Why the region passed GMA; adds cost to Road building

The Growth Management Act 1/1/98

The Growth Management Act was adopted because the Washington State Legislature found that uncoordinated and unplanned growth posed a threat to the environment, sustainable economic development, and the quality of life in Washington. Known as the GMA, the Act (Chapter 36.70A RCW) was adopted by the Legislature in 1990. In 1991 the GMA was amended to create the Growth Management Hearings Boards to hear and determine allegations of non-compliance with the GMA. (Click to see the RCW version of the GMA or a more detailed version on the CTED site.)

The GMA has been amended several times since, including 1996, when the boards’ jurisdiction was expanded to include allegations of non-compliance with certain provisions of the Shoreline Management Act (SMA, Chapter 90.58 RCW). In 1997, the Legislature again modified some of the Act’s provisions, including the boards’ standard of review.

The GMA requires state and local governments to manage Washington’s growth by identifying and protecting critical areas and natural resource lands, designating urban growth areas, preparing comprehensive plans and implementing them through capital investments and development regulations. This approach to growth management is unique among states.

Rather than centralize planning and decision-making at the state level, the GMA built on Washington’s strong traditions of local government control and regional diversity. The GMA established state goals, set deadlines for compliance, offered direction on how to prepare local comprehensive plans and regulations and set forth requirements for early and continuous public participation. Within the framework provided by the mandates of the Act, local governments have many choices regarding the specific content of comprehensive plans and implementing development regulations.

The GMA requires that the three boards meet jointly at least annually to share information that promotes the goals and purposes of the GMA. The boards have jointly adopted administrative rules of practice and procedure, which are found in the Washington Administrative Code (Title 242-02 WAC).

The boards have jointly adopted the following mission statement:

The shared mission of the three Growth Management Hearings Boards is to help local governments manage growth and to serve the citizens of the State of Washington. They do so by making informed decisions on appeals arising from the implementation of the Growth Management Act in a clear, consistent, timely and impartial manner that recognizes the diversity of the three board jurisdictional regions.

Growth Management Act adds $200,000 to price of average Seattle home

UW study: Rules add $200,000 to Seattle house price

ByElizabeth Rhodes

Seattle Times business reporter

Backed by studies showing that middle-class Seattle residents can no longer afford the city's middle-class homes, consensus is growing that prices are too darned high. But why are they so high?

An intriguing new analysis by a University of Washington economics professor argues that home prices have, perhaps inadvertently, been driven up $200,000 by good intentions.

Between 1989 and 2006, the median inflation-adjusted price of a Seattle house rose from $221,000 to $447,800. Fully $200,000 of that increase was the result of land-use regulations, says Theo Eicher — twice the financial impact that regulation has had on other major U.S. cities.

"In a nationwide study, it can be shown that Seattle is one of the most regulated cities and a city whose housing prices are profoundly influenced by regulations," he says.

A key regulation is the state's Growth Management Act, enacted in 1990 in response to widespread public concern that sprawl could destroy the area's unique character. To preserve it, the act promoted restrictions on where housing can be built. The result is artificial density that has driven up home prices by limiting supply, Eicher says.

Long building-permit approval times and municipal land-use restrictions upheld by courts also have played significant roles in increasing Seattle's housing costs, he adds.

(While his data reflect owner-occupied homes within the city of Seattle only, Eicher thinks the same basic findings may apply to surrounding cities.)

Eicher's $200,000 conclusion doesn't surprise Kriss Sjoblom, staff economist for the Washington Research Council, a nonpartisan organization that examines public-policy issues.

"It's actually pleasing," Sjoblom says, "that we finally have data that allows us to show things we thought were there all the time."

A UW professor for 13 years, Eicher is also the founding director of the UW's Economic Policy Research Center. Its goal is to provide analysis that will inform regional policy debates.

Eicher says the research center long wanted to analyze the impact of regulation on housing prices, and found a way when researchers at the University of Pennsylvania developed the Wharton Residential Land Use Regulatory Index. Based on a survey of more than 2,500 U.S. municipalities, it provided the first nationwide analysis and comparison of the effects of land-use regulation.

Eicher requested Seattle's data from the Wharton Index and analyzed it further. That led him to put a price tag on local land-use regulations.

