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Too much government has consequences

Updated: December 10, 2009 - 5:14 pm

Posted: July 26, 2004

INSIDE BUSINESS recently held a forum to present ideas and promote discussion of "Growth: How Will Our Cities Grow?"A panel of distinguished and experienced speakers talked for an hour on the topic. They could have talked all day and not addressed all the issues that little word poses for our cities. Early on in the discussion, Virginia Beach Planning Director Robert Scott opined that, as our populations continue to grow we are going to need a new model for urban planning, which I took to mean increasing government control of land development. It was perhaps indicative of the future Scott sees that the panel consisted of two professional municipal planners, a mayor, a state delegate and a developer, that is, four government types and only one private-sector participant. I was happy to hear one of the participants, Del. Terrie Suit, say that half our population growth in Hampton Roads comes from the birth rate outstripping the death rate. That's a fact that many participants in the growth debate sometimes forget. Too often I've heard the comment that developers are the cause of growth, when in reality developers respond to growth, not cause it. Perhaps we use the wrong terms in this debate, because we aren't really discussing growth. After all, the debate does not seem to be about birth control - it's really about how we will develop land and what facilities we will build. Somehow it seems that the "no growth" advocates always get a lot of press. I chuckle about that because their goal is the easiest to achieve. We could stop "growth" in Hampton Roads very quickly. Here's a five-step plan: Fire all economic development staffs in local and state government and at our two economic development alliances, so we stop attracting employers with those jobs people seem to want. Jobs clog our roads and schools and raise the cost of government. Raise taxes on existing businesses, so they won't keep those pesky jobs here (see #1). Raise individual tax rates too, just to be fair. Limit the supply of zoned land for new housing, so that prices go through the roof. Let the Navy know that their noisy jets need to go somewhere else.Anybody ready to run this plan up the flagpole? I didn't think so! The truth is, we need to grow and we want to grow. We want more jobs for the economic opportunity. We want increased incomes, and we want to enjoy spending those incomes the way we see fit.Which brings us back to the question, "How will our cities grow?" and back to Mr. Scott's comment. The debate on growth is really about land development, and it seems that the citizenry increasingly wants more government control of this vital industry. But there are questions to ask before we open that door, because we may not like what's behind it. If government is going to restrict and/or control land use, when do such restrictions cross the line of the U.S. Constitution's requirement that government compensate landowners for taking their property? Remember, you don't have to take title to land to destroy its value. For example, when government tells farmers they can't sell their land for development, it is limiting that farmer's income and diminishing his wealth. Is it right that government can take a family's home in the name of redevelopment, just so someone else can build a bigger, more expensive home on the site, as Norfolk recently has done in Ocean View? Should governments take the risks inherent in development, especially speculative development? If so, why? When? How? How does government calculate risk and reward of its development activities, and what is the accountability if things go wrong? Is it fair for deep-pocketed government to compete with private-sector property owners and developers? One example of government development: Virginia Beach has millions of dollars invested in Corporate Landing Office Park, which sat mostly vacant for years and which has still fallen way short of its original goals for attracting employers and generating tax revenue. When was the last time a profit-and-loss statement was generated on this investment? Is it proper to take such development risks with my tax dollars?When government gets involved in regulating anything, the law of unintended consequences usually kicks in. In trying to control sprawl, cities are limiting re-zonings of land for residential use. Have you talked to a homebuilder lately? Their biggest concern is finding land they can build on, and right now it is scarce. The price of developed or developable land is going through the roof, and house prices are too. If our employment base grows, new workers need to live somewhere. But home price increases have outstripped growth in incomes, so workers' main alternative for affordable housing may be to move farther out where land is cheaper. The same effect occurs when cities push for "upscale" development, which our current tax system encourages. Result: more sprawl, not less. Thankfully, our community is vibrant enough that we are debating the problems of growth, and I have no doubt the debate will be a healthy one for Hampton Roads. Tom Dillon is a senior vice president at Resource Bank of Virginia Beach specializing in real estate financing. He can be reached at 222-2426 or tdillon@resourcebnk.com.