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The Board of Regents of the University of Wisconsin System

The Price Effects of Urban Growth Boundaries in Metropolitan Portland, Oregon


Author(s): Gerrit J. Knaap
Source: Land Economics, Vol. 61, No. 1 (Feb., 1985), pp. 26-35
Published by: University of Wisconsin Press
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The Price Effects of Urban Growth


in Metropolitan
Portland, Oregon

Boundaries

GerritJ. Knaap
INTRODUCTION

The late 1960sand early 1970sbroughtincreasingpublic concern over environmental


issues such as risingpopulationgrowth, resource depletion, and the overall qualityof
life. The State of Oregon, nationallyrecognizedas a leaderin environmentallegislation,
expressedits environmentalconcernswith a
bold, innovativeapproachto land-useplanning. The 1973legislature,whichcreatedthe
Land Conservationand DevelopmentCommission(LCDC), conceiveda systemwithlocal participationyet centralcontrol. As the
state'scentralplanningauthority,LCDC directs the planningprocess throughenforcement of statewidegoals and guidelines.The
plans themselves, however, are drafted,reviewed, redrafted,and enforcedat the local
level. Once LCDCcoordinatesand approves
all the city, county, and specialdistrictplans,
the use of all Oregonlandswillbe closelyregulated.
The cornerstoneof the land-useprogram,
the urban growth boundary(UGB), represents a planningtool qualitativelydifferent
from traditional land-use regulations. The
qualitativedifferencelies in the additionof a
new dimension-the dimension of timing.
Whereas traditional land-use regulations
specify what, where, and how one can improve land, the UGB specifieswhen one can
improveland. In Oregon,currentlandusage
both insideandoutsideUGBs is regulatedby
traditionalland-use controls-e.g., zoning,
tax incentives, fee simple, and building
codes-future land usage is regulated by
UGBs. Specifically,only land inside a UGB

LandEconomics,Vol. 61, No. 1, February1985


0023-7639/85/001-0026
$1.50/0
? 1985by the Boardof Regents
of the Universityof WisconsinSystem

can be convertedto urbanuse before a specifieddate; land outside a UGB is preserved


for nonurbanuse until after the same specifieddate.
Using cross-sectiondata, this study measures the effects of UGBs on vacantsinglefamilyland values in metropolitanPortland,
Oregon. According to conventional economictheory,land-usepoliciesthatinfluence
the allocationof landmustaffectlandvalues.
A test for priceeffectsof UGBs, then, determines if UGBs influenceland allocationor
whether UGBs are currentlyredundantinstrumentsto existingland-usecontrols.The
test cannotdeterminewelfareeffects. Significant price effects might indicate inefficient
marketintervention;on the other hand, significantpriceeffectsmaybe necessaryto correct existing market, or nonmarket,imperfections.Thisissuesurpassesthe scopeof this
study.But it is clearfromthe languagein the
goals and guidelines that LCDC's intent is
clearlythe latterpurpose.
PREVIOUS RESEARCH

Previousstudies have examinedthe price


influence of land-use controls that specify
density, lot size, or allowableuse in the current time period.1Peterson (1974a, 1974b)

Departmentof UrbanStudiesandEconomics,Universityof Wisconsin,GreenBay. Thisresearchwassupported in part by the MetropolitanServiceDistrictof


Portland,Oregon, and by the WesternInterstateCommissionfor HigherEducation.The authorwouldlike to
thankTom Hibbard,SteveMaser,Ed Whitelaw,andan
anonymousreferee for their helpful commentson an
earlierdraftof thispaper.Any remainingerrorsor omissions are the author's.
'GriesonandWhite(1981)haveshownthatthe price
effects of zoning depend upon the specificationof the
constraint.Allowable-usezoning, densityzoning, and
minimum-lotzoning all may reduce the value of restrictedlots.

