Third Promise of GMA Revisited: the New Urban Growth Area Guidebook
August 1, 2013
Category: Planning Advisor , Comprehensive Planning-Growth Management
By Pat Dugan, Dugan Consulting Services
In my first MRSC Planning Advisor column, The Third Promise of the Growth Management Act (April 2007), I lamented that, among the “promises” of the Growth Management Act (GMA), local governments have made the least progress toward the goal of ensuring that new development is served efficiently by adequate public facilities. A major cause of the failure in meeting this challenge has been an inadequate understanding of the role of capital facility planning in the development of comprehensive plans.
Too often, GMA Capital Facility Plans have been prepared as an afterthought, rather than as an integral part of the planning process. A particularly critical weakness of many Capital Facility Plans (CFP) has been the failure to demonstrate that designated Urban Growth Areas (UGA) could be supported by adequate public facilities that would sustain urban development.
Recently, an important step has been made in addressing this deficiency. The Growth Management Services Division of the Washington State Department of Commerce has issued a new Urban Growth Area Guidebook that provides guidance to local governments on how to designate Urban Growth Areas consistent with the GMA. While previous guidebooks for designating urban growth areas did not materially address the importance of capital facility planning in the process of designating growth areas, this new UGA Guidebook, written by Bruce Hunt, emphasizes the importance of aligning UGAs with a Capital Facilities Plan (CFP) in order to provide cost effective and well-timed provision of urban services. The Guidebook builds on and incorporates important improvements provided by 2010 amendments to the GMA portion of the Washington Administrative Code (WAC). Those amendments added new direction on providing urban services for UGAs and for developing Capital Facilities Plans to support UGAs.1
Although the new Guidebook provides excellent guidance on the entire process of designating or expanding urban growth areas, this discussion will only address the guidance provided for capital facility planning in the process of designating urban growth areas.
Specific Requirements of the Growth Management Act
A major reason that many UGA designations have tended to fail to demonstrate that the designated UGA can be supported by adequate public facilities has been a weak understanding of the intent and the general requirements of the Act. GMA provides both specific requirements for designating UGAs and for capital facility planning, and general requirements. While the specific requirements are readily apparent to any reader of the Act and are usually closely followed in GMA planning, the general requirements are less readily apparent and are often overlooked. Nonetheless, the general requirements have frequently been emphasized in various rulings of all three growth management hearings boards.
The specific requirements for designating Urban Growth Areas are found in section RCW 36.70A.110. These requirements have focused primarily on designating areas to accommodate population forecasts while protecting environmentally sensitive and resource areas; capital facilities are only tangentially addressed.2
As a result of the Act's focus on specific requirements,
...early UGA guidebooks primarily focused on designating UGAs to accommodate population projections, outlining a methodology to determine the amount of vacant, partially used, and underutilized lands available for growth, and to provide guidance on appropriate densities and uses for urban, rural, and resource lands.3
Most counties followed this guidance closely in designating their urban growth areas and focused their efforts on these topics. Unfortunately, many counties did not give much attention to the role of capital facility plans.
The specific language in the GMA for capital facility plans is even more specific. Section RCW 36.70A.070(3) requires:
A capital facilities plan element consisting of: (a) An inventory of existing capital facilities owned by public entities, showing the locations and capacities of the capital facilities; (b) a forecast of the future needs for such capital facilities; (c) the proposed locations and capacities of expanded or new capital facilities; (d) at least a six-year plan that will finance such capital facilities within projected funding capacities and clearly identifies sources of public money for such purposes; and (e) a requirement to reassess the land use element if probable funding falls short of meeting existing needs and to ensure that the land use element, capital facilities plan element, and financing plan within the capital facilities plan element are coordinated and consistent. Park and recreation facilities shall be included in the capital facilities plan element.
In hindsight, subsection (d) proved to be misleading and troublesome for many jurisdictions. Because of this subsection, many local governments believed that all that was required for demonstrating a financial capacity to support the comprehensive plan was a six year plan. However, as noted below, the general requirements of the act require financial planning over a period of time longer than the six years stated in this subsection.
Nothing in these specific requirements directly relates to what may be required regarding capital facility planning in urban growth areas.
General Requirements of the Growth Management Act
In addition to the specific requirements of the Act noted above, the GMA goals (RCW 36.70A.020) provide additional general requirements. While the specific requirements for Capital Facility Plans (CFP) reflect GMA planning goals, the goals go well beyond these specific requirements. All three growth management hearings boards have found that the GMA goals require a more complete financial analysis than just a six year plan, especially in regards to designating urban growth areas.
