Patrick Braga is a Strong Towns reader sharing today's guest article about a unique zoning proposal.
What if there were a way to forestall speculation on property values and prevent displacement of long-term renters? What if this could happen while still allowing a neighborhood to diversify its housing typologies and add population? The answer may lie in a small change to how cities treat zoning – not as regulations prescribing a fixed view of our cities’ futures, but as a template to adapt elegantly to growth. Today I’m going to share a new idea, Dynamic Zoning, and show how a small change to zoning codes can help overcome some of the forces stifling growth in American cities.
Can increases in housing supply be more organic?
Despite increases in economic opportunity, many cities across the US have struggled over the past decade to allow housing supply to respond swiftly to new population growth and demographic change. Old zoning codes offer limited options for new construction and project a static view of what future buildout will look like. Established neighborhood groups with an interest in preserving and increasing property values oppose construction of different, denser housing typologies on the purported basis of neighborhood character. Upzoning a district, therefore, becomes a politically, emotionally, and strategically energy-intensive prospect, even if formerly single-family houses have largely become detached houses for unrelated tenants.
Yet, consider if zoning ordinances became dynamic laws that responded actively to demographic indicators. What if certain neighborhoods or zoning districts could upzone automatically (or at least systematically) if certain conditions were met? Let’s tentatively call this mechanism Dynamic Zoning, an incremental and data-responsive approach to regulating real estate development that facilitates organic urban growth.
What tends to happen?
Suppose a city has a form-based zoning code driven by the idea of the Transect — that is, the zoning code categorizes the intensity of human settlements from rural through suburban, general urban zones and urban centers, to the highest-density urban cores.
Imagine a city with the following transect-based zoning districts, borrowed from Cincinnati’s zoning code: The T3 Neighborhood (T3N) zone aims to “protect the integrity of existing, small-to-medium lot detached homes,” while the slightly denser T4 Neighborhood Medium Footprint (T4N.MF) zone seeks to “provide a variety of housing choices, in medium footprint, medium-density building types.” The T4N.MF also has an “open” sub-zone that allows for a more varied mix of uses within the same constraints on building form. Cincinnati also has another, again more intense variant of T4, T4 Neighborhood Small Footprint (T4N.SF) as well as an associated “open zone,” both allowing for higher-density building types in smaller footprints.
Form-based codes differ from conventional (and unfortunately more widespread) use-based zoning codes because form-based codes emphasize building form as the guiding principle of development regulations. Conversely, conventional zoning codes organize cities spatially by the kinds of activities that can happen on parcels of land, usually in categories like Commercial, Residential, Industrial, or Institutional, each with different categories according to intensity.
Moreover, regulating by use does not always make built form predictable, making it easier for unattractive or dissonant development to take place. (This is why you should advocate for form-based codes in your city!) Nonetheless, even conventional zoning codes are typically organized by levels of intensity, such as R1 (detached single-family houses), R2 (a mix of detached houses and duplexes), and R3 (three-unit houses also allowed).
Here is the map of our imaginary city:
Suppose Neighborhood Main Street is a rapidly growing employment center. Property owners on the block in the middle of the city start noticing increased demand for rentals, so they build additions onto their houses as far as allowed by existing building setbacks and lot coverage restrictions. Eventually some realize they can have renters pay for the mortgage on a new house, so formerly owner-occupied houses become fully renter-occupied.
But what if some of the people living on that block have been renting at low prices since before Neighborhood Main Street was such an exciting hub? If the building form remains as is with low levels of density, long-time renters may no longer be able to afford to live in that neighborhood because of rising rents responding to increasing housing demand. Residents of owner-occupied houses may also see this pressure, observe an increase in their property values, and oppose new development in their neighborhood so that competition for supply housing stock is restricted, making it easier for property owners to sell at higher prices and higher returns on their original investment.
Now suppose that the city government observes this situation and approves an upzoning of the district by two notches up to T5 Neighborhood Shallow Setback (T5N.SS), an even denser zone than T4N.MF. Now more diverse building types are allowed. Yet, sensing that real estate developers are lurking just around the corner, a seller’s market forms; property owners now set their selling prices at speculatively high levels. This makes it so that developers eventually charge higher rents to make up for the high front-end fixed costs, or prices are unreasonably high enough that little new housing supply actually gets built, contrary to the policy intentions.
Ultimately, traditional patterns of urban growth are more difficult to achieve when upzoning is a strenuous, piecemeal effort. In the majority of cases, the archetypal, walkable American boomtown in response to sudden economic opportunity is hardly a possibility.
An alternative route
What if our imaginary city adopted a Dynamic Zoning ordinance? This might read as:
If building footprints in a block reach 70% of maximum physical buildout* and if according to the American Community Survey 70% of households in that block’s Block Group are occupied by renters**, then within 60 days of the ACS data’s release, the Planning Department must increase the zoning of all parcels in that block by one transect zone. Within 90 days, the Planning Department must make a recommendation to the Planning Board and the City Council whether to modify the zoning of parcels within 500 feet of the Census Block Group, either by allowing more diverse uses or by increasing the zoning district to the next transect zone.
In our imaginary city, suppose ACS data was released on September 18. Then by mid-November, the city would have to adopt new zoning so that the block would look like this:
And by mid-December, 90 days after the data was released, and after extensive community feedback and outreach, the Planning Board and City Council might jointly decide that the following nearby parcels should be upzoned:
Of course, details could differ in terms of where the city sources its data, what the timing would be to respond to change in demographic indicators, and what scope would be affected by a change in zoning. A city might also decide that it is unwise to allow incremental upzoning in every neighborhood in the city, and might instead apply its Dynamic Zoning ordinance only to mixed-use corridors or neighborhoods near growing employment hubs. Yet the result will usually be that increases in property value will occur more steadily rather than suddenly.
Additionally, if the neighborhood has already achieved high buildout under its previous zoning properties, then existing, well-maintained properties are less likely to become redeveloped than smaller properties or ones in greatest state of disrepair. This is because the Dynamic Zoning ordinance encouraged property improvement to the greatest possible extent of the prior zoning districts, thereby increasing the fixed costs to purchase and demolish newer, already-dense housing and making smaller or derelict properties less valuable.
In short, cities that adopt Dynamic Zoning ordinances for selected districts can appease the desires of so-called “homevoter” constituents (that is, property owners who want to preserve their property values and who participate in local elections), long-term renters who will appreciate a more gradual rather than sudden increase in property values, and real estate developers who are less likely to face speculative prices if upzoning becomes more systematic and predictable. Every city faces different demographic realities, making the flexibility of this approach an enticing way to manage, respond to, and embrace the arrival of new neighbors.
*Buildout is typically determined by regulations on building setbacks from lot boundaries as well as maximum lot coverage.
**The Census Bureau administers the ACS annually or every five years, depending on city size.
About the Author
Patrick Braga is VP of New Market Development at Visum Development Group in Ithaca, NY. He is a recent graduate of Cornell University and will be pursuing a Master in Urban Planning at Harvard University starting this fall.