oversight

Community Development: Extent of Federal Influence on 'Urban Sprawl' Is Unclear

Published by the Government Accountability Office on 1999-04-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States General Accounting Office

GAO              Report to Congressional Requesters




April 1999
                 COMMUNITY
                 DEVELOPMENT
                 Extent of Federal
                 Influence on “Urban
                 Sprawl” Is Unclear




GAO/RCED-99-87
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Resources, Community, and
      Economic Development Division

      B-280699

      April 30, 1999

      The Honorable James M. Jeffords
      United States Senate

      The Honorable Carl Levin
      United States Senate

      The Honorable Diana L. DeGette
      House of Representatives

      The Honorable Max S. Baucus
      Ranking Minority Member
      Committee on Environment and
        Public Works
      United States Senate

      After World War II, people began moving in large numbers from the
      central cities to the suburbs. By 1950, the rate of growth nationally was 10
      times higher in the suburbs than in the central cities, and by 1970, the
      United States, for the first time in history, counted more suburbanites than
      city dwellers or farmers. These demographic changes were accompanied,
      on the one hand, by an increase in homeownership and opportunities for
      new businesses and, on the other hand, by the sprawling, low-density,
      fragmented, automobile-dependent development that is commonly
      referred to as “urban sprawl.”1

      Concerned about the contribution of federal programs and policies to
      “urban sprawl” while recognizing that land-use planning has traditionally
      been a function of state and local governments, you asked us to (1) review
      research on the origins and implications of “urban sprawl,” (2) describe
      the evidence that exists on the influence of current federal programs and
      policies on “urban sprawl,” and (3) identify regulatory review and
      coordination mechanisms evaluating and mitigating the effects of federal
      actions on “urban sprawl.” This report, the first of a series examining the
      implications of federal policies on negative patterns of growth, is based on
      a review of research and discussions with experts in the public, private,
      and educational communities on growth-related issues. We did not
      independently assess the validity of the research. We focused on specific
      federal programs and policies, including those reflecting decisions on

      1
       The term “urban sprawl” is, in our view, the clearest of the alternatives we considered using in this
      report to refer to outward growth. Therefore, despite its negative connotations, we decided to use the
      term.



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                   spending, taxation, regulation, and the location of federal facilities.
                   Information about each program and policy we reviewed appears in
                   appendix I.


                   The growth of suburbs outside central cities, which accelerated after
Results in Brief   World War II, had both positive and negative effects, according to the
                   research we reviewed. Suburban growth began in response to a number of
                   social, economic, demographic, and technological factors, including the
                   postwar population boom; the increased availability of suburban housing;
                   and the greater use of passenger cars, which allowed greater access to
                   suburban areas. Historically, federal housing and highway programs
                   contributed to suburban growth because the availability of housing loans
                   facilitated suburban homeownership and federal highway spending
                   financed the expansion of highways that gave consumers access to
                   suburban locations. When suburban growth means the rapid spread of
                   fragmented, low-density, automobile-dependent development on the
                   fringes of cities, some observers see such growth as “urban sprawl.”
                   Despite many studies on the costs and implications of “urban sprawl,” so
                   many factors contribute to it and the relationships among these factors are
                   so complex that researchers have had great difficulty isolating the impact
                   of individual factors. As a result, researchers have generally been unable
                   to assign a cost or level of influence to individual factors, including
                   particular federal programs or policies. Research has identified positive
                   effects of “urban sprawl,” such as increased homeownership and new,
                   sometimes lower-cost locations for businesses. At the same time, research
                   points to negative effects, such as higher infrastructure costs in
                   low-density areas, increased traffic congestion, and reduced green space.

                   Some experts believe—and anecdotal evidence exists to support their
                   belief—that the federal government currently influences “urban sprawl”
                   through spending for specific programs, taxation, and regulation, among
                   other things, but few studies document the extent of the federal influence.
                   According to some experts, the role of federal programs and policies
                   occurs in combination with a number of factors, including market forces
                   and local land-use decisions. Studies that attempt to quantify the link
                   between highway spending and “urban sprawl,” for example,
                   acknowledge the difficulty in isolating the influence of highway spending
                   from that of other factors, such as market influences. For instance, a 1995
                   Transportation Research Board report states that transportation
                   investments influence the location of growth but do not alone cause




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growth.2 Anecdotal evidence suggests that investment in water and sewer
systems may lead to residential and commercial growth in outer areas
because such investment facilitates development. We found little
quantitative research linking federal assistance for water and sewer
systems with “urban sprawl.” Tax code provisions that subsidize
homeowners through the mortgage interest and property tax deductions
are believed by some researchers to provide an incentive for purchasing
more expensive housing that is sometimes located outside urban areas.
The tax policy research we reviewed did not directly estimate the effects
of existing tax policies on “urban sprawl.” Local officials have suggested
that federal regulations implementing the Clean Air Act encourage
industrial development in greenfields, rather than settled areas, because
the act restricts emissions in areas that do not meet air quality
standards—typically urban areas. However, studies indicate that
environmental regulations play a small role in decisions about the location
of businesses. The shortage of quantitative evidence does not mean that
federal programs and policies do not have an impact on “urban sprawl;” it
simply means that the level of the federal influence is difficult to
determine.

Executive orders governing the federal regulatory review process do not
directly address “urban sprawl,” but coordination among federal agencies
on growth-related issues is increasing. Furthermore, the executive orders
establish basic principles for agencies to follow when reviewing and
approving regulations, and specific laws, such as the National
Environmental Policy Act and the Farmland Protection Policy Act, offer
federal agencies an opportunity to consider the potential influence of their
actions on growth. Federal agencies coordinate their activities primarily in
specific program areas, but coordination across agencies is increasing. For
example, the President’s Council on Sustainable Development, a federal
advisory committee, was created in 1993 to address development and
growth issues by encouraging policies to support collaboration among
federal, state, and local government agencies; public interest and
community groups; and businesses. The Council issued a report in 1996
that included goals and indicators for developing sustainable communities,
such as decreasing traffic congestion and increasing urban green space.
The Council plans to issue another report in the spring of 1999 presenting
policy recommendations. In addition, the Environmental Protection
Agency initiated a Smart Growth Network to share information among
federal agencies and other interested parties on growth-related issues. At


2
Expanding Metropolitan Highways: Implications for Air Quality and Energy Use, National Research
Council, Transportation Research Board, Special Report 245 (1995).



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             this time, coordination efforts are too new and the research is too limited
             to determine how the federal government can better assist state and local
             governments in managing growth.


             Several features of “urban sprawl” are widely recognized, but experts on
Background   growth management and related issues have not arrived at a common
             definition. Experts have difficulty agreeing on a definition because “urban
             sprawl” has frequently been described as being “in the eye of the
             beholder.” Research often characterizes this form of growth as
             low-density, auto-dependent development that rapidly spreads on the
             fringes of existing communities, often consuming agricultural and
             environmentally sensitive lands. Research also describes “urban sprawl”
             as random development characterized by poor accessibility among related
             land uses, such as housing, jobs, and services like schools and hospitals.
             Sprawling development can occur in rural and urban areas and can
             encompass residential, commercial, and industrial zones. Some research
             also makes a connection between “urban sprawl” and the declining fiscal
             condition of central cities. Still other research shows that as the outer
             rings of suburbs have grown over time, the inner rings have sometimes
             begun to decline, much as the central cities have done. As figure 1 shows,
             the percentage of people living outside the central city in the 10 largest
             U.S. metropolitan areas increased from about 40 percent in 1950 to about
             60 percent in 1990.




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Figure 1: Percentage of Population in
10 Largest Metropolitan Areas, as       100   Percent of population
Defined in 1990, Living Inside and
Outside the Central City, 1950-90
                                         80




                                         60




                                         40




                                         20




                                          0

                                                 1950                 1960           1970               1980               1990
                                                 Years



                                                         Inside central city

                                                         Outside central city



                                        Notes: The 10 largest metropolitan areas in 1990 were the New York, Los Angeles, Chicago, San
                                        Francisco, Philadelphia, Detroit, Boston, Washington, D.C., Dallas, and Houston metropolitan
                                        areas. The metropolitan areas for each decade are considered on the basis of their geography
                                        during that decade.

                                        Source: U.S. Bureau of the Census.




                                        Since land-use planning is usually considered a state and local
                                        responsibility, the federal government has had limited involvement in
                                        regulating land use. According to the literature, the federal government
                                        has not adopted a comprehensive national growth plan or land-use policy
                                        to balance the nation’s competing needs for economic growth,
                                        environmental conservation, and urban reinvestment. However, the
                                        federal government does influence land-use decisions through federal
                                        laws, such as the National Environmental Policy Act (NEPA), which
                                        requires federal agencies to prepare environmental impact statements, and
                                        federal court decisions.




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                             The states have inherent powers to regulate land use and have generally
                             delegated certain authorities, including zoning, to local governments. Even
                             so, a state can influence how and where growth will occur by using
                             permitting, funding, and construction decisions to encourage or
                             discourage the reuse of existing infrastructure or the revitalization of
                             downtown areas. At least 11 states have passed growth management
                             legislation since 1985. Some of the legislation3 allows states and/or local
                             governments to purchase lands to preserve farmland and natural
                             resources, provides financial incentives to encourage companies and
                             individuals to move to downtown areas, and restricts development to
                             specific areas.

                             The states generally confer primary authority for land-use decisions on
                             local governments. Traditionally, local governments have used their
                             zoning authority to regulate land uses. More recently, some local
                             governments have used impact fees and other techniques to manage
                             growth. Local governments are also participating in regional governance
                             structures and other types of partnerships to oversee land-use planning
                             and influence the spending of resources.


                             Suburban development evolved as a result of a combination of social,
Origins and                  economic, demographic and technological factors. For example,
Implications of              innovations such as the automobile opened access to suburban areas, and
“Urban Sprawl”               networking and computers have made individuals and businesses more
                             mobile. Some studies have identified the positive effects of suburban
                             development—opportunities for homeownership and new, sometimes
                             lower-cost locations for businesses—while others focus on the negative
                             effects. Among those cited are the diversion of economic resources from,
                             and the growth of poverty in, the central cities; the loss of green space and
                             higher public costs for infrastructure in the suburbs; and the steady
                             increase in traffic congestion.


Several Interrelated         America’s largest cities underwent dramatic demographic changes during
Factors Contributed to the   the second half of this century. The literature cites a combination of social,
Origins of “Urban Sprawl”    economic, and demographic factors that historically contributed to
                             suburban growth and created a framework for the growth patterns that
                             continue today. For example, during the 1940s, city populations exploded
                             as millions of people moved from rural areas to metropolitan areas

                             3
                              For example, in 1997, Maryland passed legislation enacting the Rural Legacy Program, which is
                             designed, among other things, to establish greenbelts of forests and farms around rural communities
                             and preserve critical habitats for native plants and wildlife.



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seeking employment. By the 1950s, much of the housing in these cities was
old and overcrowded, and the country was experiencing a population
boom that, coupled with rapidly rising household incomes, intensified the
desires of many households to live in bigger homes on larger lots. By the
mid-1960s, an immense increase in housing and other construction
occurred in suburban areas. According to researchers, the Federal
Housing Administration’s (FHA) single-family homeownership program
increased the availability of long-term housing loans while the program’s
strict construction standards and requirement that neighborhoods be
homogeneous (segregated) ensured that most FHA loans would be made
for homes in the suburbs. In addition, local governments contributed to
“urban sprawl” by encouraging low-density development through zoning
laws and subdivision regulations.

During the 1950s and 1960s, two additional factors—the movement of
African-Americans into formerly white city neighborhoods and, in some
cities, court-ordered busing to achieve racial integration in the public
schools—caused many middle-class white families to move out from the
central cities, according to the research. In some cities, the exodus of the
white middle class was followed by the withdrawal of middle-class
minority families and viable businesses. Concentrations of poverty and
crime rates increased, and the quality of the public schools declined. Some
researchers believe that this exodus may inadvertently have been given
additional impetus by such federal programs as public housing, which
destabilized many urban neighborhoods, removing older housing and
replacing it with cheaply constructed and poorly maintained public
housing developments inhabited by the poorest of the poor.

Technology has also played a unique role in facilitating suburban
development by giving people more choice in where they live and work.
Transportation innovations—beginning with the steam ferry, cable and
horse-drawn cars, commuter and elevated railroads, and the electric
streetcar—initially improved access to new towns surrounding large cities;
this access accelerated greatly with the advent and increased use of the
automobile. Researchers have pointed to the historic role played by
federal highway subsidies in contributing to “urban sprawl.” The
construction of highways facilitated growth by providing access to
suburban areas. In addition, the mechanization of farm production led
indirectly to migration from rural to urban areas. More recently, high
technology networks and machines, such as the Internet, computers,
faxes, and cellular phones, have made both individuals and businesses
more mobile than ever before.



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                        Experts have identified both positive and negative implications of “urban
Experts Cite Positive   sprawl.” On the positive side, according to experts, homeownership has
and Negative            increased because housing costs are lower in outer-ring suburbs;
Implications of         businesses have more, and sometimes cheaper, locations to choose from;
                        and consumers may have access to lower prices at suburban discount
“Urban Sprawl”          stores. But experts also said that “urban sprawl” has diverted economic
                        development from, and increased the concentration of poverty within, the
                        central cities; reduced green space; increased the public costs of new
                        infrastructure in low-density areas; and increased traffic congestion.
                        Appendix II provides a summary of the factors listed in a 1998 synthesis of
                        literature on the topic4 and shows whether the studies agreed on whether
                        each factor exists and has been significantly linked to “urban sprawl.”

