Jason Sorens on Unbundling Zoning

Howdy. I’m Nolan Gray, your friendly neighborhood city planner, senior director of legislation research at California YIMBY, and one of the co-leads of the new Metropolitan Abundance Project. Welcome back to the Abundance Podcast. In this episode, I chat with Jason Sorens. He’s a senior research fellow at the American Institute for Economic Research. He earned a Ph.D. in political science from Yale and a B.A. in economics and philosophy from Washington and Lee University.

He’s been involved in the Free State project up there in New Hampshire. And in this episode, we chat about a new report that he just came out with called Unbundling Zoning about what it would actually look like to sustainably move past zoning and some of the arguments for and against completely eliminating zoning. It’s a great conversation. Near the end, we talk a little bit about some of the exciting work that they’re doing on zoning reform up in New Hampshire.

Hopefully, we’ll have a much longer conversation about that in the future. As always, like, subscribe, leave a review. It very much helps us. And with that, on the show.

Cool so Jason, welcome to the podcast.

Thanks for having me.

So we’re talking about an interesting paper that you wrote. It came out I guess in July? June? Yes, July. Unbundling Zoning and we’ll have the full paper in the show notes. But so, it’s kind of- It was a fascinating paper to me because I’ve come out with this book essentially making the case for zoning abolition, and 99% of the conversations that I’ve had surrounding the book have been from people who I think are much more interested in the near term project of reforming zoning and making zoning less bad in the near term. But I do still believe that zoning abolition is good. And it’s so exciting to see you doing work on this.

Just to kind of quickly run through the paper very quickly. , I think that you- Level three, sort of general prevailing critiques against zoning. One, I think will be very familiar to listeners of this podcast, which is that zoning is unjust and the relationship between zoning and exclusionary policies or zoning and segregation. But there are a couple other policies that I thought were- Or critiques that I thought were novel and maybe don’t come up nearly as much in the discourse.

And one is, they’re both very subtle, by the way. The one is: zoning is useless. The other is: zoning is irrational. What do you mean by those critiques?

Yeah. So, zoning is useless is basically the idea that we don’t need to separate cities into zoning districts with arbitrary lines. As you put it in your book.

And here I am influenced by what you’ve written on this. But we don’t need to do that to solve some of the problems that zoning was originally meant to solve. So, the sort of most sophisticated pro zoning scholars, like Bill Fishel at Dartmouth, have talked about how zoning originally had this kind of good house keeping element and was meant to solve nuisances and things like that.

But it turns out that we can actually use other tools, besides zoning, to solve those. And they end up being much more flexible and actually allowing more, kind of market-driven evolution of land use, and therefore more efficient uses of land. So, for instance, if you don’t want industrial uses entering residential neighborhoods, a reasonable concern,

You don’t need to divide your city into residential and industrial districts and say only these uses are allowed in these districts. Instead, you can simply say, have an ordinance that says: ‘You can’t start any new industrial use within, say, 1000ft of an existing residence.” And that actually provides even more protection to residential uses, because right now, if you’re living in a residential district that happens to have wanted an industrial district, maybe there could be an industrial use, very close by.

So that’s the “zoning is useless” critique, that we have other tools, both from the common law of nuisance, from local ordinances that are more flexible that focus on nuisances, and just from pure market mechanisms to deal with those problems. And then the “zoning is irrational” critique is kind of a Hayekian criticism of zoning. And this is basically the claim that zoning is central planning of land use, right? So we’re basically saying “We the enlightened, have come up with a list of allowed uses and different parts of the city and various detailed dimensional regulations that every land use must obey.” And these are kind of frozen in time. We can periodically amend them, but that amendment process is often difficult and costly. But we think that we can kind of decide, once and for all, what the land use of the city is going to look like, and that just doesn’t fit the reality of how land use changes over time.

So, for instance there are many, many zoning ordinances that have not undergone any kind of complete revision in 20, 30 or even 50 years. And in that time, we’ve had the rise of work from home. We’ve had the rise of online retail. And we’ve had a growth- an interest in walkable neighborhoods and, cycling the development of e-bikes, which has encouraged more cycling.

And, just so many changes to our economy, to our society, to people’s tastes that the ordinance was written decades ago, could not have taken into account. And so we do have fortunately, some process for dealing with needed changes to zoning restrictions called the variance. But again, a variance is costly to obtain.

