Market Urbanism – Page 35 – Liberalizing Cities From The Ground Up

Only In California: Twisting an Anti-Exclusionary Law To Rationalize Exclusion

As a Market Urbanism reader, you are hopefully fluent in the problems of exclusionary zoning. If you’re new to the term, there are some good pieces on the topic here and here. Basically: exclusionary zoning is the use of zoning to price people out of a community. The classic example is minimum lot sizes or minimum unit sizes: cities only zone parcels big enough to ensure low-income families cannot afford the housing. When subsidies for affordable housing require specific unit attributes, like reduced parking ratios, a community can simply require parking ratios above that threshold (although states can move swiftly to stamp out such practices). States have also responded to exclusionary zoning practices with a wide array of policy interventions known collectively as “anti-snob laws.” One key component of California’s anti-exclusionary efforts is called the Regional Housing Needs Allocation (RHNA). The law requires each jurisdiction in the state to produce a Land Inventory (or Adequate Sites Inventory, or Sites Inventory, or Buildable Land Inventory) that demonstrates the jurisdiction possesses space to accommodate anticipated housing needs at adequate densities. Read “adequate densities” as dense enough to produce affordable units. Scott Wiener, the state senator representing San Francisco, is pushing to give the RHNA some real teeth. The most contentious component of the process is the definition of “need” for each jurisdiction. The state calculates anticipated need based on population and jobs projections for each region. Regional councils of government (COGs) are then empowered to distribute the regional need to each jurisdiction within that region. Need is quantified in terms of units, and these needed units are further categorized into four groups: units affordable to Very Low Income, Low Income, Moderate Income, and Above Moderate Income households. Regional agencies had some flexibility in making these allocations in the past. Thanks to SB 375, which passed in […]

California Palms
February 8, 2017
housing NIMBYism Policy Uncategorized Zoning
5

Market Urbanism MUsings February 3, 2017

1. Announcement Market Urbanism and the Foundation for Economics Education are partnering on a special 6-session track focused on Market Urbanism at this Summer’s conference in Atlanta. Mark your calendars for June 15-18 (we are also going to try to plan some gatherings separate from the FEE itinerary on Sunday, the 18th). Here’s the description on FEE’s website: Wherever you live, your city uses archaic regulations to restrict what can be built, and for what purposes buildings can be used. The Urbanism, Development, and Your Neighborhood track is a joint effort by Market Urbanism and FEE to shed some light on the vast spectrum of land use and transportation regulations that suck the vibrancy out of neighborhoods, cause traffic congestion, and constrain housing supply to the point we have an affordable housing crisis in cities across the world. This track provides you with the intellectual tools you’ll need to make a case for liberty in your own backyard and bring liberty to your streets. 2. This week at Market Urbanism: New contributor “California Palms“–who is using a pen name to avoid any workplace drama from Nimbys in his home city–authored his first piece When NIMBYs Use Renters’ Health To Stop Rental Housing Stay tuned, as Davis-style development laws are starting to appear on the ballots of big cities like Los Angeles, which will vote on Measure S (or the “neighborhood integrity initiative”) in March. I want to make sure you see exactly how much more difficult your community’s land use politics will become if you mistakenly go the Davis way. Michael Hamilton How to finance a sanctuary city Many cities will maintain their sanctuary status, since a large percentage of their workforce and entrepreneurial base are undocumented….Assuming that this decision robs sanctuary cities of federal funding, liberalizing land-use regulation and selling city-owned property […]

Adam Hengels
February 3, 2017
MUsings
2

The Land Value Argument Against New Housing

One common argument against new housing is that permitting it causes land to become more valuable, thus leading to higher rather than lower rents. It seems to me that this argument is unpersuasive for a few reasons. First, if it was true, places with permissive zoning would have higher rents rather than lower rents, as the possibility of building would cause land values to explode. Obviously this is not the case. Second, the argument leads to absurd results. If downzoning reduces land values, obviously the best way to ensure low rents is to prohibit as much housing as possible. Perhaps we could prohibit all housing not on five-acre lots. But suburbs with large-lot zoning tend to be pretty expensive, suggesting that such policies are more likely to increase property prices than to lower them. Third, the argument suggests that land costs are the primary determinant of rents. But in fact, land values are much more volatile. The Lincoln Institute has created a database of land value data, and shows huge swings in land prices. For example, in the New York City metro area, the land price (apparently per house) swung from $99,000 in 1996 to just over $433,000 in 2006, down to under $225,000 in 2012, and up to about $250,000 today. It goes without saying that rents and housing prices follow very different patterns.