                        The costs associated with “urban sprawl” have also received
                        considerable attention. For example, an Office of Technology Assessment
                        study examining the implications of technological changes in metropolitan
                        areas analyzed whether “urban sprawl” pays its own way or is subsidized.5
                         The costs were divided into direct costs, such as on-site development
                        costs or the costs of neighborhood services available to new developments
                        exclusively, and indirect costs, such as the impact of suburban
                        development on air and water quality and the costs of travel. According to
                        the study, the research suggests that sprawling development “costs more
                        than compact development, and that some of that cost is subsidized.”
                        Who actually pays for these subsidies is unclear. According to the study,
                        the subsidies are sometimes a combination of local, state, and federal
                        government resources. In other cases, the costs are subsidized by central
                        cities or nearby, older suburbs that are experiencing the negative
                        implications of “urban sprawl” themselves. A 1997 study on the costs and
                        benefits of “urban sprawl” concluded that under a scenario of controlled
                        growth, citizens could reduce land consumption by 60 percent and road
                        building by 25 percent.6 On the other hand, a 1990 study on growth
                        management noted that controls on local growth tend to increase housing
                        prices.7 In addition, a 1998 study on how “urban sprawl” has affected
                        Michigan concluded that, in terms of costs, urbanization is not threatening

                        4
                         Robert W. Burchell et al., Costs of Sprawl Revisited: The Evidence of Sprawl’s Negative and Positive
                        Impacts, National Research Council, Transportation Research Board (1998).
                        5
                         The Technological Reshaping of Metropolitan America, Office of Technology Assessment
                        (OTA-ETI-643, Sept. 1995).
                        6
                         Robert W. Burchell, “Economic and Fiscal Costs (and Benefits) of Sprawl,” The Urban Lawyer
                        (Spring 1997).
                        7
                        Benjamin Chinitz, “Growth Management: Good for the Town, Bad for the Nation?” Journal of the
                        American Planning Association (Winter 1990), pp. 3-8.



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                        Michigan’s agricultural industry, the negative effects of development on
                        local infrastructure costs are exaggerated, and higher residential densities
                        may increase pollution levels.8 Overall, however, so many factors
                        contribute to “urban sprawl” and are so closely interrelated that
                        researchers have found it extremely difficult to isolate the cost or
                        influence of individual factors—including those relating to federal
                        programs and policies.


                        Some experts believe—and anecdotal evidence exists to support their
Some Believe That       belief—that the federal government influences “urban sprawl” through
Selected Federal        spending, taxation, regulation, and decisions about the location of federal
Programs and Policies   facilities; however, limited data are available to document and quantify the
                        extent of the federal influence. While one noted expert said that “there
Influence “Urban        aren’t many federal policies that induce sprawl,” others believe that the
Sprawl,” but the        role of federal programs and policies is more piecemeal and incremental in
                        nature, facilitating “urban sprawl” when combined with other factors,
Extent of the           such as market forces and local zoning.9 Some information exists on
Influence Is Unclear    where federal spending is occurring for highway and water and sewer
                        programs, but data are not always geographically specific enough to
                        capture spending in suburban areas, making it difficult to analyze the
                        federal influence. Few studies use quantitative data to demonstrate a
                        direct link between “urban sprawl” and federal spending, exclusive of
                        other influences. The tax policy studies we reviewed do not directly
                        estimate whether tax policies, such as the home mortgage interest
                        deduction and property tax deductions for owner-occupied housing, affect
                        the direction and magnitude of “urban sprawl.” Local officials allege that
                        federal regulations implementing the Clean Air Act contribute to “urban
                        sprawl,” but a body of quantitative evidence indicates that environmental
                        regulations play a small role in businesses’ decisions about where to
                        locate. Some experts believe that the location of federal and postal
                        facilities plays a significant role in “urban sprawl;” however, studies have
                        not been conducted to show the impact of the location of federal and
                        postal facilities on “urban sprawl.”




                        8
                          Samuel R. Staley, “Urban Sprawl” and the Michigan Landscape: A Market-Oriented Approach,
                        Mackinac Center for Public Policy (Oct. 1998).
                        9
                         Growth Management Planning and Research Clearinghouse, U. of Washington, A Literature Review of
                        Community Impacts and Costs of Urban Sprawl, National Trust for Historic Preservation (Sept. 1993),
                        p. 47.



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                        Experts and much of the research agree that federal spending by the
The Impact of Federal   Department of Transportation for the Interstate Highway System—in
Spending Programs       combination with other factors such as population growth, rising personal
on “Urban Sprawl”       incomes, and increased automobile ownership—supported the expansion
                        of metropolitan areas by improving access to suburban locations. For
Varies                  example, a Transportation Research Board study identified evidence
                        indicating that funding for the Interstate Highway System improved access
                        to developable land on the fringes of urban areas, thus supporting
                        low-density development.10 Another Transportation Research Board report
                        noted that highway access, though necessary to support decentralization,
                        is not the only factor responsible for growth.11 The Federal Highway
                        Administration collects federal highway obligation data by type of highway
                        improvement, but these data are not detailed enough to distinguish overall
                        spending in suburban areas from spending in urban areas. Federal
                        Highway Administration officials said their reporting system reflects
                        federal spending by the legislated federal-aid designations—rural, urban,
                        small urban, and urbanized—and cannot identify spending in suburban
                        areas because suburban development can occur in any of the population
                        areas. Federal highway data show that the federal share of highway capital
                        outlays has been between 41 and 46 percent since 1987, but Federal
                        Highway Administration officials emphasize that almost all highway
                        projects are selected by state and local decisionmakers. Also, according to
                        Federal Highway Administration officials, the 1998 Transportation Equity
                        Act for the 21st Century increased metropolitan planning organizations’
                        already high level of flexibility to fund transportation projects that best
                        meet locally determined goals.

                        Anecdotal evidence suggests that investments in water and sewer systems
                        lead to residential and commercial growth in outer areas because these
                        investments facilitate development. However, we found little research
                        linking the federal assistance provided through the eight major federal
                        water and sewer programs that we reviewed to “urban sprawl.”12 We did
                        find analyses that related federal spending for water and sewer systems to
                        economic growth, but not to “urban sprawl” specifically. In addition,
                        some federal agency staff said that their programs had a past or present
                        influence on growth, while other officials said that water or sewer projects
                        allow for future population growth. The five federal agencies that


                        10
                           Consequences of the Development of the Interstate Highway System for Transit, National Research
                        Council, Transportation Research Board, Research Results Digest No. 21 (Aug. 1997).
                        11
                          See footnote 2.
                        12
                          See app. I for more information on the programs and our criteria for selecting them.



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administer the eight programs we reviewed maintain varying types of
spending data for their programs, making it difficult to summarize the
distribution of federal funding for these programs geographically or by the
type of construction (new versus upgrade).

Historically, researchers have cited FHA’s single-family homeownership
program as contributing to “urban sprawl” through its strict construction
and design standards and its requirement that neighborhoods be
homogeneous, which ensured that most FHA loans would be made for
homes located in the suburbs. We did not find any recent research
showing that the single-family housing program encourages housing
development in suburban areas over central cities. The goal of FHA’s
current single-family mortgage insurance program is to increase
homeownership regardless of the location of the home. In light of this
focus, FHA’s single-family mortgage insurance program is an important tool
to help first-time buyers attain homeownership and to encourage
homeownership in underserved areas.13 According to a Department of
Housing and Urban Development (HUD) publication based on 1996 Home
Mortgage Disclosure Act data, 46 percent of FHA’s loans were made in
central cities while 37 percent of the conforming conventional market’s
loans were for central city properties.14

Some researchers have described the historic contribution of federal
public housing policies to the concentration of poverty in central cities
and the movement of the middle class to suburban areas. To counteract
poverty in central cities and give low-income renters mobility, the
Congress established the Section 8 voucher and certificate programs to
provide tenant-based rental assistance. Using a voucher or certificate, a
low-income tenant can look for suitable housing anywhere in the United
States where a housing authority is administering a tenant-based program.
According to a 1998 article by an Urban Institute expert on the program,
the program has the potential to help families move to healthier
neighborhoods, but several obstacles currently limit the mobility of
Section 8 voucher and certificate holders.15 For example, the local public
housing authorities that manage the programs lack strong incentives to


13
 An underserved area is a metropolitan census tract in which (1) the median income is less than or
equal to 90 percent of the local area’s median income or (2) the minority population is greater than or
equal to 30 percent of the total population and the median income is less than or equal to 120 percent
of the local area’s median income.
14
  U.S. Housing Market Conditions, HUD, Office of Policy Development and Research (Aug. 1998).
15
 Margery Austin Turner, “Moving Out of Poverty: Expanding Mobility and Choice Through
Tenant-Based Housing Assistance,” Housing Policy Debate, Vol. 9, No. 2 (1998), pp. 373-394.



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                       encourage mobility and may lack resources to assist tenants seeking
                       apartments. Ineffective local program management also discourages
                       landlords in suburban areas from participating in the program.

                       Some agencies are implementing programs or taking steps to address
                       growth-related issues associated with their missions. For example, the
                       Federal Highway Administration administers the Congestion Mitigation
                       and Air Quality Improvement Program, which funds transportation
                       projects that help urban areas improve air quality. The Department of
                       Commerce’s Economic Development Administration includes among its
                       strategic funding priorities the consideration of sustainable development
                       and the reuse of brownfields.16 In addition, the Farmland Protection
                       Program, administered by the U.S. Department of Agriculture (USDA),
                       allows for the purchase of conservation easements17 or other interests on
                       land that would limit the conversion of prime and unique farmland to
                       nonagricultural uses, such as residential development. In fiscal year 1998,
                       USDA obligated $17.3 million under this program to preclude the conversion
                       of about 46,000 acres with an estimated easement value of about
                       $96 million. Nineteen states are participating in the program, including
                       Michigan, which expects to protect an estimated 1,728 acres, and Vermont,
                       which expects to protect an estimated 6,830 acres.


                       Tax code provisions that subsidize homeowners through the mortgage
Very Little Research   interest and property tax deductions are believed by some researchers to
Exists on the Impact   provide an incentive to purchase the more expensive housing that is
of Selected Tax        sometimes located outside urban areas.18 Very little research has focused
                       specifically on how preferential tax treatment for homeowners affects the
Policies on “Urban     direction or the magnitude of “urban sprawl.” Some studies present
Sprawl”                statistics they believe imply such a relationship, but no one has directly
                       estimated the effects of tax preferences on “urban sprawl.” Studies of
                       housing tax preferences have focused mainly on the effects of tax
                       preferences on the quantity of housing purchased, the price of housing, the
                       homeownership rate, the tendency of households to move, and federal tax
                       expenditures rather than on the location of the new housing. As discussed
                       in appendix I, researchers broadly agree that removing these tax

                       16
                        Brownfield sites are abandoned, idled, or underused industrial and commercial facilities where
                       expansion or redevelopment is complicated by real or perceived environmental contamination.
                       17
                        A conservation easement is a deed restriction that landowners voluntarily place on their property to
                       protect resources such as productive agricultural land or wildlife habitat.
                       18
                         The location of a home is not a condition that affects a homeowner’s ability to use the mortgage
                       interest deduction.



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                            preferences would reduce both housing purchases and the price of
                            housing. However, researchers have not reached consensus on the
                            magnitude of these effects.

                            Some supporters of new estate tax provisions providing exclusions for
                            qualified family-owned business interests and qualified conservation
                            easements believe that these provisions encourage the continued
                            operation of family farms and are likely to increase donations of land for
                            conservation purposes. A study by USDA’s Economic Research Service
                            provides some support for such claims. The study notes that the new
                            exclusion for qualified family-owned businesses “. . .should reduce, if not
                            eliminate, the need to sell farm assets to pay federal estate taxes. . . .”19
                            The study further notes that the exclusion for land subject to conservation
                            easement is likely to benefit a relatively small number of landowners.

                            The research also addresses the effect of changes in tax provisions
                            covering employer-paid parking benefits. While some studies indicate that
                            employer-paid parking, employer-provided incentives for ridesharing, and
                            high-occupancy-vehicle lanes may decrease the probability that an
                            employee will drive to work alone, a 1991 study on commuting incentives
                            notes that factors other than commuting costs are more important in
                            explaining patterns of commuting.20


Environmental Regulations   While the Clean Air Act and the Clean Water Act were enacted to improve
Play a Small Role in        the quality of the nation’s air and water, some have stated that they have
Decisions About Locating    unintentionally contributed to “urban sprawl.” For example, local
                            governments have claimed that the Clean Air Act’s regulations restricting
Businesses                  emissions in areas that do not meet air quality standards—typically urban
                            areas—contribute to decisions by businesses not to locate in central cities.
                            However, we did not find any quantitative research supporting claims that
                            environmental regulations governing air quality and water quality
                            encourage growth in undeveloped areas rather than in existing urban and
                            suburban areas. In fact, as discussed further in appendix I, a body of
                            research shows that environmental regulations have played a small role in
                            businesses’ choices of location.



                            19
                             James Monke and Ron Durst, The Taxpayer Relief Act of 1997: Provisions for Farmers and Rural
                            Communities, USDA, Economic Research Service, Agriculture Economic Report No. 764 (July 1998),
                            p. 18.
                            20
                             Genevieve Giuliano and Kenneth A. Small, “Is the Journey to Work Explained by Urban Structure?”
                            Urban Studies, Vol. 30, No. 9 (Nov. 1993), pp. 1485-1500.



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                             Because the Environmental Protection Agency (EPA) views “urban
                             sprawl” as an environmental problem, it has initiated programs such as
                             the Clean Air/Brownfields Partnership Pilot to improve air quality while
                             encouraging the redevelopment of cities and sustainable new
                             development. EPA started the pilot program because “it believes that
                             locating development on brownfield sites within the city as opposed to
                             greenfield sites in the surrounding areas has a net benefit for the
                             environment, including cleaner air.” By documenting the air quality
                             benefits of brownfield and urban redevelopment, EPA hopes to offer
                             communities greater flexibility in meeting federal clean air standards
                             while still meeting economic development needs. Baltimore, Chicago, and
                             Dallas are participating in the pilot program.


Executive Orders on          Some experts believe that the location of federal and postal facilities plays
Locating Federal Buildings   a significant role in the economic viability of downtown urban areas.
Encourage Consideration      Executive orders covering the location of federal facilities require federal
                             agencies to give first consideration to central business areas and historic
of Central Business          properties when deciding where to locate. However, we did not find any
Districts, but No Studies    studies quantifying the impact of the location of federal and postal
Quantify Effects of          facilities on “urban sprawl.” The lack of research in this area is due, in
Decisions About Location     large part, to a lack of data. The General Services Administration (GSA),
                             responsible for administering the policy on location for 8,073 federal
                             facilities, and the Postal Service, responsible for administering the policy
                             on location for 34,377 owned and leased postal facilities, are not required
                             to, and do not, centrally collect data that could be used to show whether
                             federal facilities are relocating to suburban areas.

