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Category Zoning

The Coase Theorem in Land Use

On a recent post about property rights in the land market, commenter David Sucher brought up the issue of transaction costs. He commented here and at his blog City Comforts: The “least intrusive means” should be always kept in mind. The only issue for me is the huge transaction costs which, I believe, make private agreements for land use quite impossible. The very reason we have government is because “voluntary private contracts” are too complex. We got rid of tort law (as to land use) because it was much easier to have uniform area-wide regulations. While David brings up very valid points, I think that economist Ronald Coase offered a persuasive argument against these area-wide regulations. The Coase Theorem, which interestingly, I don’t think we’ve written about in depth here, addresses this issue of transaction costs. In 1960, Coase published his most famous paper, “The Problem of Social Cost,” exploring a common problem for city dwellers: annoyance at their neighbors’ behavior. Coase uses as an example a confectioner whose business is adjacent to a doctors office. The confectioner uses loud machinery which causes vibrations next door and bothers the doctor. We can imagine a variety of solutions to this problem: the doctor could sound proof his office, the confectioner could upgrade to quieter machinery, one of them could move his business, the confectioner could compensate the doctor for the bother, or the doctor could pay the confectioner to stop making noise during his business hours. Assigning property rights would help any of these solutions emerge; if the confectioner has a right to make noise, the responsibility lies with the doctor to remedy the situation (or learn to live with the noise) or the reverse if the doctor has a right to quiet. In a standard Micro 101 class, in my experience, the […]

William Fischel On The Origins of Zoning

If you’ve ever done a Google Scholar search for anything zoning related, you’ll probably recognize the name William Fischel. He’s an economic historian at Dartmouth who’s written a lot about local government, and especially land use regulations. He’s got a wide-ranging paper published in 2004 called “An Economic History of Zoning and a Cure for its Exclusionary Effects,” and while I can’t speak to the recommendations part, the history is pretty interesting. …

Tea Partying at Planning Meetings

At the Atlantic Cities, Anthony Flint writes on recent Tea Party activism in urban development arena. Tea Party groups across the country have spoken out against all manner of urbanist plans, from CAHSR to Smart Growth in Florida. Flint opines: What’s driving the rebellion is a view that government should have no role in planning or shaping the built environment that in any way interferes with private property rights. Both Flint and the Tea Party members that he’s writing about are seeing right past an essential property right.  Don’t landowners have a right to employ their property as they see fit without explicit approval from their communities? Smart Growth tends to limit the right to build sprawl although its historic presercation component creates competing objectives. Traditional land use planning limits property owners’ right to build too though. In an article all about the Tea Part and land use, Stephanie Mencimer at Mother Jones quotes a Tea Party activist who said, “”We don’t need none of that smart growth communism.” I love this as a stand alone quote, but this activist is ignoring the other side of the issue. Traditional planning, at least as top down as Smart Growth, has shaped his or her presumably suburban neighborhood. How about, “We don’t want these socialist setback requirements,” or “Down with pinko minimum lot sizes?” Property rights in land use are, of course, a contentious and debatable issue. Charlie Gardner offers a summary of the court decisions that have led to a world where municipal governments are permitted to take away property rights without compensating land owners for these takings by limiting the density and uses that they are allowed to build. The suburbanist side of this debate is that property rights include the right to control a certain degree of land use for […]

Urbanization and GDP

I am no macroeconomist; however, I think there are some important dots to connect between cities and economic growth. The Gated City by Ryan Avent, (discussed more in depth here), explores this thesis and offers a nice overview of the research that links population density and productivity. He cites Ed Glaeser and others who see a strong correlation between the two. Glaeser finds that with a 50 percent increase in population density, productivity increases by 4 percent. Additionally, I find Geoffrey West’s work (not cited by Avent) particularly intriguing. West is a former physicist who has studied the correlation between city size and all sorts of variables from the number of gas stations to the number of bank deposits per year. He’s found that every time a city doubles in size, worker productivity increases by 15 percent. The distinction between West and many others who study this issue is that he focuses on a city’s total population rather than its population density. Increasing worker productivity is the holy grail of macroeconomics. As worker productivity grows, it raises our wages and standard of living. This is what lifts poor countries out of poverty and ensures that future generations will enjoy a higher standard of living than we do today. Some of the factors that economists widely agree contribute to higher growth rates include education, property rights, and rule of law. Perhaps urbanization should be added to the list too. I won’t weigh in here on whether the variable that influences productivity is population size or population denisty; maybe they both do. In the context of land use policy, I would argue that it doesn’t matter which variable we look at. By limiting development, land use restrictions typically lead cities to be both less dense and of smaller populations. This applies equally to traditional land use […]

