More on the White House and Zoning

Earlier this week, I shared a document released by the White House called the Housing Development Toolkit. It contained ten actions that local governments can take to promote functioning housing markets. I applauded the first five as being solidly Strong Towns in nature (POTUS: Zoning Sucks), but expressed some misgivings about the others. At the prompting of some of our members, I'll now go through the other five and explain my misgivings:


Here's the context that the toolkit provides for this recommendation: 

Local zoning code changes that allow for the development of higher-density and multifamily housing, especially in transit zones, can help to alleviate some of the pressure of the growing population in many city centers.

That is a true statement. That is also a statement that begins by accepting a really messed up reality for a premise, a reality created by some really messed up federal policies.

Let me rephrase the statement to highlight the inherent problem:

Local zoning code changes that allow for the development of higher-density and multifamily housing, especially in places where we've built expensive transit systems in an effort to induce growth and development, can help all those living in single family homes that don't want their neighborhoods to ever change to continue to have their lifestyle subsidized by everyone else, particularly the poor.

Now, to be fair, there are areas in Washington DC, New York, Chicago and San Francisco -- in Washington DC policy circles this is otherwise known as simply Civilized America -- where there are neighborhoods near massive transit investments that are stuck because of zoning. The chicken/egg argument of build-it-and-they-will-come was decided in favor of build long ago. What government hath sown in these neighborhoods it must now reap and so, yes, the difficult conversations about how a neighborhood with so much public investment must be allowed to evolve and change must now be had. Better that those conversations had taken place before the massive investment, but the world is not perfect.

This is like trying to put out a fire with truckloads of champagne, a fire that was intentionally set by the champagne distributor.

For the rest of the country -- and we could be talking about billion dollar rail investments here in Minnesota or others like Salt Lake City, Kansas City or Austin -- the issue is slightly more problematic. In these places, transit investments have largely acquiesced to the commuter model (following the federal funding). In short, how do we move people from low density residential areas to high density employment areas through transit and do this as a mechanism to alleviate automobile congestion? Fiscally, this is like trying to put out a fire with truckloads of champagne, a fire that was intentionally set by the champagne distributor.

Nodes of high density (amid the park-and-rides) may help these areas be slightly less financially insane, but it also distracts from the real work of a broad thickening up that needs to happen if these cities are to become somewhat solvent over time. It's also a convenient way to concentrate those people in ways that make us feel socially justified yet fail to make things better over the long term.

Finally, the term "density" is a trigger word for broad swaths of our population. That includes those who live in auto-oriented housing smeared across the landscape enjoying ignorance of their actual insolvency and unaware of the pending financial day-of-reckoning. It also includes planners, zoners and other meddlers of the orderly but dumb variety that believe enough in their own skills and infallibility to direct the complexity of humanity towards what they find to be a simple metric of success. Reality is a cure for ignorance but there is no easy fix for delusion.

Here's a smattering of essays we've produced on this topic:


The general concept the White House describes here is an effort to get developers to take a loss on some of their housing units -- and, again, we're talking apartment complexes and the other intense building types that would be applicable in less than 0.1% of the land mass of North America -- in exchange for allowing them to recoup that loss by building a lot more units (quantity over quality development strategy).

I've always struggled with these schemes, not only because it's not a market with any real feedback, but because of all the distortions it represents. If that level of housing intensity works well there, why not allow it to be built without the incentive of a bonus? If that level of intensity does not work well there, why allow it under any circumstances? Are we that out of ideas that we have to build a lot of things we don't want, just to get a little bit of something we do?

It's a little like rent controls, the magic weight loss pill of housing policy. Aren't you simply acknowledging that your market is totally messed up but, for whatever reason, you are never going to take the diet and exercise kind of steps necessary to address it? You are just going to pop a regulatory pill and trust that will take the edge off the worst of it?

Density will happen as a byproduct of success, but we must be humble enough to recognize that we really don’t know where that will be, where all those complex variables that make a place work will come together.

I once got a tour of Vail, Colorado, from a team of the city's planners. They told me all this money was being spent by the state and the region to improve transit and transportation systems because none of the workers in Vail could afford to live there. Workers had to live in a neighboring town and get bused in. My thought: If these rich people can't pay enough in wages for a necessary worker to afford to live in their city, then they can wash their own dishes. Seriously, why is it now someone else's problem to solve? If they can't find enough workers, wages will either need to go up or housing prices will need to go down, the level of inconvenience from not having enough employees being the feedback pressure forcing the change. That's not some libertarian creed; it's basic supply/demand.

Outside of a few places (mentioned above) where we've made massive transit investments that depend on future growth to make them less financially ridiculous, we don't need more artificial concentrations of housing. What we need is incremental growth over a broad area over a long period of time. I've called this thickening. Density will happen as a byproduct of success, but we must be humble enough to recognize that we really don't know where that will be, where all those complex variables that make a place work will come together. I'm not a fan of the planner as urban god approach.

What might be an expedient band aid in a few of our largest urban cities is a weapon of fiscal mass destruction throughout the rest of the country. I'm not a fan of density bonuses as a form a bribery.

Here are some related Strong Towns essays:

8. Employing inclusionary zoning

Functionally, this is density bonuses (see above) through coercion instead of bribery. The misgivings I listed above largely apply here as well. This policy is only taken seriously becuase we've used zoning to freeze our neighborhoods. Instead of dealing with that problem -- which would require a deep cultural conversation -- we deal with it through regulation. And because we are regulating people who have money (developers), they use their influence and acquiescence in that regulatory process to limit competition and drive up prices. How perverse.

I'm not going to say that there are no instances of inclusionary zoning making the world a better place. I am going to say that, in a world of cause and effect, I'm more than a little skeptical that the net result of this approach is a market equilibrium that meets the needs of poor people. I'll also argue that it doesn't deal with the underlying problem, which is our abandonment of incremental development. Here are two pertinent terms that we use often at Strong Towns:

Suburban Experiment: The approach to growth and development that has become dominant in North America during the 20th Century. There are two distinguishing characteristics of this approach that differentiate it from the Traditional Development Pattern. They are: (1) New growth happens at a large scale and (2) Construction is done to a finished state; there is no further growth anticipated after the initial construction.
Traditional Development Pattern: The approach to growth and development that humans used for thousands of years across different cultures, continents and latitudes. There are two distinguishing characteristics of this pattern that differentiate it from the Suburban Experiment. They are: (1) Growth happens incrementally over time and (2) All neighborhoods are on a continuum of improvement.

Instead of adding more regulation to development, add more options in your marketplace of developers. Here's some related content on that this topic:

9. Establishing development tax or value capture incentives

10. Using property tax abatements

I'll put these two together under the heading: Paying developers to pretend to solve your problems.

I realize that planners and policy wonks love these things -- they work so well in theory and they vest a lot of power in the bureaucracy to make deals -- but in a world where no city bothers to actually calculate return-on-investment, giveaways like these are even more problematic. And again, while they attempt to address the symptoms of bad land use, transportation and finance policies, they don't come near addressing the underlying problem. If you want to read more on this topic, check out these essays:

(Top photo from Wikipedia.)

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