                             In response to our request, GSA provided data on active building leases21
                             with effective dates between October 1, 1995, and November 13, 1998.
                             These data show that during the period analyzed, federally leased facilities
                             were, for the most part, located in central cities, not in suburban areas. As
                             shown in figure 2, almost half of all leased facilities were located in central
                             business districts. Furthermore, of the leased facilities that were located
                             outside central business districts, 91 percent were located within the
                             central city limits.22 According to GSA’s data, the two most common
                             reasons provided by agencies for not choosing a central business district


                             21
                               For buildings in cities where GSA leases 100,000 square feet or more of rental space.
                             22
                              This calculation does not include 129 of the total 642 leased facilities that were located outside the
                             central business district because they were not located within a metropolitan statistical area. A
                             metropolitan statistical area is an area that includes at least one city with 50,000 or more inhabitants or
                             an urbanized area with a total metropolitan population of at least 100,000.



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                                         location are that it (1) would conflict with the agency’s mission
                                         (40 percent) or (2) would not fulfill special requirements (27 percent). For
                                         example, the mission of the Immigration and Naturalization Service might
                                         require that one of its offices be located adjacent to a major port.
                                         According to GSA, data prior to 1995 were not readily available.


Figure 2: GSA’s Data on the Location
of Federal Buildings With Leases
Effective Between October 1, 1995, and                                                           3%
November 13, 1998                                                                                No data




                                                   52%                   45%                     Inside central business district




                                                                                                 Outside central business district


                                         Note: The 45 percent of buildings leased within the central business district represent
                                         approximately 17 million square feet, the 52 percent outside the central business district
                                         represent about 20 million square feet, and the remaining 3 percent represent about 0.5 million
                                         square feet.




                                         Although not required to do so, Postal Service officials have pledged to
                                         comply with the executive orders applicable to federal facilities. However,
                                         Postal Service officials said they collect data on the number of postal
                                         facilities that relocate annually but do not collect data on how many
                                         facilities relocate outside central cities. As a result, they could not provide
                                         us with data that would indicate to what extent postal facilities have
                                         relocated from central cities to suburban locations. Postal officials said
                                         they explore every option for maintaining retail operations in downtown
                                         locations and, in some cases, have retained retail operations in downtown
                                         locations and moved distribution operations to different locations. While
                                         the research includes anecdotal evidence of instances in which post office



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                          retail facilities have relocated from downtown locations in small towns,
                          Postal Service officials said that post offices are often the last facilities to
                          relocate from already empty downtowns. In response to heightened
                          sensitivity about the location of postal facilities, the Postal Service
                          recently issued regulations that establish procedures for notifying local
                          citizens and public officials of projects, as well as for soliciting and
                          considering community input, before making a final decision to expand an
                          existing facility, relocate to another existing building, or start new
                          construction.23 In February and March 1999, bills that include guidelines
                          for the relocation, closing, consolidation, or construction of post offices
                          were introduced in the House and Senate, respectively.


                          Regulatory review mechanisms do not directly consider “urban sprawl,”
Federal Regulatory        but several federal coordination efforts are addressing growth-related
Review Mechanisms         issues. Executive orders establish basic principles for agencies to follow
Do Not Directly           when developing regulations, and specific laws require agencies to
                          consider the impact of federal actions. For instance, laws such as NEPA and
Address “Urban            the Farmland Protection Policy Act offer federal agencies an opportunity
Sprawl,” but              to consider how their actions influence growth. Coordination among
                          federal agencies on growth-related issues is increasing, but most agencies
Coordination of           continue to focus on specific program issues.
Growth-Related
Issues Is Increasing
Regulatory Review         The executive orders governing the regulatory review process establish
Mechanisms Do Not         basic principles for developing regulations but are not intended to address
Directly Address Growth   “urban sprawl.” For example, Executive Order 12866, the order that
                          establishes the framework for regulatory planning and review, does not
Issues                    specifically require federal agencies to consider how their actions will
                          influence patterns of growth. Instead, the order outlines general principles
                          that federal agencies should adhere to when developing new regulations
                          or considering whether to modify existing regulations. For example, these
                          principles require agencies to consider available alternatives to direct
                          regulation; prepare cost-benefit analyses when developing regulations;
                          and, whenever feasible, seek the views of appropriate state, local, and
                          tribal officials before imposing regulatory requirements. According to the
                          Acting Administrator of the Office of Management and Budget’s Office of
                          Information and Regulatory Affairs—the office responsible for reviewing



                          23
                           The Postal Reorganization Act of 1970, as amended, already requires the Postal Service to consider
                          how a post office’s proposed closing or consolidation will affect the community served.



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significant regulatory actions24—the principles set forth in Executive
Order 12866 do not mention specific policy issues, such as “urban
sprawl,” because the principles were designed to be overarching and
applicable to all regulations. Executive Order 12875 supplements
Executive Order 12866 by requiring federal agencies to develop an
effective process for obtaining input when developing regulatory
proposals containing significant unfunded mandates.25 Nonetheless, as
part of its Sustainable Urban Environments effort, EPA plans to analyze
whether its regulations, policies, or programs create barriers or
disincentives that encourage sprawl or growth with negative
consequences.

NEPA  requires federal agencies to consider the indirect as well as the direct
effects of their actions on the environment and thus offers federal
agencies an opportunity to consider the influence of their actions on
growth. NEPA requires that a detailed environmental impact statement be
prepared for every major federal action that may significantly affect the
quality of the human environment. According to the act and its
implementing regulations, a statement must, among other things, present
the environmental effects of the proposed action—including the direct,
indirect, and cumulative effects. Although the Council on Environmental
Quality—which has issued regulations for implementing the procedural
provisions of NEPA—has not provided guidance beyond the implementing
regulations on determining indirect effects, EPA officials said that one of
the things that federal agencies may (but are not required to) consider is
the effect of a proposed action on “urban sprawl.” Officials responsible
for some of the water and sewer programs we reviewed said that they
considered growth-related issues, such as traffic congestion, as part of
their environmental assessment under NEPA.

The Farmland Protection Policy Act, enacted in 1981, gave the federal
government an opportunity to control “urban sprawl” by limiting the
extent to which its actions lead to the conversion of farmland. The act was
designed to minimize the extent to which federal programs contribute to
the unnecessary and irreversible conversion of farmland to
nonagricultural uses. It requires federal agencies to consider the adverse
effects of federal programs on the preservation of farmland and alternative
actions that could lessen these effects. However, USDA did not issue

24
  Executive Order 12866 defines significant regulations as those that may (1) have an annual effect on
the economy of $100 million or more; (2) interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the
rights and obligations of recipients; or (4) raise novel legal or policy issues.
25
 Unfunded mandates are laws that require an action on the part of another level of government
without providing funding.


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                           revised regulations to respond to changes made to the law in 1985 until
                           June 17, 1994, and, according to the Congressional Research Service and
                           others, the act has not been effectively implemented.


Coordination on            Coordination among federal agencies and between federal agencies and
Growth-Related Issues Is   their state and local counterparts on growth-related issues has steadily
Increasing                 increased in recent years through the efforts of a federal advisory group
                           and EPA. The President’s Council on Sustainable Development, a
                           broad-based federal advisory committee established in 1993, is addressing
                           development and growth issues by encouraging policies to support
                           regional collaboration among federal, state, and local government
                           agencies; public interest and community groups; and businesses. The
                           Council issued an initial report in 199626 that included goals and indicators
                           of sustainable development—such as decreasing traffic congestion and
                           increasing urban green space—and recommendations for changes at all
                           levels of government that the Council believes must occur to achieve
                           sustainable development.27 On January 9, 1999, the Council released a
                           draft of its latest report to the President presenting recommendations in
                           four policy areas, including policies to build partnerships to strengthen
                           communities. The Council expects to finalize the report in the spring of
                           1999. EPA also initiated a Smart Growth network to share information
                           among federal agencies and other interested parties on issues related to
                           “urban sprawl.”

                           More narrowly focused federal interagency coordination efforts are
                           indirectly addressing growth-related issues. These include efforts such as
                           the Federal Interagency Working Group on Brownfields, the Community
                           Empowerment Board, and the Clean Water Action Plan. The Federal
                           Interagency Working Group on Brownfields, established in 1996, is a
                           forum for federal agencies to exchange information on brownfields-related
                           activities and to develop a coordinated national agenda on brownfields.
                           The federal brownfields program focuses on redeveloping abandoned
                           industrial and commercial sites. The Community Empowerment Board’s
                           mission is to facilitate interagency cooperation, engage its members and
                           agencies to ensure follow-through on commitments to local areas, and
                           assist HUD and USDA with urban and rural programs. The purpose of the
                           Clean Water Action Plan is to coordinate the work of EPA, USDA, and other

                           26
                             Sustainable America: A New Consensus for Prosperity, Opportunity, and a Healthy Environment for
                           the Future, The President’s Council on Sustainable Development (Feb. 1996).
                           27
                            Sustainable development is development that meets the needs of the present generation without
                           compromising the ability of future generations to meet their own needs.



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               federal agencies to improve and strengthen water pollution control efforts.
               As part of this initiative, EPA is working with other agencies to identify
               ways to support locally initiated smart growth efforts designed to improve
               water quality.

               In addition, Executive Order 12372 provides a vehicle for coordination
               between the federal government and state and local governments. This
               order, dated July 14, 1982, requires federal agencies to provide
               opportunities for affected state and local officials to review proposed
               federal financial assistance and direct federal development.28 Applicants
               for the aid are expected to respond to concerns raised by state or local
               agencies before the application is approved by the federal agency.
               According to federal officials, concerns raised under this process
               sometimes include growth-related issues.

               Some experts on local growth issues have recommended that the federal
               government use a regional approach to address local growth issues. For
               instance, the Center for Neighborhood Technology, a Chicago-based
               nonprofit group that supports community development issues linked to
               ecological improvements, endorses a stronger linkage between the federal
               government and metropolitan areas to solve regional problems. According
               to a 1997 Center article, the federal government can help further regional
               goals through leverage, or using its resources to enhance network
               relationships; linkage, or connecting various community networks with
               each other; and learning, or developing network capabilities for
               communities to more effectively reach their goals.29 Proponents of
               regionalism often cite the metropolitan planning organization structure
               established by the Intermodal Surface Transportation Efficiency Act of
               1991 and continued with only modest refinements by the Transportation
               Equity Act of the 21st Century as an example of how the federal
               government is responding to local needs within regions.


               The extent of the federal influence on “urban sprawl” is not well
Observations   documented or quantified. The lack of agreement on a definition of
               “urban sprawl,” coupled with the many interrelated factors that
               contribute to this condition, makes it extremely difficult to isolate and
               measure the influence of specific factors—including those relating to
               federal programs and policies. The shortage of quantitative evidence does

               28
                 Executive Order 12372 was slightly amended by Executive Order 12416 in Apr. 1983.
               29
                Clement Dinsmore, The Federal Role in Metropolitan Cooperation, Center for Neighborhood
               Technology (1997).



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                     not mean that federal programs and policies do not have an impact on
                     “urban sprawl”; it simply means that the level of federal influence is
                     difficult to determine. Even so, growth-related considerations are
                     emerging as concerns for federal agencies. In addition, state and local
                     governments, which remain primarily responsible for land-use decisions,
                     are taking steps such as passing legislation to manage growth. Though all
                     levels of government are searching for ways to counter the negative
                     effects of “urban sprawl” and the unintended consequences of federal
                     policies, these efforts will be constrained by the limited availability of
                     quantitative data and the potential costs of identifying spending patterns.


                     We provided a draft of this report to the 13 federal agencies—USDA,
Agency Comments      Commerce (for the Economic Development Administration), Defense (for
and Our Evaluation   the U.S. Army Corps of Engineers), Energy, EPA, GSA, HUD, the Interior, the
                     Internal Revenue Service, Transportation, Treasury, the Office of
                     Management and Budget (OMB), and the U.S. Postal Service—that
                     administer or oversee the programs and policies discussed in this report.
                     Commerce, EPA, and GSA provided letters commenting on the draft that
                     appear in appendixes III, IV, and V of the report, along with our detailed
                     responses. Energy, HUD, the Interior, the Army Corps of Engineers, the
                     Internal Revenue Service, and OMB provided clarifying language and
                     technical comments that we incorporated into the report as appropriate.
                     USDA, Treasury, and the U.S. Postal Service did not have any comments on
                     the report.

                     Commerce’s letter characterized the report as a fair and appropriate
                     representation of “urban sprawl” as it relates to the programs of the
                     Department’s Economic Development Administration (EDA). Commerce’s
                     additional comments focused primarily on EDA’s local planning process
                     and suggested that the process, which involves multicounty planning
                     organizations that assist EDA in establishing priorities for projects and
                     investments, could be viewed as another model for regionalism and a
                     means for the federal government to address local growth issues. Because
                     EDA’s local planning process was not cited as an example of regionalism in
                     the literature we reviewed or by the officials we interviewed, we did not
                     review the process and, therefore, did not add it as an example in the
                     report. See appendix III.

                     EPA agreed that most researchers have found that federal policies
                     contribute, to some degree, to sprawl, but that the magnitude and extent
                     of the federal contribution is difficult to quantify. EPA said we could have



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made a stronger case as to whether certain federal policies contribute to
lower-density development by grouping policies that have similar effects
in one section and noting that they promote low-density development. In
addition, EPA said that good data exist on some federal policies—such as
transportation—and their contribution to outward movement and that we
could highlight these areas. While we agree with EPA that there is research
on several federal programs and policies that may also contribute to
outward movement, the lack of research in other areas makes the
suggestion about grouping the policies in one section impractical. In
addition, creating such a section in the report might lead readers to
assume that the other policies do not contribute to lower-density
development when, in reality, research does not exist to prove the point
either way. Therefore, we did not make this change to the report. EPA was
also concerned about our discussion of the impact of outward growth and
said there is widespread agreement within the research community on the
effects of outward growth. We disagree with EPA that there is widespread
agreement. As summarized in appendix II of the report, a synthesis of
available literature found very little agreement on many alleged positive
and negative effects of “urban sprawl.” Because our intent was to provide
a balanced discussion of the positive and negative implications of “urban
sprawl” cited by experts, we revised the language in the report to make it
clear that statements about positive and negative effects are the views of
experts. See appendix IV.