Michael Lewyn
February 2, 2017
housing
4

When NIMBYs Use Renters’ Health To Stop Rental Housing

Davis, CA, is a small college town a twenty minutes’ drive outside of Sacramento (on a good day). It has a vacancy rate on par with Manhattan despite being surrounded by flat, developable farmland. Some critics attribute this absurd vacancy rate to Measure R, a ballot initiative approved by Davis residents in 2000 that requires a public vote on any peripheral development. Since it’s passage, three developments went up for a vote, and all of them failed. The group that defends Measure R is known as the “Citizens for Responsible Planning” or CRP. Throughout various development battles, CRP has strategically utilized air quality concerns to push new development further away from existing neighborhoods. They opposed the most recent Measure R development, Nishi Gateway, because toxic air quality made the site virtually uninhabitable, at least in their minds! In fairness: the site is sandwiched between railroad tracks and a major highway, Interstate 80. So it’s a real concern. But fast-forward just six months later, and CRP is demanding the University of California, Davis, the area’s largest employer, dramatically expand its on-campus housing options for students, staff, and faculty. In an effort to appear proactive, they produce a map of optimal sites to locate student housing on the UC Davis Campus. One of the sites they select is adjacent to the Nishi parcel they so aggressively opposed development on just six months earlier. Another parcel they suggest building housing on is also sandwiched between the same railroad tracks and highway that Nishi sat between, but just a couple miles further south (and further from existing neighborhoods). You can see all of this in a map provided below, where the Nishi site they killed at the ballot is marked in red and the sites they claim to support student housing on are colored in blue: […]

The Sheer Craziness Of New York City’s Rent Stabilization Mandates

Recently, I met someone who was trapped in a terrible apartment. Why “trapped”? For months (if not years) she had been in an adversarial relationship with both her landlord and her neighbors, but she can’t quite bring herself to leave. Why not? First, she is in a rent-stabilized apartment, and is afraid to give that up because such units are hard to find. Second, because of rent stabilization, she had made the sort of capital investments in her apartment–such as repairs–that are normally made by landlords, but neglected when they are overseeing these price controlled units. By contrast, in a normal city, my friend’s dysfunctional relationship with her apartment would have ended long ago: either the landlord would have evicted her (something very difficult in New York), or she would have moved to someplace less atrocious.

How To Finance A Sanctuary City

President Trump has threatened to withhold all federal funds from so-called sanctuary cities–municipal governments that do not enlist their police departments in the president’s mass deportation plan. If he makes good on his threat, cities that insist on maintaining their sanctuary status can offset revenue losses with two policies: liberalizing land-use regulation and depoliticizing public land sales. It’s unclear exactly how much money each city would lose by maintaining its sanctuary status, but New York City, to name one example, relies on federal funding for 10% of its budget, according to state comptroller estimates. A sudden drop of that magnitude would devastate many jurisdictions, and Miami-Dade County has already caved. However, a handful of cities with high rents and very restrictive land-use regulations could dramatically increase property tax revenue and the value of city-owned real estate through liberalization. Millions of Americans would love to live in cities like New York, Los Angeles, San Francisco, Seattle, San Jose, Austin, Portland, and Denver, but legal restrictions on what can be built limit the number of housing units available and increase the cost of each unit. Some estimates have found that regulation alone accounts for fifty percent of the cost of housing in San Francisco. At the same time, land-use regulation has the opposite effect on the price of land itself. A plot of land with limited legal potential for development is worth much less than a plot a developer could use to build a large, lucrative building. Economist Keith Ihlanfeldt has found that the decrease in land values more than offsets the increase in home prices—meaning some cities are decreasing potential revenues by restricting development. San Francisco has large neighborhoods of single-family homes where rent levels would sustain large apartment towers. The drastic mismatch between what is currently allowed and what consumers demand suggests that land values would skyrocket if restrictions were relaxed. […]

Michael Hamilton
January 30, 2017
Policy Zoning
5

Market Urbanism MUsings January 27, 2017

1. This week at Market Urbanism: If Landlords Can Profit, Homes Must Be Great Investments, Right? by Emily Hamilton A childless couple might purchase a four-bedroom home in a good school district for the future, meaning that they end up over-consuming housing for their yet unborn children. If this hypothetical couple decided to rent until their children were school-age instead, they would likely be able to save and invest a substantial amount by spending less on housing in the near term. The Disconnect Between Liberal Aspirations And Liberal Housing Policy Is Killing Coastal U.S. Cities by Shane Phillips There really is something inherently flawed in the way we’ve approached housing policy for the past several decades (at least), and I would argue that it comes down to a kind of cognitive dissonance on three key issues…. 2. Announcement Market Urbanism reader Kyle Zheng alerted us to his blog TwoFiveSeven.org. It includes a “Master City” page that connects readers, in very user-friendly fashion, to just about every urban issues blog in America. There’s even a built-in feature to add any blog he may’ve missed. This site is a great resource for urbanists far and wide. 3. Where’s Scott? Scott Beyer has arrived in the San Francisco Bay Area, settling in the Merritt Park neighborhood of Oakland. His two Forbes articles this week were America’s ‘Inner City’ Problem, As Seen In One Baltimore Neighborhood and The Case For Localizing Federal Transportation Policy This underlies a longtime trend, in which states of largely rural and suburban character get more federal funding per tax dollar paid than urban ones. It is particularly pronounced for transportation funding. Scott also did a radio interview about his cross-country trip, on Sacramento’s KFBK Home Show. He appears at the 20:40 mark. 4. At the Market Urbanism Facebook Group Elizabeth Lasky wants to start a political meme: “Mothers for more housing” […]

