Zoning

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Minneapolis 2040: Have the YIMBYs Already Won?

Two historic houses in Minneapolis. Photo: McGhiever via Wikimedia Commons

Time to note a major victory: the City of Minneapolis is on board with YIMBYism in a serious, substantial way. Minneapolis has become the first major U.S. city to adopt a comprehensive plan that eliminates single-family-only zoning districts. And, although its amended zoning still caps out development of many parcels at just three units, it will still (in broad theoretical terms) allow builders to triple the number of housing units within those neighborhoods. That’s impressive. And since housing markets are more regional than municipal, and Minneapolis is the largest city in its region, I predict this legislation (presuming it passes the remaining hurdles) will have a salutary effect on housing affordability throughout the Twin Cities, for years to come. This really is great news.

In a related story, the Oregon Legislature may soon consider a Democratic bill to eliminate single-family-only zoning districts in cities with a population of 10,000 or more. The fact that the lead sponsor is the House Speaker indicates the degree of acceptance that our kind of zoning analysis has attained, politically, in a very short time. Of course, there is pushback, as there always is in politics. But once it comes into focus, the picture is pretty clear, and economy, equity, and the environment all call for one basic solution: expanding the latitude of property owners to build more housing in response to the need for … more housing. People see the need to stop protecting a calcified status quo that is working for fewer and fewer people.

When I first started writing here about exclusionary zoning laws and their distortion of housing prices (way back in 2010, when I was a law student at Rutgers) it remained a very arcane issue. The basic nexus between restrictive land use policies and declining affordability had been well documented in New Jersey case law through the Mount Laurel decisions of the 1970s and 80s. But outside the local community of housing activists, the slow crisis of an artificial, regulatory shortage of housing units in growing metropolitan regions was hardly on anyone’s radar. Today, housing activists on both right and left accept this common-sense analysis: zoning laws that limit development of new units play a major part in the lack of housing affordability in growing cities.

I got into this issue because I saw people being displaced from their long-term neighborhoods across the New York & New Jersey region in the late 1990s and early 2000s — and nobody with a voice seemed to be noticing. Since then, the soaring cost of housing options in metropolitan America has become, perhaps, the most glossed-over factor among the myriad economic challenges facing Millennials. Now, finally, we are making some real progress, and although we’re not there yet, I am more optimistic than ever.

Cheers to everyone who is out there working on the front lines.

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Missing the Point?

This is what affordable housing once looked like.

Incredibly, Bryce Covert, in a long article at The Nation about the supposed roots of America’s affordable-housing crisis, manages to go on for nearly 5,000 words about the history of American affordability programs and initiatives — while offering only one, almost offhand mention of zoning. And while the focus of the piece is the situation in Los Angeles, migration patterns to Southern California — a huge part of the story there, from post-war internal migration to more recent immigration –don’t even get a passing nod.

The ebb and flow of public monies for housing construction certainly makes for an interesting angle about the changing political philosophies of the United States over the past century. And, to be sure, large-scale federal housing initiatives backed by the power of eminent domain created a lot of new, often spacious units during the post-war period. But that the story of such initiatives, and their decline or disappearance, provides a satisfactory explanation for the current housing crisis is not accurate.

The private housing market has always provided the overwhelming majority of housing units in the United States. (For decades, it has also been heavily subsidized by taxpayers through the mortgage-interest deduction, as well as other elements of federal, state, and local tax policy — but that’s a separate issue.) And until fairly recently, the private housing market has produced sufficient housing to meet demand. What has changed is that, as population has grown, and the remaining land within commuting distance of major cities has dwindled, markets have collided with local zoning policies that prevent new construction. This has chronically limited the number of units, placing a premium on each and every one. Without new units, subsidies to individual households will only push rents even higher.

The argument that poor people cannot afford the carrying costs of new construction is also missing the point. When land prices are not artificially inflated by a policy-imposed scarcity, middle-class and wealthy households, by and large, can afford the carrying charges for new units. Cheaper units then “filter” into the market in older buildings, whose construction costs have been paid off; a knock on effect is that these cheaper units in older buildings, when they exist, can provide a counterweight to forces that might encourage an upward spiral toward exorbitant prices for newer units.