It’s discretionary. There are pretty rigorous criteria. , it has to be a true hardship. And the land use that you’re permitting has to be consistent with the intent of the ordinance. All these restrictions that make it difficult actually to unfreeze land uses. And there are many cases of frozen land uses due to zoning.

And, Bob […] has one great example of this in Palo Alto, California, where, because single family neighborhoods have been kind of frozen in amber for decades, the economic growth that’s happened there has been shunted to a kind of waterfront, quasi-industrial area where, for whatever reason, the residential density restrictions were not binding.

And so all the new residential density has gone to this area where it doesn’t really make much sense. It’s far from jobs, actually, like the tech jobs that these people are coming in to take. And, so it’s not a rational use of land, but given the kind of central planning that happened decades ago, that’s how the market kind of works around it.

And so wouldn’t it be better if we had a more flexible system- A much more decentralized system that did not centrally plan land use? While still dealt with the inevitable nuisances and externalities, as economists put it, of land use.

Yeah. You make a really good point on the sort of “zoning is irrational” piece of so many zoning standards are nice round numbers. They’re multiples of 5 or 10, right. It’s like reality or the equilibrium in any given market is rarely consistently a beautiful multiple of ten. Like something’s kind of fishy here. But it’s an interesting issue with that, even when I think I talk to a lot of pro-liberalizing reform planners, there’s still this feeling of, yeah, the standard’s arbitrary, but you need some sort of minimum standard. Or even if, for example, I have a lot of conversations with planners where I say, “Hey, minimum lot sizes, they don’t really serve a health and safety function anywhere that you have water and sewer. Just get rid of them.” And the pushback is usually, “Well, let’s just make it so small that it’s virtually never binding.”

What do you think is going on there? What are your thoughts on like, you could just be mean about it, call it “planner brain,” but I’m always fascinated by this impulse to just have a standard.

Yeah, I think there is some of that. And I’ve encountered that too, because you get a lot of planners who are actually more pro-housing and more pro-development than the median voter in some of these communities.

But they definitely still have the sense that, well, the planning needs to be done. Like, we definitely need to have kind of detailed restrictions here. And when we do liberalize, we should do so in a way that’s sort of strategic, like, “Well, okay, I’m going to try to zone for naturally affordable housing by kind of allowing more density,

If you cap your unit size at 600ft².” or something like that, right? All those sorts of things are meant to kind of channel the market in one direction or another. But I think the reality is when, once you look at how land use economics work and how cities grow. It’s much more vibrant and complicated than that.

And on setting any kind of standard, yeah, some standards are more harmful than others. But, setting any kind of standards, it is going to be arbitrary, it is going to the extent that it binds, it’s going to have some negative consequences.

So turning just quickly to the zoning is unjust piece, and then I think we’ll talk about some of the arguments that you collect in favor of zoning.

The zoning in San Jose, I think you’re exactly right that we have sort of nonzoning mechanisms for dealing with true nuisances, and we have buffers for real nuisance uses. I think where zoning becomes necessary is if, and I think this is part of what happened in the early 20th century, is a sufficient majority of people said “Oh, I really want to live in a neighborhood that’s all residential uses, that’s exclusively residential uses. I want to live in a neighborhood where there’s consistent front setbacks and consistent heights.” And I’m wondering, what’s your response to this? Doesn’t the government have some obligation? These are not sort of rooted in nuisance or impacts traditionally understood, but somebody might say, “Well, I find it so offensive that there’s one house that sits five feet back from the street rather than 20 feedback from the street. It’s so offensive to me that it would be just like if this person had a noisy bar blasting club music until 3 a.m..” What’s your perspective on that?

Yeah, and sometimes it’s hard for me to enter into the mindset of people who just downright hate density or value complete uniformity of built form. I just don’t have those preferences. But I understand that some people do have those preferences. And as an economist, my view is, well people should be able to satisfy their preferences so long as they’re not imposing external costs on others. And so the problem with zoning is it is at a much larger scale than just the neighborhood scale.

Right? These are enacted at a jurisdiction level- Could be a county, could be a city, or other form of municipality. And so there are external costs, right? So you’re imposing your preferences on others who disagree with you. And we could talk about how ideally this might work, but it seems to me that ideally you would have people joined together through contracts, through deed restrictions and governance and things like that, that they could set up to achieve their objectives through a form of private land use governance.

And at least that type of governance is much smaller scale than zoning. And so there’s some choice and competition there and a kind of market test. And if you set up crazy rules for your neighborhood, you’ll actually hurt property values in your neighborhood. People won’t want to live there, certainly in the long run.

