Land Development

Land development is a process of land use change most often initiated by the private sector, managed by the public sector, and subject to intense social conflict as existing and future interests collide. This is almost always true, regardless of the place of land development—whether in an urban neighborhood or at the city's edge. Urban land development can alter the character of neighborhoods through gentrification or revitalization; urban fringe development can lead to air and water pollution and declines in adjoining urban area viability while also providing for safe, affordable housing.

The land development process in the United States occurs in a highly decentralized system of governance and public finance. Authority for land [Page 430]development is a state government responsibility, but most states pass this authority to their local governments. Funds for public services are raised locally, and the types of services to be provided (schools, police, fire, etc.) are locally determined. The primary revenue source for services is the local property tax.

Pressures for land development originate from two sources that reinforce each other. First, in a system of decentralized governance and finance, local governments are compelled to continually grow physically and fiscally in response to ever-rising public services costs. Local officials have two choices—raise property taxes on existing landowners or generate more economic value from land. Encouraging land development is one easy way to generate more value. So, land intensification— whether in the form of urban gentrification or agricultural land conversion—increases the land's market value and thus the taxes that the land provides to local governments. Therefore, local officials are predisposed to pursue land development because such development allows for the continued provision of local services, and perhaps an increase in services, without having to increase tax burdens on existing owners.

A second source of land development pressure is the mismatch between the different logics of individual and social decision making about land. An individual landowner can achieve significant personal benefits by selling land for a more intensive use. Yet, the accumulation of a set of logical individual decisions can become socially illogical; for example, the inability of long-standing, elderly residents to live in a neighborhood because of increased assessed values or the loss of agricultural land and environmental resources. In short, local government wants land to be developed to generate more tax revenue, and some owners can want to intensify land use, but the result can be a loss for society.

Governments have experimented with a diverse set of tools to manage this process, including zoning, property tax relief, transfer of development rights, and support for nonprofit land and community development organizations. In selected places, these approaches have reshaped the geographic form of land development. Still, pressure on land continues.

Land development is not just about dollars and cents, but rather about the relationship of landownership to fundamental rights in a democratic market society. It is wrapped in complex historical and legal baggage that makes it difficult to address and resolve.