GSA’s  comments provided supplemental information on the agency’s
implementation of the executive orders governing the location of federal
facilities. We considered GSA’s comments on the implementation of the
executive orders but did not make any changes to the report because we
believe that the report contains sufficient information on these activities.
GSA also provided additional information on its activities that support the
Federal Livable Communities Agenda, introduced as part of the fiscal year
2000 budget. For example, among other things, GSA began a Good
Neighbor Program in 1996 that encourages the use of space on the ground
floor of federal buildings for restaurants and shops, as well as the use of
federal buildings and plazas for activities and events. In response to GSA’s
comments, we referred in appendix I of the report to GSA’s Good Neighbor
Program. See appendix V.

Along with their technical comments, HUD and OMB provided general
comments. HUD praised the report for recognizing the complex forces of
urban development and decline and for treating the subject with
objectivity. OMB thought the report implied that there is no role for the



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              federal government with respect to “urban sprawl.” OMB said that a more
              appropriate conclusion would be that “. . . the federal government’s
              appropriate response may be to align its own actions in support of local
              efforts and provide a broad array of tools to local communities so that
              they can address issues in a comprehensive manner.” However, the report
              does not state that there is no role for the federal government, but rather
              observes that it is difficult, on the basis of existing research, to determine
              what the federal role should be. We also describe the role of the federal
              government in several initiatives.


              To determine the history and implications of “urban sprawl,” we
Scope and     conducted interviews and collected documentation and studies from the
Methodology   literature on sprawl and growth-related issues. Specifically, we
              interviewed officials from federal, state, and local governments;
              educational institutions, such as the Albany Law School; and private
              nonprofit organizations, such as the Brookings Institution and the National
              Trust for Historic Preservation. We attended the National Governors’
              Association’s Conference on Smart Growth, the Georgia
              Conservancy/Urban Land Institute/Environmental Protection Agency
              Smart Growth Conference, and the Second Annual Partners for Smart
              Growth Conference. To better understand the implications of “urban
              sprawl” at the local level, we attended round table discussions on sprawl
              in Burlington, Vermont, and Denver, Colorado. We also reviewed key
              studies such as The Costs of Sprawl Revisited by Robert Burchell and
              others and Crabgrass Frontier: The Suburbanization of the United States
              by Kenneth Jackson. A selected bibliography of the studies we reviewed
              appears at the end of this report.

              To determine the evidence that exists on the federal influence on “urban
              sprawl,” we interviewed officials and collected documentation and
              studies from the federal agencies administering selected federal programs.
              Specifically, we interviewed federal officials and gathered documentation
              from the departments of Agriculture, Commerce, Energy, HUD, the Interior,
              Transportation, and the Treasury and agencies including the U.S. Army
              Corps of Engineers, EPA, GSA, the Internal Revenue Service, OMB, and the
              U.S. Postal Service. We also drew on our own prior work on these
              agencies.

              To further identify quantitative evidence on how selected federal programs
              and policies influence “urban sprawl,” we conducted literature searches
              and interviewed and gathered studies from think tanks and advocacy



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groups. We searched economic and business literature to identify
quantitative research on the federal influence on sprawl. We did not
independently assess the validity of the research. We interviewed officials
and gathered studies from organizations such as the American Farmland
Trust, Brookings Institution, Fannie Mae, National Academy of Public
Administration, National Association of Home Builders, National
Association of Realtors, Natural Resources Defense Council, National
Trust for Historic Preservation, Northeast-Midwest Institute, Surface
Transportation Policy Project, Transportation Research Board, U.S.
Conference of Mayors, and Urban Institute. In addition, we employed J.M.
Pogodzinski, an economics professor from San Jose State University, to
identify and summarize research on the implications of federal tax policies
on sprawl. To identify major federal municipal water and sewer programs,
we also searched the June 1998 edition of the Catalog of Federal Domestic
Assistance. We did not include water and sewer programs in our listing if
they did not provide assistance for the new construction, upgrade,
operation, or maintenance of municipal systems or if they had not had at
least one annual funding or expenditure of approximately $50 million or
more since fiscal year 1995. We also conducted an electronic mail survey
of colleges and universities with urban/regional planning programs
accredited by the American Planning Association. We received responses
from 14 schools.

To identify regulatory review and coordination mechanisms related to
“urban sprawl,” we conducted interviews with and collected
documentation and studies from federal agencies. We reviewed executive
orders and the Council on Environmental Quality’s regulations on NEPA.
We interviewed federal officials at HUD, EPA, and OMB. We also reviewed
reports published by the President’s Council on Sustainable Development
and the Center for Neighborhood Technology.

We performed our work from July 1998 through April 1999 in accordance
with generally accepted government auditing standards.


As arranged with your offices, unless you announce its contents earlier,
we plan no further distribution of this report until 5 days after the date of
this letter. At that time, we will send copies to Senator John Chafee,
Chairman, Senate Committee on Environment and Public Works;
Representative Thomas Bliley, Jr., Chairman, and Representative John
Dingell, Ranking Minority Member, House Committee on Commerce;
Representative Bud Shuster, Chairman, and Representative James L.



Page 23                                GAO/RCED-99-87 Research on “Urban Sprawl”
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Oberstar, Ranking Minority Member, House Committee on Transportation
and Infrastructure; and other appropriate congressional recipients. We are
also sending copies of this report to the Honorable Dan Glickman,
Secretary of Agriculture; the Honorable William M. Daley, Secretary of
Commerce; the Honorable William S. Cohen, Secretary of Defense; the
Honorable Bill Richardson, Secretary of Energy; the Honorable Andrew
Cuomo, Secretary of Housing and Urban Development; the Honorable
Bruce Babbitt, Secretary of the Interior; the Honorable Rodney E. Slater,
Secretary of Transportation; the Honorable Robert E. Rubin, Secretary of
the Treasury; the Honorable Charles O. Rossotti, Commissioner of Internal
Revenue; the Honorable Carol M. Browner, Administrator of the
Environmental Protection Agency; the Honorable David J. Barram,
Administrator of the U.S. General Services Administration; the Honorable
William Henderson, Postmaster General; and the Honorable Jacob Lew,
Director of the Office of Management and Budget. Copies will also be
made available to others upon request.

If you have any questions, please call me at (202) 512-7631. Major
contributors to this report are listed in appendix VI.




Judy A. England-Joseph
Director, Housing and Community
  Development Issues




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Page 25   GAO/RCED-99-87 Research on “Urban Sprawl”
Contents



Letter                                                                                               1


Appendix I                                                                                          28
                        Agriculture                                                                 28
The Influence of        Environmental Protection                                                    29
Selected Federal        Housing                                                                     32
                        Location of Federal and Postal Facilities                                   34
Policies and Programs   Taxation                                                                    37
on “Urban Sprawl”       Transportation                                                              41
                        Utility Pricing                                                             44
                        Water-Sewer Infrastructure                                                  47


Appendix II                                                                                         53
Summary of Studies
on Factors Related to
“Urban Sprawl”
Appendix III                                                                                        58
                        GAO’s Comments                                                              61
Comments From the
Department of
Commerce
Appendix IV                                                                                         62
                        GAO’s Comments                                                              64
Comments From the
Environmental
Protection Agency
Appendix V                                                                                          65
                        GAO’s Comments                                                              68
Comments From the
General Services
Administration




                        Page 26                               GAO/RCED-99-87 Research on “Urban Sprawl”
                        Contents




Appendix VI                                                                                        69
Major Contributors to
This Report
Selected Bibliography                                                                              70


Tables                  Table I.1: Reasons for Locating Federal Facilities Outside the             35
                          Central Business District
                        Table I.2: Analysis of Federal Highway Spending for Fiscal Year            44
                          1995
                        Table I.3: Availability of Aggregate Funding Data for Major                50
                          Federal Water and Sewer Programs, Distributed by Type of
                          Activity


Figures                 Figure 1: Percentage of Population in 10 Largest Metropolitan               5
                          Areas, as Defined in 1990, Living Inside and Outside the Central
                          City, 1950-90
                        Figure 2: GSA’s Data on the Location of Federal Buildings With             15
                          Leases Effective Between October 1, 1995, and November 13,
                          1998
                        Figure I.1: Obligation of Federal Funds for Highway                        43
                          Improvements, Fiscal Years 1992-97




                        Abbreviations

                        DOE        Department of Energy
                        DOT        Department of Transportation
                        EDA        Economic Development Administration
                        EPA        Environmental Protection Agency
                        FHA        Federal Housing Administration
                        GAO        General Accounting Office
                        GSA        General Services Administration
                        HUD        Department of Housing and Urban Development
                        NEPA       National Environmental Policy Act
                        OMB        Office of Management and Budget
                        USDA       U.S. Department of Agriculture


                        Page 27                              GAO/RCED-99-87 Research on “Urban Sprawl”
Appendix I

The Influence of Selected Federal Policies
and Programs on “Urban Sprawl”

                    This appendix presents the results of our review of research on the
                    relationship between specific federal programs and policies and “urban
                    sprawl.” The questions included in the appendix were asked in the
                    June 10, 1998, request letter. The appendix covers policies and programs
                    related to agriculture, environmental protection, housing, the location of
                    federal and postal facilities, taxation, transportation, utility pricing, and
                    water and sewer infrastructure. For each policy, the appendix includes
                    (1) the results of our literature review and (2) the views of federal, state,
                    and local government agencies; advocacy groups; and academia.



Agriculture

Issue:              Which federal agricultural programs, if any, support the objective of
                    maintaining prime agricultural land near areas becoming more urban?


Research Results:   We identified only one U.S. Department of Agriculture (USDA) program that
                    is specifically designed to preserve prime agricultural land—the Farmland
                    Protection Program. The objective of this program is to purchase
                    conservation easements30 or other interests on land that would limit the
                    conversion of prime and unique farmland to nonagricultural uses. The
                    Department has already obligated the $35 million made available for the
                    program, and the President has requested an additional $28 million in
                    Commodity Credit Corporation funds and $50 million in discretionary
                    funds for the program in his fiscal year 2000 budget submission. In
                    addition, the Farmland Protection Policy Act requires federal agencies to
                    consider the adverse effects of federal programs on the preservation of
                    farmland and alternative actions that could lessen these effects. However,
                    according to the literature we reviewed, the act has not been enforced and
                    is, therefore, limited in its effectiveness. USDA officials told us that the act
                    is not enforceable because it offers no guidance for choosing a less
                    damaging alternative and no incentives for doing so.

                    Whether urbanization poses a threat to prime agricultural land and
                    agricultural production has been debated in recent years. For example, in
                    1994, USDA’s Economic Research Service reported, after studying rural land
                    conversion rates between 1960 and 1980, that the loss of farmland to urban
                    uses did not pose a threat to total cropland or agricultural production in

                    30
                     A conservation easement is a deed restriction that landowners voluntarily place on their property to
                    protect resources such as productive agricultural land and wildlife habitat.



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                    Appendix I
                    The Influence of Selected Federal Policies
                    and Programs on “Urban Sprawl”




                    the United States.31 In a 1996 report, the Economic Research Service
                    concluded, on the basis of analyses conducted over the past two decades,
                    that urbanization does not pose a threat to the nation’s supply of prime
                    cropland or its ability to produce food.32 In 1997, the American Farmland
                    Trust reported, after analyzing USDA’s most recent National Resources
                    Inventory, that about 4.3 million acres of the nation’s prime and unique
                    farmland were converted between 1982 and 1992 and that most of this loss
                    was due to urbanization.33 The American Farmland Trust also determined
                    that 79 percent of the fruit, 69 percent of the vegetables, 52 percent of the
                    dairy products, and 28 percent of the meat produced in the United States
                    was produced on high-quality farmland threatened by development.
                    Although there is disagreement on the potential impact of lost farmland,
                    both the Economic Research Service and the American Farmland Trust
                    have stated that farmland preservation is one way to curb “urban
                    sprawl.” USDA’s Natural Resources Conservation Service is equally
                    concerned about erosion resulting from the increased use of marginal land
                    in agricultural production.



Environmental
Protection

Issue:              Do federal policies on air quality encourage development in greenfields,
                    rather than in existing urban and suburban areas?


Research Results:   Certain provisions of the Clean Air Act have been criticized because they
                    may encourage development in greenfields, rather than in existing urban
                    and suburban areas; however, research has shown that private firms’
                    decisions about location are not influenced to any significant extent by
                    environmental regulations. The provisions often cited are the stringent
                    restrictions imposed when an area is not in compliance with the standards
                    for certain air pollutants, such as ozone, and the requirement that federally
                    supported transportation activities conform with states’ plans for attaining
                    and maintaining air quality standards. However, according to a study of

                    31
                     Marlow Vesterby, Ralph E. Heimlich, and Kenneth S. Krupa, Urbanization of Rural Land in the United
                    States, USDA, Economic Research Service, Agricultural Economic Report No. 673 (Mar. 1994).
                    32
                     Keith Wiebe, Abebayehu Tegene, and Betsey Kuhn, Partial Interests in Land: Policy Tools for
                    Resource Use and Conservation, USDA, Economic Research Service, Agricultural Economic Report
                    No. 744 (Nov. 1996).
                    33
                     A. Ann Sorensen, Richard P. Greene, and Karen Russ, Farming on the Edge, American Farmland
                    Trust (Mar. 1997).
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                    the effects of environmental regulations on competitiveness, evidence
                    from U.S. studies questions the widespread belief that environmental
                    regulations have a significant effect on the siting of new plants in the
                    United States.34 In addition, a review of studies analyzing the effects of
                    environmental regulation on decisions about location concluded that
                    “although we cannot conclude statistically that environmental regulations
                    are unimportant without first asking more refined questions, there is little
                    evidence that regulations have become a truly important location factor
                    for a wide spectrum of industries.”35 Finally, a study of the impact of
                    environmental regulations on the location of Fortune 500 manufacturing
                    branch plants did not find any statistically significant effects of
                    environmental regulation on the location of businesses.36


Issue:              Do requirements for water quality treatment (including combined sewer
                    overflows) encourage development in greenfields, rather than in existing
                    urban and suburban areas?


