The thesis of the book, to which the Mayor apparently subscribes, is that stable land ownership is needed to create capital. Legal title is all important. The city's strategy is to avoid tax sales—cut out the middle man (O'Malley's words), and transfer properties directly to private and non-profit ownership.
The mayor praised the local law community and The Daily Record for providing pro bono and reduced rate services to help the city realize the goals of Project 5000.
Although the Mayor's remarks were all positive, questions from the audience betrayed some degree of skepticism on the part of builders that the problems of the city that affect housing can be overcome in the neighborhoods containing the majority of the vacant properties. Are the jobs being created going to the right locations, they asked, and will any of these jobs be quality blue collar jobs with wages capable of supporting rising property values?
The very next day the Sun ran an article that mentioned a Baltimore statistic that is not promising—a 42% increase year-over-year in the juvenile homicide rate. Yet another article reminded that Baltimore and Detroit share the distinction of being perceived as the most dangerous cities in America, according to the annual survey conducted by Morgan Quitno Press ( www.morganquitno.com).
The Mayor's director of Project 5000, Michael Bainum, who is in the Department of Housing and Community development, also spoke at the builders’ meeting. He described CITISTAT, which is an advanced software program for data collection and computer mapping. Mr. Bainum claimed this software has allowed the city to have a much more complete and current picture of the status and impacts of these 14,000 properties, and they can also track performance and evaluate their progress as they go forward.
The next speaker, Jennifer Vey, a senior research analyst at the Brookings Institution Center for Urban and Metropolitan Policy, described new strategies, some of them regional, that involve tax incremental financing (TIF). She spoke of the importance of community colleges and technical schools to provide inner city youth with the job skills that will attract employers. She said that Maryland and New Jersey are leading the US in the use of smart growth initiatives.
The first builder/developer to speak was David Flanagan, president of Elm Street Development, and former president of the Maryland National Capital Building Industry Association. Mr. Flanagan said that his experience with smart growth has been that it feels like no growth. He pointed to several technical problems in the implementation of smart growth "overlays" on existing zoning. He also stressed that the counties need to be aware of the State's interest in smart growth, and said that, so far, they don't seem to be getting it. He pointed to the “lot supply problem” as the primary cause of the escalation in the price of housing.
The next speaker was George Maurer, senior planner for the Chesapeake Bay Foundation. He traced the history of priority funding areas created by a gubernatorial executive order in 1998. This order directs growth to central business districts, downtowns, empowerment zones, revitalization areas, designated neighborhoods, and transit areas. He considers the executive order to be “a big win for the Chesapeake Bay,” saying it will conserve dwindling farm and forest lands that filter runoff, reduce auto emissions, and improve existing water quality. He explained that the leading source of airborne nitrogen is power plants (33%), and the next is auto and truck exhaust (over 25%). He noted, however, that smart growth seems hard to accomplish, and he cited three main reasons: reactive planning, rigid and cumbersome existing policies and procedures, and insufficient public investment. One of the factors holding back smarter land use decisions is that citizens don't show up at public hearings unless their own property is directly affected.
Mr. Maurer advocated an energetic effort to "take the mountain to Mohammed" and reach out to the widest range of citizens through the internet, focus groups, telephone surveys, etc. with the goal of reaching people that are neither political or rich. Typical planning documents tend to be arcane—written by planners for planners. They do not answer the average person's question—what will my community look like? He discussed watershed planning and how important it is to integrate it into the planning process early. Lot lines don't work well with natural systems. Society must invest in alternatives to the automobile. He mentioned an effort in Parole, Maryland to create a "people mover" with its own right of way, as part of the revitalization plan for that historic town. He is a proponent of transportation districts or authorities with power to raise revenues.
After a break, we next heard from Michael Replogle, transportation director for the Environmental Defense Fund. Mr. Replogle is a leading expert on transportation and environmental laws, regulations, and policies. He is the architect of the 50% tax credit program for Maryland employers who offer commuter transit benefits or cash-in-lieu-of parking incentives to employees. In his talk, he focused on the connection between air quality, transportation, and land use. He cited the extreme ozone pollution in the Baltimore area caused by car and truck emissions and lax power plant controls.
It is a proven fact that sprawl leads to more traffic miles, whereas smart growth causes the opposite, cutting emissions and saving scarce infrastructure funds. The suburbs air quality is actually worse than the cities in most cases, and the old planning models do not reflect this. The Baltimore area is in danger of losing control over the use of federal transportation funds, when the air is tested two years from now, if air quality does not improve. If that happens, it is likely that all growth will be frozen. Studies show that expanding road capacity increases traffic by 30 to 130%.