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27

Knaap:UrbanGrowthBoundaries

testedfor the priceeffectsof zoningin Fairfax


County, Virginia, and Boston, Massachusetts. In FairfaxCounty,Petersonfoundland
valuesinfluencedby densityzoningandfound
the effectsof densityzoninginfluencedby distance to the urbancore. In Boston, Peterson
found land values affected by minimum-lot
zoning.Jud (1980), in a studyof the effectsof
zoning on land values in Charlotte, North
Carolina, also found land values influenced
by minimum-lotzoning. In an analysis of
allowable-usezoning in BrooklinPark,Minnesota, Gleeson (1979)found landvaluesinfluenced by a development boundarythat
separatesurbanland from agriculturalland.
The evidence regardingallowable-usezoning, however, is mixed. Maser, Riker, and
Rosett (1977) found no price differentialbetween single-familyand multiple-familyland
in MonroeCounty,New York.
In sum, mixed evidence has surfacedregardingthe effectsof currentlyeffectivelanduse controls on land values. This studyprovides furthermixed evidence in this regard.
What'smore, this study also providesmixed
evidence concerningthe timing of land-use
constraints-that is, boundariesthat specify
future land-use constraintsmay also affect
landvaluesand, hence, landallocation.

Suppose there exist two types of residential land, urbanand nonurban,wherethe differenceis enforcedby zoningregulationsand
defined by housing density, minimum-lot
size, or some other allowable-usecriteria.
Supposefurtherthat as a resultof zoning,urban rents, Ru, are highervaluedthan nonurban rents, Rn, for some radialdistancefrom
the urbancore. For ease of graphicalexposition, urbanrents are assumedto decline linearlywith distance,t, andnonurbanrentsare
assumedspatiallyinvariantunderpermanent
zoning.The marketvaluesof urbanandnonurbanlandequalthe presentvalueof theirrespectiverentalstreams.Thatis,
R + Rn/(l
+ Rn/(l

[Ib]

+ r)?

Figure 1 illustratesthe behaviorof urban


andnonurbanlandvalueswithdistanceto the
urbancore underthe above assumptionsand
under the assumptionthat zoning designations are permanent. Urban land is higher
valued to distancet'. Beyond distancet', all
land commandsnonurbanland values. This
occurs because zoning regulationstypically
prohibitnonurbanland from urbanuse but
not urbanlandfromnonurbanuse.
When zoning designationsare not permanent, and nonurbanland may become urban
landsometimein the future,the valuesof urban and nonurbanland remain the present
value of the expectedrentalstreamsbut with
certainmodifications:
Pn(t) = Rn + Rn/(l

+ r) +
+ r)x ...

+ R,(t)/(l

Rn/(l

+ r)x-

Ru(t)/(l

+ r)?

. . .

[2a]

wherex = expecteddate of up-zoning;

...

R.(t)/(l

+ r)I
+ r)?

[2b]

#0

0
-o
)
a
0
O
__a

Pu(t)

FIGURE 1

+r)

+ r)2+

+ * * * R(t)/(l

P,(t) = Ru(t) + R,(t)/(l

A PARTIALEQUILIBRIUMMODEL

P=

P,(t) = R(t) + R(t)/(l +r)'

.. Rn//(
+r))

[la]

LAND VALUES WITH DISTANCE UNDER PERMANENT


ZONING

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28

Land Economics

Figure 2 illustrates the behavior of urban


and nonurban land values with distance to the
urban core under these assumptions. The
value of nonurban land increases by the
present value of the incremental rent received
following up-zoning to urban land and incidentally becomes spatially variant. That is,
nonurban land values at t < f' reflect expectations of future urban rents, and urban rents
vary with distance to the urban core.
UGBs, in specifying when nonurban land
can convert to urban land, affect land values
in this simple model as follows:
Pn(t) = R + Rn/(l
+ R,(t)/(l

+ r)+

*--R*

+ r)x ...

/(l + r)x-l

R(t)/(l

+ r)?o

[3a]

where, e.g.,
P'

= price of nonurban land inside the


boundary, and x is the expected date
of up-zoning inside the boundary;

P?(t) = R, + R/(l

+ r)+

. .

* + Rn/(l

+ r)x

+ R//(I + r)y-'

+ R,(t)/(l

+ r) ...

R,(t)/(l

+ r)?

where, e.g.,

(1

-j

t"
FIGURE 2

LAND VALUES WITH DISTANCE UNDER


NONPERMANENT ZONING

values in urban zones will not vary across the


UGB. UGBs indicate when nonurban land
may become urban land and receive urban
rents; and since land in urban zones already
receives urban rents, urban land values will
not vary across the UGB. Land values in nonurban zones, however, will vary across the
UGB. The price differential equals the difference between the present value of the expected rental stream inside the boundary and
the present value of the expected rental
stream outside the boundary due to the difference in timing of allowable urban development. That is,
P
n,(t)-

Pn = price of nonurban land outside the


boundary, and y is the expected date
of up-zoning outside the boundary,
andy > x;

Distance(t)

P(t)=

[(t)

+ [R,(t)

R, ]/(1 + r)X

- R]/(1

+ r)+l

...