Research Results:   Combined sewer systems are sewer systems that collect both storm water
                    runoff and sanitary sewage in the same pipe. They serve roughly 950
                    communities with about 40 million people. Most communities with
                    combined sewer systems are located in the Northeast and Great Lakes
                    regions. According to the Environmental Protection Agency (EPA),
                    communities with combined sewer systems will incur up to $45 billion in
                    costs to comply with its combined sewer overflow control policy. Issues
                    associated with the costs of compliance have been raised by the CSO
                    Partnership, a consortium of about 100 communities with combined sewer
                    overflow problems. A Partnership official stated that municipalities served
                    by such systems are often required to raise their water and sewer rates to
                    cover the costs of compliance; the higher rates then discourage growth in
                    these jurisdictions and drive development out to the surrounding areas.
                    However, we did not find any quantitative research supporting this view.

                    As part of the National Pollutant Discharge Elimination System, EPA
                    requires certain entities to obtain permits for their storm water discharges.
                    In November 1990, the agency issued storm water control regulations that
                    require communities with over 100,000 inhabitants and industrial sites

                    34
                     Adam B. Jaffe, et al., “Environmental Regulation and the Competitiveness of U.S. Manufacturing:
                    What Does the Evidence Tell Us?” Journal of Economic Literature, Vol. 33 (Mar. 1995), pp. 132-163.
                    35
                     Kelly Robinson, “Industrial Location and Air Pollution Controls: A Review of Evidence From the
                    USA,” Progress in Human Geography, Vol. 19, No. 2 (1995), p. 223.
                    36
                     Timothy J. Bartik, “The Effects of Environmental Regulation on Business Location in the United
                    States,” Growth and Change, Vol. 19, No. 3 (Summer 1988), pp. 22-44.
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                    (including construction activity sites involving at least 5 acres) to obtain
                    permits. In January 1998, the agency proposed regulations that would
                    extend permitting requirements to small communities in urbanized areas
                    and small construction sites. We did not find any quantitative research
                    indicating that EPA’s storm water control regulations encourage “urban
                    sprawl.”


Issue:              Does the literature mention other Clean Water Act provisions that can
                    influence “urban sprawl?”


Research Results:   Although several documents we reviewed stated that federal wetlands
                    policy influences “urban sprawl,” we did not find any quantitative
                    research proving that federal policies on wetlands encourage “urban
                    sprawl.” Section 404 of the Clean Water Act regulates the discharge of
                    dredged and fill material into the nation’s waterways, including wetlands.
                    Most land preparation and construction activities in wetlands would
                    involve the discharge of fill and would, therefore, require a permit from
                    the U.S. Army Corps of Engineers. In fiscal year 1998, the Corps issued
                    89,857 permits, allowed about 31,090 wetlands acres to be filled, and
                    required that about 46,630 wetlands acres be mitigated.37 An article
                    analyzing the influence of environmental mandates on urban growth
                    concluded that although section 404 does not significantly limit urban
                    growth, it does discourage and delay development in some areas.38

                    The Sierra Club and the Environmental Working Group have reported that
                    the Corps is encouraging development by issuing certain nationwide
                    permits—generic licenses that grant blanket authorization for specific
                    types of fill in wetlands of certain sizes.39 One of the permits they criticized
                    was Nationwide Permit 26, which allows discharges into headwaters and
                    isolated waters as long as they do not cause the loss of more than 3 acres
                    of waters. In response to concerns about the extent to which adverse
                    effects are being authorized by Nationwide Permit 26, the Corps agreed to



                    37
                     Through mitigation, the Corps seeks to offset the adverse effects of wetlands conversion, generally
                    by requiring the replacement of important wetlands functions and values.
                    38
                     Lindell Marsh, Douglas Porter, and David Salvesen, “The Impact of Environmental Mandates on
                    Urban Growth,” Cityscape: A Journal of Policy Development and Research, Vol. 2, No. 3 (Sept. 1996),
                    pp. 127-154.
                    39
                     Brett Hulsey, $ubsidizing Disaster: How Your Tax Money and Weak Wetland Protection Increase
                    Your Risk of Being Flooded, Sierra Club Midwest Office (Apr. 15, 1997).



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                    replace the permit with activity-specific permits that more clearly define
                    the activities being regulated.



Housing

Issue:              Which federal housing programs, if any, have credit policies that
                    encourage new development in suburban areas rather than reinvestment
                    in central city areas?


Research Results:   The Department of Housing and Urban Development (HUD), through its
                    Federal Housing Administration (FHA), operates the federal government’s
                    largest single-family home mortgage insurance program and oversees the
                    financial safety and soundness of the two privately owned but federally
                    chartered corporations—Fannie Mae (the Federal National Mortgage
                    Association) and Freddie Mac (the Federal Home Loan Mortgage
                    Corporation). These programs represent the primary tools used by HUD to
                    reach its goal of increasing homeownership opportunities for low- and
                    moderate-income families and for those living in underserved areas.

                    HUD’s single-family home mortgage insurance programs are available to all
                    qualified borrowers for homes located in rural, suburban, or central city
                    areas. For this reason, it is not clear what impact, if any, these programs
                    currently have on “urban sprawl.” While FHA’s relatively liberal credit and
                    down payment requirements would facilitate qualified inner city residents’
                    purchases of homes in the suburbs, other aspects of the program are
                    designed to stimulate mortgage lending in the inner city. In addition, data
                    from FHA show that its insured loans in metropolitan areas are almost
                    evenly concentrated between central cities and suburbs.

                    Our review of existing research identified no recent studies that directly
                    address the relative impact of federal single-family housing programs on
                    development in suburban and central city locations. However, reports by
                    HUD and GAO show that FHA is an important source of mortgage insurance
                    for low-income and minority home buyers and for homes purchased in
                    central cities.40, 41 Under the Home Mortgage Disclosure Act, the federal

                    40
                     An Analysis of FHA’s Single-Family Insurance Program, HUD, Office of Policy Development and
                    Research (Oct. 1995).
                    41
                       Homeownership: FHA’s Role in Helping People Obtain Home Mortgages (GAO/RCED-96-123, Aug. 13,
                    1996).



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                    government collects data on the income, race, and geographic location of
                    borrowers obtaining home mortgages. These data show that in 1996
                    almost half (46 percent) of FHA’s single-family loans were made for homes
                    located in central cities and 41 percent were made for homes in what are
                    defined as underserved areas.42 In comparison, 37 percent of conventional
                    loans purchased by Fannie Mae and Freddie Mac were for homes located
                    in central cities.


Issue:              Do low-income housing tax credits favor new construction rather than
                    rehabilitation of existing housing?


Research Results:   The Low-Income Housing Tax Credit program uses tax credits as an
                    incentive for developers and investors to provide affordable rental housing
                    for households whose income is at or below specified income levels.
                    Recent quantitative studies include information on the mix of new
                    construction and rehabilitation and indicate whether projects are located
                    in urban or rural areas. A 1997 GAO report revealed that most low-income
                    housing developments were newly constructed, but some were
                    rehabilitated.43 This report examined projects placed in service between
                    1992 and 1994. Another study that looked at 2,554 tax credit projects
                    completed between 1987 and 1996 found that the number of projects
                    located in central cities increased over time.44 This study focused on data
                    from four syndicators of tax-credit equity.45 HUD reviewed projects
                    completed primarily between 1992 and 1994 found that more than half of
                    the units were located in central cities.46 HUD officials recognize there may
                    be some regional implications for this program and believe more
                    information on the potential impact of the Low-Income Housing Tax
                    Credit program’s policies is needed.

                    42
                      Metropolitan census tracts in which (1) the median income is less than or equal to 90 percent of the
                    local area’s median income or (2) the minority population is greater than or equal to 30 percent of the
                    total population and the median income is less than or equal to 120 percent of the local area’s median
                    income.
                    43
                     Tax Credits: Opportunities to Improve Oversight of the Low-Income Housing Program
                    (GAO/GGD/RCED-97-55, Mar. 28, 1997).
                    44
                     Jean L. Cummings and Denise DiPasquale, Building Affordable Rental Housing: An Analysis of the
                    Low-Income Housing Tax Credit Program, City Research (Feb. 1998).
                    45
                     Syndicators act as brokers between developers and investors by pooling several projects into one tax
                    credit equity fund and marketing the tax credits to investors, thus spreading the risk to investors
                    across the projects.
                    46
                     Abt Associates, Inc., Development and Analysis of the National Low-Income Housing Tax Credit
                    Database, HUD, Office of Policy Development and Research (July 1996).



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Location of Federal
and Postal Facilities

Issue:                  To what extent are federal agencies complying with the executive orders
                        governing federal facility location decisions?


Research Results:       Executive Orders 12072 and 13006 require federal agencies making urban
                        location decisions to give first consideration to central business areas and
                        historic properties. According to information provided by the General
                        Services Administration (GSA) on 1,242 active leases, about 45 percent of
                        the leased facilities are located within central business districts.47 GSA
                        explained that a federal facility might be located outside a central business
                        district if (1) a location within the central business district conflicted with
                        the agency’s mission, (2) an agency’s special requirements could not be
                        met within the central business district, or (3) there was not enough
                        competition within the central business district.

                        The Rural Development Act of 1972, as amended, directs federal agencies
                        to give first priority to locating new offices and other facilities in rural
                        areas. However, when an agency’s mission and programs require an urban
                        location, the agency must comply with Executive Orders 12072 and 13006.
                        Executive Order 12072, promulgated in August 1978 by President Carter,
                        directs federal agencies to give first consideration to a centralized
                        community business area and adjacent areas of similar character48 when
                        filling space needs in urban areas. Executive Order 13006, issued by
                        President Clinton in May 1996, reaffirms the commitment set forth in
                        Executive Order 12072 to strengthen the nation’s cities by encouraging the
                        location of federal facilities in central cities. Specifically, it requires federal
                        agencies to give first consideration to historic properties within historic
                        districts, especially those located in central business areas.

                        GSAis responsible for administering Executive Orders 12072 and 13006.
                        The implementing regulations for Executive Order 12072 state that
                        agencies can locate outside a central business area only if the market
                        cannot supply suitable space or if a central business area cannot meet the

                        47
                         Central business districts are specific districts within central business areas where localities have
                        chosen to concentrate the development of offices or mixed uses.
                        48
                          These adjacent areas may include empowerment zones or other redevelopment areas that are outside
                        the central business district but still within the city limits.



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                                         agency’s mission requirements. As discussed in the letter of this report,
                                         almost half of the leased facilities that GSA analyzed were located in central
                                         business districts. Moreover, as shown in table I.1, the most common
                                         reason cited by GSA for locating outside a central business district was that
                                         locating within it would conflict with the agency’s mission. We did not
                                         independently verify GSA’s reasons.

Table I.1: Reasons for Locating
Federal Facilities Outside the Central   Reason                                       Number of leases         Percentage of leases
Business District                        Location within the central
                                         business district would
                                         conflict with the agency’s
                                         mission                                                     257                         40
                                         The agency’s specialized
                                         requirements could not be
                                         met within the central
                                         business district                                           175                         27
                                         Competition was inadequate
                                         within the central business
                                         district                                                    133                         21
                                         Other reasons (e.g., the
                                         central business district was
                                         not defined)                                                 34                          5
                                         Combination of the above                                     20                          3
                                         No information available                                     23                          4
                                         Total                                                       642                        100
                                         Source: GAO’s analysis of data provided by GSA.



                                         GSA has been both criticized and praised for its enforcement of Executive
                                         Order 12072. For instance, the National Council for Urban Economic
                                         Development criticized GSA for allowing the Internal Revenue Service to
                                         leave the central business district in Fresno, California, despite efforts to
                                         find a suitable location within the downtown area. According to GSA, it
                                         reviewed the Internal Revenue Service’s request to move out of downtown
                                         Fresno and found that the request was mission driven and that the Internal
                                         Revenue Service was in compliance with Executive Order 12072. The
                                         Secretary of the Treasury attested to the fact that the move was based on
                                         the Internal Revenue Service’s mission-related requirements. In
                                         December 1998, the Mayor of Baltimore, Maryland, praised GSA for adding
                                         over 500 new federal jobs to the city and complying with Executive Order
                                         12072.




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                        In addition to enforcing the executive orders covering the location of
                        federal facilities, GSA initiated the Good Neighbor Program in 1996 to
                        promote local economic and civic activities. The agency uses the program
                        to accomplish a variety of civic initiatives in communities with federal
                        facilities. For instance, GSA sets aside ground-floor and plaza space in
                        federal buildings for public activities and events and joins business
                        improvement districts—districts created by property owners so that they
                        can tax themselves to cover the costs of maintenance, security, and other
                        services.


Issue:                  Is there an effective process for considering the potential impact of
                        relocating postal facilities on existing communities?


Research Results:       The U.S. Postal Service issued regulations effective October 5, 1998, that
                        greatly expanded its procedures for notifying local citizens and public
                        officials of facility projects, as well as for soliciting and considering
                        community input, before making a final decision to expand an existing
                        facility, relocate to another existing building, or start new construction.
                        These procedures, which are similar to those required when post offices
                        are closed, include

                    •   meeting with and sending a letter to high-ranking local public officials to
                        describe the project that is under consideration;
                    •   sending an initial news release to local media;
                    •   posting a copy of the letter to local officials and/or the news release in the
                        lobby of the affected post office; and
                    •   except under exceptional circumstances, attending or conducting at least
                        one mandatory public hearing to describe the project, invite questions,
                        solicit written comments, and describe the process for considering
                        community input.