And so that’s going to be a natural check on bad rules. There is a role for land use governance, right? There are externalities from land use, and some of those might even be aesthetic, right? And we do see that private community associations that exist often have very detailed aesthetic rules about how you can keep your lawn, what doorknobs look like, and things like that that are much more extensive than zoning.

And some people value that, and there should be a way for them to realize those preferences. But we need to do it on a small enough scale and with enough flexibility that those who don’t have those preferences can also achieve them. And we can have some kind of organic development. And when we look at the real world, places that often developed without much land use governance, today we often think of them as very beautiful.

, in the town I live in, Amherst, New Hampshire, the part of town that everyone says is so beautiful is this village. It’s historic, and all the houses were built in the 1700s. It was built before zoning. In fact, the zoning that is there now makes that entire neighborhood illegal. There are two acre minimum lot sizes there. But that’s the minimum lot size that the zoning imposes. And so, we need to be careful about the aesthetic justification for zoning because in many ways, zoning actually creates un-aesthetic spaces, definitely runs counter to the grain of a lot of people’s preferences.

Yeah. I mean, I’m calling from Seville, Spain today, which is, I’m learning, at least just like Amherst in at least one respect, which is that the most beautiful parts of the city were built without any zoning. No, it’s funny when you look at the early work around zoning too, because I think now that’s like a lot of the heavy lifting of what zoning is doing, but courts were so dismissive of this idea of land use regulations in pursuit of aesthetic qualities, right? Even front setbacks get couched as like, well, we might need the right of way at some point for a future road expansion, or heights are like lingering sort of fire abatement sort of measures that then become aesthetic. But it’s kind of interesting how there’s been that shift there of thinking about the role of esthetics and land use regulation.

Getting to defenses for zoning, of why- the arguments that people make for keeping it is a really, really important concept here. And this is going to feel like a PhD qualifying oral question, but fiscal zoning in like five minutes or less. What is fiscal zoning, and how does it- explain this intersection between property taxes, public revenue, and zoning?

Yeah. Well, if you live in New England, and you go to the town meeting, you will at some point hear someone say, “Well, the problem with development is that it brings more kids into the schools, and that’s going to raise our taxes.”

The ultimate nuisance: children, right?

Yeah, exactly. We just, especially in America in the world today, we just have too many of them, right? I’m being sarcastic of course. If anything, we have the opposite problem now. But, but, yeah, I mean, this is- The intuition here is that when you have public services that are funded through general taxation, especially property taxation at the local level, then it makes sense to use your land use regulations in such a way as to make development pay its own way. And that basic idea of ensuring that development pays its own way makes a lot of sense, right? We don’t want to subsidize sprawl, for example. And this is the whole idea behind the Strong Towns movement, which I have some agreements and some disagreements with. But the basic idea is sound, that we don’t want to have developments that require lots of new paving, lots of new roads and extension of municipal, water, and sewer systems that the whole town pays for and not just the people who are living in the newly developed area.

But we have techniques to deal with that. Impact fees are supposed to be used for that, right? So it’s a way of ensuring that development pays for any new infrastructure that’s needed, any new public infrastructure that’s needed to serve that development. And states regulate impact fees differently, but in principle, I’m okay with impact fees as long as we have public roads and municipal utilities and things like that. I think it’s a way actually to potentially incentivize development, and incentivize towns to say, yeah, actually, we can allow this because it’s going to at least pay its own way, and it’s a potential fiscal benefit to the town. The problem comes in when, to return to the school example, the idea is, “Hey, we need to restrict development because it’s going to result in extending more public services to more people.”

And first of all, that’s often just a mistake. And it’s often just a mistake to think that zoning helps this problem. So there’s an economist who’s done a lot of research and I’m blanking on his name right now, but he’s done, he has a piece in National Tax Journal that’s particularly interesting on land use regulations in Massachusetts and property value per student. And the whole idea here is,  if you’re worried about your property tax burden, you want to kind of maximize property tax value per student, because that means that you have a big tax base, and a small, I guess customer service, population. And so you can have a lower property tax rate, given that big tax base and small population that you’re serving. And so he looks at how zoning affects this. It turns out that actually allowing more residential density, at least within the – across the margins he’s looking at – and these are all relatively dense communities in the greater Boston area. But within that kind of spectrum, allowing greater residential density actually raises the residential tax base per student. And the intuition here is that when you let people build apartments and small houses, they actually tend to be more singles and young couples and elderly couples. It’s actually not bringing in a bunch of students, but you are raising the value of the property, right?