A broader reading of the Act recognizes that a comprehensive plan's land use element is inextricably linked to the capital facility element. GMA planning goals 1 and 12 together would be difficult to achieve unless we know how the land use commitments made in the land use element are to be supported by adequate facilities and services. Equally, if not more importantly, we should have some idea about how to finance those facilities and services.
Among the 12 GMA goals, goal 12 is particularly important in this context:
12) Public facilities and services. Ensure that those public facilities and services necessary to support development shall be adequate to serve the development at the time the development is available for occupancy and use without decreasing current service levels below locally established minimum standards.
Without a good Capital Facilities Plan and an analysis of the financial burden new development will place upon the resources and fiscal capacity of local government, goal 12's challenge to address how facilities and services will be adequate for anticipated development would be frustrated.
While it is literally true that a CFP must include a six-year financing plan (at least), implementing goal 12 goes beyond that minimal threshold. To achieve planning goal 12, a capital facilities element should address, over the life of the plan, how the needed public facilities and services will be provided and financed throughout the jurisdiction. This does not need to be as explicit or detailed as the six-year financing plan specifically required by the RCW 36.70A.070(3)(d), but an effective CFP should describe a strategy (or at least an approach) for financing the facilities needed and how it will be able to support the land use plan at the adopted levels of service. A county or city can't fulfill the requirements of planning goal 12 without a futuristic look at its capacity to fund capital facilities, as developed in a detailed capital facilities plan element.
Most of the cases that the growth management hearings boards have heard regarding capital facility plans have involved how well those CFPs have demonstrated that designated urban growth areas will be served by capital facilities4. While each of the three boards have approached the particular issues raised in various cases a bit differently, they have all reflected the general reading of the Act as described above. Many of these cases resulted in remands to local governments to more adequately plan the provision of facilities to support urban growth in UGAs.
Capital Facility Planning in the New Guidebook
The new Urban Growth Area Guidebook reflects the broad reading of the GMA and applies it to the process of designating urban growth areas. Rather than approaching capital facility planning as an afterthought on the processes of designating urban growth areas, the Guidebook focuses on capital facility planning as a key component, if not the driving force, of UGA planning and designation. Perhaps to symbolize this focus, capital facility planning is addressed in chapters 1 thru 3 of the Guidebook rather than being the last chapter. By addressing capital facility planning in the first chapters, the Guidebook orients the reader's thinking to the critical role that capital facility planning should have in the process of designating or expanding UGAs.
Planning for UGAs must begin with planning for urban services. In fact, planning for a 20-year urban growth area can best be served by first planning for 20 years of capital facilities. In doing so, service areas need to be ascertained, the quantity and quality of available infrastructure must be inventoried, an analysis performed to determine and prioritize what is needed for 20 years of infrastructure, and a sound financial plan for obtaining the funding necessary to underwrite urban services for an UGA must be completed. These are the primary components of a CFP. The CFP can then be translated into the geography of a potential UGA. At a minimum, capital facilities and UGA planning will also need a concurrent public participation program, an agreed upon 20-year population forecast to plan for, a land capacity analysis, and a SEPA analysis to ensure that a community preferred UGA will emerge to balance twenty years of potential growth with affordable urban services5
The Guidebook goes beyond the mathematical exercise that UGA designation can become when it is focused too much on sizing to accommodate a population forecast and recognizes that;
Designation or expansion of an UGA is a planning commitment by the jurisdiction(s) to provide urban services during the 20-year planning horizon...6
The local government's plan should be prepared to live up to that commitment.
The Guidebook recognizes that this commitment to provide urban services cannot be achieved with just a six year financing plan:
The CFP should include a reasonable plan for extending a local government's 6-year Capital Improvement Program (CIP) to years 7 through 20. The 6-year CIP is typically updated each budget year with new capital projects. The CIP is integral to the local government's budget cycle. A local government that has its budget linked to its 6-year CIP, and its CIP linked to its 20-year CFP, has integrated its short and long-term capital improvement plans, operations and maintenance plans, and financial plan to support updates to its comprehensive plan and UGA.7
The real strength of the Guidebook is not just articulating what the GMA requires in how capital facilities should be approached in designating UGAs, but in recognizing that a plan's vision regarding how it will accommodate future growth will be frustrated if the local government cannot support that growth with adequate facilities.
