REFinBlog

November 23, 2015

Planning for Affordability

Prospect New Town in Longmont, Colorado

Rick Hills and David Schleicher have posted Planning an Affordable City to SSRN. The abstract reads,

In many of the biggest and richest cities in America, there is a housing affordability crisis. Housing prices in these cities have appreciated well beyond the cost of construction and even faster than rising incomes. These price increases are a direct result of zoning rules that limit the ability of new supply to meet rising demand. The high cost of housing imposes a heavy burden on poorer and younger residents and, by forcing residents away from these human capital rich areas, has even reduced regional and national economic growth. While scholars have done a great deal to identify the problem, solutions are hard to come by, particularly given the strong influence of neighborhood “NIMBY” groups in the land-use process that resist any relaxation of zoning limits on housing supply.

In this Article, we argue that binding and comprehensive urban planning, one of the most criticized ideas in land-use law, could be part of an antidote for regulatory barriers strangling our housing supply. In the middle of the last century, several prominent scholars argued that courts should find zoning amendments that were contrary to city plans ultra vires. This idea was, however, largely rejected by courts and scholars alike, with leading academic figures arguing that parcel-specific zoning amendments, or “deals,” provide space for the give-and-take of democracy and lead to an efficient amount of development by encouraging negotiations between developers and residents regarding externalities from new building projects.

We argue, by contrast, that the dismissal of plans contributed to the excessive strictness of zoning in our richest and most productive cities and regions. In contrast with both planning’s critics and supporters, we argue that plans and comprehensive remappings are best understood as citywide deals that promote housing. Plans and remappings facilitate trades between city councilmembers who understand the need for new development but refuse to have their neighborhoods be dumping grounds for all new construction. Further, by setting forth what can be constructed as of right, plans reduce the information costs borne by purchasers of land and developers, broadening the market for new construction. We argue that land-use law should embrace binding plans that package together policies and sets of zoning changes in a number of neighborhoods simultaneously, making such packages difficult to unwind. The ironic result of such greater centralization of land-use procedure will be more liberal land-use law and lower housing prices.

For me, the paper highlights one of the great paradoxes of housing policy — people say that they want restrictive land use policies which limit the construction of new housing at the same time that they say that housing is too darn expensive in their communities.

The paper’s proposal to adopt “binding and comprehensive urban planning” is an intriguing one that could solve that paradox, but I wonder if there is sufficient political will to implement it over the interests of the parties that benefit from our current ad hoc system of land use regulation.