Vision 2030 is a comprehensive study being completed which will explore possible futures. it will be released in late 2003. An interesting statistic is that walking and biking account for 23% of transportation modes in the city and only 8% in the suburbs. Mass transit miles are 10% in the cities, less than 1% in the suburbs.
Michael Bainum again returned to the issue of vacant city properties and promised that the city would do a much better job this time around of seeing that only reputable private entities wind up with ownership. They will be vigilant for flipping schemes, and the public-private partnership model will have to serve the broader public interest.
The next speaker, Douglas Wrenn, director of Urban redevelopment programs in Montgomery County, talked about the redevelopment of Silver Spring. It is an example of a successful public-private partnership that has endured for many years. It was not without serious challenges in the early years, which have now been largely overcome. He said that one of the big hurdles is to overcome the disconnect between local land use plans and regional transportation plans. Certainly, this lack of coordination is visible everywhere. It is notable that no speaker ever mentioned the proposed Intercounty Connector (ICC) which was a major political football in the gubernatorial race in Maryland just concluded. We may get slots before we get an "outer beltway."
The next part of the program discussed new alliances to respond to the changing development climate. The first speaker was William Baker, President of the Chesapeake Bay Foundation. He spoke about the partnership approach—meeting in planning charettes, instead of in the courthouse. His top priority for the Chesapeake Bay is to organize a six-state watershed alliance, with the goal of reducing the amount of nitrogen that reaches the bay. At present, 300 million pounds of nitrogen enters the bay each year. The bay can only process 150 million pounds. Upgraded sewage treatment plants would accomplish a reduction of about one-third. A healthy oyster population would filter more waste and farm run off. The Chesapeake is now on the EPA's dirty water list.
We have until 2010 to meet federal guidelines or the federal government will step in to manage the bay. A likely consequence would be to freeze building permits, which would be devastating to the building industry. This is why environmentalists and builders need to be in coalition. The Blue Plains sewage treatment plant in Washington, D.C. is now being upgraded to meet EPA guidelines and would be a good model for Maryland. Marta Goldsmith, vice president for the Urban Land Institute (ULI), described the new alliance of the Coalition for Smart Growth and the Chesapeake bay Foundation. EPA partnered with the ULI in a recent national conference. The overall conclusion coming out of the conference was that land use will be the key issue of the decade.
Smart Growth has to make it at all levels—State, County and Local. There is no national plan. The old adversarial paradigm was not driving smart land use policy. This new coalition brings together diverse groups of stakeholders at the local level. It turns out that local visions are very similar to the consensus vision. Once recommendations are agreed to, they must be implemented at the political level.
California is leading the way with a concept that sets up district councils which pull together leading talent throughout the state. The council puts the pieces together utilizing the institutional knowledge of the environmental, development, and non-profit stakeholders.
Gary Garczynski, president of the National Association of Homebuilders, described how there is a new respect growing among the diverse interests in the development process. There is enough common ground, as he put it, perhaps 80%, where we can agree, and the rest we can agree to resolve differences amicably. He spoke of the concept of "workforce housing," essentially matching jobs to housing. He recommended alliances of former "foes" to work together to persuade public officials of the necessity of " smart growth." Otherwise, the no-growthers will win the day.
Mr. Garczynski offered a framework for public officials to follow: projects should be judged on location, density, design, diversity, mixed use, transportation accessibility, environmental impact, and community benefit. He said his own business should be a model of smart growth, in that he does smaller "in-fill" projects in established neighborhoods with existing infrastructure. Nonetheless, his projects are routinely opposed by local officials who have “a knee-jerk reaction against increasing density.”
Public policy makers and staff must be educated. he stressed, and become aware that almost all design professionals and planners and even the Board of Trade are on board in favoring smart growth through higher density "overlays " over existing zoning. He mentioned a study to be released in 2003 that is underway at George Mason University which will examine the connections between job growth, people growth, and land use planning.
One of the inherent impediments to sensible planning is that politicians resist the kinds of predictability that the development process requires. They will typically avoid taking positions that force them to favor one outcome over another. As soon as something is put on paper, they freeze up because someone is likely to disagree. The famous NIMBY's, he suggested, seem to hold much more sway than their numbers would suggest.
It is too early to tell if this kind of conference will mark a turning point for smart growth policies of the future. It is encouraging, however, that HBAM is taking the lead in putting together this kind of dialogue, and embracing ideas outside the ordinary, short-term, profit-maximizing strategies. Long-term strategies are needed for the long-term health of people and nature itself. It seems that a new understanding may be emerging—a concept of natural capitalism that will stimulate—who knows?—a new industrial revolution.
J. Russell Tyldesley, an insurance executive, writes from Catonsville.
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This story was published on February 10, 2003.