Adam Hengels
January 27, 2017
MUsings
1

The Disconnect Between Liberal Aspirations And Liberal Housing Policy Is Killing Coastal U.S. Cities

[This post was originally published on the blog Better Institutions] The people who live in coastal urban cities tend to be a pretty liberal bunch. We’re leading the country on minimum wage laws, paid sick leave, climate change mitigation, and a host of other important issues. We care deeply about equality of opportunity, and we’re willing to invest our time and money to advance that effort—even if the people we help don’t always look like us or come from the same neighborhood, state, or even country. I’m proud to count myself among their number. And then we turn to housing. Maybe it’s just because we’re doing great on so many other fronts, but when I look at our inability to solve the housing crisis in places like San Francisco, New York, and Washington, D.C., I’m left feeling nothing but depression and hopelessness. It’s all the more frustrating because unaffordable housing might be the most important economic problem facing residents of liberal U.S. cities, and we’re perfectly, comprehensively, and unmistakably blowing it. The causes of this failure are too numerous to ever fully enumerate in a single blog post, and, admittedly, some are out of the hands of cities themselves. But I don’t want to be too forgiving—state and federal policy plays a role, for example, but liberal U.S. cities are also typically located in liberal U.S. states, and federal policy applies equally to all, including the cities that have managed to remain affordable. There’s also the impact of global capitalism on a few world class cities, but it’s hard to feel genuine pity for places where foreign investors are willing to dump billions of dollars. Boo-hoo. At it’s heart this is a problem of liberal governance and/or policy, and we need to face it head on. We can’t blame this on someone else. It’s our […]

If Landlords Can Profit, Homes Must Be Great Investments, Right?

Homeownership boosters use many arguments in favor of buying rather than renting, one of which is that purchasing a home is a key part of the path toward a lifetime of financial success. They often say that renters are helping landlords profit when they would be better off paying their own mortgage instead. But a more nuanced analysis shows that it’s possible both for landlords to profit and for renting to make more financial sense than buying for some people. Someone purchasing a property to rent out will be purchasing an investment rather than a home — an emotionally fraught purchase often fueled with American Dream mythology. Because of the large transaction costs in buying and selling houses, people tend to buy the home they foresee wanting for many years after the purchase date. A childless couple might purchase a four-bedroom home in a good school district for the future, meaning that they end up over-consuming housing for their yet unborn children. If this hypothetical couple decided to rent until their children were school-age instead, they would likely be able to save and invest a substantial amount by spending less on housing in the near term. Would a landlord purchase this couple’s single family dream home? Probably not. Rather, with the same money, he might purchase a small apartment building in a less desirable part of town. These differences in purchasing decisions help to explain why landlords can profit in the same cities where people may not come out ahead by buying instead of renting. In addition to having disparate motivations when purchasing property, a potential landlord likely has other comparative advantages that make him more likely to profit from real estate relative to the average homebuyer. He may have above-average knowledge of which neighborhoods are likely to see […]

Market Urbanism MUsings January 13, 2017

1. This week at Market Urbanism: The Rural Libertarian As A Historical Anomaly by Sandy Ikeda I believe the positive correlation between political conservatism and libertarianism and rural or “agricultural” living is an historical anomaly; that historically the countryside has been a great obstacle to liberty while cities have been the places where liberty and the fruits of liberty have flourished. Burrowing Owls, Comic Books, and Telling Stories That Change the World by Jeff Fong Translating the article’s information, ideas and arguments into a visually consumable format, however, makes it accessible to a much larger group of people. For every person that read the original article, there are probably fifty who would thumb through the comic book if left out on your coffee table. 7 Reasons To Oppose Los Angeles’ Neighborhood Integrity Initiative by Shane Phillips It’s a really bad plan, but calling Measure S “bad” doesn’t go nearly far enough. It is, in fact, the Donald Trump of ballot initiatives. It’s a cynical effort to co-opt a legitimate sense of frustration—frustration felt by those who haven’t shared in the gains of an increasingly bifurcated society—and to use that rage and desperation for purely selfish purposes. 2. Announcement: Kim-Mai Cutler, a Bay Area journalist, launched a kickstarter for her upcoming comic book about the need for more housing. Saturday is the final day of the campaign. 3. Where’s Scott? Scott Beyer will spend most the upcoming week meandering his way from Los Angeles to San Francisco, stopping in Malibu, Santa Barbara, Monterey and other coastal cities. His Forbes article this week was about his Year Spent Traveling Through America’s Fast-Growing Sunbelt The popular explanation is that people are seeking warmer climates. This is likely somewhat true–but regulatory climates also factor in. Economic Freedom rates, which in America have been a driver of […]

Adam Hengels
January 13, 2017
MUsings

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