Impacts of Form-Based Code on Property Values, Development Costs, and Amount and Patterns of Development
Information quoted from National Association of REALTORS® Growth Management Fact Book (2022 Update).
Property Values
“The extent to which the form-based code can affect property values is largely dependent on where and how the code is applied. In those cases where the code is used in a redevelopment (or ‘infill’) context, it can generally be expected to increase property values if the code is carefully written to promote development that reinforces or enhances the already-existing character of the area. According to the executive director of the Metropolitan Nashville-Davidson County Planning Department, between 2005 and 2013 property values increased by 115% in areas where form-based codes were applied—particularly in downtown locations and along highway corridors—compared to a 33% increase in property values countywide over the same time period. Where the area to be redeveloped has been significantly neglected or abandoned, use of a form-based code to create a ‘place’ where none presently exists can generally be expected to increase property values in that area. In a ‘greenfield’ context, the positive impact of a form-based code may not be so dramatic, except in those cases where the conventional zoning regulations have prevented a more intense, mixed-use development. In those cases, the existence of form-based options may increase property value as the type of mixed-use development authorized achieves market acceptance. The depth of that market is yet unknown.”
Development Costs
“The ‘charrette’ process may bring with it relatively significant costs at the front end of a form-based codes project. The writing of regulations based on this exercise is also time-intensive and can be costly. Accordingly, if a developer proposes and funds the creation of a form-based code for a specific area, the costs associated with creating the form-based code may be passed on to future purchasers and tenants in the form of higher sales prices and rental fees. On the other hand, if the municipality itself engages in the production of the form-based code, the direct cost of the code production would not be borne by the market.
As with review and approval processes under conventional zoning regulations, there also is a cost associated with the local government permitting process under a form-based code. However, if the code is sufficiently prescriptive, it is possible that the majority of development permits can be granted as of right, thereby streamlining the development approval process. IN those cases where the codes are not sufficiently detailed or where the municipality prefers to keep development approvals under form-based code discretionary in nature, here would be no cost savings over a conventional regulatory process that utilizes discretionary review for development approvals.
Form-based codes can also impose high ‘compliance costs’’ These costs flow in large part from the imposition of architectural standards, which, at a minimum, require securing the services of an architect to ensure compliance, but may also require expensive materials. While not specific to form-based codes, one study examining the economic return on New Urbanist developments found that such developments typically resulted in increased development costs, but that homes in these developments generally sold at a premium over homes in comparable conventional developments.”
Amount and Patterns of Development
“Because form-based codes promote mixed use and higher density, they directly affect the amount and patterns of land development in a community. If formulated with a sufficient level of detail, a form-based code can clearly establish the pattern of land development where it is applied. The regulating plan is intended to be largely predictive of the location of public improvements and buildings.
Some proponents of form-based codes argue that a more regional approach is needed to address the negative effects of suburban sprawl. Form-based codes can be implemented at a regional level to focus density in key areas, such as transportation corridors, and limit the development of open space and agricultural areas.”