                        Although it is too soon to determine if the new process will be effective,
                        critics have maintained that members of affected communities should be
                        able to appeal relocation decisions to the Postal Rate Commission, as they
                        can do when post office closures are planned. In February and
                        March 1999, bills that include guidelines for the relocation, closing,
                        consolidation, or construction of post offices were introduced in the
                        House and Senate, respectively. The bills would allow any person served
                        by a post office whose relocation has been approved to appeal the
                        relocation decision to the Postal Rate Commission.



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                    According to some of the researchers whose work we reviewed, the
                    relocation of post office retail facilities from downtown locations to
                    outlying areas is detrimental to the downtown economy and contributes to
                    “urban sprawl.” However, we did not find any quantitative research that
                    supports this conclusion. One reason for the lack of quantitative research
                    may be a lack of data. Although the Postal Service can determine how
                    many relocations occurred during a given year, it cannot readily determine
                    how many postal facilities were relocated to outlying areas because it does
                    not have centralized data showing whether the facilities were relocated
                    across the street or in outlying areas. However, organizations such as the
                    National Trust for Historic Preservation follow this issue and have
                    documented instances when post offices have been relocated outside
                    central business districts.



Taxation

Issue:              Do federal tax provisions that create a tax advantage for more expensive
                    housing tend to favor low-density development outside existing urban and
                    suburban areas?


Research Results:   We identified many studies of federal tax preferences for owner-occupied
                    housing that focus mainly on the effects of tax preferences on the quantity
                    of housing consumed, the price of housing, the homeownership rate, the
                    tendency of households to move, and federal tax expenditures. We found
                    very little research that focused specifically on whether preferential tax
                    treatment for homeowners affects “urban sprawl.” Although some
                    authors present statistics that they believe imply such a relationship, no
                    one has directly estimated the effects of tax preferences on “urban
                    sprawl.”

                    The main features of the federal tax code pertaining to owner-occupied
                    housing that have been analyzed in the literature are the deductibility of
                    mortgage interest payments and property taxes and the tax treatment of
                    capital gains on housing. Investment in owner-occupied housing is treated
                    differently from other investments under the income tax rules in three
                    ways. First, the value of housing services (the imputed rental income) that
                    a homeowner derives from occupying his or her own house is not included
                    in his or her taxable income. This means that an owner-occupier’s income




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from housing (the imputed rental income) is treated differently from a
landlord’s rental income, which is subject to tax. Second, under the
Taxpayer Relief Act of 1997, gains due to the appreciation of
owner-occupied homes are exempt from income taxation for almost all
taxpayers. Third, other costs of homeownership (e.g., maintenance costs)
are not deductible.

The direction and magnitude of the effects of the tax preferences for
owner-occupied housing on the location of housing are also uncertain. To
analyze the effects of these preferences, Blackely and Follain employed a
widely used economic model of households’ locational choices.49 They
concluded that, in general, the impact of the preferences on locational
choice was ambiguous. For specific model assumptions that they
considered reasonable, they found that the preferences may, in fact, be a
countervailing force to suburbanization.

A study by Gyourko and Voith developed three theoretical models to
determine the conditions under which tax preferences for owner-occupied
housing would contribute to the decentralization of metropolitan areas.50
The authors did not develop quantitative estimates of these effects.
Gyourko and Voith argued that tax preferences by themselves do not
create greater population decentralization, less dense central cities, and
more extreme residential sorting by income. These spatial effects arise
from the interaction of the tax treatment of housing with other features of
the housing market, such as land-use constraints and methods of financing
local amenities.

Some other recent studies have analyzed the effect on “urban sprawl” of
modifying the tax treatment of capital gains.51 Under the Taxpayer Relief
Act of 1997, individuals are permitted to exclude from taxable income up
to $250,000 of gain (generally $500,000 for joint filers) realized on the sale
or exchange of property that has been used as a principal residence. There
are certain conditions the taxpayer must satisfy to qualify.


49
 Dixie Blackley and James R. Follain, “Inflation, Tax Advantages to Homeownership and the
Locational Choices of Households,” Regional Science and Urban Economics, Vol. 13, No. 4
(Nov. 1983), pp.505-516.
50
 Joseph Gyourko and Richard Voith, “Does the U.S. Treatment of Housing Promote Suburbanization
and Central City Decline?” Working Paper No. 97-13, Federal Reserve Bank of Philadelphia (Sept. 17,
1997).
51
   Linking Tax Law and Sustainable Development: The Taxpayer Relief Act of 1997, Environmental Law
Institute (1998) and The IRS Homeseller Capital Gain Provision: Contributor to Urban Decline, Ohio
Housing Research Network (Jan. 5, 1994).



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We found no quantitative studies estimating the effect, if any, on “urban
sprawl” of the current favorable capital gains treatment for
owner-occupied housing. One study suggests that the past treatment of
capital gains contributed to the outmigration from cities when home
prices in central cities declined relative to home prices in the suburbs.52 A
homeowner with accrued capital gains had a disincentive to move inward
if such a move involved the purchase of a less expensive home because
that purchase would require the homeowner to pay tax on at least some of
the gains earned on the sale of the original home. The Environmental Law
Institute notes that the recent change in the law removes this
disincentive.53 The Institute also suggests that the new treatment—under
which exclusions may be claimed every 2 years—may encourage some
homeowners to live in and rehabilitate a succession of older urban homes
in order to earn tax-free gains. The Environmental and Energy Study
Institute suggests that another effect of the favorable treatment may be to
encourage wealthier taxpayers to purchase larger homes on larger lots,
which are more likely to be in outlying areas.54 No estimates have been
made of the magnitude of these, or any other, effects of the current capital
gains exclusion on the amount or location of the housing purchased.

Several recent papers have used models and simulations to estimate
various effects associated both with removing the mortgage interest and
property tax deductions and with altering the treatment of capital gains in
housing, but these papers have not tied their results specifically to “urban
sprawl.”55 There is broad agreement that removing these tax preferences
would reduce overall housing consumption and the price of housing.


52
 The IRS Homeseller Capital Gain Provision: Contributor to Urban Decline, Ohio Housing Research
Network (Jan. 5, 1994).
53
  See footnote 51.
54
 Don Gray and Carol Werner, “Sustainability Provisions in the New Tax Law,” Memorandum to
Members of the Sustainable Communities Advisory Committee and Other Potentially Interested
Parties, Environmental and Energy Study Institute (Nov. 6, 1997).
55
 James Berkovec and Don Fullerton, “A General Equilibrium Model of Housing, Taxes and Portfolio
Choice,” Journal of Political Economy, Vol. 100, No. 2 (1992); Leonard E. Burman, Sally Wallace, and
David Weiner, “How Capital Gains Taxes Distort Homeowners’ Decisions,” 89th Annual Conference
on Taxation, National Tax Association (Nov. 12, 1996); Dennis R. Capozza, Richard K. Green, and
Patric H. Hendershott, “Taxes, Mortgage Borrowing and Residential Land Prices,” in Henry J. Aaron
and William G. Gale (eds.), Economic Effects of Fundamental Tax Reform (Brookings Institution
Press: Washington, D.C., 1996); Richard K. Green and Kerry D. Vandell, Giving Households Credit: How
Changes in the Tax Code Could Promote Homeownership, Working Paper, Center for Urban Land
Economics Research, U. of Wisconsin-Madison (Jan. 27, 1998); Todd M. Sinai, “The Effect of Tax
Reform on the Owner-Occupied Housing Market,” Ph.D. Dissertation, Massachusetts Institute of
Technology (June 1997); Todd Sinai, “Taxation, User Cost, Household Mobility Decisions,” Working
Paper, Wharton School, U. of Pennsylvania (Dec. 1997).



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                    However, there is no consensus among researchers on the magnitude of
                    these effects.


Issue:              Do federal estate taxes encourage the conversion of farmland that is
                    located near urban areas?


Research Results:   Some supporters of special treatment for qualified family-owned business
                    interests and qualified conservation easements believe that recent tax
                    changes encourage the continued operation of family farms and are likely
                    to increase donations of land for conservation purposes. A study by USDA’s
                    Economic Research Service provides some support for such claims. The
                    study notes that the new exclusion for qualified family-owned businesses
                    “. . . should reduce, if not eliminate, the need to sell farm assets to pay
                    Federal estate taxes. . . .” 56 The same study notes that relatively few
                    landowners would benefit from the exclusion for land subject to
                    conservation easements.


Issue:              Does the literature mention other tax provisions that can influence “urban
                    sprawl?”


Research Results:   The literature also addresses the effect of changes in employer-paid
                    parking benefits. Section 132(f) of the Internal Revenue Code allows
                    employers to exclude from the income of their employees the value of
                    employer-provided parking up to $175 per month in 1999. The
                    Environmental and Energy Study Institute contends that tax provisions
                    that favor driving to work contribute to traffic congestion, pollution, and
                    other public costs associated with automobile use.57 While some studies
                    indicate that employer-paid parking, employer-provided incentives for
                    ridesharing, and high-occupancy-vehicle lanes may have a large effect on
                    the probability that employees will drive to work alone,58 another source

                    56
                     James Monke and Ron Durst, The Taxpayer Relief Act of 1997: Provisions for Farmers and Rural
                    Communities, USDA, Economic Research Service, Agriculture Economic Report No. 764 (July 1998),
                    p. 18.
                    57
                      See footnote 54.
                    58
                     David Brownstone and Thomas F. Golob, “The Effectiveness of Ridesharing Incentives:
                    Discrete-Choice Models of Commuting in Southern California,” Regional Science and Urban
                    Economics, Vol. 22 (1992), pp. 5-24; Richard W. Willson, “Estimating the Travel and Parking Demand
                    Effects of Employer-paid Parking,” Regional Science and Urban Economics, Vol. 22 (1992), pp.
                    133-145.



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                    on commuting incentives notes that factors other than commuting costs
                    are more important in explaining patterns of commuting.59 Section 132(f)
                    of the Internal Revenue Code also allows employers to exclude from the
                    income of their employees the value of employer-provided transit passes
                    and transportation in commuter highway vehicles up to an aggregate of
                    $65 per month in 1999. An IRS official noted that this multiple ridership
                    provision could have the potential to decrease the incentive to commute
                    alone.



Transportation

Issue:              Do federal transportation programs encourage “urban sprawl” through
                    the construction of new highways rather than the maintenance of existing
                    highway systems?


Research Results:   The research we reviewed did not focus on whether federal programs
                    encourage new construction at the expense of maintaining or preserving
                    systems. The research did support the conclusion that, historically,
                    interstate highways improved access to developable land on the urban
                    fringe, supporting dispersed, low-density development. This phenomenon
                    originated with the passage of the Federal-Aid Highway Act of 1956,
                    according to the Transportation Research Board. The Interstate Highway
                    System is about 100 percent complete, and the federal share of annual
                    highway expenditures is about 21 percent, though the federal share of
                    annual highway capital outlays has been between 41 and 46 percent since
                    1987. More recently, quantitative research data were collected on the
                    impact of specific transportation investments on the physical development
                    of metropolitan areas. One study of areas with and without beltways had
                    difficulty deducing any effect of beltways on central city populations.
                    Another study analyzed the changes in residential and commercial
                    development in certain California areas and found a strong relationship
                    between expanded highway capacity and increased residential
                    construction. The study did not determine whether there was a shift in
                    development from other parts of the region. The Transportation Research
                    Board suggests that even with sophisticated statistical techniques,
                    cause-and-effect relationships are difficult to distinguish. Moreover,


                    59
                     Genevieve Giuliano and Kenneth A. Small, “Is the Journey to Work Explained by Urban Structure?”
                    Urban Studies, Vol. 30, No. 9 (Nov. 1993), pp. 1485-1500.



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transportation investments may affect development for many decades, but
most studies examine only short-term consequences.

As shown in figure I.1, from fiscal year 1992 through fiscal year 1997, most
federal highway funds were obligated for system preservation projects.
Although the proportions of obligations were relatively constant for all
categories, the percentage of federal funds obligated for new routes and
bridges decreased slightly while the percentage obligated for system
enhancements increased by about 6 percent. Figure I.1 represents
federal-aid highway projects under way. These projects account for
two-thirds of the total federal obligations for highway improvements.
Figure I.1 also shows that over the 6-year period, obligations were as
follows: $8.7 billion for new routes and bridges, $16.2 billion for capacity
additions, $36.8 billion for system preservation, and $12.3 billion for
system enhancements.




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                                           The Influence of Selected Federal Policies
                                           and Programs on “Urban Sprawl”




Figure I.1: Obligation of Federal Funds for Highway Improvements, Fiscal Years 1992-97

8   Dollars in billions

7


6


5


4


3


2


1


0

    1992                     1993         1994                   1995                  1996                   1997

             New routes and new bridges

             Capacity additions

             System preservation

             System enhancements


                                           New routes and new bridges—construction of new roads and bridges that do not replace or
                                           relocate existing roads or bridges; Capacity additions—relocation, major widening, and
                                           reconstruction—added capacity; System preservation—minor widening, restoration and
                                           rehabilitation, reconstruction—no added capacity, bridge replacement, major bridge
                                           rehabilitation; and minor bridge rehabilitation; system enhancements—safety/traffic/traffic system
                                           management, and environmentally related projects.

                                           Note: Dollars are in constant billions.

                                           Source: Federal Highway Administration’s Fiscal Management Information System.




                                           Researchers such as Kenneth Jackson, David Rusk, and the Growth
                                           Management Planning and Research Clearinghouse have concluded that
                                           highway capacity expansion projects contributed to “urban sprawl.” In
                                           addition, according to the Transportation Research Board, most expansion
                                           of road capacity is taking place at the urban fringe.60 However, the lack of

                                           60
                                              Expanding Metropolitan Highways: Implications for Air Quality and Energy Use, National Research
                                           Council, Transportation Research Board, Special Report 245 (1995), p. 194.



