Physical Address

304 North Cardinal St.
Dorchester Center, MA 02124

Detroit: LVT would fix that

In a recent Mackinac Policy conference, Detroit’s Mayor Mike Dugan proposed *drum roll* a land value tax. Sort of. Mayor Dugan’s proposal would create separate tax rates for land and capital improvements (i.e. the buildings on top). Specifically, he wants to decrease the tax rate on buildings by ~30% and increase rates on land by ~300%. The change would increase revenue for the city and also cause a series of second order effects. Taxing Blight & Rewarding Investment Detroit’s existing tax structure disincentives development. Holding vacant land or land with dilapidated (i.e. assessed as worthless) structures is cheap from a tax perspective. Actually developing land triggers a tax increase because of the brand new structure who’s value gets figured into the tax bill. What’s worse, the existing tax system encourages land hoarding. Land speculators sit on neglected parcels on the off chance that a developer needs it as part of a larger project. To caveat that, though, not all land speculation is bad. Holding some land off market and releasing it later into a development cycle can have positive benefits. In Detroit’s case, however, these are mostly vacant lots and abandoned buildings creating public health hazards the city has to deal with. The Political Economy of Land Value Taxation Unexpectedly – for me as a latte sipping coastal urbanite in California – Dugan’s LVT would also lower tax bills for homeowners. Land values in Detroit are low — in absolute terms and relative to structure values. Making the shift to taxing the less valuable land component of a property nets out positive for most homeowners. And the fact that it’s a win for homeowners makes me think it’s politically viable, both in Detroit and elsewhere. In places struggling to get back on a growth footing — places where land values […]

Tell It to the Judge: New Lawsuits Take Exclusionary Zoning to Court

As various housing reform bills work their way through the lawmaking process in American state legislatures, several new legal challenges to local land use and zoning ordinances are simultaneously underway in state and federal courts. Among these courtroom efforts are challenges to occupancy restrictions, short-term rental bans, inclusionary zoning and single-family zoning itself. On May 9, 2023, the Pacific Legal Foundation filed a complaint on behalf of two plaintiffs in the United States District Court for the District of Kansas challenging a City of Shawnee ordinance (Ordinance No. 3419) which prohibits more than three unrelated adults from living together in a single residence. These limits, often adopted by localities as a means of excluding student renters or other groups of persons who are perceived as subverting the proper purpose of the so-called single-family home, are challenged by the plaintiffs as a violation of the constitutional right of free association and specifically the right to select and establish a household. The lawsuit also alleges that the ordinance violates equal protection and is beyond the scope of Kansas’ zoning enabling act (K.S.A. 12-741 et seq.), which does not authorize cities to regulate persons based upon blood or legal relationship. In Nevada, the Clark County District Court on February 16, 2023 issued a preliminary injunction blocking Clark County from implementing and enforcing certain sections of its short-term rental ban (Clark County Code, Title 7, Chapter 7.100, Sections 7.100.110-.260). The lawsuit, filed by the Greater Las Vegas Short Term Rental Association, alleges among other things that the ordinance is arbitrary and capricious, reads as unconstitutionally vague, infringes on free association and effects a taking of property. That ruling has now been appealed to the Supreme Court of Nevada. On December 15, 2022, the Institute for Justice commenced a lawsuit on behalf of a Seattle […]

What’s Scott Alexander asking, anyway?

In a pair of posts, Scott Alexander goads his mostly-YIMBY readers by claiming to believe that density is likely to increase prices. To quantify his readers’ views, he laid out a thought experiment in a Google poll, the results of which we’ll no doubt see in a few days. You can see the poll – and my answer – below. As a YIMBY scholar, I mood-affiliate with the first answer, but I chose the middle one because there is a fundamental misunderstanding between pro-housing people like me and Scott’s recent posts. Housing growth is not the same as city densification Scott’s experiment isn’t a “housing growth” experiment, it’s a “city densification” experiment. Crucially, he requires “proportional increases in the number of office buildings, schools, etc”. That is, the experiment would increase office space at the same pace as housing even though office vacancy rates (19%) are far higher than housing vacancy rates (~1.7%). Oakland is a pretty balanced city: as best I can tell from simple Census data, it probably has a jobs/residents ratio pretty close to the California average (by contrast, San Francisco has twice the state jobs/resident ratio). If Scott ran his experiment in a bedroom community, or stipulated that office space is left under current regulations, I’d have an easy time coming down on the “less expensive” side of the ledger. The point of the YIMBY movement is that housing faces uniquely strict regulation. California cities (and those in some other states) believe that offices and industrial uses are “taxpayers”, generating more revenue than they use in services. Housing is viewed as a fiscal cost. Regulation (“fiscal zoning“) and discretionary decisions have reflected this bias for decades. The result is headlines like “SF added jobs eight times faster than housing since 2010.” If Oakland upzoned citywide, it […]

