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Urban
Growth Controls: The Transitional Dynamics of Development Fees and Growth
Boundaries
URAG Working Paper #03-05
by Geoffrey K. Turnbull, Journal of Urban Economics, Vol. 55, Issue 2, pp. 215-237, March 2004.
Keywords: development fee, urban growth boundary, land development
This paper investigates how development fees and urban growth boundaries affect urban development when the short run construction supply function is upward sloped (i.e., development costs are convex). Whereas the two policies are equivalent in the traditional static model, this dynamic analysis reveals important differences out of the steady state. In particular, the development fee that is efficent in the steady state is also dynamically efficient. In contrast, the long run efficient urban growth boundary generates inefficiently fast development out of the steady state. The results are robust with respect to the presence or absence of location rents and landowner foresight assumptions.
Comments and questions regarding this paper may be directed to Geoffrey K. Turnbull.