Urban[ism] Legend: Zoning Creates Density

If I may paraphrase: “Government does not create; government only restricts.”

Also, if density increases in some places, it will have to decrease in others. The supply of people is fixed (in the short- and medium-term) and the supply of land is a phrase long worked into the vernacular of real-estate agents.

I would also think that many people in low-density areas would be pleased to sell to a high-density developer for a huge bucket of money — which could be put towards a new house in a different low-density area, with plenty of $$$ left over.

Part of the problem might be that eminent domain confiscations do not provide sufficient compensation to home owners. Let the market sort it out, and all sides will walk away happy.

“In order for a higher density development to be feasible, it must be in a location desired by many more people”

Yes. And, essentially, the key factor in this is transportation infrastructure.

Transportation has always shaped cities, and it changes zoning where required (at least, it does in the long run). A rapid transit line attracts desirability among consumers and, hence, high density developers, who push politicians to change zoning within proximity of stations. On the other hand, highways attract low density within a wide basin on either side of the highway, and there is no demand, and therefore no pressure, to upzone.

Thanks for the input Bert,

You are very correct in pointing out how transportation shapes our landscape.

Unfortunately, public pressure tries to keep density low to preserve character, etc. Many places are severely underzoned, even where very high density could be built. For example, try to get a site upzoned in Boston…

Hopefully, this website will help dispell some of the myths people & politicians use to restrict development.

I agree, in the big picture, “Government does not create; government only restricts.”

But, government can create density by subsidizing it (and it often does). Of course, subsidizing diverts capital from more productive uses, which ultimately restricts the overall economy.

I would also think that many people in low-density areas would be pleased to sell to a high-density developer for a huge bucket of money — which could be put towards a new house in a different low-density area, with plenty of $$$ left over.

Unfortunately, their NIMBY neighbors don’t see it that way. The neighbors have an economic incentive to stop the developers from exercizing their property rights. Although, their action usually hurts their own property values in the long run….

Government “creates” density like it “creates” education, transportation, etc.

I know what you are saying, but (at the risk of sounding too exacting), I would reword it: Government, through laws and regulations, creates incentives that change density patterns that would not occur if left to individuals and their private actions.

Or, put another way: If the resulting densities are such a good idea, then why must the government force it on people?

I do think that there is some merit to the “NIMBY” argument insofar as externalities are concerned; i.e., should I be able to exercise my property right to build a slaughterhouse or brothel next to your single-family house? I don’t know what the solution to this is, though, other than perhaps private covenants.

I do think that there is some merit to the “NIMBY” argument insofar as externalities are concerned; i.e., should I be able to exercise my property right to build a slaughterhouse or brothel next to your single-family house?

I agree that there is some merit to restricting certain uses. But, it would rarely need to be implemented. In the current land use patterns where transport costs are negligible, it would be unlikely that a slaughterhouse would want to locate in a residential area where land prices are higher. That is, unless the residential area is declining and property is cheap…

Although some sort of voluntary private covenants could work just as well, if not better than zoning.

Though I can see merit to the externalities argument, I’m not so sure about the merit to the government-restriction solution. And that is because of the “slippery slope” problem of today’s govt restrictions on slaughterhouses leading to tomorrow’s restrictions on other uses.

Incidentally, I agree that it is unlikely that a slaughterhouse would want to locate in an expensive residential area. But even the most obvious economic predictions are prone to error. It’s certainly possible that a slaughterhouse executive might prefer an “irrational” location for reasons that we cannot anticipate.

And what then?

Should the nearby homeowners pay the slaughterhouse operator to go elsewhere (as the Coase Theorem might predict)?

Should the nearby homeowners accept the property rights of the slaughterhouse operator and live with it?

Should the nearby homeowners sell (presumably at a loss) and move away?

Obviously, I don’t have the answers…but I haven’t seen evidence that anyone else has the answers, either. And so, I guess we take the easy way out, establish government zoning, and hope that they won’t abuse their powers. (Just like the proverbial alcoholic in a liquor store won’t abuse his powers…)

Bill Nelson:

You forgot another option: the owner of the apartment building next to the slaughterhouse could outright buy the property, thereby ensuring that its original property is not surrounding by any undesirable businesses. This increases the incentives of having a large piece of property (as only the edges of it would be subject to others’ externalities), which is desirable in and of itself for other reasons – including the far-off goal of all us market urbanists of private developers building their own transportation systems.