This entire dynamic, which works relatively well in a mixed market, has been distorted by a chronic, artificial shortage of housing units because of restrictive zoning laws. As an aside, some of the public monies now being used to support marginally effective (drop in the bucket) programs could potentially support infrastructure projects, instead, if private development were freed to meet a more meaningful proportion of the current pent-up housing demand.

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The Defeat of California’s SB-827

Sad to report that a promising and important piece of legislation went down to defeat this week in the California State House. SB-827 , placed in the hopper by Senator Scott Wiener (D-San Francisco), would have superseded municipal zoning ordinances to permit five-story housing development within half a mile of most railroad stations, and within a quarter mile of certain major bus routes.

California, of course, has some of the highest home prices in the world. More than its booming tech economy, a resistance to new development, combined with decades of population growth, has driven the crisis. Local political resistance comes from two sources: sentiment and shrewdness. Between residents who hate change, and those who realize that their own property values are inflated (at least while the music keeps playing) by an artificial shortage, it is usually possible to muster opposition to any new proposed development if the permission-granting institution is only accountable to municipal residents. SB-827 would have overridden the local political resistance to new development in the parcels most able to support higher densities than what is presently allowed.

The shortage of affordable housing in the metropolitan regions of California — as in the regions surrounding New York City, Washington, and several of the capitals of Western Europe — is perhaps the most salient driving force behind rising inequality in the West. High housing costs block people from moving to the cities where the opportunities exist; they shut people out of opportunities to build equity in real estate; and they enshrine the economic advantages of those who inherit, or can afford to purchase, real estate in hot markets. Ryan Avent wrote about this phenomenon at length in his well-written piece, The Gated City. LT has belabored it for years. And my recent article advocating for a left-right consensus on zoning reform is focused on the costs of bad zoning policy.

The good news is that, although SB-827 has been defeated, it has also significantly raised the profile of the nexus between zoning and housing supplies. The expectation (and certainly my hope) is that a revised version of the bill will be presented soon. It is a hopeful sign that in the California State House, even the bill’s opponents were forced to concede that the diagnosis was accurate, even as they rejected the prescription. This issue is not going away, and neither is the impetus to address it. I don’t think we can (or should) be returning to a Victorian-era, common-law land use policy, where bare-bones building codes, private covenants, and nuisance lawsuits are the only restraints on private development. BUT, we do need to move in the direction of significantly liberalizing the density restrictions on housing development in competitive real estate markets. SB-827 would have been a major step in that direction; and with the heightened awareness that its debate has caused, creative variations on the proposal can now be tested in the laboratories of democracy.

Only with a lot more supply — new units — can the cost of housing be returned to some sort of equilibrium with people’s incomes. And only with such a change can we hope to create in the economic centers of the West a tangibly more egalitarian economy.

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Time for a Left-Right Consensus on Zoning Reform?

Early “use-district” map of Midtown New York. Source: NYPL.

My latest piece — in which I venture into more political writing for TAC — argues that the failures of Euclidean zoning antagonize some of the most fundamental priorities of American traditions on both the Left and the Right; and that there may be an opening for some agreement between people with a broad range of philosophies. For example:

During the postwar era—when suburbs and cars were the way of the future, and cheap, undeveloped land surrounded all our cities—the postwar type of zoning seemed a reasonable trade-off for many conservatives. While it regulated the private land market, it was locally enacted. In addition, its intent was to protect a broad base of individual, private owners.

Today, things have changed. Many of our most prosperous regions have been effectively built-out—few undeveloped lots remain—and laws preserve building patterns from the less populous 1950s and 1960s. This in turn has created an artificial shortage of housing units to which local markets cannot respond. Property owners who could benefit from making more intense use of their parcels find their hands tied by local zoning. Families and individuals are priced out of regions where opportunities are strongest. Personal potential and mobility are limited. And local governments become powerful fiefdoms, selectively approving lucrative projects for (often) politically-connected developers while preventing smaller owners from similarly maximizing returns.