Cataloguing California’s Cornucopia of Land Use Legislation

The Terner Center for Housing Innovation at the University of California, Berkeley has released a policy brief summarizing the effect on housing production of the bewildering array of new housing laws California has enacted since 2016.  A preliminary analysis of market effects of the new laws, accompanied by findings from interviews with California-based planners and land use lawyers, points toward the effectiveness of simple and direct legislation requiring localities to give ministerial approval to small-scale projects. For other laws, including those prescribing more complex formulas regarding affordability criteria for larger developments, it remains too early to gauge how housing production will respond. Of the legislation that has been enacted to date, California’s accessory dwelling unit laws (beginning with SB 1069 in 2016), according to those interviewed by the Terner Center, have been responsible for the astonishing twenty-fold increase in ADU permits documented from 2016 to 2021.  Legislation enacted in 2021 requiring ministerial approval for duplexes and lot splits (SB 9), estimated by the Center to allow for up to 700,000 new units, has not yet been widely used, partly due to localities’ use of other restrictive zoning regulations such as mandatory setbacks to impede use of the law.  Further strengthening of this law, in the same manner that the ADU law was fortified through 2019 revisions, may be necessary to unlock its full potential for new home construction.  Other new laws are in the early stages of demonstrating their effectiveness. The imposition of stricter requirements on localities’ Regional Housing Needs Allocation (RHNA) process through legislation enacted in 2017 and 2018 has resulted in dramatic increases in zoning capacity targets for the next eight-year period set by the Housing Element Law (of which the RHNA is a part).  For Southern California and the Bay Area, total housing allocation has increased from […]

Another of these studies that don’t mean what some people thinks it means

A group of researchers at the Urban Institute came out with a new study on zoning and housing affordability. At governing.com, a headline about the study screamed: “Zoning Changes Have Small Impact on Housing Supply.” The Governing writer’s spin was, of course, “there’s no evidence it [upzoning] makes housing cheaper.” Governing has published numerous articles that criticize pro-supply zoning reform (one of which I critiqued on this blog), so this conclusion seems to fit in with its general point of view. The most important conclusion (to me) of the study is that it reinforces the commonsense view that lower housing supply leads to higher costs. In particular, the study concludes: “Reforms tightening regulations are associated with increased rents, potentially worsening conditions for low- and moderate-income renters.” (page 4, emphasis mine). What about upzonings (reforms that allowed more construction)? The study concludes that they “lead to a 0.8 percent increase in housing supply, on average.” (p. 28). How small is 0.8 percent? In fast-growing Harris County, Texas (Houston and its inner ring suburbs), 17 percent of the county’s 1.885 million units have been built since 2010, or about 1.7 percent per year. So 0.8 percent increase would be only five or six months’ worth of new housing in Houston- not a huge amount. Given the miniscule amount of reform the lack of impact on housing prices should hardly be surprising. In other words, if zoning allows six months’ worth of new housing (compared to the pre-reform status quo), things stop getting worse but don’t really get better. If zoning allows less housing, things get worse.

Do The Cities Need The Suburbs?

Aaron Renn has an interesting article in Governing. He suggests that even though urban cores are responsible for a significant chunk of the regional tax base, “[t]he city is dependent on the suburbs, too.” In particular, he notes that downtowns are dependent on a labor and consumer pool that extends far beyond downtown. For example, Manhattan is valuable because it is at the center of a vast region. He’s right- if you define “suburb” broadly as “everything that isn’t downtown.” A downtown that isn’t surrounded by neighborhoods is just a small downtown. But that isn’t always the way Americans understand suburbs. If you think of suburbs as “towns outside the city with a different tax base that are usually much richer than the city” , suburbs aren’t good for the city at all. Because of the growth of suburbs, cities have stunted tax bases because they have a disproportionate share of the region’s poverty, and have to pay for a disproportionate share of poverty-related government programs. By contrast, if cities resembled the cities of 100 years ago that included nearly all of their regional population, they would have stronger tax bases. (This may seem like a pipe dream to residents of northeastern cities trapped within their 1950 borders, but plenty of Sun Belt cities include huge amounts of suburb-like territory). Similarly, if you think of suburbs as “places where most people have to drive to get anywhere” their existence is not so good for the city. When suburbanites drive into the city they create pollution, and they lobby for highways that make it easier for them to create even more (while taking up land that city residents would otherwise use for businesses and housing). And when jobs move to car-dependent suburbs, that devalues city living, either because carless city residents […]

Trending now

gentrification
Only 2 Ways to Fight Gentrification (you’re not going to like one of them)
The problem with “public” transportation
The Great American Streetcar Myth
O’Toole Under More Fire