Municipal Service Pricing

Impact on the Growth of Residential Development

by Benjamin Zycher, L. A. Dougharty, Carole Chew, Isao Kobashi

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Estimates the effect of development charges--fees paid by residential developers to localities as a prerequisite to the development process--on residential development location choice. An econometric model, using data from 15 cities of Santa Clara County for the years 1966 to 1973, supports the hypothesis that the use of development charges is a relevant policy tool available to localities for the purpose of influencing the rate and pattern of development. This report reviews four alternative pricing policies; some of the policies impose higher costs on the developer than others, and hence would be stronger deterrents to growth. While pricing policy can act to curb growth, it cannot place enforceable ceilings on the rate of growth. Therefore, pricing policy cannot be recommended as an effective growth control strategy. It should play a role, however, in an integrated policy of growth management. (See also R-1878/1, R-1878/2, R-1878/4.)

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