TGIF Links

1. A reader from Vancouver wrote in to let Stephen and me know about a proposed policy to tax foreign investors at a higher rate than local property owners. Support for this policy is growing among residents, and with a mayoral election this Saturday, some are hoping to get candidates to endorse the policy now. Of course the higher tax rate would be done in the name of affordable housing for Vancouver natives. Hmm, with this one I’d say that the road to hell is paved with questionable intentions. 2. In other Vancouver news, recently upzoned parcels have sold for three times their previous value. 3. Two NYC taxi medallions sold for over $1 million each this week. On Marketplace, David Yassky, chairman of the city’s Taxi and Limousine Commission said that he believes the fundamentals are solid in the medallion market. When the supply of your commodity is rigidly fixed, you’re already halfway to strong fundamentals. 4. A University of Connecticut study finds that growth in the number of a city’s parking spots is inversely correlated with population growth rates. 5. Some have questioned whether the abismal state of American infrastructure is a fact or just something that everyone knows and repeats. Gizmodo points out that in the United States we have a road system that built with cheap initial construction but expensive and ongoing maintenance costs. 6. Roberta Brandes Gratz at The Atlantic Cities speculates that Jane Jacobs’ female perspective led her to be able to see the small-scale, bottom-up activities of cities more effectively than men, who tend to look at cities from the macro level. Not sure where this leaves Hayek.

Affordable Housing vs. Density: The Unintended Consequences of Zoning Bonuses

California Assembly Bill 710 was introduced to earlier this year to tackle the problem of municipalities requiring onerous amounts of parking for new development, widely recognized as one of the main impediments to transit-oriented development and infill growth. The bill would have capped city and county parking requirements in neighborhoods with good transit to one space per residential unit and one space per 1,000 sq. ft. of non-residential space, with an exemption process for areas with a true parking crunch and some other caveats….

Alon Levy on the Suburbanization of Poverty

Over at Pedestrian Observations, Alon Levy has a typically well-written and researched post on the gentrification of poverty. He explores the well-researched trend that low-income Americans are increasingly moving to the suburbs as gentrification is driving up rents in inner cities. He hypothesizes that this “current” trend has really been happening for the past fifty years: Both the inner and the outer limits of poverty are pushed outward. What we saw last decade was just a tipping point in which the expansion of the gentrified core was by itself enough to offset the wealth loss coming from the expansion of the ghetto. Levy suggests that this trend is largely due to the typical pattern of poverty moving outward in a “donut” pattern, but today the center of the donut is in the suburbs. He writes: In general, a similar story played out in the first-ring suburbs of many Rust Belt cities, especially in ill-favored quarters: the places that people used to flee the city to are now cities that people flee. His post sparked two thoughts: 1) Could part of the reason that wealthy and middle income residents are moving to inner cities have to do with the demand for time? As we as a society are becoming wealthier, the value of time — the ultimate finite resource — is increasing. So as the price of free time rises, people may be moving to places where their commute times are shorter. In many cases, they are trading off quality of public schools and public safety to enjoy shorter commutes. When they move to Jacobian mixed-use neighborhoods, they could enjoy the added benefit of shorter travel time when running errands and seeking out entertainment. I think this pull toward inner cities helps explain gentrification, in addition to the push away from […]

Does Urban Growth Have to Mean Gentrification?

When libertarians (and liberals) argue that increasing the supply of urban housing will lower the price of urban housing, they’re drawing on some pretty basic and well-established economic concepts. And yet, the coexistence of gentrification and housing supply growth seem to put a lie to that theory – in cities across America, we see neighborhoods adding housing while still seeing rapid increases in the price of housing. From the point of view of the poor and often non-white residents who are being pushed out, the market remedy of increasing supply just doesn’t seem to be working. …

Transit Oriented Development in Chevy Chase

In Chevy Chase, MD county planners have revised plans for the Chevy Chase Lake Sector from high rise, mixed-use development to low-rise, primarily residential buildings. The trigger to allow for higher-density development will be the arrival of the Purple Line, a proposed light rail that would stretch across Metro’s Red Line. The light rail would connect Bethesda directly to New Carollton. Construction is scheduled to be completed by 2020, but I for one am not betting on a light rail by that time. For one, no funding has been secured, and for another reason the project is met with considerable opposition to NIMBY-ists in Bethesda and Silver Spring. The town of Chevy Chase has been the most vocal opponent of the project. Personally, I could see the Purple Line being very well-used, and potentially coming closer to profitability than the “cherry blossom” line. However, waiting for the arrival of transit to permit Transit Oriented Development creates a chicken and egg problem. When high-density development is not allowed where there is demand for it, the restriction limits potential for other viable transit options. For example increasing density along the proposed Purple Line could allow for a Circulator or increased MTA routes to provide service in the meantime. And opposition to the light rail is likely to remain strong as long as residents don’t see the clear value of mass transit in their municipalities.  

E-books for everyone!

The era of liberals writing e-books about market urbanism is upon us! I knew about Matt Yglesias’ upcoming “Kindle Single” The Rent is Too Damn High, but Ryan Avent’s The Gated City took me by surprise. Ryan’s book has a “print length” of 90 pages, costs $1.99, and despite the name “Kindle Single,” can be downloaded to pretty much any computer or smart phone. I haven’t read it yet, but I’m going to download it soon. Consider this an open thread to discuss the book(s).

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