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Unplanned Cities (paper)

February 7, 2012

This paper by law professor David Schleicher (George Mason) is pertinent to my argument against SMDs:

Generations of scholarship on the political economy of zoning have tried to explain a world in which tony suburbs run by effective homeowner lobbies use zoning to keep out development, but big cities allow relatively untrammeled growth because of the political influence of developers. Further, this literature has assumed that, while zoning restrictions can cause “micro-misallocations” inside a metropolitan region, they cannot increase housing prices throughout a region because some of the many local governments in a region will allow development. But these theories have been overtaken by events. Over the past few decades, land use restrictions have driven up housing prices in the nation’s richest and most productive regions, resulting in massive changes in where in America people live and reducing the growth rate of the economy. Further, as demand to live in them has increased, many of the nation’s biggest cities have become responsible for substantial limits on development. Although developers are, in fact, among the most important players in city politics, we have not seen enough growth in the housing supply in many cities to keep prices from skyrocketing. 

This paper seeks explain these changes with a story about big city land use that places the legal regime governing land use decisions at its center. Using the tools of positive political theory, I argue that, in the absence of strong local political parties, land use law sets the voting order in local legislatures, determining policy from potentially cycling preferences. Specifically, these laws create a peculiar procedure, a form of seriatim decision-making in which the intense preferences of local residents opposed to re-zonings are privileged against more weakly-held citywide preferences for an increased housing supply. Without a party leadership to organize deals and whip votes, legislatures cannot easily make deals for generally-beneficial legislation stick. Legislators, who may have preferences for building everywhere to not building anywhere, but stronger preferences for stopping construction in their districts, “defect” as a matter of course and building is restricted everywhere. Further, the seriatim nature of local land use procedure results in a large number of “downzonings,” or reductions in the ability of landowners to build “as of right”, as big developers do not have an incentive to fight these changes. The cost of moving amendments through the land use process means that small developers cannot overcome the burdens imposed by downzonings, thus limiting incremental growth in the housing stock. 

Finally, the paper argues that, as land use procedure is the problem, procedural reform may provide a solution. Land use and international trade have similarly situated interest groups. Trade policy was radically changed, from a highly protectionist regime to a largely free trade one, by the introduction of procedural reforms like the Reciprocal Trade Agreements Act, adjustment assistance, and “safeguards” measures. The paper proposes changes to land use procedures that mimic these reforms. These changes would structure voting order and deal-making in local legislatures in a way that would create support for increases in the urban housing supply.

I’d call this an argument for a weak version of “ward courtesy.”  The “deal” he proposes would fail in Austin due to the sizable block of voters who lack even a weak preference for an increased housing supply.

By the way, pages 18-30 is a very nice, readable introduction to the law and economics of zoning.

(Aside: My land-use professor, Robert Ellickson, features prominently in the discussion.  He was one of the first to recognize, way back in the 1970s, that the growth controls just then beginning to flourish in places like California not only make housing unaffordable, they are economically inefficient.)

(Aside to the aside:  I participated in the landlord-tenant clinic one semester, as a law student.  We represented poor tenants in New Haven, almost exclusively in eviction proceedings.  In practice, this meant going through the paperwork and finding small technicalities to force the evicting landlord to reissue notice and recommence the proceedings.  Delay offered the opportunity to extract a concession for our clients.

Thanks to the success of prior generations of students, most experienced landlords hired from a small stable of lawyers in New Haven, who charged through the nose but who didn’t make stupid paperwork mistakes.  We could still usually find non-frivolous arguments to warrant a hearing, even if the loss rate was pretty high.

We had a weekly seminar as part of the clinic.  Ellickson came to speak once.  He told us that, while we had good intentions, we were just driving up housing costs for the average low-income tenant in New Haven.  We, a bunch of leftist idealists, were skeptical.  But, in retrospect, he was probably right:  in New Haven circa 1990, the standard security deposit was two full months rent.  That’s a lot of liquidity for a renter, and I’m pretty confident it was due to the difficulty of evictions.  There would be a lot more people in Austin looking for housing if that was the standard here.)


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