Asheville – In the midst of ongoing public outcry, including rioting, following the recent George Floyd incident, municipal leaders across the country are feeling extreme pressure to, among other things, defund the police and pay reparations.
Defying logic, but consistent with political processing, discussions have excluded consideration of one strategy that would reduce municipal policing power, lift burdens denying generational wealth creation to people of color, and cost local governments almost nothing.
Vanessa Brown Calder, who now serves as the deputy director of the United States Congress Joint Economic Committee, authored a policy analysis, “Zoning, Land-Use Planning and Housing Affordability,” while serving as a Fellow at the Cato Institute in 2017. Her study merely established a statistical correlation for what academicians and other policy analysts had been arguing for decades.
It stood to reason that mandates – regulating where new housing could go; what size lots it needed with how much parking; what kind of buffering, fenestration, and exterior materials were conforming; and other rigidities preventing builders from innovating and applying discretionary efficiencies in construction – came with costs of compliance that directly raised housing prices and indirectly resulted in scarcity that had the same effect. Also forcing costs up were delays introduced by design review processes; especially, in a climate of escalating building material costs. There was also that element of caprice, increasing the risk of investing in an already expensive process, of a city council in the eleventh hour sending a design back to square one.
Calder merely performed a regression analysis, using court cases with the words “land use” or “zoning” as a proxy for regulation, and examined how it correlated with local housing prices. She concluded, “rising land-use regulation is associated with rising real average home prices in 44 states and that rising zoning regulation is associated with rising real average home prices in 36 states.”
Another finding was that the $200 billion the federal government spent on housing subsidies in 2015 flowed disproportionately to areas with more-restrictive zoning and land-use policies. These funds were not only needed to compensate for a problem government created, they were exacerbating the problem by subsidizing artificially-high rents. Even worse, in some places, the resulting rents were so out of market alignment, the only way to rent the apartments was with public subsidy; in other words, the government was once again running a racket, making jobs for itself.
Most startling of all, Calder is among many who say zoning is the new redlining. They show how today’s zoning maps align with the “residential security maps” created for lenders in the early days of the Federal Housing Administration. Los Angeles was the first city to pilot zoning in 1908, and a raft of lawsuits followed. It wasn’t until 1926, however, in the landmark Village of Euclid v. Ambler Realty Corporation, that the courts definitively concluded that land-use regulation was a legitimate exercise of government’s policing power.
In its early days, advocates were not bashful about using zoning’s policing power as an end-run around a growing distaste for segregation. In doing so, Baltimore’s Mayor J. Barry Mahool declared, “Blacks should be quarantined in isolated slums in order to reduce the incidents of civil disturbances, to prevent the spread of communicable disease into nearby White neighborhoods, and to protect property values among the White majority.” Birmingham’s city plan also stated a purpose of zoning to be, “to restrict the Negroes to certain districts.”
A host of scholars are of the opinion that references to preserving the “tone” or “character” of the neighborhood, phrases ambiguous enough to accommodate any governmental whim, are actually dog whistles. Even to this day, NIMBY’s, while legitimately concerned about their home value and traffic, typically organize to reject multifamily housing in single-family neighborhoods. By limiting the amount of housing that can go on land and its aesthetic qualities, government prices out of the market otherwise potential buyers/renters, low incomes correlating highly but not causatively with minority status.
Among various studies cited are one that found each regulation on average increased the cost of housing 4.5% and rentals 2.3% in California, and another that found zoning rules increased the cost of apartments in Manhattan, San Francisco, and San Jose 50%. The policies also introduce scarcity. Higher risk and less buildable land forces developers to take their projects elsewhere. Wage-earners, unable to pay city rents, go where the apartments are, dislocating labor from jobs, and reducing potential economic output. Land-use policies, regressive because the poor feel their weight more heavily, do, however, let low-income families live near polluting factories and other hazards that can add an element of poor health to the load of adversity they already carry.
Measures taken to fix the government-induced problem with more government noted Calder, often work at cross-purposes. Not only do the problems allegedly addressed – including protecting the environment and farmland, improving public safety, preserving aesthetics, creating dynamic urban environments, building low-cost housing, and controlling the tax base – respond differently to prescribed outputs; proposed remedies, including, “inclusionary zoning, state affordable housing plans, luxury condominium taxes, developer linkage fees, and affordable housing quotas,” often backfire.
Low-cost measures municipalities could take include eliminating regulations that have no bearing on health and safety, making more uses by-right, and streamlining design review processes. A policy that would come with a price would be paying reparations to compensate property owners for “regulatory takings,” or decreases in property value forced by government policies and actions that reduce land value and opportunities to increase it.