Smart Growth and Community Development: The Necessary Connection Center on Urban and Metropolitan Policy Bruce Katz, Director The Brookings Institution Presentation to the Federal Reserve Bank November 28, 2001

Major Questions  What are the general trends affecting metropolitan areas?  What is the emerging smart growth agenda?  What does this mean for smart growth and community development?

I. What are the general trends affecting metropolitan areas?

1. Metropolitan areas are decentralizing

Suburbs grew faster than cities during the 1990s Source: U.S. Census Bureau Population Is Decentralizing

This trend was obvious in both expanding and contracting metropolitan areas 1 Source: U.S. Census Bureau Population Is Decentralizing

Counties outside of Baltimore grew rapidly during the 1990s; the city lost a substantial number of residents 1 Source: U.S. Census Bureau Population Is Decentralizing

Source: Fulton et al., “Who Sprawls Most? How Growth Patterns Differ Across the U.S.”; Brookings Institution, July The Baltimore and Washington regions are “De-Densifying” Population Is Decentralizing

Most cities gained jobs, but suburbs invariably gained more 1 Based on changes between 1992 and 1997 Source: U.S Department of Housing and Urban Development, State of the Cities Employment Is Decentralizing

Jobs are also de-densifying; a large share of employment is located further than 10 miles from the central business district Source: Edward Glaeser. “Job Sprawl: Employment Location in U.S. Metropolitan Areas.” Brookings, May Employment Is Decentralizing

2. Decentralization Is Costly

Decentralization leaves behind concentrated poverty in inner cities. The city of Baltimore’s share of the state welfare caseload increased significantly between 1994 and 1999 Decentralization Is Costly Source: Katherine Allen and Maria Kirby. “Unfinished Business: Why Cities Matter to Welfare Reform.” Brookings, July 2000.

Source: Washington Post Middle Income High IncomeLow Income Washington, D.C. is experiencing a growing income divide 1990 Dollars High Income = >$125,000 Low = <$15,000 Decentralization Is Costly

Metropolitan Atlanta (Low income housing is concentrated in the south) Source: Moving Beyond Sprawl, Brookings Institution, 2000 Affordable housing is concentrated in declining areas Decentralization Is Costly

Older suburbs are beginning to take on many of the challenges of central cities.  Increasing school poverty  Growing racial and ethnic diversity  Declining fiscal capacity.  Declining commercial corridors and retail malls Decentralization Is Costly

Older suburbs are home to the working poor. Recipients of the EITC are concentrated in Washington and its eastern suburbs Source: IRS, E-File Demographics.

Metropolitan Washington (Non-white students are concentrated in the east) Source: A Region Divided, Brookings Institution, 1999 Decentralization has exacerbated racial division in metropolitan areas like Washington, D.C. Decentralization Is Costly

Traffic congestion Air pollution Loss of open space Overcrowded schools Decentralization has had many negative consequences for newer suburban areas Decentralization Is Costly

II. What is the emerging smart growth agenda?

Smart growth involves efforts to change the governmental “rules of the development game” that facilitate sprawl and concentrate poverty. Smart growth efforts are designed to slow decentralization, promote urban reinvestment, and enhance access to opportunity.

The New Metropolitan Agenda 2. LAND USE REFORM 3. INFRASTRUCTURE 4. TAXATION 1. REGIONAL GOVERNANCE 5. ACCESS TO OPPORTUNITY

Smart Growth Reforms: State Examples

Regional Governance  Combats air pollution, traffic congestion and sprawl development  Mandates approval for major highway and development projects that affect the metro Atlanta region  Requires local governments to cooperate with GRTA or face loss of state and federal funds for road-building Georgia Regional Transportation Authority (1999)

Issue #1 - Clean Ohio Fund (2000) Land Use Reform: Preservation  Voters authorized $200 million in general obligation bonds for the conservation and preservation of natural areas, open space, and farmlands  $200 million in revenue bonds to remediate urban brownfields and promote economic development

 Clarifies authority of counties and municipalities to create Locally Designated Growth Areas  Encourages transfer of development rights from open space to planned growth areas  Facilitates regional planning  Gives local governments greater ability to withstand legal challenges while planning growth Pennsylvania Growing Smarter Law (2000) Land Use Reform: Growth Management

Infrastructure  Targets major state funding (e.g. transportation, housing, state facilities) to Priority Funding Areas  Priority Funding Areas include municipalities, inner beltway areas, enterprise zones, industrial areas and new planned growth areas Maryland Smart Growth and Neighborhood Conservation Act of 1997

Taxation Minnesota Fiscal Disparities Law Allocates 40% of the growth in property tax revenues from commercial industrial development to a metropolitan tax base pool Funds in the pool are redistributed to communities based on their commercial tax capacity While the law has narrowed fiscal disparities, growing suburbs continue to have 25 to 30 percent more tax base per household than central cities and inner suburbs

Access to Opportunity  Approximately $450 million per year is awarded in federal and state tax credits to assist in the construction and rehabilitation of affordable rental housing  Priority is given to properties located within close proximity of transit corridors, parks, recreational facilities, retailers, grocery stores, schools and senior centers California Tax Credit Allocation Committee

The New Metropolitan Agenda 2. LAND USE REFORM 3. INFRASTRUCTURE 4. TAXATION 1. REGIONAL GOVERNANCE 5. ACCESS TO OPPORTUNITY

III. What does this mean for smart growth and community development

Smart Growth & Community Development Promoting reinvestment in central cities Strengthening central city fiscal capacity Providing more affordable housing in suburbs Converting spatial mismatch to spatial match for low-income workers Smart growth complements community development by:

Smart Growth & Community Development Advancing state and regional policy reforms Organizing state and regional coalitions to advance smart growth agenda Encouraging urban constituencies - particularly political leaders - to join state and regional coalitions Community development entities can support smart growth by:

Smart Growth & Community Development Building mixed income communities Creating wealth (as opposed to housing) Leveraging school, land, and other local reform efforts Community development entities can help create communities of choice and opportunity by advancing smart growth in their own work CDC’s should be placing emphasis on: Community development entities can also advance the smart growth agenda by extending geographic coverage to suburbs