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                                         The Influence of Selected Federal Policies
                                         and Programs on “Urban Sprawl”




                                         a specific geographic designation for suburban areas makes it difficult to
                                         capture spending in these areas. For example, one study made
                                         assumptions about federal highway data and concluded, as shown in table
                                         I.2, that nonurbanized areas—defined as small towns and low-density
                                         suburbs—received a disproportionate amount of federal roadway funds.61
                                         Federal Highway Administration officials said their reporting system
                                         reflects federal spending by the legislated federal-aid designations—rural,
                                         urban, small urban, and urbanized—and cannot identify spending in
                                         suburban areas because suburban development can occur in any of the
                                         population areas. For instance, federal highway expenditure data are
                                         associated with two types of communities—urban (those with a
                                         population of more than 5,000) or rural (those with a population of up to
                                         4,999)—making it difficult to distinguish spending in suburban areas. The
                                         states report highway expenditure data to the Department of
                                         Transportation in the aggregate—combining funding and transfers for
                                         federal funding, according to Federal Highway Administration officials.

Table I.2: Analysis of Federal Highway
Spending for Fiscal Year 1995                                                 Percentage of          Percentage of
                                                                             roadway funds                nation’s       Amount received
                                                                                   received             population            per capita
                                         Urbanizeda                                         46                     64                 $54.25
                                                          b
                                         Nonurbanized                                       14                       9               $115.11
                                         Rural c                                            39                     28                 $98.01
                                         a
                                          Population is equal to or greater than 50,000.
                                         b
                                          Population is between 5,000 and 49,999. The Surface Transportation Policy Project considers
                                         these areas as small towns and low-density suburbs.
                                         c
                                          Population is equal to or fewer than 4,999.

                                         Source: Getting a Fair Share: An Analysis of Federal Transportation Spending, Surface
                                         Transportation Policy Project (1996).




Utility Pricing

Issue:                                   Do Federal energy providers encourage suburban development through
                                         their rate structure?



                                         61
                                          Getting a Fair Share: An Analysis of Federal Transportation Spending, Surface Transportation Policy
                                         Project (1996).



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                    The Influence of Selected Federal Policies
                    and Programs on “Urban Sprawl”




Research Results:   Our review identified very little research on the impact of utility rates and
                    costs on suburban development. A study on the costs of urban growth in
                    Oregon communities examines power generation costs and suggests that
                    the costs of growth-related investments in electric power generation are
                    distributed among all ratepayers through their utility bills. 62 The study
                    criticizes this form of pricing—on an “average cost basis”—because
                    suburban developments do not pay for the full cost of receiving electricity.
                    The study argues that many communities subsidize urban growth by
                    recovering only a fraction of their costs for new development, including
                    those for utility infrastructure. Another study estimates the costs of basic
                    public facilities and infrastructure associated with population growth for
                    730 U.S. cities and towns.63 The study acknowledges the difficulty of
                    distinguishing growth-related costs from other public-sector costs.

                    The federal government has played a significant role in the development of
                    electricity markets. Since the New Deal, the federal government has
                    established about 130 water projects that—in addition to promoting
                    agriculture, flood control, navigation, and other activities—produce
                    electric power. To provide this power to large portions of rural America,
                    the government also created five power marketing administrations, along
                    with the Tennessee Valley Authority.64 The Tennessee Valley Authority is a
                    multipurpose independent federal corporation, which generates and
                    markets its own power. In addition, the government made financing
                    available to rural utilities to assist them in building and maintaining
                    electricity distribution systems that provide electricity to rural areas
                    through USDA’s Rural Utilities Service. In 1996, the power marketing
                    administrations and the Tennessee Valley Authority provided about
                    10 percent of the nation’s electricity supply.65

                    The power marketing administrations, created between 1937 and 1977, sell
                    and transmit power generated at federal facilities operated primarily by
                    the Department of the Interior’s Bureau of Reclamation and the U.S. Army
                    Corps of Engineers. The power marketing administrations’ mission is to
                    market federal power in a manner that encourages the most widespread
                    use at the lowest possible rates consistent with sound business practices.

                    62
                      Eben Fodor, The Cost of Growth in Oregon: 1998 Report, Fodor and Associates (Oct. 1998).
                    63
                       Beyond Sprawl: The Cost of Population Growth to Local Communities, Carrying Capacity Network
                    (Dec. 1998).
                    64
                     One power marketing administration, the Alaska Power Administration, was divested in 1997 and
                    1998.
                    65
                     Federal Power: Options for Selected Power Marketing Administrations’ Role in a Changing
                    Electricity Industry (GAO/RCED-98-43, Mar. 6, 1998).



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The Influence of Selected Federal Policies
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They generally sell this power in wholesale markets, mostly to publicly
and cooperatively owned utilities that, in turn, sell power to end-use
(retail) consumers. Each administration has its own specific geographic
boundaries. Together, the power marketing administrations and the
Tennessee Valley Authority currently market power within 33 states.

The power marketing administrations are generally required to recover all
costs incurred as a result of producing, transmitting, and marketing power,
including the costs of repaying the federal investment in the power
generating facilities and other debt, with interest. However, we recently
concluded that the power marketing administrations are not recovering
through their electricity rates all of the power-related costs incurred by the
federal government.66 In addition, certain nonpower costs are allocated to
power revenues for repayment. For example, under the concept of
aid-to-irrigation, revenues earned from the sale of power are supposed to
repay billions of federal dollars invested in irrigation facilities that the
Secretary of the Interior believes irrigators will be unable to repay. The
Federal Energy Regulatory Commission reviews the rates charged by the
power marketing administrations. From 1990 through 1995, the power
marketing administrations sold wholesale power at average rates that
were 40 to 50 percent below those charged by nonfederal utilities.67, 68 In
the recent past, however, the Bonneville Power Administration’s rates
were at or above market rates.

The largest federal power producer is the Tennessee Valley Authority. By
some measures, it is the largest utility in the nation. Providing about
5 percent of the nation’s power, it generates its own power and markets it
in wholesale markets, as well as directly to large industrial customers. The
Tennessee Valley Authority is required by law to set rates so that power
revenues cover all operating expenses, including depreciation and
amortization. According to recent GAO work, the Tennessee Valley
Authority was generally recovering all power-related costs incurred by the
federal government through its rates. The Tennessee Valley Authority also
approves the retail rates charged by the 159 municipal and cooperative
utilities that are its primary customers. The power program is by far the
Tennessee Valley Authority’s largest activity. Unlike the rates of other
utilities and the power marketing administrations, the Tennessee Valley


66
   Federal Electricity Activities: The Federal Government’s Net Cost and Potential for Future Losses,
Vols. 1 and 2 (GAO/AIMD-97-110 and 110A, Sept. 19, 1997).
67
  Federal Power: Regional Effects of Changes in PMAs’ Rates (GAO/RCED-99-15, Nov. 16, 1998).
68
  Federal Power: PMA Rate Impacts, by Service Area (GAO/RCED-99-55, Jan. 28, 1999).



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                    The Influence of Selected Federal Policies
                    and Programs on “Urban Sprawl”




                    Authority’s power rates are not subject to review and approval by state
                    public utility commissioners or the Federal Energy Regulatory
                    Commission. Instead, all authority over the Tennessee Valley Authority’s
                    operations—including the sole authority to set wholesale power rates and
                    approve the retail rates charged to distributors—is vested in a
                    three-member board of directors.

                    In addition to authorizing the sale of federal power, the Congress passed
                    laws to encourage the development of nonfederal power systems.
                    Investor-owned utilities were historically reluctant to serve sparsely
                    populated areas because of the heavy capital costs involved in installing
                    power systems that serve relatively few customers. As a result, in 1935,
                    scarcely 1 in 10 farm households in the United States had electricity. The
                    Rural Electrification Act of 1936 authorized the Rural Electrification
                    Administration (now the Rural Utilities Service) to provide loans and loan
                    guarantees to organizations that generate, transmit, and/or distribute
                    electricity to small communities, farms, and persons in rural areas. From
                    fiscal year 1992 through fiscal year 1996, the Rural Utilities Service made
                    or guaranteed 880 loans to rural utilities for capital expenditures generally
                    related to improving systems and extending electric service to new
                    consumers. Some of these systems buy power from the power marketing
                    administrations. According to recent GAO work, the Rural Utilities Service
                    is not recovering all of the federal government’s costs through its loan
                    rates.



Water-Sewer
Infrastructure

Issue:              To what extent do federal water-sewer programs tend to support the
                    building of new infrastructure rather than the operation, maintenance, and
                    upgrading of existing infrastructure?


Research Results:   Our search of the literature and interviews with agency officials and trade
                    associations disclosed little evidence linking federal domestic assistance
                    for municipal water and sewer systems to “urban sprawl.” Three studies
                    related federal spending for water or sewer systems to growth-related
                    effects, either directly or indirectly, but not to “urban sprawl.” One study
                    suggested that larger public infrastructure stocks in central cities,




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and Programs on “Urban Sprawl”




including state and federally aided sewer systems, have a positive effect on
suburban land values.69 Another study—an evaluation, sponsored by the
Economic Development Administration (EDA), of 203 public works
projects that received a closeout payment in fiscal year 1990—describes
over a dozen water/sewer projects that contributed directly or indirectly to
the creation or retention of jobs in an area, additional investment, or
population growth.70 The third study, sponsored by HUD, describes two
instances in which Community Development Block Grant funds, used in
part for water or sewer systems, helped to stabilize neighborhoods or
reduce blight in impoverished census tracts.71 The five articles we
identified cited anecdotal evidence suggesting that “urban sprawl” had
occurred in areas receiving assistance for water and sewer systems,
particularly for the construction of new lines or extensions. However,
these citations did not distinguish federal assistance from state, local,
private, or other assistance.

We identified eight major72 federal domestic programs that provide
assistance for new construction or construction to upgrade municipal
water and sewer systems. These programs are listed in table I.3. This table
also shows that some of these programs maintain data on the amount of
funding spent for each type of construction activity, while the other
programs do not. We found, through interviews with agency officials, that
only the two Community Development Block Grant programs generally
provide funding for operations and maintenance. According to HUD
officials, the Department does not maintain data on funding for each type
of activity, such as new construction, repairs, or operations and
maintenance for the two programs. In addition, we found that USDA, HUD,
EDA, and EPA either have or will have funding data distributed by the
population of the area receiving the assistance.73 However, the agencies
maintain these data in different ways. Some of the variation can be
attributed to the different ways the individual programs were designed.
For instance, according to program officials, three of the eight programs
were designed to provide assistance only for the capital costs associated
with a system—for the costs of construction or upgrades—but not for

69
 Andrew F. Haughwout, “Central City Infrastructure Investment and Suburban House Values,”
Regional Science and Urban Economics, Vol. 27 (1997).
70
 Robert W. Burchell, et al., Public Works Program: Performance Evaluation, U.S. Department of
Commerce, EDA (May 1997).
71
 Urban Institute, Federal Funds, Local Choices: An Evaluation of the Community Development Block
Grant Program, HUD, Office of Policy Development and Research (May 1995).
72
 We identified major programs as those with at least one annual funding or expenditure of about
$50 million or more since fiscal year 1995 for water and sewer systems.
73
 Department of the Interior officials generally described the areas served by their programs’ projects
as urban or rural but did not refer to databases for this information.
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and Programs on “Urban Sprawl”




operation and maintenance. Other programs were designed, according to
program officials, to provide assistance to specific areas, such as rural
areas or distressed cities. Some of the variation is due to the use of
different definitions. For instance, EDA characterizes areas receiving
assistance as urban or rural; EPA relies on multiple population ranges
without characterizing the ranges as urban, suburban, or rural; and USDA
provides funding only to rural populations, although its definition of
“rural” differs from EDA’s. Because of this variation, it would be difficult
to summarize the distribution of federal funding for water and sewer
systems by the type of construction or by the location (urban, suburban,
or rural) of the systems.




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                                       The Influence of Selected Federal Policies
                                       and Programs on “Urban Sprawl”




Table I.3: Availability of Aggregate
Funding Data for Major Federal Water                                                                Construction to                 Varied
and Sewer Programs, Distributed by                                                                       upgrade an           construction
Type of Activity                       Agency and program                 New construction         existing systema               activityb
                                       USDA, Rural Utilities Service
                                       Water and Waste Disposal
                                       Loans and Grants                                      X                                           X
                                       Department of Commerce, EDA
                                       Public Works                                          X                      X                    X
                                       EPA
                                       Capitalization Grants for
                                       State Revolving Funds                                 X                      X                    X
                                       Capitalization Grants for
                                       Drinking Water State
                                                                                               c                         c                c
                                       Revolving Fund
                                       HUD, Office of Community Planning and Development
                                       Community Development
                                       Block Grants/ Entitlement
                                       Program                                                                                           X
                                       Community Development
                                       Block Grants/State
                                       Program                                                                                           X
                                       Department of the Interior, Bureau of Reclamation
                                       Title XVI Water
                                       Reclamation and Reuse
                                       Program                                               X
                                       Appropriated Municipal,
                                       Rural and Industrial Water
                                       Programs in North and
                                       South Dakota                                                                                      X
                                       a
                                        This column includes data for such upgrading activities as renovation, rehabilitation, and
                                       replacement.
                                       b
                                           This column includes data for both new construction and upgrade activities.
                                       c
                                       According to an EPA official, data are not currently available for this new program.



                                       It is also difficult to summarize agency officials’ views on how the funding
                                       for these systems influences growth. For instance, some officials identified
                                       a past or present influence on growth. An EDA official recognized that
                                       significant growth in some counties had been made possible by large
                                       water and sewer system projects that the agency assisted in the late 1960s
                                       and early to mid-1970s. He believes that assisted projects are now, for the
                                       most part, so much smaller in scope that he did not think they would
                                       contribute significantly to “urban sprawl.” HUD officials indicated that




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and Programs on “Urban Sprawl”




funding for a water or sewer line in a rural area, provided under the
Community Development Block Grant State Program, could not help but
support growth. However, the officials indicated that funding for
distressed cities, provided under the Community Development Block
Grant Entitlement Program, would be supporting redevelopment rather
than growth.