X [R,(t)- R]/(AI + r)y-'> 0


[4a]

Pe(t) = R,(t) + R,(t)/(l


+ ...

+ r)?

R,(t)/(l

P?(t) = Ru(t) + R(t)/(l


+ . . . R(t)/(

+ r)

P(t) - po(t) = o
[3b]

+ r)l
+ r)??

Figure 3 illustrates the effects of an UGB


on urban and nonurban land values. Land

[4b]

In sum, the model above describes the effects of an UGB-a demarcation of where
zoning changes and future urban development may take place-on urban and nonurban land values. As the model is specified, urban land may exist outside the UGB; urban
development may have been allowed in the
past where additional urban development is

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Knaap:UrbanGrowthBoundaries

29

NONURBAN = a dummyvariableindicating

zoning (nonurban = 1);

UGB = a dummyvariableindicatinglocation
withrespectto the UGB (outside= 1); and,
w = a stochastic disturbance.

t'" Distance(t)

FIGURE 3
LAND VALUESWITHDISTANCE
ANDAN UGB

not currentlypermitted.The value of urban


landoutsidethe boundary,if it exists,willnot
diverge from the value of urbanland inside
the boundaryexcept due to non-UGBdifferences. Thatis, the valueof landcurrentlydesignatedfor urbanuse will not be affectedby a
boundarythat identifies land that may become urban in the future.2Nonurbanland
values, however, will diverge at the UGB.
Zoning changes to urban use are expected
sooner inside the UGB than outside the
UGB; hence, since urbanland valuesare assumed higher than nonurban land values,
nonurbanlandvaluesinsidethe UGB will be
higherthannonurbanlandvaluesoutsidethe
UGB.
METHODOLOGY

Hedonicpriceestimationis usedto test the


model above. The hedonic equationmay be
expressedas follows:
PL= Bo+ EPi1jE+ 12URBAN+ p13(NONURBAN
+ w;
*UGB)+ P14(URBAN*UGB)

where,
PL= the marketprice per acre of the homesite;
Ej= a vectorof extraneousvariables;
URBAN = a dummyvariableindicatingzoning (urban = 1);

Similarspecificationshave been employedby


Peterson (1974b) and Diamond (1980) and
permitmeasurementof the effectsof land-use
controls on subsets of observations-in this
case, the effectof the UGB is measuredon urban and nonurbanlandvalues.
Threeimplicationsof the suggestedmodel
can be tested using the above hedonicequation. First,the effectsof zoningcan be tested
by estimatingP2;if 2 > 0, then urbanlandis
higher valued than nonurbanland. Second,
13providesa measureof the price effects of
UGBs on nonurbanlandvalues;if P < 0, then
nonurbanland values are higher inside the
UGB than outside the UGB (e.g., equation
[4a]). Third, 134provides a measure of the
priceeffectsof UGBs on urbanlandvalues;if
[4 = 0, then urbanlandvaluesdo not diverge
at the UGB (e.g., equation[4b]).
THEDATA

The data consist of every vacant singlefamilyhomesitesold duringfiscalyear1980in


Washingtonand Clackamascounties.3Accordingto the countyassessors'offices, each
of the observations represents an "arm's
length"transaction,whichsuggestsa sale at
true marketvalue. All 455 transactionswere
recordedbetween September1979 and August 1980, approximatelyfour yearsafterthe
UGB was originallydrawn.
2Ina generalequilibriummodel, the valueof urban
land may be affectedby a UGB. The magnitudeof the
effect dependson the elasticitiesof demandfor urban
and nonurbanland and the cross-priceelasticityof demandbetween the two markets.See, e.g., Ohls, Wiesberg, andWhite(1974).
3Observationswere also gatheredfromMultnomah
Countybutwereexcludedfora lackof observationsoutside the growthboundaries.Further,Chowtests, which
showed instability of coefficients across county submarkets, precludedany pairwisepooling of observations.

