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How land use regulations hurt the poor

Sandy Ikeda and I have published a new Mercatus paper on the regressive effects of land use regulation. We review the empirical literature on how the effects of rules such as maximum density, parking requirements, urban growth boundaries, and historic preservation affect housing prices. Nearly all of the studies on the price effects of land use regulations find that — as supply and demand analysis would predict — these rules increase the price of housing. While the broad consensus on the price effects of land use regulations is probably to no surprise to Market Urbanism readers, some policy analysts continue to insist that in fact rules requiring detached, single family homes help cities maintain housing affordability. Ed Glaeser, Joseph Gyourko, and Raven Saks estimate the effects of regulations on house prices in their paper “Why Is Manhattan So Expensive? Regulation and the Rise in Housing Prices.” They estimate what they call the “zoning tax” in 21 cities. The zoning tax indicates the proportion of housing costs that are due to land use regulations. The chart below shows the percentage of housing costs that this “tax” accounts for: Policies that increase housing costs have a clear constituency in all homeowners, but they hurt renters and anyone who is hoping to move to an expensive city. The burden of land use regulations are borne disproportionately by low-income people who spend a larger proportion of their income on housing relative to higher income people. These regressive effects of land use policy extend beyond reducing welfare if the least-advantaged Americans. Additionally, rules that increase the cost of housing in the country’s most productive cities reduce income mobility and economic growth. In our paper Sandy and I also discuss proposals for reducing the inefficiency of cities’ current land use regulation practices. David Schleicher has proposed some […]

Engineering in the dark

The similarities of urban design across American neighborhoods is no coincidence, but neither is it the result of city planners’ uniform adherence to best practices. Infrastructure is often built based on shockingly little information about the demands of its users. And while poorly reasoned infrastructure policy in one city is bad enough, the United States’ broad adherence to poorly reasoned policies has resulted in a nation in which swaths of neighborhoods are built on poor design foundations. Parking Requirements In The High Cost of Free Parking, Donald Shoup explains the origin of municipal parking requirements. Municipal planning offices do not have the resources to study the amount of parking that businesses should provide. Even with more staff, it’s not clear that planners would be able to determine optimal parking requirements unless they allowed business owners themselves to experiment and choose the amount of parking on their own in a learning process of how to best serve their customers. The Institute of Transportation Engineers is one of the only organizations that provides estimates of the number car trips that businesses generate. Given the lack of information planners have to determine parking requirements, they often rely on ITE’s information to set their parking requirements. However, ITE studies are often conducted at businesses that already provide ample free parking, ignoring the potential for businesses to manage demand for parking on their property through prices. Furthermore, ITE estimates of trip generation are typically based on a very small sample of locations, which are unlikely to be representative of businesses and cities in general. In the example below, the ITE provides a recommendation for fast food parking requirements based on their floor area. Even though the chart includes a line of best fit for the plot of peak parking spot occupation and floor area, the ITE hasn’t demonstrated a correlation between these two variables. Shoup points out: We cannot say much about how […]

Urban[ism] Legend: The Free Market Can’t Provide Affordable Housing

Over at Greater Greater Washington, Ms. Cheryl Cort attempts to temper expectations of what she calls the “libertarian view (a more right-leaning view in our region)” on affordable housing.  It is certainly reassuring to see the cosmopolitan left and the pro-market right begin to warm to the benefits of liberalization of land-use.  Land-use is one area the “right,” in it’s fear of change, has failed to embrace a widespread pro-market stance.  Meanwhile, many urban-dwellers who consider themselves on the “left” unknowingly display an anti-outsider mentality typically attributed to the right’s stance on immigration.  Unfortunately, in failing to grasp the enormity of the bipartisan-caused distortion of the housing market, Ms. Cort resigns to advocate solutions that fail to deliver widespread housing affordability. Yes, adding more housing must absolutely be a part of the strategy to make housing more affordable. And zoning changes to allow people to build taller and more usable space near transit, rent out carriage houses, and avoid expensive and often-unnecessary parking are all steps in the right direction. But some proponents go on to say relaxing zoning will solve the problem all on its own. It won’t. Well, if “relaxing” zoning is the solution at hand, she may be right – relaxing will only help a tad…  While keenly aware of the high prices many are willing to pay, Cort does not seem to grasp the incredible degree to which development is inhibited by zoning.  “Relaxing” won’t do the trick in a city where prices are high enough to justify skyscrapers with four to ten times the density currently allowed.  When considering a supply cap that only allows a fraction of what the market demands, one can not reasonably conclude “Unlimited FAR” (building density) would merely result in a bit more development here and there. A radically liberalized land-use regime would […]