So what used to be an open field or just a single house, now you’ve got a bunch of houses on it. Obviously, you’re getting a lot more tax revenue from that. And so this is, kind of what I try to tell people about and educate people about in my area because property taxes are the overwhelmingly dominant source of public funding for local services in my state. You should be letting development in, especially multifamily and small single family because that is the type of stuff that is a big fiscal benefit to the town. And that will reduce our tax burden. And you actually see that when you compare towns, it’s often the cities that have more multifamily and more commercial development that actually are able to afford lower property tax rates, and more public services. So, yes, there is a potential argument for using fiscal zoning to try to reduce your property tax burden, but it’s often misapplied.

Well, so just to read this back to you, because this is a really complicated area, and it actually took a while for me to wrap my head around it when I was first learning about it. So the idea here is that local governments can use zoning to establish a minimum level of housing consumption, and through that, they can establish a minimum property tax that every household is going to have to pay. The idea being that we’re going to crank this up until we hit a property tax bill that roughly covers whatever public services we think you’re going to cover.

So if you’re, if you’re building an apartment building of low income family size units, the property tax per household, at least under this theory, is going to be far too low to compensate for the cost of all those new students. And that might be true of a whole bunch of other homes. I think you’re kind of making an important point here, which is that actually there’s a whole bunch of forms of multifamily housing, especially if it’s multi-family housing for seniors or one bedroom or studios.

It’s like, that’s free money. And when I lived- I went to planning school at Rutgers and- and, New Brunswick, New Jersey, and I was visiting my girlfriend in New York City every weekend. You take the Northeast Corridor, and almost at every single station – these New Jersey towns have figured this out – there’s a giant tower that’s all studios and one bedrooms of young professionals who live in, let’s say, Metuchen and then ride into Manhattan, work a job, come back, spend a bunch of money at the supermarket, pay a property tax bill, consume no public services, and then by the time they have kids, they move along to eastern Pennsylvania or New Hampshire, the last remaining affordable vestiges in the northeast, right? It’s kind of a funny point because you so universally hear “oh, new development doesn’t pay its own way“ as a justification, often to oppose some of the housing developments that are most likely to pay their own way. Or, for example, like smaller homes on smaller lots are just going to require much less new infrastructure in terms of road, pavement and sewer lines and electrical cables and everything like that, right?

Yeah. I mean, yes, there’s a logic for fiscal zoning, but if you were to do fiscal zoning, it would look a lot different from how a lot of places do it. So you would allow those studios and one bedrooms in great quantities. You allow a lot of commercial, a lot of mixed use, especially in dense configurations that don’t require a lot of new road building and stuff like that and a lot of new snow plowing and repairs that go on for years.

And then if it’s single family, you might restrict that quite a bit. And like, well now you need at least five acres, alright? So that we can make sure that you’re going to have a really hefty property tax bill that’s definitely going to pay for whatever public services you consume. And that’s just not really what we see out there.

And it suggests to me that when we look at the politics of zoning, there’s something else going on here that it’s not really the fiscal justifications that are making the biggest difference to what communities are actually doing.

Yeah. I mean, I think the- Alex Armlovich, we were at a conference recently and he said, fiscal zoning needs to be taken seriously, but not literally, right? Yes, of course local governments are making development decisions on the basis of fiscal considerations, but they’re not really doing this sort of complex analysis of estimating that new developments’s public service consumption relative to its likely taxes. But I think it’s an important point, and I do think it’s certainly a major factor in how a lot of people think about this. Another important defense of zoning. And this is, I thought, a really, really interesting section, is sort of the politics of zoning and, radically simplified, why don’t we just do zoning well? So Celline first offered what was, probably one of the best critiques of my case for abolishing zoning. It’s a good critique because it’s flattering, so I can’t argue with it too aggressively. He said “I would prefer to live in a city where you, Nolan, are the chief urban planner, and we have zoning rather than a city, the sort of a typical city with no zoning.” I was like, “Yeah, very flattering, but, reread the book until you understand the wisdom.” But it’s an interesting point here. And so you kind of run through a few ways that we could sort of put guardrails around zoning and actually get it to be better. So, what do you think about that? Is that a salient defense of zoning?