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30

Land Economics

The relevantzoning designationfor each


parcelwas obtainedfromthe localzoningauthorityandclassifiedas urbanor nonurban.A
parcel is classifiedas nonurbanif zoning restrictsdevelopmentto less than 4.4 unitsper
acre; a parcelis classifiedas urbanif zoning
permits developmentgreaterthan 4.4 units
per acre. Thus in this classificationsystem,
the differencebetween urbanand nonurban
land is defined in terms of densityzoningandthisis the classificationsystemusedto enforcethe UGB.
A dummyvariablecapturesthe relationshipof the parcelof landto the UGB: a value
of zero for the UGB dummyvariableindicates locationinsidethe boundary;a valueof
one indicateslocationoutside the boundary.
Parcelsinside the UGB can be developedat
urbandensitiesbefore the year 2000, parcels
outside the UGB cannot. The UGB coefficientshould be interpretedas the decrease
in price per acre of a parcellocated outside
the UGB compared to a parcel inside the
UGB.
One additional variable should be explained.The IntermediateGrowthBoundary
(IGB) identifiespropertieslyingin areasdesignatedas futureurbanor speciallyregulated.
These designationsexist as a politicalcompromiseover the placementof the UGB and
are locally enforced. Propertiesoutside the
IGB cannotcurrentlybe developedat urban
densities, but will presumablyconvertto urban use before propertiesoutsidethe UGB.
The IGB, then, can be perceivedas a UGB
withina UGB, the IGB havingan earlierexpirationdate. The two variablesare mutually
exclusive;a value of one for eitherprecludes
the samefor the other.4
RESULTS

Table 1 presentsordinary-least-squares
estimatesof the hedonicvaluations.The model
of the price effects of the UGB suggeststhat
the impact of the UGB should be proportional to the value of land, hence the regression is specifiedin the log form.5Further,the
equation is specified in double-logform to
overcome multicollinearity problems between the noncategoricalindependentvariables.

Washington County

The resultsin WashingtonCountywererobust. Out of eleven variablesused to capture


extraneousdeterminantsof landvalue, seven
were significantwithexpectedsigns.In brief,
land values were higher for parcels located
within300feet of a sewerline;landvaluesare
higherfor parcelslocatedin incorporatedmunicipalities;and land values are higher for
parcelslocatedin recordedplats.Landvalues
increasewith the medianincome of the census tract and increaseslightlyover the fiscal
year. Land values decreasewith distanceto
the urban core and decrease (in per acre
terms)withthe size of the parcel.
The Oregon land-use program affected
land values in WashingtonCounty as suggested by the model above. Holding other
thingsconstant, urbanland is highervalued
thannonurbanland, as measuredby the variableURBAN. Further,nonurbanlandvalues
are higher inside the UGB than outside the
UGB, as measuredby the variableNONURBAN*UGB. Urbanland, however,does not
exist outside the UGB, hence, the effect of
the UGB on urban land values cannot be
measured.
Nonurbanland values inside the IGB are
alsohigherthannonurbanlandvaluesoutside
the IGB, as measuredby the variableNONURBAN*IGB. But urbanland valuesinside
the IGB arenot higherthanurbanlandvalues
outsidethe IGB, as measuredby the variable
URBAN*IGB. Further,the effectof the IGB
on urbanand nonurbanlandvaluesis not the
same; that is, the coefficienton the variable
NONURBAN*IGB is significantlydifferent

4TheIGB was createdto correctwhat LCDC perceived as an excess amountof land insidethe Portland
metropolitanUGB. To preserverichagriculturalfarmlandfor as long as possiblefromurbanencroachment,a
"line within a line" approachwas adopted. All land
withinthe UGB is designatedfor urbanuse beforethe
year 2000;but land withinthe IGB mustbe developed
first-preserving for a time those lands best suited for
agriculturaluse. The concept of the IGB was drawn
fromthe UGB; henceits effecton landvaluesshouldbe
similar, but with a different time dimension.A map
showingthe IGB andUGB is providedin AppendixB.
5Iam indebtedto an anonymousreviewerfor pointing this out.

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31

Knaap: Urban Growth Boundaries


TABLE 1
SINGLE-FAMILY
VACANT
- LAND,
---- -I -FY-1980

Clackamas County

The results in Clackamas County were


mixed.Of ten variablesusedto captureextraneous determinantsof landvalue, only three

Washington
County

Clackamas
County

URBAN

.267
(1.80)*

- 407
(1.74)

were significant. In brief, land values are

NONURBAN*UGB

-.980

- .258

acre terms) with parcel size.

