Fix Housing Supply, Save the City: Is it really that easy?

Planning wonks might have felt all warm inside when they noticed zoning topics wedging their way into broader conversations about community affordability and equity. Bring it on. Finally.

In response, some folks have accepted the call, including those who focus mostly on macroeconomic gardening without messing around much in the weeds. Paul Krugman in the New York Times, for instance. Krugman and the others got their inspiration from a speech by Jason Furman, Chairman of the Council of Economic Advisors, before the Urban Institute last month. Here’s a taste of Furman’s argument:

The artificial upward pressure that zoning places on house prices — primarily by functioning as a supply constraint — also may undermine the market forces that would otherwise determine how much housing to build, where to build, and what type to build, leading to a mismatch between the types of housing that households want, what they can afford, and what is available to buy or rent.

Furman took the trouble to lay some context before he went all supply-side. There are plenty of good reasons, he said, to regulate land use to serve community environmental, health and safety priorities. And he went out of his way to stress that zoning “is not the only or even necessarily the main factor” in reducing options for those seeking better jobs and housing. Still, libertarians heard the summons.

Ilya Somin, in a December 5 opinion piece in the Washington Post, was pretty sure he spotted “an emerging cross-ideological consensus on zoning.” Time to free up the invisible hand of the market. And while some reformers preferred “a more technocratic approach to limited zoning,” he was of a mind, said Somin, “to follow the excellent example of Houston, and abolish zoning altogether.

“In my view,” he said, “the latter solution is preferable in a world of widespread voter ignorance, where the public is unlikely to be able to monitor the extremely complex details of zoning closely to ensure that it will not serve narrow interest groups at the expense of the general public.”

Leave aside for the moment the problem of framing a land use policy assuming “a world of widespread voter ignorance.” Let’s just say elected officials might be reluctant to claim that as a foundation for planning the future.

Make it a thought experiment. Imagine a place and a situation in which development is freed from the constraints of zoning — or from any other regulatory policies that would, in Furman’s words, “determine how much housing to build, where to build, and what type to build.”

Where might that happen?

It already does happen in some unincorporated areas distant from urban centers, where growth pressure is low or non-existent, where community leaders are desperate for any sort of development that contributes to the tax base. It’s a supply-side dream. No rules. Lax enforcement. Freedom, baby. (And lots of free parking, by the way. There’s a space right there in front of the boarded-up store.)

Now visualize places more likely to be the real focus of those who fret about economic mobility and housing affordability. That would be highly urbanized areas with appealing neighborhoods, diverse populations, jobs and supportive (if strained) infrastructure. In places like that, high demand heats up the competition for housing and access to alternatives for getting around without a car. What does no-zoning look like there?

Since Somin likes the example, let’s consider Houston, the poster child for zoning-free land use planning.

Ryan Holeywell did just that for a September post in The Urban Edge blog, where he interviewed Matthew Festa from the South Texas College of Law:

For all that’s been made of Houston’s infamous lack of zoning, Festa said it increasingly seems that reputation isn’t deserved or even accurate.

‘We do have a lot of land-use regulations,’ Festa said. ‘We still have a lot of stuff that looks and smells like zoning.’

To be more precise, Houston doesn’t exactly have official zoning. But it has what Festa calls ‘de facto zoning,’ which closely resembles the real thing. ‘We’ve got a lot of regulations that in other cities would be in the zoning code,’ Festa said. ‘When we use it here, we just don’t use the “z” word.’

Houston

Among constraints on anything goes in Houston: Developer or resident-imposed deed restrictions, historic district designations, mapped-out density allocations, home owner association regulations, lot size restrictions, federally mandated land use rules around the airports. And, of course, if neighborhoods leverage enough political influence, they can put pressure on elected officials to make life tough for developers.

“As decisions about building are made,” wrote Holeywell, “they’re often not done in a way that examines how they positively or negatively affect each neighborhood. Instead, it’s the communities with the time, resources and political clout that essentially have the power to restrict development within their borders. That pushes it to other areas without a meaningful discussion of the citywide implications.”

Which sounds pretty much like the opposite of what Somin hopes for in eliminating zoning: “to ensure that it will not serve narrow interest groups at the expense of the general public.”

Those of us in the practice of planning know Holeywell is right about bumping up policy-making to the jurisdictional level in a comprehensive plan. That’s the ideal. However, the challenge for “a meaningful discussion of the citywide implications” of land use policy is complexity.

Strategies comprehensive enough to improve community affordability and economic opportunity for broader cross-sections of the citizenry require breaking out of the supply-demand box and addressing the competing political forces tugging policy in a bunch of different directions. That’s especially true now, when a toxic mixture of fears — of economic uncertainty, of failing institutions, even of personal safety — encourage a devolution of trust in everyone and everything beyond family and tribe.

The Houston example helps us understand how constraints on opportunity happen even without official zoning. Festa, the law professor, describes how politically influential citizens and groups pressure city staff and elected officials to inhibit development they don’t want close to them:

In the abstract, giving neighborhoods more control about their future make sense. But practically, it allows certain areas to easily make end-runs around the status quo.

What Houston might have is the worst of both worlds: all the burdens of regulation and none of the foresight to use it effectively. ‘It works like zoning,’ Festa said, ‘but it’s not the product of a comprehensive plan.’

Here’s what happens: Politicians who, after all, have promised to represent the people who voted for them, put thumbs on the scales of policy-making, often overriding the recommendations of staff and citizen boards in order to appease the pressure groups, thereby devolving planning to parcel by parcel duke-outs. Which frustrates property owners and developers and anyone with a stake in different outcomes, including advocates for more diverse housing options.

The outsiders cobble together a countervailing political movement to bully staff and officials or to elect their own people to office to overrule what’s been overruled. Which leads to more frustration and eventually to policy paralysis (See: U.S. Congress).

The only winners in that arrangement are those who profit by the perpetuation of unsatisfied demand guaranteed in the status quo, a status quo that so many people agree is unfair. So while those skeptical of zoning are right in their analysis that supply and demand are misaligned by misguided policy, they mistake the ad hoc policy that’s more often the effect of civic dysfunction than its cause.

Time to find another villain and another, better fix. One that recognizes and addresses the messiness of public policy-making.

Ben Brown

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Comments

  1. I think the situation is a bit analogous to our firearms problems.
    If civic dysfunction is like firearms…
    Very restrictive, pro-NIMBY zoning means the civic dysfunction is like an AK-47- very destructive.
    Moderately restrictive but not-well-planned regulation (which is what Houston has) means the civic dysfunction is like a handgun- still dangerous but not quite as destructive.

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