Yeah. I mean, it’s like, defenses of other economic policies that we can conceive that they could work really well, and maybe we even have individual examples where they’ve worked really well, but on average, they haven’t worked well, like industrial policy or protectionism or things like that. Yeah. We economists can come up with these rare cases where they actually do work well, but that’s not how we observe it functioning in the real world. And I think when we look at the politics of zoning, we tend to find a lot of capture going on. , it’s not being done in the interest of the median voter or the kind of representative property owner in the town. It’s often being done much more in the interests of actually a very small but highly motivated subset of people in town.

There’s a book by three Boston University political scientists called Neighborhood Defenders that looks at this in the New England context. And they find a lot of evidence that the people who show up to land use hearings and even who vote in local elections tend to be disproportionately older, whiter, wealthier, more home owning, and more male.

And they have much more anti-development views than other people in town. And I found this as well when you get bigger turnout, you tend to get more pro-development outcomes at the local level. But the problem is that that turnout often does tend to be very low in local elections. And there are many reasons for that. One is that these are often very much off cycle, so there’s nothing else going on- It’s only local elections, and the issues are often complex. I mean, when you see a zoning amendment on your ballot, I mean, most people’s eyes glaze over, and they kind of default to, well, did the planning board say okay? Then yeah. Then it’s probably okay. And so you don’t get a lot of the people who would actually benefit from housing options and who actually really care a lot about their property tax bill, right? Because maybe they’re lower income and actually run the risk of losing their home if property taxes go up too much. Like those people who would actually benefit from allowing development tend to not turn out to vote as much. Certainly renters don’t show up in nearly the numbers that homeowners do. And so, zoning tends to get geared toward an activist subset of homeowners who sometimes have a direct stake in land use regulations. So there is the benefit of exclusionary zoning, the kind of pure financial benefit that, hey, if I just don’t let people build houses, then my home will be worth more. And I don’t dispute that that is probably going on to some extent, but then there are also those people who really just have a strong aesthetic preference against density in favor of kind of the uniform, maybe more suburban kind of look, and those people, for various reasons, are much more likely to turn out to vote.

And then what we also see is some evidence of an arms race among local jurisdictions. So, there’s some evidence that when neighboring jurisdictions tighten their land use regulations, that makes a jurisdiction more likely to tighten its own land use regulations because the idea here is there are some people in town who don’t want multifamily or don’t want low income housing or whatever for a variety of reasons. And if other communities around them are not allowing that to be built, they don’t want to be the only place that is allowing it, right? Because then you’ll get much more of it than you otherwise would. And so that really is a strong kind of political economy reason for why we need some higher level oversight, whether it’s from state legislatures or courts, to kind of limit how far localities can go, because they are imposing external costs through their land use regulations on their neighbors.

Most typical metropolitan US areas are kind of almost in a prisoner’s dilemma on this, right? And this is what I think certain fair share mechanisms try to do is to try to say, okay, “We’re going to everybody’s tying your hands, you have to allow at least something.” Because exactly in this sort of more open local control of these issues, you’re going to potentially not get nearly enough housing, especially of inherently affordable forms. I want to talk about a few of the sort of arguments against zoning abolition. I’ll swallow my pride here.

I think you level a few, which was one, this sort of talk confuses and alienates voters. It kind of freaks people out, right? People have bought homes, they’ve developed expectations.You can maybe spend a whole conversation on this, talking about zoning as a property, right? And, I don’t think it’s necessarily, in any meaningful sense, a property right, but people have made development-backed expectations and political discourse around, “I bought a home thinking it’s going to be a certain way”, and I don’t necessarily think there’s an ethical or legal obligation to defer to that, but the practical political reality of it is that if you go in and to massively disrupt some of these rules that people have built their lives around, there’s going to be pushback.

Am I missing anything else here that was very important for your skepticism of a sort of straight, hey, let’s talk about zoning abolition?

Yeah. I mean, that’s the main thing. And with a coda to that, alternative forms of land use governance have been crowded out by zoning. So if we were to start over again, I don’t think we should do zoning. But given that we’ve had it for, going on 100 years now, there are a lot of places where that’s what they’ve relied on. It kind of atrophied the alternative. So we have to gradually build up those alternatives, rather than wiping the slate clean.

Yeah. Right. A little bit of your zero thinking never hurts in the final section of a book that 99% of people will never get to the end of. But yes, I think your point is extremely well taken that for the work that we’re doing day to day of reforming zoning abolition, I think basically never makes sense to be the sort of leading argument, but you have some creative policy solutions for what you’re referring to as unbundling zoning, or sort of taking out different functions of zoning that I think in isolation people would consider valid, but might not have nearly as many of the issues that zoning policy as we have at today currently has. Do you want to talk a little bit about some of those policy solutions?