He received no outside funding for the project and stresses he makes no value judgments about whether regulation is good, bad or needs to change.

Rather, Eicher wants the public to "understand the impact of their choices. There's always a cost associated with the cityscape. Who wants to have no parks in the city? Or, a 10-story high-rise in Blue Ridge? But there's a cost to that."

Compared with 250 major U.S. cities, he says, Seattle:

• Is first in terms of the impact of state political involvement in land issues.

• Is in the top 3 percent for approval delays for new construction.

• Is in the top 10 percent in local political pressure influencing land use.

As an example of how this plays out, Eicher explains that "the statewide growth-management plan gave King County few options but to require that landowners in rural areas that haven't already cleared their land to keep 50 to 65 percent of their property in its 'natural state.' This forced greater density in Seattle."

Then a King County referendum to repeal some of the county's land-use restrictions was judged illegal in 2006 by the state Supreme Court because it violated the state's Growth Management Act.

"The state is intervening to restrict supply. It's not that there's no land at all," Eicher says.

Economists hold that housing costs are driven by supply and demand, and say those factors have certainly influenced the cost of Seattle's housing.

But Eicher argues that "demand does not need to drive up housing prices."

Cities such as Houston and Atlanta, which have few growth restrictions, have shown that. They've been able to add enough housing to meet demand, so their home prices have risen more moderately than heavily regulated San Francisco and Boston, which have a harder time increasing housing.

According to the Wharton study, cities such as Seattle that have high median incomes, high home prices and a large percentage of college-educated workers tend to have the most land-use regulations.

Sjoblom says that makes sense: "People with higher incomes want the kind of amenities that regulation provides," he says. "If you're a homeowner and growth controls are imposed and housing prices shoot up, you're grandfathered because you own the place. In theory people will say it's [rising prices] a bad thing, but in practice it's not hurting them."

Sjoblom says that's why making the changes that would foster affordability are so hard to get past the public, some 68 percent of whom are homeowners. "When you bring up specific things, like allowing multifamily housing in their neighborhood, they have misgivings."

That frustrates renters, who suspect they're being priced out. And they're right, according to a housing-affordability index created by the Washington Center for Real Estate Research at Washington State University.

Last summer, King County's potential first-time buyers earning the median family income ($75,143) had just 37 percent of the financial wherewithal to buy the median-priced single-family house ($477,000) at the prevailing interest rate (6.47 percent).

Five years earlier, when King County's median-priced house cost $282,500, median-income, first-time buyers possessed 72 percent of the income needed.

(No breakout statistics are available for Seattle.)

But various government regulations make it challenging to add more affordable housing, notes Sam Anderson. He's executive officer of the Master Builders Association of King & Snohomish Counties, which has pushed government to rethink some of the regulations.

Anderson estimates that regulatory costs comprise up to 30 percent of the total cost of building a new house (land costs included). The laundry list of fees and requirements can run to 30 or more, depending on where the house is built.

Among them, Anderson says, are transportation, school and park impact fees, stormwater management fees, critical-areas mitigation and monitoring, pavement requirements and rockery permits.

And then there's the dollar cost of the process itself.

Building in Seattle can be very time-consuming compared with nearby cities, because of Seattle's neighborhood-based design-review process, says Linda Stalzer, project development director for the Dwelling Company, an Eastside homebuilder.

Design-review committees, composed of citizens interested in architecture and development, are located throughout Seattle; their job is to review commercial and multifamily housing designs before they're approved.

"Depending on how complicated your project is, it might take you three or four times to get through it," Stalzer says.

Add together all the various review and comment periods, and it can take 12 to 18 months to get to the point of applying for a building permit, she says.

On a 25-unit Capitol Hill town-house project now under way, Stalzer estimated the various fees (including consulting and mitigation costs, but not building permits or land prices) have totaled about $650,000.

"I think there's value in going through the process because we're building things that have an impact on communities," Stalzer says. "The difficult part is the process isn't very efficient."

In the final analysis, Eicher believes Seattle's regulatory climate exists because its residents want it. "My sense is land-use restrictions are imposed to generate socially desirable outcomes," he says. "We all love parks and green spaces. But we must also be informed about the costs. It's very easy to vote for a park if you think the cost is free."