1) I think the NYC media in general and, perhaps, “The New York Times” in particular have been particularly guilty of confusing upzoning with an actual physical increase in density. You read many articles about proposed upzonings (e.g., a recent one on proposed zoning changes for Willets Point, Queens) and one would think that developers have already purchased the land, commissioned designs, submitted plans for approval, obtained the necessary financing and hired the contractors! The construction equipment is already en route, and the sales offices are opening tomorrow! In fact, as I understand it, many outlying areas of NYC have been zoned since 1916 (and then 1961) for much higher densities than those that currently exist and nothing ever came of it because the demand / financing was never there.

2) While I generally agree with your assessment of the unliklihood of skyscrapers in areas of single-family houses, I think the truth is more complex — and this more complex reality helps explain the appeal of zoning restrictions to property owners (even though I personally believe that from a public policy standpoint that zoning restrictions are way overdone).

First off, I think it is useful to look at how development had progressed in cities like New York before the adoption of zoning. (In other words look at the history of built-up NYC neighborhoods, or other East Coast / Mid West big city neighborhoods, and also look at current some neighborhoods, like Greenwich Village, where there are streets where all the buildings pretty much pre-date zoning.)

I think you will notice three things:

a) Some areas of the city, obviously, did change radically over time. For example, skyscrapers, factories, commerce, etc. did, in fact, invade a good number of low-rise residential neighborhoods when the demand warranted it. These [often wonderful] big city neighborhoods weren’t just born that way!

b) Most of the time development moved in logical waves (i.e., the factories were continguous to blocks that already had factories). In other words, more or less one could pretty much tell when a neighborhood’s time as a quiet, low-rise residential area “was up.”

c) Occasionally, however, some odd-ball developer would build a factory, skyscraper, etc. “off the beaten path” and the wave would never reach that far along the path. Or the boom cycle would go bust — sometimes permenantly. (The Williamsburgh [?] Savings Bank skyscraper in the far off reaches of “downtown” Brooklyn may be a good example of this type of thing.)

I think looking at these three facts helps explain why people (even property owners) don’t support growth more than they do (when one thinks they would welcome making a lot of money selling their property to a developer who would build a higher desnity development), and why they instead support zoning restrictions.

Yes, some of it is laziness / comfort level. “For $X of money, I really rather not move from my home area.” But, I think one also has to recognize that land values go up only if the trend to higher development continues indefinitely, and if the wave then washes over one’s own property. If the trend stalls, then some property owner is going to be stuck with a high-rise apartment house next to his single-family home with no one willing to offer him the same kind of money for his property.

So from this perspective, zoning makes property owning safer and more predictable. Property owners don’t have to worry (as much) that they will the ones stuck next to an “undesirable” use that would lower THEIR property values (even if that undesirable use did actually pay a lot of money to the property owner next door).

P.S. — When I was in grade school many single-family homes in my area, Jamaica Hills, Queens, were bought up and demolished for “luxury” aparment houses. (The area is at the end of one of NYC’s last built subway lines.)

On some blocks, there are odd single family homes stuck here and there. I suppose some owners didn’t want to sell out under any circumstances and this destroyed the value of adjacent lots for the purpose of building an apartment house. Or in some circumstances, I suppose the apartment house builder had all the property he needed anyway and just didn’t need these additional lots. I wonder how this affected property values for the remaining single-family homes? (By the way, it seems to me from recent visits to the area that some of the remaining “odd” single-family homes are now, many years later in the more recent housing boom, being torn down for three-family type houses.)

Actually, from a public policy perspective, I don’t think the end result was that bad. Some of the resulting streets aren’t too bad — and some are actually rather nice. I think a lot depends on the actual design of the individual apartment houses. The earlier, less “modern,” apartment houses, for instance, generally lend a touch of glamour to the area, in my opinion. But I think, looking at the mix of apartment houses and single-family houses in the area might help explain the mindset of property owners who may be afraid of the marketplace and becoming the odd man out.

Great points! I think the most profound thing I took out of your comment is that the market is very complex and unpredictable. Here’s my 2 cents on the complexity aspect:

Complexity and uncertainty scare people (especially planners). Thus, the certainty provided by zoning may help property values in many moderate cases.