(4.10)**
NONURBAN*IGB

-.944

higherfor parcelslocatedwithin300 feet of a


sewer line, and land values decrease with
-.645
(2.50)** property-taxationlevels and decrease(in per
(.78)

(5.57)**
URBAN*IGB

-.005

ACCESS

-.404

-.064

(.28)

(.03)
(2.36)**
ACRES

-.186

SEWER

(2.85)**
.148
(1.71)*

PLAT

not be shown higher valued than nonurban

0.662)**
.470
(279)**
.084

land values. In fact, the variableURBAN is


nearly significantin the opposite direction.
However, nonurbanland values inside the
UGB are higher than nonurbanland values
outside the UGB, as measuredby the variable NONURBAN*UGB. The effect of the

-.140
(l.11)

UGB on urban land values, again, cannot be


measured.

(.12)

.506
-.374

(3.61)**
.255
(.48)
.414

ClackamasCounty.Urbanlandvaluescould

-.019

(.44)

(4.23)**
NOCITY

The model of the Oregon land-use pro-

gram is supported only in part by the results in

The IGB could not be shownto affect eitherurbanor nonurbanlandvalues.Both the


TAX
-1.442
variables NONURBAN*IGB and UR(.95)
(3.35)** BAN*IGB are insignificant;andthe effect of
INCOME
1.055
.311
the IGB on urbanand nonurbanland values
(2.31)**
be shownsignificantlydifferent.7
cannot
6(.27)
RACE
-1.048
In sum, two of the variablesused to cap(1.34)
(.39)
ture the effects of the Oregon land-useproSLOPE
-.108
.087
gram support the model above. Nonurban
(.89)
(.50)
land values are higherinside the UGB than
DATE
.085
.057
outside the UGB, and urbanland valuesare
(1.73)*
(1.16)
Constant
11.061
-5.751
not higher inside the IGB than outside the
R2
.812
IGB. But two of the land-usevariablesdo not
.787
N
267
188
supportthe model above. Urbanlandvalues
are not higher than nonurbanland values,
F
72.38
45.75
and nonurbanlandvaluesinsidethe IGB are
*Significantat the 95%level;one-tai1ltest.
not higherthannonurbanlandvaluesoutside
PORTLAND

**Significantat the 99%level; one-taiiltest.

than the coefficient on the variable URBAN*IGB.6

In sum, and as the modelsuggested,urban


land is higher valued than nonurbanland;
nonurbanland inside a growth boundaryis
highervalued than nonurbanland outside a
growthboundary;andurbanland,whenit existson both sidesof a growthboundary,is not
highervalued inside the boundarythan outside the boundary.

the IGB.

Explaining The Mixed Results

The resultsconfirma significantUGB effect on land values in both Washingtonand

6A test usinglinearrestrictionsrejectsthe hypothesis


33= P4 (for the IGB) at the 99% level. Ft = 20.027.
not rejectthe
7'Atest using linearrestrictionscoul&
hypothesis
= 067.
Ftest

03=

(for the IGB) at the 90% level.

