Local economic development is a complex and evolving field that requires a nuanced understanding of various interconnected factors. This report delves into the critical role of land use policies and practices in promoting inclusive and effective economic development. The goal is to encourage progress in local economies, both large and small, by addressing the challenges and opportunities presented by land use tools and their integration with other economic development strategies.
The Importance of Land Use Tools
Land use policies and practices have long been contentious and high-stakes, but they are increasingly under scrutiny. This report extends previous work by outlining why land use tools should be upgraded and integrated with other tools to promote economic development that generates shared gains, including racial and social equity. The stakes are high, as local economies face significant pressures from housing affordability crises, shifts in federal policy, and the impacts of climate change.
Economic and Fiscal Pressures
Several forces are converging to intensify economic and fiscal pressures on local and state governments. These include the housing affordability crisis, dramatic shifts in federal policy, and the risks and rewards associated with economic development proposals. Understanding these forces is crucial for communities seeking to make inclusive economic development work as budgets are strained.
Housing Affordability Crisis
The housing affordability crisis has increased frustration about the mismatch between wages and the cost of living. This frustration fuels skepticism about claims made to win support for real estate and land development projects, which are often promoted as bolstering local government budgets. Gentrification, displacement pressure, and racial equity in land use planning and development are also significant concerns.
Federal Policy Shifts
The Trump administration and Congress have brought about dramatic shifts in federal policy and spending, affecting subnational governments. For example, the One Big Beautiful Bill Act of 2025 made significant cuts to future Medicaid spending and clean energy production while expanding certain tax incentives, such as the Opportunity Zone (OZ) investment incentive. The impacts of the OZ program have been mixed, with much of the invested capital going to build market-rate rental housing rather than focusing on job creation in distressed neighborhoods.
Economic Development Proposals
Economic development proposals are taking on greater significance, especially in light of inflation, recessionary fears, and uncertainties driven by steep and shifting tariffs. Communities are drawing new battle lines over the proliferation of energy-hungry data centers, driven by hundreds of billions of dollars in private capital investment to support the diffusion of artificial intelligence throughout the economy.
Upgrading and Integrating Land Use Tools
To achieve inclusive and fair economic development goals, localities need the right tools. This report discusses the limits of conventional land use tools and offers an integrated framework that upgrades and integrates them with other tools. The framework aims to affect four key areas: which “game” gets played, who gets to play, the rules of the game, and which plays get investment to unlock value, access, and ownership.
The Limits of Conventional Land Use Tools
Conventional land use regulation, such as zoning, is not an instrument for ensuring access to high-quality and affordable training, connections to employers offering good jobs, or more inclusive development of suppliers and other small and midsized businesses. Upgrading land use tools and integrating them with other economic development tools is essential for promoting equitable economic development.
An Integrated Framework
The integrated framework for more inclusive and equitable local economic development includes several critical shifts:
1. Holistic Planning: Define goals and success measures for a locality or region within a normative and strategic framework. This framework should include specific indicators of whether economic progress is inclusive or not, disaggregated by race, gender, and other traits.
2. Inclusive Real Estate Development: Shift the focus toward more inclusive real estate development by emphasizing community engagement, measurable outcomes, and sustained contributions to economic and social vibrancy.
3. Equitable Economic Benefits: Create more consistent and transparent rules that attach equitable economic benefits to major development proposals. This includes aligning interests around clear public benefits attached to publicly funded projects and major public contracts.
4. Scorecard for Tradeoffs: Develop a scorecard or similar rubric for weighing and making tradeoffs on specific projects or rezoning proposals. This helps in making informed decisions about the allocation of public subsidy and land.
5. Modernized Sector Development Strategies: Embed inclusion goals, measures, and tangible mechanisms in sector development strategies. This includes local workforce linkages, local supplier development, and community or worker ownership models.
6. Expanding Local Players: Support an ecosystem to develop the capacity of hyperlocal organizations to co-envision, co-invest, and co-lead planning and development projects.
7. Mobilizing Investment: Align available capital behind well-defined priorities to ensure that plans do not become broken promises. This includes offering a clear prospectus to the private sector and philanthropy for multiple sources of capital to “crowd in” for impact.
Beyond False Choices
Local economic development is a complex and evolving field that requires a nuanced understanding of various interconnected factors. This report delves into the critical role of land use policies and practices in promoting inclusive and effective economic development. The goal is to encourage progress in local economies, both large and small, by addressing the challenges and opportunities presented by land use tools and their integration with other economic development strategies.
This report critically re-examines several evergreen debates about what constitutes more equitable and valuable economic development. It emphasizes the importance of rejecting false choices between economic inclusion and stronger city budgets. The opportunity to make mutually reinforcing changes outlined in the action framework has been hard won, and there is real progress across the country to integrate land use with plans and investment tools for economic development.
Conclusion
Integrating land use controls and other rules with equitable investment and more holistic planning is essential for promoting economic growth, development, and resilience. This approach helps create the conditions for achieving inclusive economic success, environmental sustainability, and other goals, while minimizing the risk of displacement and greater inequality.