Meanwhile, from the Left:

If local zoning had simply permitted [working-class neighborhoods in major cities] to absorb growth as it occurred, it is likely many longtime residents would never have been priced out by rising rents or property taxes. This means that more young people could have remained in their home communities and benefited from deep ties to family, social networks, and local wealth; and space could also have been made for new immigrants (and internally-migrating Americans) on much friendlier terms. Instead, our inability to accommodate change at the neighborhood level has resulted in the attenuation of countless social ties; the loss of myriad old communities; and an increased degree of hostility and resentment between competing, but similarly powerless groups, over space that never needed to be so scarce. If anything should outrage even the most nominal leftist, it is a bureaucratic policy that pointlessly pits the American working class against new immigrants over something as fundamental as the need for decent housing.

Feel free to join in the discussion at the bottom.

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Single-Family Houses and the Affordability Crisis

A zoning map from East Rockaway, New York, shows the abiding prevalence of single-family housing zones (Residence A) in a highly competitive land market.

This Times article, I think, really takes aim at the largest zoning-related cause of the housing crisis. Single-family neighborhoods will have to give way to multifamily development, one way or another, if we are ever going to build enough housing units to absorb demand in the places where economic opportunity exists. The California law facilitating “granny flats” is one step in the right direction. New Jersey’s Mount Laurel doctrine is based on a prescient, 1970s recognition of the exclusionary role of zoning. (Unfortunately, it has not done nearly enough to counter the zoning-driven shortage of affordable housing, especially in Northern New Jersey.

What other measures will come, based on the principle (which we have often recited) that restrictive zoning is creating artificial housing shortages? Innovation in this realm cannot happen soon enough. At some point, the dam is going to break. There will either be more housing; or there will be a dampening of the regional economies in places that cannot provide a housing equilibrium. What worries me, next, is that the artificial shortage of housing may have become such a chronic, long-term situation in our most affluent regions that we may have reached a point where the economy is dependent upon an artificial shortage being preserved.

Zoned for single-family.

That is to say, so many mortgages have been written on the assumption that astronomically high prices are stable; so much private wealth is now sunk into ultra-high-cost real estate. If the regulatory barriers came down, and builders were able to begin to catch up with market demand in places like New York City and California, then how much wealth would gradually begin to evaporate as prices trended toward a healthier equilibrium? The saving grace is that — absent a watershed court decision — the gears of this change will probably be quite slow to turn.

 

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California’s Radical Experiment: Granny Flats

Most would not be as fancy as Alexandre Dumas’.

Driving home from the train station on a recent night, I heard this piece on NPR’s Marketplace: a story about a recent California statute that makes it significantly easier for homeowners in that state to develop additional units on their property. Here’s a link to a memo from the Department of Housing and Community Development, describing the changes. Among other things, the new statute overrides certain off-street parking requirements, which can preclude new units that would otherwise be permitted under zoning rules. These requirements are particularly onerous in large cities where public transportation is a viable option — and this law takes aim, specifically, at requirements within walking distance of transit. Of course, this development is just a small step toward achieving a land marketplace that is actually allowed to be responsive to market demands, rather than legal ones; but I think it is a very important one.

As early as the mid-1970s, the primary cases in New Jersey’s Mount Laurel doctrine began to lay out all of the major land use regulatory devices that have stifled the development of resourceful housing options since the early 20th century. Getting rid of unnecessary off-street parking requirements, and taking a publicly favorable stand toward in increase in the number of units in heavily-regulated suburban neighborhoods, are both major steps toward dismantling the regulatory morass that has been strangling housing development as the amount of raw, zoned land has dwindled throughout our major metropolitan areas. This is an important step in the right direction. Would be interested in hearing from people who would like to see a similar bill in New Jersey.

One of the most important takeaways from the NPR story was its hard evidence of pent-up demand for smaller, less-expensive housing units in pricey California. Local builders and contractors who specialize in the construction of small homes cannot keep up with demand. Their schedules are full for months into the future.

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On the Outskirts of Town

Casey Bill Weldon, 1936.

We gonna leave here, mama. I don’t want you staying here.
I don’t need no iceman, I’m gonna get me a Frigidaire
That’s what I’m gonna do when we get on the outskirts of town.