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32

Land Economics

Clackamascounties,but the differencein the


ington Countywhere the county has chosen
measured effects of the variablesURBAN
to enforce its zoning restrictionsand to use
and IGB between the two countieswarrants the IGB as a growth boundary within a
furthercomment.As the principalinstrument growthboundary.The effects of zoning and
of the statewideland-useprogram,the UGB
the IGB are insignificant in Clackamas
is enforcedubiquitouslythroughoutthe metCountywhere the county has chosen to use
ropolitanarea; the enforcementof land-use flexible short-termland-use controls inside
constraints inside the UGB, however, rethe UGB.
mains the responsibility of local planning
CONCLUSION
agencies. What's more, the Metropolitan
ServiceDistrict,the metropolitan-wideplanThisanalysisof the residentiallandmarket
ningagencyfor Portland,Oregon,"hasacted
to insurea degree of latitudethat local juris- in metropolitanPortland,Oregon,soughtto
dictions may exercise in adopting growth identify the price effects of urban growth
managementstrategies[inside the UGB]."8 boundaries.A model of the effects of UGBs
Thusthe differencein the measuredeffectsof
was presented where it was suggestedthat
the variablesURBAN and IGB is likely the
UGBs affectlandvaluesvia the timingof traresult of a differencein the enforcementof
ditionalland-useconstraints.Observationsof
the constraintsthese variablesrepresent.
land values in the market place were then
"Washington County, with large areas used to test the suggestedmodel.
The resultsweremixedbutexplicable.The
having sewer and water service has existing
andstrictlyenforcedimmediateurbanandfuUGB was found a significantinfluence on
ture urban areas."9 Because of this long- land values in both counties; the effects of
standingresolveto enforcecurrentandfuture zoningandthe IGB variedbetweenWashingland-use controls, the land-use programin
ton and ClackamasCounties.In Washington
Washington County operates precisely as
County, where the instrumentsto control
suggested by the general model and affects growthwere fixed and strictlyenforced, the
landvaluesaccordingly.
results stronglysupport the general model.
Unlike Washington County, however,
Urban land values were higher than nonurClackamasCounty has not resolved to enban land values, nonurbanland values were
force the existingland-usecontrolsinsidethe
shown divergentat growth boundaries,and
UGB. "ClackamasCounty,withoutthe lux- urbanland values could not be showndiverury of broad sewer coverage, has opted in
gent at a growthboundary.Thus,land-useretheirComprehensivePlanfor a growthman- strictionson both currentand future urban
agement strategyof a flexible line-within-a- developmentwerefoundto affectlandvalues
line approach."10
Thatis, ClackamasCounty as expected.
hasnot resolvedto enforceexistingzoningreIn ClackamasCounty, where the instrustrictionsand the IGB to control develop- mentsto controlgrowthinsidethe UGB were
mentinsidethe UGB. Instead,the countyhas flexibleand weaklyenforced,the resultssupchosento keep its land-usecontrolsinsidethe
port the general model only in part. NonurUGB flexibleandconditionaluponthe avail- ban land values were showndivergentat the
UGB, and urbanlandvalueswere not shown
abilityof sewerservice.Hence, landvaluesin
ClackamasCountyareless influencedbyzon- divergentat the IGB. Contraryto the model,
urbanland valueswere not higherthan noning and the IGB and are more influencedby
the availabilityof sewerservice.
urbanland values, and nonurbanlandvalues
In sum, the mixedresultsreflectin partthe
could not be shown divergentat the IGB.
resolve of the planningagencies to enforce Thus, only one of the land-userestrictionsexisting land-usecontrols. The effect of the
UGB is significantin both countiesbecause
the UGB must be enforced by order of the
8TheMetropolitanServiceDistrict(1979),p. 46.
state land-useauthority,LCDC. The effects
9Ibid.,p. 46.
of zoningandthe IGB aresignificantin Washl?Ibid.,p. 46.

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33

Knaap:UrbanGrowthBoundaries

one on future urban development-was


found to affect land values as expected. But
thenonly one of the land-userestrictionsis effectivelybindingin this county.
Althoughthe UGB was founda significant
influence on nonurbanland values in both
Washington and Clackamascounties, only
the IGB providedevidenceregardingthe effects of growthboundarieson urbanlandvalues. This was not surprising. By design,
UGBs in Oregon encompassall urbanareas
in the state;therefore,the effectsof the UGB
on urbanlandvaluescannotbe measuredusing cross-sectiondata.Timeseriesdata,then,
must be used to uncoverfurtherinformation
on the price effects of UGBs on urbanland
values.Thisis left for futureresearch.
Turningnow to allocativeimpacts,the observed price differentialsin nonurbanland
values suggestthat UGBs are not redundant
instruments. If growth boundaries specify
timing-as they appear to do, especiallyin
Washington County-their allocative impactsarenot as obviousas theyfirstseem. Urban growth boundaries,as they are used in
Oregon, do not currently constrain urban
land supplies-traditional zoningregulations
do. If the landareainsidethe Portlandmetropolitan UGB doubled, urban land supplies
would not increase. Only when additional
land is zoned for urbanuse will the supplyof
urbanland increase.Therefore,the currently
effective urbangrowthboundaryis the outline of all landcurrentlyin urbanzones.
HighernonurbanlandvaluesinsideUGBs
reflect expectations of future urban zoning
and, hence, futureurbanrents.These expectations, however, have currentallocativeimpacts. The impacts,once again, are manifest
throughthe timingof the conversionof land
fromnonurbanuse to urbanuse. Landis convertedto urbanuse as soon as zoningpermits,
since, as a result of zoning, urbanrents are
higherthan nonurbanrents. Therefore,nonurbanland inside UGBs will be used less intensivelythan nonurbanlandoutsideUGBs.
This occursbecause all fixed costs in agricultural productionmust be recovered before
the land is convertedto urbanuse. Existing
productionon nonurbanlandis unaffectedby
UGBs, but no new nonurban improvements-e.g., irrigationsystems,fencing,and