At the same time, top-down planning prevents entrepreneurial risk taking in locations that harbor a market for creative destruction. With less restrictive zoning, a developer may fail miserably if he tries to develop something too dense for the market to bear, but other developers will see the failure and avoid making the same mistake. The market serves to police these mistakes.

Yes, some out-of-place developments may happen, and could have negative effects on the neighborhood, but these situations are likely to be relatively isolated. Yet, the unseen costs of restrictions on innovation and complex market forces is widespread and harmful to overall growth and affordability.

Thanks for the positive feedback! I agree with most of what you say, and would also add that the relatively few people who feel they benefit from highly restrictive zoning are people who wield a great deal of power because they vote; while the much, much greater number of people who would benefit from less restrictive zoning (e.g., high density zoning) are people who don’t vote — as they are in the future and don’t “exist” yet!

By the way, I think you might enjoy reading my comments to a thread on the subject of “high” density zoning on a webblog called, “2Blowhards.” (The most active proprietor of the weblog, “Michael Blowhard.” is somewhat market oriented and might enjoy being introduced to your weblog — so you might want to introduce yourself and your blog.) The thread is called “Urban Squeezing” and is from Feb. 19, 2008. If the following link doesn’t work, you can find it using the blog’s search feature, by typing in “zoning.”

I say, Michael “Blowhard” is “somewhat” market oriented because he seems to have succumbed to some of the planning rhetoric of the people I call “New [Sub-]Urbanists.” There were two or three recent (in August) threads on New [Sub-]Urbanism (and what I feel are the strong anti-market tendencies of some prominent New [Sub-]Urbanists (e.g., Christopher Alexander, Leon Krier, Roger Scruton and Nikos Salingaros).

1) Link to 2/19/08 thread, “Urban Squeezing”:

http://www.2blowhards.com/archives/2008/02/urban_squeezing_1.html

2) Link to 8/15/08 thread, ” ‘Burb Thoughts, Info, Questions”:

http://www.2blowhards.com/archives/2008/08/burb_thoughts_i.html

3) Link to 8/21/08 thread, “The Alexander Effect”:

http://www.2blowhards.com/archives/2008/08/the_alexander_e.html

Here in Paris the debate over density is just as intense. The regional plan will be approved today that is supposed to increase density and provide a solution to the “housing crisis” by freeing up more land for development. That is however not the reason there is a housing crisis in the first place. Zoning codes in France are extremely decentralized. Aside from Paris, which has a population of 2 million, the next biggest city in the region has only a hundred thousand people, and then it rapidly declines into hundreds of cities with a few thousand inhabitants pestering the mayor. If any of these cities were to raise zoning density one little percent, the result would be all the demand for the metropolitan area channeling through that city, a major population migration, and the mayor thrown out of office next election. So none of the cities, individually, will dare raise densities.

What you say about the market applies to a whole metropolitan area, and it is true that if zoning density was raised across the entire metropolitan area simultaneously, the unmet demand would be distributed evenly and gradually across it. But that is not possible so long as there is decentralization. Whoever moves first loses.

I applaud your efforts to reconcile the market with urbanism. My own personal perspective is that there is an enormous amount of confusion as to the place of government in cities. Cities are not governments but public enterprises, no different than the post office or the electric utility. As they get bigger, they become more and more capitalist, meaning by this that they must make increasingly capital-intensive investments. When you have a city like Paris that is made up of thousands of little enterprises (cooperative or communist in organization), it is impossible to solve problems at the scale of the whole city.

I’m not ready to write an article about this yet, but maybe you can.

Thanks Mathieu!
Sorry for the slow response – I was visiting Portland, getting back to the grind, and am just getting re-situated.

I’m hoping to post about France’s recent liberalization of zoning restrictions, although I haven’t yet familiarized myself with the legislation and restrictions. I also want to touch on how it may effect the character of Paris’ urban streets.

I like what you have to say on centralization and scale of organization, and would certainly hope to write on that and encourage you to.

Adam

Mathieu,
I just checked out your blog for the first time. It seems fascinating!! I will spend some time this weekend reading it more thoroughly, but I expect to find some similarities between your work and the “emergent order” of the market place. I’m really excited about what I may learn.
Also, I added a link to the blogroll….
Adam