BART, Josefowitz, and Mass Transit in the Bay

Last week, Nick Josefowitz unseated a multi-decade incumbent for a spot on the BART board of directors. Normally I don’t pay too much attention to elections, but Mr. Josefowitz might actually have some good ideas. For everyone outside the Bay Area, the BART (Bay Area Rapid Transit) system is a commuter rail line that constitutes the vital transportation link between the East Bay and San Francisco. On a typical weekday it provides 400,000 rides and that number is increasing as the regional economy continues to boom. Suffice it to say that BART is a big deal to a lot of people who rely on it every day (myself included). While Josefowitz’s campaign website talks about cleaning up dirty stations and increasing late night train availability, I had the privilege of hearing him outline an interesting proposal during a private, small group discussion some months ago. According to Josefowitz, BART sits on a substantial amount of real estate in the form of station parking lots. His proposal was to repurpose some of this space as high density housing. This would help with the region’s housing shortage and support BART ridership by clustering population around the system’s stations and the lost spots could be offset by building parking structures on the remaining lot space (many BART parking lots are ground level only as opposed to multi-level parking structures). This sounded a lot like Hong Kong’s integrated rail-property development approach which has proven to be an unqualified success, so my interest was definitely piqued. As always, there’s plenty of which to be skeptical. The fact that the proposal was brought up in a private discussion, but isn’t listed on the campaign website may say something about where it falls in Josefowitz’s priorities. Also, it’s difficult to tell how effective the incoming director will be […]

The Status of Smart Growth Regulation

Debates over land use policy often devolve into opponents arguing over how to interpret the same set of facts. For example, “market suburbanists” argue that because apartments in walkable neighborhoods tend to cost more per square foot than suburban single family homes, high densities make coastal cities expensive. Smart Growth advocates may look at the same data and argue that zoning rules that restrict the supply of high-density housing in desirable locations is what makes housing expensive. In order to provide clarity to the debate on land use regulations, Mike Lewyn and Kip Jackson survey the zoning codes of the 24 cities with populations between 500,000 and 1,000,000 residents. In their new Mercatus Center study, they find that while some cities have in fact enacted the sorts of policies that market suburbanists fear — minimum density requirements and maximum parking rules — these regulations remain very rare relative to near-ubiquitous maximum density rules and minimum parking requirements. Lewyn and Jackson list the mid-size cities that have adopted various types of Smart Growth regulations below. While a handful of cities have adopted the types of regulations they surveyed, every U.S. city in this sample has a maze of traditional zoning rules. A perpetual challenge in studying the effects of both traditional and Smart Growth regulations is finding data. Municipal codes are all housed on unique websites with varying degrees of accessibility. The difficulty of achieving clear answers as to what causes high housing prices contributes to advocates of traditional zoning and Smart Growth to shout past one another. While Smart Growth as a whole is maligned by some advocates of the free market, many Smart Growth tenets are actually deregulatory. Policy changes including upzoning, reducing parking requirements, and permitting mixed-use development are all steps toward laissez-faire land use relative to the status-quo, even though these policies […]

Glamour in streetscapes

A while ago I attended an Urban Land Institute event on development trends in Fairfax’s Mosaic District. A presenter from the retail developer EDENS described their strategy of adding “sidewalk jewelry,” a design technique used to entice shoppers to travel down sidewalks between stores. Having never heard the term before, it nonetheless stuck with me as I thought about retail developments that manage to create relatively lively pedestrian environments from the top down. At Mosaic District, this street jewelry takes the form of signage designed to engage pedestrians, fountains, and planters: It’s certainly more aesthetically pleasing and engaging to pedestrians than the average strip center. While the typical strip mall has a parking lot for a set back, Mosaic District has a parking garage that allows the rest of the center to be more pedestrian-scaled. With the “sidewalk jewelry” framework in mind, it’s easy to see that many retail developers have embraced this trend toward focusing on the pedestrian experience once shoppers have left their cars at the center’s periphery. While Easton Town Center in Columbus has many of the same stores as any major mall, it’s outdoor shopping environment is distinctly different, attempting to emulate the “town center” in its name: For shoppers who value retail ambience, these “lifestyle center” sidewalks provide a much nicer atmosphere relative to more dated strip center or shopping mall designs, but they can’t compare to environments where storefront decorations developed more organically. A recent trip to Quebec City reminded me of the sidewalk jewelry term, but there the visual treats that lure pedestrians down the sidewalk have much more texture than the shopping centers’ above because they are the result of an emergent order among the street’s businesses and residents rather than one developer’s vision: This type of street meets social critic Virginia Postrel’s framework of glamour. In […]

DC streetcar: Worse than nothing

On Tuesday, DC’s city council passed a tax reform package that will cut funding for future streetcar construction. These cuts come as the H Street streetcar delays continue to mount, and much of the commentary supporting the streetcar has shifted from touting its transportation benefits to its economic development role. As Stephen has explained, the benefits of streetcar over bus depend heavily on streetcars having dedicated lanes, which most of DC’s streetcars wouldn’t have. Earlier this spring, I was in a bike accident that cemented my opposition to DC’s streetcar. Because the streetcar tracks cover the right two-thirds of H Street’s right-hand lanes, bicyclists typically ride between the two tracks. This creates a situation in which the sudden need to swerve or a brief loss of concentration puts cyclists at a risk of catching their front tire in the track, causing an over-the-handlebars accident when the front wheel comes to a sudden stop. In Toronto, streetcar tracks are a factor in nearly one-third of serious bicycle accidents. While I can say I’ll now go to great lengths to avoid riding on H Street, DC’s lack of good east-west bike routes make it unrealistic to expect all cyclists to avoid the streetcar tracks. Avoiding tracks will be much more difficult for cyclists under DDOT’s plan to eventually construct 22 miles of tracks. Aside from creating a hazard for cyclists, this streetcar will only provide effective transportation for people visiting H Street retail destinations from the adjacent residential neighborhoods. It does not connect residential neighborhoods to job centers. While some have argued that it’s designed to serve tourists rather than District residents, the streetcar line doesn’t pass by any sightseeing, I don’t think that H Street’s retail is a common destination for tourists. Passengers using the streetcar to travel east from Union Station have to navigate a large parking garage to board the […]

