The Case Against Annexation and Consolidation

By Randal O’Toole
The following is the written version of
my presentation in Durham. As you will see, I have a slightly
different take on annexation. In my actual presentation, I said that
people should oppose both annexation and city-county consolidation,
as both of my co-panelists said they opposed forced annexation but
supported consolidation.

One hundred and fifty years ago, annexation was not an issue in America’s growing industrial cities because the transportation technology of the day forced most people to live within walking distance of their work. But soon, 'horse-car' transportation made it possible for some people to live further away and the number of urban workers living outside of city limits began to grow. In the 1860s and early 1870s, many of these people welcomed annexation because the cities could offer them water, sewer, and other services.

But in 1873, the community of Brookline, Massachusetts, voted not to be annexed into Boston. Suburban areas had developed their own water and sewer facilities and increasingly viewed the cities as centers of corruption and political unaccountability. By 1880, resistance to annexation had grown fierce.

The story of urban government in the twentieth century is the struggle between cities and suburbs. In some states, such as North Carolina, cities can annex adjacent unincorporated lands at will. But in states where cities lack that power, cities frustrated by the resistance of suburbs to annexation have tried to gain control over the suburbs through city-county consolidation and metropolitan planning organizations.

Outwardly, annexation is a debate over the ideal size of government. Is it more efficient for an urban area to be governed by one council, or can it effectively operate broken up into dozens of cities, towns, and unincorporated areas, each with their own councils, special service districts, and other layers of government?

Supporters of annexation, such as former Albuquerque Mayor David Rusk, point with horror at the hundreds of thousands of governmental units that can be found in many metropolitan areas. Consolidation, they say, would be more efficient.
(Read Wendell Cox refute David Rusk here)

But even more, Rusk argues that urban fragmentation has led to urban decline as the central cities become enclaves of the poor while the wealthy and middle-class flee to the suburbs. According to this view, suburbanites are parasites on the cities, enjoying the benefits of proximity to the great cities but not having to pay their fair share of the costs in taxes.

However, Columbia law professor Edward Zelinsky says that Rusk’s analysis is statistically flawed. Rather than look at a large number of metropolitan areas, Rusk compared various city pairs, such as Houston and Detroit. Zelinsky showed that differences between such city pairs were due to many historical factors, and annexation was relatively unimportant.

Zelinsky argues that metropolitan governments are less responsive and less likely to encourage citizen participation. Nor are they any more likely to achieve racial and ethnic integration, as Rusk claimed.

Jane Jacobs, the author of The Death and Life of Great American Cities, agrees with Zelinsky, saying that “All bureaucracies make mistakes ,but mega-city bureaucracies tend to make big, big mistakes. What is worse, they tend thereafter to be paralyzed with respect to correcting their mistakes or learning from them.” Regional government would be “less responsive than what we have now, more prone to costly error because less on top of detailed realities, more inert and very likely more vulnerable to favoritism and hidden agendas at the expense of taxpayers.”

While Rusk says cities need the taxes of wealthy suburbanites to help poor inner-city residents, Harvard researcher Howard Husack notes that in reality cities spend their resources in areas with the most political influence—which rarely includes the poorest neighborhoods. He observes that studies of schools have found higher test scores in urban areas with many separate school districts than in ones with large unified districts and suggests that it is similarly likely that fragmented urban governments perform better than unified ones.

While size of government is an important issue, annexation debates are often really about another issue: growth. During the 1990s, North Carolina was the nation’s ninth fastest growing state. Raleigh-Durham was the twelfth-fastest growing urban areas in the U.S., with annual growth rates of 3.3 percent. Such rapid growth often stresses roads, schools, and other infrastructure, and local residents worry that they are having to pay higher taxes to support newcomers.

Surveys show resident satisfaction to be highest in cities with moderate growth rates. Cities with slow or no growth feel stagnant and people worry that their children will be forced to live somewhere else or if they lose their jobs they won’t be able to find another one. Fast-growing cities change so rapidly that people feel out of place, that familiar open spaces and historic sites are likely to disappear forever. The comfort range seems to be a growth rate of about one-half to one-and-a-half percent.

Three great schools of thought have emerged in response to growth debates. The first is no-growth, slow-growth. According to this view, cities should control their growth by limiting the number of building permits allowed each year, down zoning land to limit development, or otherwise prevent growth.

No-growth/slow-growth has the least support from politically powerful interests, but may have the greatest support from neighborhood residents upset with increased congestion, disappearing open space, and higher taxes. A recent book by Eben Fodor, Bigger Not Better, makes the case for no-growth/slow-growth and offers people with a toolkit to get such policies enacted. Ironically, if my home state of Oregon had implemented Fodor’s ideas, he would not have been allowed to move to Eugene, Oregon, as he did a few years ago.