Other officials indicated that the water or sewer projects allow for future
population growth. For example, according to the USDA official, projects
funded through the Water and Waste Disposal program are designed to
serve the existing population, as well as the projected growth in
population, as much as 100 percent, over the service life of the water or
sewer line. EPA’s Capitalization Grants for State Revolving Funds program
will fund the replacement or major rehabilitation of an existing sewer
system only if, among other factors, the capacity of the project is equal to
the existing capacity, plus a reasonable amount for future growth. Under
the agency’s newer Capitalization Grants for Drinking Water State
Revolving Fund, expenditures for the expansion of any public water
system in anticipation of future population growth are to be avoided.
However, the program’s requirements do not preclude the use of financing
for facilities that meet the objectives of the Safe Drinking Water Act for
the population to be served by the facility over its useful life. An official
from the Department of the Interior’s Municipal, Rural and Industrial
Appropriated Water Programs in North and South Dakota indicated that
the Department considers projected growth in the development of its
projects, which are intended to provide water supply infrastructure where
none previously existed. An official from the Department of the Interior’s
Water Reclamation and Reuse Program noted that its projects, designed to
extend the usefulness of water systems and increase the reliability of local
water supplies, could draw industry to areas served by the projects.

Of the officials we interviewed, only two, from EDA and HUD, were able to
cite a study—one for each agency, already described—assessing the
linkage between a program’s assistance and growth-related effects, such
as job creation or neighborhood stabilization. Research on the
growth-related effects of the agencies’ other programs may not be
available, in part, because the programs were not designed to foster
residential growth. The objectives for the eight programs we identified
varied from water reclamation and reuse to the economic development of
distressed communities to the mitigation of health hazards. Consequently,
any “urban sprawl” that occurs would be an unintended effect of the
program’s assistance. Moreover, the USDA, Interior, and EDA officials we



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The Influence of Selected Federal Policies
and Programs on “Urban Sprawl”




interviewed said that three of these programs provide assistance in
response to a need identified by the applicant or local sponsor. According
to HUD and EDA officials, their agencies’ programs require the formula grant
applicants to rank and describe the eligible needs that are being met by a
program’s funding.




Page 52                                      GAO/RCED-99-87 Research on “Urban Sprawl”
Appendix II

Summary of Studies on Factors Related to
“Urban Sprawl”

                                            The following table is a synthesis of alleged positive and negative effects
                                            of sprawl found in studies reviewed by the authors of The Costs of Sprawl:
                                            Revisited.74 The alleged effects are grouped according to their potential
                                            impact on five areas: (1) public/private capital and operating costs,
                                            (2) transportation and travel costs, (3) land/natural habitat preservation,
                                            (4) quality of life, and (5) social issues. The table shows if there is
                                            agreement in the studies reviewed as to whether (1) development patterns
                                            bring about the alleged positive or negative impact (i.e., does this
                                            condition exist to a high degree?) and (2) the alleged impact—if it
                                            exists–has been significantly linked to sprawl.


Area
potentially
affected/            Does this condition exist to a high degree?                              Is it strongly linked to sprawl?
alleged            General        Some           No clear  Substantial              General            Some           No clear Substantial
impact           agreement    agreement          outcome disagreement             agreement        agreement          outcome disagreement

Public/
private
capital and
operating
costs

Alleged negative impact
Higher
infrastructure
costs                     X                                                                                   X
Higher public
operating
costsa                                  X                                                                                      X
More
expensive
private
residential/
nonresidential
development
costs                                   X                                                                                      X
More adverse
public fiscal
impactsb                                X                                                                     X
Higher
aggregate
land costs                              X                                                                     X
Alleged positive impact
                                                                                                                                     (continued)
                                            74
                                             Robert W. Burchell, et.al. Costs of Sprawl Revisited: The Evidence of Sprawl’s Negative and Positive
                                            Impacts, National Research Council, Transportation Research Board (Sept. 1998).



                                            Page 53                                            GAO/RCED-99-87 Research on “Urban Sprawl”
                                             Appendix II
                                             Summary of Studies on Factors Related to
                                             “Urban Sprawl”




Area
potentially
affected/             Does this condition exist to a high degree?                       Is it strongly linked to sprawl?
alleged              General       Some          No clear  Substantial         General             Some       No clear Substantial
impact             agreement   agreement         outcome disagreement        agreement         agreement      outcome disagreement
Lower public
operating
costs                                    X                                                                            X
Less
expensive
private
residential and
nonresidential
development
costs                                    X                                                              X
Fosters
efficient
development
of
“leapfrogged”
areas                                                   X                                                             X

Transportation
and travel
costs

Alleged negative impact
More vehicle
miles traveled             X                                                            X
Longer travel
times                                                   X                                                             X
More
automobile
trips                      X                                                            X
Higher
household
transportation
spending                                 X                                                              X
Less
cost-efficient
and effective
transit                    X                                                                            X
Higher social
costs of travelc                         X                                                              X
Alleged positive impact
Shorter
commuting
times                                                   X                                                             X
Less
congestion                                              X                               X
                                                                                                                           (continued)


                                             Page 54                                        GAO/RCED-99-87 Research on “Urban Sprawl”
                                            Appendix II
                                            Summary of Studies on Factors Related to
                                            “Urban Sprawl”




Area
potentially
affected/            Does this condition exist to a high degree?                       Is it strongly linked to sprawl?
alleged             General       Some          No clear  Substantial         General             Some       No clear Substantial
impact            agreement   agreement         outcome disagreement        agreement         agreement      outcome disagreement
Lower
governmental
costs for
transportation                                         X                                                             X
Automobiles
most efficient
mode of
transportationd                         X                                              X

Land/natural
habitat
preservation

Alleged negative impact
Loss of
agricultural
land                      X                                                            X
Reduced
farmland
productivity                            X                                                                            X
Reduced
farmland
viability                                              X                                                             X
Loss of fragile
environmental
lands                     X                                                            X
Reduced
regional open
space                                                  X                                                             X
Alleged positive impact
Enhanced
personal and
public open
space                                   X                                                                            X

Quality of life

Alleged negative impact
Aesthetically
displeasing                             X                                                                            X
Lessened
sense of
community                               X                                                                            X
Greater stress                          X                                                              X
                                                                                                                          (continued)


                                            Page 55                                        GAO/RCED-99-87 Research on “Urban Sprawl”
                                            Appendix II
                                            Summary of Studies on Factors Related to
                                            “Urban Sprawl”




Area
potentially
affected/            Does this condition exist to a high degree?                       Is it strongly linked to sprawl?
alleged             General       Some          No clear  Substantial         General          Some        No clear Substantial
impact            agreement   agreement         outcome disagreement        agreement      agreement       outcome disagreement
Higher energy
consumption                                            X                                                           X
More air                                                                                                               X
pollution                               X
Lessened
historic
preservation                            X                                                                          X
Alleged positive impact
Satisfies
preference for
low-density
living                    X                                                                         X
Lower crime
rates                                   X                                                                          X
Reduced
costs of public
and private
goods                                   X                                                                          X
Fosters
greater
economic
well-being                              X                                                           X

Social Issues

Alleged negative impact
Fosters                                                                                                                X
suburban
exclusione                              X
Fosters spatial
mismatchf                 X                                                                         X
Fosters
residential
segregation                             X                                                                          X
Worsens city
fiscal stress                           X                                                           X
Worsens
inner-city
deterioration                           X                                                           X
Alleged positive impact
                                                                                                                           (continued)




                                            Page 56                                     GAO/RCED-99-87 Research on “Urban Sprawl”
                                        Appendix II
                                        Summary of Studies on Factors Related to
                                        “Urban Sprawl”




Area
potentially
affected/          Does this condition exist to a high degree?                             Is it strongly linked to sprawl?
alleged           General       Some           No clear  Substantial             General            Some             No clear Substantial
impact          agreement   agreement          outcome disagreement            agreement        agreement            outcome disagreement
Fosters
localized
land-use
decisions               X                                                                                  X
Enhances
municipal
diversity and
choice                  X                                                                                  X

                                        a
                                         Public operating costs include public workers’ salaries and benefits; normal expenditures for
                                        supplies, repairs, and replacement items; and debt service for capital facilities.
                                        a
                                         Unplanned growth is believed to result in greater cost to municipalities.
                                        c
                                         These social costs include air and water pollution, noise, and the costs of parking and accidents
                                        that are not paid by transportation users.
                                        d
                                            Automobiles are the most efficient means of travel when development is dispersed.
                                        e
                                         Suburban exclusionary zoning increases the concentration of low-income households in certain
                                        neighborhoods.
                                        f
                                         A spatial mismatch occurs when most new jobs are created in the suburbs and many low-skilled
                                        workers live in inner-city neighborhoods; this mismatch aggravates the high rates of
                                        unemployment in inner-city neighborhoods.




                                        Page 57                                             GAO/RCED-99-87 Research on “Urban Sprawl”
Appendix III

Comments From the Department of
Commerce

Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




                             Page 58   GAO/RCED-99-87 Research on “Urban Sprawl”
                 Appendix III
                 Comments From the Department of
                 Commerce




See comment 1.




See comment 2.
Now on p. 6.




See comment 3.
Now on p. 19.




                 Page 59                           GAO/RCED-99-87 Research on “Urban Sprawl”
                  Appendix III
                  Comments From the Department of
                  Commerce




See comment 4.
Now on page 54.




                  Page 60                           GAO/RCED-99-87 Research on “Urban Sprawl”
                 Appendix III
                 Comments From the Department of
                 Commerce




                 The following are GAO’s comments on the Department of Commerce’s
                 letter dated April 5, 1999.


                 1. Identifying whether agencies had the resources to conduct analyses on
GAO’s Comments   the impact of federal investments was outside the scope of this report.

                 2. A more in-depth look at the tools and policies developed at the local
                 level to manage growth is planned for our next report on “urban sprawl.”

                 3. Because the Economic Development Administration’s (EDA) local
                 planning process was not cited as an example of regionalism in the
                 literature we reviewed or by the officials we interviewed, we did not
                 review the process; therefore, we did not include the process as an
                 example in the report.

                 4. We have underlined EDA in table I.3. We did not include EDA’s Economic
                 Adjustment Program in the table because it did not meet our criteria for a
                 major program. We identified a major program as one with at least one
                 annual funding or expenditure of about $50 million or more since fiscal
                 year 1995 for water and sewer systems.




                 Page 61                              GAO/RCED-99-87 Research on “Urban Sprawl”
Appendix IV

Comments From the Environmental
Protection Agency

Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




See comment 1.




                             Page 62   GAO/RCED-99-87 Research on “Urban Sprawl”
                 Appendix IV
                 Comments From the Environmental
                 Protection Agency




See comment 2.




See comment 3.




See comment 4.



See comment 5.




See comment 6.




                 Page 63                           GAO/RCED-99-87 Research on “Urban Sprawl”
                 Appendix IV
                 Comments From the Environmental
                 Protection Agency




                 The following are GAO’s comments on the Environmental Protection
                 Agency’s (EPA) letter dated April 1, 1999.


                 1. We changed the report to make it clearer that the shortage of evidence
GAO’s Comments   does not mean that federal programs and policies do not have an impact
                 on “urban sprawl.”

                 2. We agree with EPA that there is enough research in a few federal
                 program and policy areas, such as transportation, to make stronger
                 statements about the federal impact on “urban sprawl.” However, we did
                 not revise the report as EPA suggested. The lack of research on some
                 federal polices makes the suggestion about grouping the similar policies
                 into one section impractical. Furthermore, creating such a section in the
                 report might lead readers to assume that the other policies do not
                 contribute to lower-density development when, in reality, research does
                 not exist to prove the point either way.

                 3. We disagree with EPA that there is widespread agreement in the research
                 community on the impact of outward growth. As summarized in appendix
                 II, a synthesis of available literature found very little agreement on the
                 alleged positive and negative effects of “urban sprawl.” Because our
                 intent was to provide a balanced discussion of the positive and negative
                 implications of “urban sprawl” cited by experts on both sides of the issue,
                 we revised the language in the report to make it clear that the statements
                 about positive and negative effects represent the views of experts.

                 4. We agree with EPA that affordability is not inherent to “urban sprawl”
                 and that alternatives, such as clustering housing, can also increase the
                 affordability of housing. However, experts believe that a positive effect of
                 “urban sprawl” is that housing costs are lower in the outer-ring suburbs.
                 Because our intent was to cite the views of experts, we did not revise the
                 report.

                 5. In response to EPA’s comments, we deleted the last sentence in the
                 observations section.

                 6. We changed the report’s title to Extent of Federal Influence on “Urban
                 Sprawl” Is Unclear.




                 Page 64                               GAO/RCED-99-87 Research on “Urban Sprawl”
Appendix V

Comments From the General Services
Administration

Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




See comment 1.




                             Page 65   GAO/RCED-99-87 Research on “Urban Sprawl”
                 Appendix V
                 Comments From the General Services
                 Administration




See comment 2.




                 Page 66                              GAO/RCED-99-87 Research on “Urban Sprawl”
Appendix V
Comments From the General Services
Administration




Page 67                              GAO/RCED-99-87 Research on “Urban Sprawl”
                 Appendix V
                 Comments From the General Services
                 Administration




                 The following are GAO’s comments on the General Services
                 Administration’s (GSA) letter dated April 2, 1999.


                 1. We considered the additional information provided by GSA on its
GAO’s Comments   implementation of Executive Orders 12072 and 13006 but did not make
                 any changes to the report because the report contains sufficient
                 information on these activities.

                 2. In response to the additional information provided by GSA on its role in
                 the Federal Livability Communities Agenda, we added a reference to GSA’s
                 Good Neighbor Program in appendix I of the report.




                 Page 68                               GAO/RCED-99-87 Research on “Urban Sprawl”
Appendix VI

Major Contributors to This Report


                        Signora May, Evaluator-in-Charge
Housing and             Lisa Moore
Community               Paige Smith
Development—
Atlanta Field Office
                        Susan Campbell, Assistant Director
Housing and             Patricia Farrell Donahue
Community               Donna Lucas
Development—            Patrick Valentine
                        James Vitarello
Resources,
Community, and
Economic
Development
Division, Washington,
D.C.
                        John McGrail
Office of General
Counsel




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