What is zoning supposed to do? I've heard it said that it is supposed to “protect property values”, whatever that actually means, but I think it’s worth examining the specific responsibilities that state statutes have actually charged local planning boards with. In the U.S., local jurisdictions such as cities and townships derive their authority from the state, which means that state statute establishes what the actual purpose and limits of zoning are. What are these boards that write, or at least approve, zoning regulations meant to be doing with all that power, according to the statute?
In my state of New Hampshire, the enabling legislation for zoning as it relates to subdivision and site plan regulations talks about how we create zoning ordinances so as to provide for prosperity. We are charged to (a) Provide against such scattered or premature subdivision of land as would involve danger or injury to health, safety, or prosperity by reason of the lack of water supply, drainage, transportation, schools, fire protection, or other public services, or necessitate the excessive expenditure of public funds for the supply of such services.
Emphasis mine. But let’s look at one particular line again:
…provide against the excessive expenditure of public funds for the supply of public services…
So what does that mean in practice?
I think the enabling language clearly urges local planning boards to look at whether the zoning they have created is going to make a town prosperous. How do we do that? We consider the likely tax return on development against the cost of providing services—something Strong Towns has been urging cities to do for years.
“Excessive expenditure of public funds”: that’s what we’re supposed to guard against. Does that mean that if a developer builds a road, we’ve guaranteed prosperity? After all, the town didn’t spend that money. But the town is going to have to repave that road when the time comes. If the tax revenue won’t cover that expense, then we have failed to provide prosperity.
The easiest way to see whether our zoning is leading to the aforementioned “excessive expenditure” is to compare apples to apples. Here’s one example: In my small town, we adopted an overlay district [a special set of zoning rules applying to a particular part of town] that would allow more residential density. It was a hard fight, but we established that a 5000 square foot lot (about 1/8 of an acre, or a fairly typical urban lot size) is allowed in certain districts as long as the developer manages to jump through all the required hoops. It’s possible, but it’s not easy. In our rural zone, the minimum lot size is three acres. How do we compare which of these development patterns are contributing the most to general prosperity for the town?
Case Study 1
A one-acre parking lot right in town, next to the elementary school, was developed. Eight new houses were built on it, each assessed at $325,000. The parcel went from being worth $47,000 to being worth $2.6 million and delivering $30,000 in taxes to the town (the school district gets the other $50,000 in taxes). Same paving and plowing and piping as there were when it was a parking lot. No new expenditure to the town to get those eight houses.
Case Study 2
A four-lot subdivision in the rural district, comprising 12 acres altogether. The four houses assessed at $350,000 each. The houses are situated at the end of an 800-foot-long cul de sac, which functions as a private drive for those four houses.
Using the same math as our first example, these four houses pay $12,000 a year to the town in property taxes. But when we look at how much it is going to cost to repave that cul-de-sac when the time comes, we see that it will cost about $50,000 to repave. They’ve paid $12,000 a year so we’re good, right? Not really. That $12,000 covers every bit of town expenditure: ambulance, fire, recreation, Christmas tree lighting, everything. The public works budget is about 10% of the total town budget, so those four houses have paid only $1200 per year towards the public works budget.
Do the Math
It will take more than 40 years to collect enough tax income at $1200 a year from those four houses to repave the road once. And that is the same money that pays for plowing and salting and sanding and every other cost associated with keeping the road open. That’s for a road which contributes nothing to the town: no shops, no connectivity, no opportunity for further growth. It’s a driveway for those four houses.
So, which set of zoning rules have provided for the prosperity of the town? I think it is clear that in making the second development pattern—a large-lot rural subdivision—the easy, default way to develop, we are failing to encourage prosperity. And conversely, making the compact, small-lot, infill development more difficult to build doesn’t help, either. We probably can’t get the town to agree to further restrict cul-de-sacs and large rural lots, but we ought certainly make the compact, in-town development the easiest way to build and not the hardest.
And, according to the state statute, we had better get right on that.