Fodor correctly argues that many cities unnecessarily subsidize growth. The race to attract new industry can end up with politicians impoverishing their regions in order to get a few jobs. But Fodor doesn’t always correctly identify subsidies.

For example, he calculates that the public services required to support new residents cost taxpayers thousands of dollars more than those residents are likely to pay in taxes. What he ignores is that the public services required to support existing residents also cost taxpayers more than those residents pay in taxes. The difference is made up by property and other taxes on businesses, not residents.

If Fodor only opposed subsidies, we could deal with these technical questions. But he goes much further, advocating a policy that would not allow anyone to move into a region unless someone else moved out.

While such restrictions are probably unconstitutional, many communities in California and elsewhere have enacted strict limits on growth. Some, such as Boulder, Colorado, limit the number of building permits allowed each year. Others, such as Danville, California, have drawn urban-growth boundaries inside of which growth is strictly limited. These are different from Oregon’s urban-growth boundaries, which limit growth outside the boundary.

In every case the result is the same: A dramatic rise in housing prices. While existing homeowners gain a windfall, they also must often pay for it in higher property taxes. And newcomers simply cannot afford to buy a house. Growth controls forces children to leave because they can’t afford to stay.

The second response to concerns over growth is smart growth, whose proponents say they don’t want to limit growth but merely want to manage it. Smart-growth advocates blame growing pains on automobiles and low-density housing. Their prescription calls for restrictions on development outside of urban-growth boundaries, development of transit, especially rail transit, instead of highways, and minimum-density zoning along with subsidies to force or entice people to live in high-density, mixed-use developments.

Smart-growth advocates extol the virtues of their “livable communities,” but they quietly realize that most Americans don’t want to live in high-density housing and get along without their automobiles. As Douglas Porter of the Urban Land Institute points out, there is a gap between the way Americans want to live and the way most planners think they ought to live. Unfortunately, or fortunately depending on your point of view, local government officials are likely to accede to the personal desires of individual Americans so that they don’t get voted out of office.

Smart growth thus strongly supports regional government, either through annexation or through regional planning agencies. Such planning agencies, says Porter, can make decisions out of the public view and then local officials can enforce the decisions while plausibly denying any responsibility.

Portland has the strongest regional government in the nation, known as Metro. Metro predicts that the region’s population will grow by 80 percent in the next few decades, yet it opposes significant expansion to the region’s urban-growth boundary which was drawn in 1979. So Metro ordered the more than two dozen municipalities in the region to rezone neighborhoods to higher densities to accommodate new residents.

To meet density targets, many cities rezoned single-family neighborhoods for multifamily housing, sometimes leading to apartments appearing in people’s backyards. Minimum-density zoning in some neighborhoods means that, if your house burns down, you will only be allowed to replace it with an apartment. Metro also encouraged the construction of four- and five-story high-density apartments in neighborhoods once dominated by one- to two-story buildings.

Where Metro allowed new single-family homes, it wanted them to be on lots that were as small as possible. The homes in some new neighborhoods have no backyards. Instead, their backdoors open directly on an alley. The side yards are only ten-feet wide. Houses are built on the property lines so each homeowner has a yard on only one side of their house.

Before Metro began implementing its plans, the region’s relatively rapid growth had filled up most of the available land in the urban-growth boundary and land and single-family home prices were rising rapidly. But there was no shortage of multi-family housing, and apartment rental rates barely kept up with inflation. So developers were not interested in building high-density housing in areas zoned for that use.

Metro and various cities responded by offering huge subsidies to developers of smart-growth housing. In some cases, Metro used federal money to buy land and resell it – sometimes to the same developers – at below-market prices on the condition that the owners put in high-density housing. Tax breaks, fee waivers, infrastructure subsidies, and direct grants were also used. As a result, many high-density developments have been built, and they also have some of the highest vacancy rates in the region.

It seems ironic that no growth, which is attempts to limit density, and smart growth, which attempts to increase densities, have the same outcome: unaffordable housing. The nation’s least affordable housing markets tend to be in California regions that have adopted no-growth/slow-growth policies. The nation’s next least-affordable housing markets have been in Oregon urban areas that have urban-growth boundaries.

Unaffordable housing is not smart growth’s only flaw. Smart growth is based on a premise that is fundamentally flawed. Planners know that urban development is profoundly influenced by transportation technology. Cities that developed in the pre-streetcar era, such as New York and San Francisco, tend to have extremely dense urban centers surrounded by newer lower-density developments. Cities that developed in the streetcar era, roughly 1890 to 1920, do not have as dense an urban center but tend to be fairly dense over a wide area. Los Angeles is a streetcar city. Cities that developed in the automobile era, roughly the last eighty years, tend to have low densities and often have no particular urban center. Phoenix and Houston are such cities.