With fewer dollars from state and federal grant and loan programs, local government general fund shortfalls, gas and real estate taxes in decline, and sales tax revenue also declining, it is imperative that thoughtful land use planning for urban growth areas and reasonable population projections for the future, be combined with affordable capital facilities plans to manage anticipated growth in our Washington cities and counties.8
The risk in not analyzing the costs of urban services and aligning these costs to a compatible land use plan is a deepening budget hole - where new growth will always be needed to pay the debt service on old growth. This is not a sustainable pattern of development that will generate the funding to provide for new urban services, let alone pay the long term obligation for replacing large urban infrastructure systems once their current life cycle ends.9
Focusing on capital facility planning in this regard is good planning that will achieve not just compliance with GMA, but will also achieve the intent of GMA.
The Guidebook follows up on chapter 1 with chapter 2. Chapter 2 outlines additional guidance in various administrative regulations and provides several examples of cities that have applied a broader approach for capital facility planning.
Integrating Land Use Planning With Capital Facility Planning
The third chapter takes the integration of capital facility planning and planning land uses in urban growth areas full circle by describing how land use tools such as density, design, infill and redevelopment, innovative zoning, and land use policy can economize the cost of urban services in urban growth areas.
In my various efforts at describing how land use planning, public facility planning and public financing can be integrated, I have used the following diagram. It is worth repeating in this context since the Guidebook reflects a similar approach.
Land use and public financing are interrelated, as illustrated on the adjacent diagram. Planning for more development in the land use plan requires more public facilities and services. These services and facilities require financing. At the same time, more development generates revenue to finance those facilities and services. Development of public facilities can also affect these relationships since adding infrastructure, such as new transportation facilities, can attract new development.
A comprehensive plan should balance these relationships to assure that the land use commitment made in the plan can be financially sustained over time. The plan can achieve this balance by:
- Adjusting the amount, location, or timing of the land development. Increasing or decreasing the amount of growth will not only increase or decrease the costs for supporting facilities, it will also increase or decrease revenues available for financing such facilities (although the change in costs will usually be more or less than the change in revenue). In addition, when and where development occurs will affect the costs of facilities needed. Generally, it is much easier to finance new facilities to support that growth if the development is concentrated in a few locations and is spread out over several years, rather than occurring all at once in many locations. Also, as suggested in chapter 3 of the Guidebook there are a range of land use measures that can be used to reduce the need for capital facilities.
- Adjusting the amount of public facilities and services or the level of service (LOS) provided by those facilities and services. As described in chapter 3 of the Guidebook, setting levels of service is a key part of capital facility planning. Lowering or raising the level of service will increase or decrease the amount of funding needed to support the land use plan.
- Adjusting the amount of financing available. Balancing the plan requires complete understanding the fiscal capacity of the local government and an assessment of what revenues can be raised under what circumstances. In my experience, one of the byproducts of the type of planning described in the Guidebook is an accent on the need to increase the reliance on developer contributions, especially in the context of UGA planning.10
Since these actions are interrelated, balancing between them can become complex. For example, while additional revenue can be generated by economic development, the additional demand from new development for more facilities and services needs to be taken into account.
Things the Guidebook Does Not Resolve (And Probably Can't)
The Guidebook lays out the value of cohesive and integrated capital facility planning in the process of designating or expanding urban growth areas. However, I fear that a potential unintended consequence of the guidance may be that some local governments might consider the guidance only as a part of the process of designating UGAs, and not think of it in the context of other CFP planning. This could lead to a capital facility plan for the purpose of designating UGAs separate from the CFP for the existing city. Since, ultimately, today's unincorporated UGA should be absorbed into an expanded city of tomorrow, the capital facilities program (especially levels of service) should be planned as part of the city's development of its capital facilities. A worst case would be a good CFP plan for the UGA that follows the guidance, but leaving the associated city with a poorly developed CFP. It will be difficult to reconcile potential inconsistencies between the UGA CFP and the city CFP as the two areas coalesce into one urban area.
This problem of a potentially different CFP in the UGA from the city is already imbedded in the GMA system and the structure of local government. GMA, reflecting the legal structure of local governments, places the responsibility for CFP planning in unincorporated UGAs on counties, with cities only being legally responsible for planning within their incorporated areas. While this poses issues for all types of planning in the UGA, it is a particularly important problem for capital facilities planning since, in most areas, cities are responsible for providing some of the key facilities that would be needed to support the development of the UGA. If the city providing the services is not committed to the funding strategy in the CFP, the strategy will tend to have little relevance during implementation.
