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Chapter 2

THE PROCESS OF CHANGE

As the market status of the land changes, the land use structure is altered. Parcels change in both status and ownership. Neighborhoods change their component and dominant land uses. Regions change in their mix of land uses.

The essential actors and actions in this process of change are summarized in Table 9. The next three tables (10-12) outline the problems which stem from land use change, and the inherent remedies. Analysis of those tables leads to some basic conclusions about land use change and the management of it. But the tables use a number of shorthand terms to describe actors, actions, and measures of change; and those terms are reviewed briefly in the following section.

FAMILIAR ACTORS

Many familiar actors appear in the land use system as the scenes unfold.

Although all of those terms are common in discussions of land use, the last five often have different meanings for different people. Here they have the following definitions:

• Developers include private individuals, firms, or public agencies. The term includes site developers, who are responsible for internal improvements on a parcel - the type of developer to whom the label is almost universally applied. But it also includes location developers who build the external streets, roads, and utilities which link together many parcels (sites) and form the circulation framework for an urbanized area. The location developers are almost always public agencies or franchised utilities; while the site developers are generally smaller private firms or individual entrepreneurs.
• A speculator may be a buyer, developer, or lender who gambles that his profits will increase as a result of misperception of the value of the parcel by either the seller or potential future buyers.
• Land use planners describe, explain, and evaluate alternative future patterns of land use for a parcel or larger area and recommend a particular choice or scheme of priorities for development. Such planning may be either professional or casual, public or private.
• Land use regulators might be agencies which influence land use decisions on authority from a public legislative body. Or they might be legislative bodies which exercise regulatory powers directly or delegate them to an agent. While land use planners operate in either the public or private sector of the economy, the regulators are all public officials.
• A bystander is anyone on the scene who observes and feels the impact of actions of other agents - the buyers, sellers, lenders, developers, planners, and regulators; but he does not participate in any of the actions. Some by-standers might never play any of the other roles in the process of land use change; but every one of the other actors is also on some occasions a bystander.

FAMILIAR ACTIONS

Many familiar actions also occur as the land use scene unfolds and the land use map changes. The terms are well-known.

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But again, it is important to be clear about the meaning of these terms.

• Holding is the current action most of the time on most of the land. The owner is maintaining possession of a parcel during the period of time it is in the current land inventory for urban development.
• Land improvement applies to both the location and the site of any given parcel. Location improvements are external to the parcel - for example, highways or utility systems. They increase the accessibility of the parcel and thus enhance its value. They also lead to the development of other parcels, hence reduce the competition and "ripen" the value of the parcel in question. Site improvements are normally made by the owner or developer on the particular parcel he controls - buildings, drives, or landscaping are examples.
• When parcels are improved, their land uses change; and some of the new uses are incompatible with their neighboring uses. That is, they are noxious to other land uses on other parcels within the same neighborhood.
• Speculation may well occur throughout the process of land use change. It is essentially the purchase or improvement of land on the chance that there has been or will be misperception of its real value by either a past seller or a future buyer. Such misperception is actually an erroneous judgment of the value added to a parcel as a result of improvements.
• Planning results in parcels or larger areas being either committed or recommended for a particular future use, according to some set of priorities and an evaluation of the area for development. The planning may be either public or private. Where it involves commitments and not merely recommendations, planning is done by landowners (either private or public) or by public bodies with powers to license, permit, or zone.
• Finally, bystanders' intervention is an organized effort by bystanders to influence the actions of planners, regulators, and developers. This is usually motivated by the bystanders' fear of the impact of a proposed action upon their lives, their property, or the environment of a neighborhood they know intimately.

MEASURES TO DESCRIBE AND EVALUATE ACTIONS

Some familiar measures help to describe and evaluate the actions which are taken during the process of land use change.

• The sale price provides a measure of the value of the parcel with its improvements.
• The seller's costs include his original purchase price, depreciated cost of internal improvements he made while he held the land, taxes paid which were used to maintain or increase the value of the parcel, and management and selling costs, minus the value of income or other benefits derived from the property while he held it.
• Profit from sale of a parcel is the difference between the sale price and the seller's costs. It may be negative. If it is positive, it appears that it should equal the income foregone on his equity during the holding period. Profit in excess of that amount would appear to represent value added by external improvements and be therefore "unearned". (The seller paid only the share of the cost of external improvements covered by his own taxes; and that is included in the cost items which make up the fair selling price. The seller's foregone interest from alternative investments would appear to be equivalent to a fair return on this land sale. It also appears that there is no need for unusual profits to attract more money into the land market from other types of investment, for a large amount of speculative activity in the land market suggests that there is already a surplus of money in the market. Hence, there appears to be no reason for returns from land sales to be more lucrative than the average return from investment in other parts of the economy.)
• Many different agents judge the suitability of a parcel for a particular kind of development or preservation. Suitability of the parcel depends upon its characteristics compared with ideal characteristics for the stated use. There is concern with both site suitability - the intrinsic characteristics of land and improvements on the parcel - and locational suitability - the relative accessibility of the parcel to population, markets, jobs, or resources in the wider region.
• Those same agents must also judge the priority for development of a given parcel. That is, they must set the time at which the parcel should be developed (or pre-served), compared with the timing of development of other parcels suitable for the same kind of land use.

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Table 9 - Market Status and Land Use Change

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SUMMARY

Table 9 summarizes the interrelationships between elements of the land use structure, the agents, and the actions in the process of change.

The left-hand column of the table indicates the possible range of market status for any given parcel at the beginning of any time period. The columns to the right then show: 1) possible future land uses which might be selected for the parcel, moving from its initial status; 2) the criteria for selecting future uses; 3) the agents who make the selection or influence it; and 4) the points at which the public (Bystanders) has a chance to participate formally in the land use selection process, under both traditional and emerging new conditions.

Examination of the matrix in Table 9 brings out three particularly important points:

• All of the agents who select future land use for a given parcel, at all stages of its development, use the same basic criteria for selection - the quality of the parcel's accessibility and the quality of its site. If they use the same criteria, they must need the same information. Hence, it appears that, at least among reasonable men, incompatible developments could be anticipated and reduced by the greatest possible development and diffusion of information concerning location and site qualities.
• Recreation or preservation lands acquired by the public will normally be those with the least site and location value for any other use, unless they are acquired in advance of general development in the area. For they are the lowest intensity uses and will not normally be able to compete with higher intensity uses in the market. Hence advance planning and early action are especially important.
• Traditional procedures have allowed virtually no opportunity for potentially affected bystanders to participate in the land use selection process until after development decisions have been made. Their possible actions have been limited largely to protest.

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