The promise of the modern American suburb was a measure of independence. Given how annoying the constant interaction of urban life can be, the suburbs seemed to offer a wholesome alternative. And when the suburbs were being built as physical towns, they offered urbanism on a more human scale than big, industrial cities. But what happened when the suburbs, because of evolving land use policies, essentially became the permanent outskirts of town? When the development of urban nodes — with their opportunities for social and commercial interactions — was banned within walking distance of people’s new homes?

In some cases, suburban developments offered a space to create artificial fiefdoms; a separation of households from entire categories of interactions. Many blue-collar American men faced the first green shoots of female economic and political parity in the period preceding the suburban boom. (American women in the 1940s had proven their economic power by essentially running the domestic industrial system while the men who were their peers were in Europe and the Pacific, fighting World War II.) A certain type of American man would likely have recognized that his tenuous status was in flux. Having the iceman hanging around was not a pleasant thought!

It is well documented that mid-20th century suburban development patterns helped prolong the racial disparities that characterized American life. My question is, to what extent did the post-war land-use policies also slow the progress of feminism? And to what extent did the men who participated in these developments recognize and value that aspect of the physical forms of these communities? Having listened to American women who lived through the mid-20th century, it is hard not to recognize how stifling of an arrangement that iteration of suburbia could be.

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New York City: A Century of Zoning

The Equitable Building from Nassau Street. Photo: Theo Mackey Pollack.

The last straw. The 1913 Equitable Building led to passage of the 1916 law.

Today is the 100th anniversary of New York City’s original zoning ordinance. In commemoration of a century of land use regulation (it was also America’s first zoning law), the local chapter of the AIA has published Zoning at 100, which includes a number of essays by top architects, planning officials, and scholars, looking back, and looking forward. (Thanks to H. for the link!) Authors include Robert A.M. Stern, Bill Rudin, Carl Weisbrod, and Gina Pollara. Looking forward to finding some time to read these.

Here are a few more pictures I’ve taken of the massive 1913 Equitable Building, located at 120 Broadway, which put the issue of development massing at the forefront of city politics, and led to the law.

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Paul Krugman Hits the Nail on the Head

NYC Zoning mapIn a Times piece called “Inequality and the City” about the competitive real estate markets in America’s affluent cities, Paul Krugman identifies the role that restrictive land use regulations continue to play in the chronic shortage of affordable housing:

But what about all the people, surely a large majority, who are being priced out of America’s urban revival? Does it have to be that way?

The answer, surely, is no, at least not to the extent we’re seeing now. Rising demand for urban living by the elite could be met largely by increasing supply. There’s still room to build, even in New York, especially upward. Yet while there is something of a building boom in the city, it’s far smaller than the soaring prices warrant, mainly because land use restrictions are in the way.

Exactly. Thank you. In the last five years, we seem to have gone from a time when no one was even cognizant of the role that zoning laws played in the chronic shortage of urban affordable housing, to the beginnings of a left-right consensus about the inequitable and anti-competitive impacts of those laws — and the ways in which they are distorting the market. This is really a cause for celebration, and I think we should take a moment to recognize how far the conversation has come.

But we almost certainly have not come to the end of the line. This issue has been so far beneath the radar that even those who have benefited from distortions of the real estate market by restrictive zoning laws have made little political effort to defend the status quo. They have just assumed that it would go on forever. Now, as those with vested interests in the artificial limits to development — primarily, urban land owners — begin to realize that their gravy train could be in peril, the attacks on reform proposals will begin in earnest. Here’s a great example of what’s likely to be on the way, peddling the usual pseudo-leftist bullshit that appeals to the urban bourgeoisie:

We, the undersigned residents of New York City, call for an end to the violence that real estate developers have inflicted on our skyline, parks, public areas, and cityscape with the proliferation of dramatically over-scaled buildings that ignore the historic context of our city.

Translation: we paid a lot for the exclusive right to live in our neighborhood. We have just realized how precarious our investment could become if the regulations were changed, and people actually had housing choices in the same (or comparable) locations.

Keep an eye out for more of this nonsense in the near future. Of course there’s a role for design and aesthetics in development policy, and massing considerations may sometimes be a part of that role. But for now, I’m sticking with those who recognize the need to permit much more residential construction in places like New York City. Let’s keep the conversation going.