Los Angeles’ Pedestrian Environment

Last week, Tyler Cowen wrote that Los Angeles is the best city in the world based on several factors, including that it’s one of the best cities for walking. While he makes the valid point that LA’s beautiful weather gives it an advantage over many other American cities with good walking opportunities, I have to disagree that it ranks among the best cities for walking as a tourist or for enjoyment. I’ve spent a lot of time thinking about this topic because my boyfriend is from LA and has often tried to convince me that it has great walking neighborhoods. Tyler is clearly correct that weather is an important aspect of walkability, so whether or not LA can compete with older, colder American cities on walkability depends on the walker’s preferences for weather relative to other factors like aesthetics and safety. Personally, I weight urban design much more heavily for walkability than weather, and from this standpoint I don’t think LA can compete with the few cities built before wide boulevards became standard street construction. As Nathan Lewis points out, American city planners began building wide streets well before personal cars became common for transportation. Only the U.S.’s oldest neighborhoods that predate the Revolutionary War feature the narrow streets that facilitate a pedestrian scale environment. Stephen Stofka at Strong Towns supports 1:1 as the best ratio of building height to street width, but personally, I prefer a “really narrow street” design with mid-rise buildings, with a ratio often approaching 2:1. With buildings taller than the streets, pedestrians feel a sense of enclosure and close-in building facades pull the walker along as compared to the expansiveness of wide streets that make comparable walking distances feel farther. Although some call Boston’s financial district an urban canyon, to me it’s one of the most interesting places to walk that I’ve […]

The Use of Knowledge in Urban Development

This post was written for an essay contest on the question “What would Hayek say today?” Hayek and other Austrian economists demonstrated that government ownership of the means of production is a sure route to poverty, but today, central planning remains the norm in one crucial area: cities. In the United States, the Supreme Court determined that cities could designate sections of city land for specific types of development in the landmark case Euclid v. Ambler. Since then, land use regulation has expanded to include heights limits, parking requirements, and design guidelines across the world’s great cities. Urban planners and politicians determine the rules for the location and types of development permitted within their jurisdictions, and ultimately have veto power over major projects designed in the world’s great cities. If Hayek were alive today, he would focus on applying his work on the knowledge problem to city planning. In the United States, progressive city planners began promoting restrictions on building height and density with the objectives of promoting light and air in the early twentieth century. At the time, these objectives were considered important for public health.  Property owners and policymakers soon realized that zoning tools could also be used to protect home values by preventing the construction of low-cost, high-density housing. Today, property owners support a wide range of policies designed to limit housing supply and increase the value of their assets. These policies include minimum lot sizes, density limits, and parking requirements. While a large economics literature describes the regressive effects of zoning, these policies remain nearly ubiquitous in the Western world. They owe their persistence to powerful public choice incentives that lead policymakers to favor their current constituents over the unrepresented people prevented from moving into their municipality or neighborhood by restrictive land use regulations (Schleicher, 2012). […]

Local Greenhouse Gas Rules Likely to Backfire

Next week the Cambridge City Council will consider a petition to require new or newly renovated buildings of 25,000 square feet or more to be net-zero emissions. Under the rule, any energy that buildings use beyond what they produce must be sourced from approved, renewable energy sources. While intended to reduce greenhouse gas emissions, the rule would have some easy to foresee side effects: Jeff Roberts, a land use and zoning project planner for the city, said the cost of developing what is being called “net zero” buildings could be passed on to tenants, and could drive away new development. “There’s always the possibility that this would create a shift–that the cost might cause development that would otherwise occur in Cambridge to occur in other communities that don’t have similar requirements, such as Boston or Somerville or suburban areas,” Roberts said. With this rule, Cambridge would follow in the path of other cities that have attempted to reduce greenhouse gas emissions at the local level. Santa Monica has been one of the municipalities leading the way on  attempts to reduce greenhouse gas emissions since 1994. The city has adopted its own standards for greenhouse gas reduction, but has made little progress toward its defined targets, today using 35% more electricity per household than the average California household does. While the environmental activists that support these local-level rules surely realize that greenhouse gases do not recognize political jurisdictions, local greenhouse gas emissions reductions in cities like Santa Monica and Cambridge miss the real opportunities to reduce reliance on fossil fuels. It’s unsurprising that very left-leaning cities have pioneered these types of rules, but in doing so, these cities are missing the real opportunities they have to reduce emissions. Santa Monica is one of the most walkable places in the Los Angeles area, offering […]

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