Fact Pack

Smart Growth Saves States Cash

An analysis of Maryland’s “Heritage Structure Rehabilitation Tax Credit” found that in 2000 and 2001, $39 million worth of tax credits granted by the state spurred $155 million worth of private investment in existing urban areas, and resulted in $20 million of new revenue for the state.(1)

A 2000 study by Rutgers University found that New Jersey could save $2.32 billion by 2020 in transportation and water infrastructure costs if it were to adhere to its own statewide plan rather than allowing unfettered sprawling development.(2)

States and localities spent almost 20 percent, or $340 billion, of their budgets during FY 1999-2000 on new infrastructure outlays related to development, and recurring service costs to maintain them. Even modest shifts towards smart growth will save taxpayers billions.(3)

The Smart Growth Tax Credit Does Not Subsidize Brownfields Cleanup

This bill would not stick taxpayers – as opposed to polluters – with the bill for brownfield cleanups. These costs are specifically excluded from the calculation of the tax credit under the act’s definition of “allowable costs”; the credit is instead limited to affecting the cost of the redevelopment of sites.

States may have existing codified definitions for brownfields that differ from New Jersey’s, and which may or may not be more appropriate for use in this legislation. Some definitions, such as the federal definition of brownfields (42 U.S.C. §9601), include a long list of exclusions of specific types of sites from being categorized as brownfields, such as Superfund sites, in order to ensure that certain subsidies do not go to cleanup efforts that are already either mandated or otherwise subsidized by the federal government. In the context of the Smart Growth Tax Credit, these exclusions are not necessary because the tax credit does not subsidize cleanup costs.

This Bill Will Not Deter Growth Where It Is Needed Most

The location criteria of this act prevent developments in environmentally sensitive areas such as coastlines and wetlands from qualifying for a Smart Growth Tax Credit (see Section 6 (A)(3) of the bill text).

However, where significant development has already taken place, an area may be categorized as “highly urbanized” and exceptions to some of those environmental criteria may be made. An area becomes eligible if further urban development and redevelopment makes sense because it has historically occurred there, even if it is in an area that is in some ways environmentally sensitive.

In New Jersey, Hoboken is near the coast but it is already built up so that the net environmental benefit of encouraging compact development there, in order to utilize the existing infrastructure and services, outweighs concerns for protecting the coastline from further development. In general, exceptions to environmental criteria based on the fact that an area is “highly urbanized” should encourage infill development in existing urban areas.

Please see our Suburban Sprawl, Community Revitalization, and Green Building policy issue packages for further information.