nonresidentialstructures,etc.-will be made
insideUGBs unlessthe costs of the improvements can be recoveredbefore the expected
date of conversionto urbanuse. As a result,
nonurbanland insideUGBs will be prepared
for conversionto urbanuse, while nonurban
landoutsideUGBs will remainfree of speculative influence. These are the exact effects
UGBs were intendedto have in Oregon.But
additionalresearchis necessarybefore these
or otherconclusionscan safelybe drawn.

References
Diamond, Douglass B. 1980. "The Relationship
Between Amenities and UrbanLand Prices."
LandEconomics56 (Feb.):21-32.
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34

Land Economics
APPENDIX A
DESCRIPTION
OFVARIABLES

VARIABLES
DependentVariable:
1. Price
Independent
Variables:
1. Access
2. Acres
3. Sewer
4. Slope
5. Income
6. Race
7. URBAN
8. NONURBAN*UGB

9. NONURBAN*IGB

10. URBAN*IGB

11. Tax
12. Date
13. Portland
14. Nocity
15. Plat

EXPECTEDSIGN

DEFINITIC
)N

SOURCE

the salespricedividedby the


numberacresin the sale

the countysales-ratioreports

peak-hourtraveltimein minutes
to downtownPortland
the numberof acresin the sale

matrix
Metro*transportation

negative

the countyassessor'smapsand
files
Metrooverlaymaps

negative

dummyvariable;1 if within300
feet of a sewerline
Metrooverlaymaps
dummyvariable;1 if sloped
morethan25 percent
medianincomeof the census
1970census
tract
1970census
percentageof the censustract
thatis white
Metrogeneralizationof local
dummyvariable;1 if zonedfor
single-familyuse greaterthan
zoningcodes
4.4 unitsper acre
Metrogeneralizationof local
dummyvariable;1 if zonedfor
single-familyuse less than4.4
zoningcodesandmetromaps
unitsper acreandlocatedoutside the UGB
Metrogeneralizationof local
dummyvariable;1 if zonedfor
single-familyuse less than4.4
zoningcodesandmetromaps
unitsper acreandlocatedoutside the IGB butinsidethe UGB
Metrogeneralizationof local
dummyvariable;1 if zonedfor
single-familyuse greaterthan
zoningcodesandmetromaps
4.4 unitsper acreandlocated
outsidethe IGB butinsidethe
UGB
propertytax rateper $1,000of
countyassessor'soffice
assessedvalue
Discreteindexof salesdate;
sales-ratioreports
1 = Sept. 1979,12= Aug. 1980
dummyvariable;1 if in the City
countytaxcodes
of Portland
dummyvariable;1 if unincorpo- countytaxcodes
ratedin a localmunicipality
dummyvariable;1 if locatedin a countyrecords
recordedplat

positive
negative
positive
positive
positive
negative

negative

zero

negative
positive
negative
negative
positive

*METROis an abbreviationforthe MetropolitanServiceDistrict,the metropolitanwide


planningagencyin Portland, Oregon.Metrocoordinatesthe planningeffortsof the localplanningagenciesandis responsiblefor enforcing
the UGB.

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Knaap:UrbanGrowthBoundaries

35

DESCRIPTIVE
STATISTICS
WashingtonCo.
mean
std. dev.
URBAN
NONURBAN*UGB
NONURBAN*IGB
URBAN*IGB
ACCESS
ACRES
SEWER
PLAT
NOCITY
PORTLAND
TAX
INCOME
RACE
SLOPE
DATE

.599
.082
.255
.045
28.899
.748
.427
.790
.618
.004
1998.528
11363.974
95.562
.026
7.281

.491
.275
.437
.207
9.726
.195
.496
.408
.487
.061
156.935
1616.535
1.422
.160
3.532

ClackamasCo.
mean
std. dev.
.718
.228
.021
.032
29.617
.577
.681
.773
.394
.000
1989.064
11738.989
97.612
.165
6.505

APPENDIX B

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.451
.421
.145
.176
8.017
.663
.467
.449
.490
.000
221.630
2017.018
.797
.372
3.387