Not only is the geographic responsibility for planning fragmented between cities and counties, responsibility for various services is also split. While cities generally would provide the water and sewer services needed by development in urban growth areas, counties are responsible for providing the roads and streets (and possibly storm water management services). The fragmentation of services is exacerbated when there are special purpose districts serving the UGA.
It is important that a CFP be a complete system incorporating all capital facilities that are needed to support development since all these services compete ultimately for revenues from the same sources.13 Funding priorities must be balanced between competing services and then be consistent over time. If the CFP is fractured, dividing up the area (such as between the cities and the UGA) and services (county, city or special district), it will be difficult to maximize the use of available fiscal capacity between the various areas and services. The problem of developing a single effective CFP is, of course, compounded when special purpose districts provide some of the key services.
As difficult as it is to prepare a good capital facility plan that provides a viable strategy for financing the facilities needed to support development planned in the comprehensive plan, it is even more difficult to implement that plan consistently over a twenty year period. Not only do economic forces ebb and flow during the period, the institutional framework also changes. Personnel and policy officials change, resulting in different ideas and policies that may or may not be consistent with the plan. This implementation is even a bigger challenge if different jurisdictions are responsible for different elements of the development process.
The Guidebook appropriately describes the need to involve all stakeholders in the planning process14 and the need for coordination and cooperation, including inter-local agreements, between jurisdictions and service providers.15 While these measures will do much to provide consistency between various plans and elements of the different jurisdictions, the Guidebook does not discuss the need for a single, integrated CFP for both the city and its associated UGAs. The Urban Growth Area Guidebook leaves the need for integration of various capital facility plans and programs to the established GMA mechanisms of countywide planning policies, consistency requirements, and monitoring, to provide the consistency between city and UGA capital facility planning and implementation. Since the enforcement mechanism under GMA to ensure consistency is appeal to the hearings boards, enforcement will continue to be irregular because not all inconsistent plans are appealed.
Ideally, there should be one CFP plan for both a city and its affiliated urban growth areas. Since the GMA encourages cities to absorb adjacent UGAs, this CFP should be part of the city's comprehensive plan. This city CFP should include transportation, with the UGA portion of the transportation system planned in close consultation with the county public works department, who would remain responsible for roads and streets in the UGA until it is incorporated.16 Fortunately, there are many jurisdictions that have recognized the need for consistent CFP planning between a city and its UGA, and agreements have been made between cities and counties to allow the cities to prepare the CFPs for UGAs in consultation with the county. This should be considered the “best practice.”
One of the major GMA compliance challenges that many local governments have encountered is having their UGA designations remanded by hearings boards for failing to demonstrate the capacity to provide the public facilities necessary to support the urban development within the UGA. This failure was often due to an inadequate understanding of the role of CFP planning in the process of designing urban growth areas. The new Urban Growth Area Guidebook strengthens previous GMA guidance on designing urban growth areas by focusing the UGA planning process on capital facility planning.
The new Urban Growth Area Guidebook provides clear guidance not only on the importance of adequate capital facility planning in designing UGAs, but also the general value of such planning in achieving the objectives of the GMA. The guidance it provides on capital facility planning should be provided to all aspects of capital facility planning under the GMA, not just the process designating or expanding urban growth areas. Perhaps, Bruce Hunt's boss, Leonard Bauer, might consider assigning Bruce to an update of the Growth Management Services guidance on capital facility planning.
2. Such as in RCW 36.70A.110(3)
3. Hunt, Bruce. Urban Growth Area Guidebook, Washington State Department of Commerce, 2012, page 10.
4. See the Guidebook, pages 20 to 24, 32-33, and 45-46 for a summary of key cases. Hunt op. cit.
5. Hunt, op cit. pages 26-27.
6. Hunt, op cit. page 15.
7. Hunt, op cit., page 17.
8. Hunt, op cit. pages 27-28.
9. Hunt, op cit. page 40.
10. If developers want their land to be incorporated into UGAs, they should be involved in planning how the facilities their development will need will be financed-the answer is often that much of the facilities will need to be financed by them.
11. In some cases, separate CFPs have been produced after hearings board decisions requiring improved CFP planning for UGAs.
12. Ideally such a CFP should also be closely coordinated with financial planning for ongoing services.
13. Revenues come from the same tax/rate payers, even if there are separate rates to pay for different services. Excessively high sewer rates, for example, usually will make it harder to get voters to approve bond issues for streets.
14. Hunt, op cit. page 18.
15. Hunt, op.cit. page 148.
16. This would create a needed format for requiring a transition plan from county to city as the UGA incorporates.
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