Since transportation technology influences urban form, smart-growth theorists reason that changing urban form will influence people’s transportation choices. This is like saying that since wealthy people like classical music, then forcing teenagers to listen to classical music will lead them to get better-paying jobs.

There is virtually no evidence for smart-growth’s thesis and plenty of counter evidence. For one thing, America’s urban areas range in density from about 600 people per square mile to nearly 6,000 people per square mile, and there is practically no relationship between density and per capita driving.

For another thing, smart-growth planners themselves predict that Portland’s plans will have little impact on travel habits. Portland’s plan calls for a 70 percent increase in overall population density, the development of dozens of high-density, transit-oriented developments, construction of 120 miles of rail transit, and almost no new road construction. Using one of the nation’s most sophisticated transportation models, planners predict that the automobile will remain the mode of choice for 88 percent of all regional travel and that per capita driving will actually increase. Traffic delays due to congestion will quadruple and because cars pollute more in stop-and-go traffic air pollution will be far worse.

In short, by almost every measure, including congestion, pollution, taxes, and housing affordability, smart growth is reducing Portland’s livability. The push for high-density development inside the urban-growth boundary is also leading to the destruction of many open spaces, including urban farms, golf courses, and even city parks.

The third major response to growth stresses is free-market growth, which says that the real problem isn’t growth but making sure that people pay the costs of their own actions. Congestion is a problem because we charge everyone the same to use highways even though those who drive during peak periods place a far greater strain on urban road networks than those who drive during off-peaks. Pollution is a problem because we let people dump their emissions into the air without imposing any cost. Transit is a problem because, as government-subsidized monopolies, many transit agencies are more interested in building pork-barrel empires than in serving transit-dependent people. Zoning is a problem because the people making the zoning decisions are usually not the ones who live in the areas being zoned.

The free-market solutions to urban problems may seem radical only because we have grown used to the regulatory environment we live in today. But they are no more radical that Portland’s solution of letting congestion rise to intolerable levels in the hope that a few more people will ride transit and letting housing become unaffordable in the hope that a few more people will live in apartments.

The free-market solution to congestion is to fund more roads out of electronically collected tolls. Tolls can vary by time of day, allowing highway managers to give drivers an incentive to drive in off-peak periods. Since two-thirds of rush-hour traffic is not work related, tolls can significantly reduce congestion while they fund any necessary additions to road capacity.

The free-market solution to air pollution is to charge auto drivers based on the amount of air pollution they emit. There are low-cost technologies that can reduce auto emissions by 90 percent beyond what we have already done, and some of these technologies can be retrofitted on existing cars. There are several ways of measuring pollution, and if people got a bill every month for the air they polluted we would quickly see them buy cleaner cars and retrofit their old ones.

The free-market solution to transit is to privatize or at least de-monopolize transit, opening the existing transit agencies to private competition. Instead of subsidizing transit agencies, we should subsidize transit-dependent people, giving them vouchers to use that any transit carrier could reimburse for a set amount.

The free-market solution to zoning is to replace it with CC&R's written and enforced by homeowner associations. On the one hand, this gives people in a neighborhood ultimate control over the fate of their neighborhood. On the other hand, they will have little control over what happens outside that neighborhood. This system is very successful in a number of American cities, notably Houston. If Houston has a bad reputation, I suggest it is more because Houston’s population if five times greater than Raleigh-Durham.

On the question of annexation, I come down on the side of opponents of bigger jurisdictions and metropolitan governments. Like school districts, urban areas are better off with a multiplicity of governments that have to compete to make their residents happy. But those who oppose annexation must realize that the size of government is only one little part of the growth equation. The tools we apply to growth will make a big difference for the future of our communities. If those tools rely on central planning and government control, we are less likely to end up with livable cities than if we rely on freedom of choice combined with incentives designed to insure that people pay the full cost of their choices.

Read more about Land Use Planning and how it affects you today at: http://americandreamcoalition.org
****** Make plans to attend the 2008 Annual Conference being held in Houston *******

Information about the 2005 American Dream Coalition Conference, http://americandreamcoalition.org/pad05.html
(The headline debate at the conference discussed the pros and cons of Regional Government)

Read Howard Husock's views on David Rusk and Municipal Expansion: HERE

Wendell Cox - The Role of Urban Planning in the Decline of American Central Cities:
http://www.demographia.com/db-xplannerscities.pdf

Read more from Randal O'Toole at his website: The Thoreau Institute http://www.ti.org