Yeah, and some of them are not, by any means, original. The first one, it really was inspired by your book and that is to replace use zoning with districts that with ordinances, carefully specify what kinds of uses are allowed near potentially incompatible uses. And so that could be the restriction on setting up a new industrial use within 1000ft of an existing residence, for example. And you’d have to kind of carefully specify these and then you’d actually have to enforce them, right? And this is a point that you make in your book is that a lot of cities just under enforce their nuisance regulations. And if we did a lot of that, maybe that would reduce a lot of the demand for zoning, and that’s kind of the most traditional and maybe most defensible use, which is trying to separate incompatible uses. So that’s one. That’s the first way of unbundling zoning. It’s kind of like, thematically, and moving away different functions out of zoning and into other areas of the legal code.

And on that point very quickly, I think this is important. It’s a really important point. I think the reason why we end up getting strict use segregation in the US is that people do not rely on the local government to do the sort of basic code enforcement, right? So I might not mind if a corner grocery moves here, but if a corner bar moves in, I also might not mind if it’s a corner bar either.

But what happens when the original bar owner swaps out and it becomes a noisy club, right? And then I can’t necessarily be confident that the noise enforcement is going to be sufficiently strict. So I sort of rationally say, “Okay, well, let’s just solve this problem by not having any commercial use here, right?”

Yeah, exactly. And, I think that’s a lot of what’s going on here because commercially, the evidence actually suggests that commercial uses, on average, are a benefit to property values, to residential property values. Even things that people think of as commercial uses that they don’t like so much like, like Walmart’s, right? So there’s a lot of people in New England who don’t want a Walmart moving in near them, or at least that’s what they say, but, I mean, the evidence suggests that when that moves in, it actually raises property values in the area. So, people on average, in general, prefer to have these amenities close by.

They actually see commercial development as an amenity. And so there is this tendency where people resist something in advance because they’re worried about what it might be, even though on average it works out, right? And so if we had more tools to deal with those fears of what the downside might be, then I think people would be much more willing to allow all sorts of new amenities to be built in their area.

So in my work on zoning reform, and you’ve done a little bit of this in New Hampshire, we’ll talk about that in a minute. We spend a lot of time trying to get the state to intervene. And, I would say intervene on behalf of the individual property owner, the ultimate form of local control. But in any case, getting the state to intervene and put up guardrails around, “Hey, you can’t impose parking requirements near transit,” “You got to allow homeowners to build 80s,” etc.. But in this paper, you elevate the possibility of even further decentralizing land use planning decisions as a way of liberalizing these codes. So do you want to talk a little bit about that?

Yeah. And , I’m not against this. The state level stuff. I do work on that too. And there are certain things, like parking minimums are just patently irrational that everyone should abolish them everywhere. But okay, let’s talk about how further decentralization might work. And again, some of these ideas are not original to me, but there’s the idea of allowing neighborhood or even block level upzoning, where there’s a lot of incentive just in terms of added property value, for a small group of landowners to allow more density on their land. And, so if we had maybe a state law that says, “Hey if a group of property owners wants to do this, you have to let them,” that actually brings zoning even more local than the municipality. But does so in a way that’s likely actually, I believe, to lead to more residential development. You could make it so that blocks and neighborhoods could allow downzone as well and reduce the permitted density. I think if you do that, again, you need to have a good institutional framework. So for instance, you need to require compensation for regulatory taking. And Arizona probably has the most stringent regulatory taking compensation law, something that has been talked about for decades. I think other states should really take a look at this because, in my work looking atArizona, it really has been a deterrent to down zoning attempts. , if it’s a downzoning, so you’re making your regulations more restrictive, if it’s something that actually adds value that people really want and they’re willing to pay for it, then you can do that. But let’s make them actually pay for it. Let’s make them pay landowners for the diminution of their value from losing those development rights. So that’s one idea is kind of neighborhood or block level zoning.

And the one idea that might be slightly more original to me is allowing private communities to opt out of public land use regulation altogether. And this could, again, be state level legislation that authorizes this. It’s maybe the most ambitious idea of all of these. We could say something like if you have 100 acres or more, you can choose to be exempt from public land use regulation with some sort of guardrails here to kind of help, maybe assuage, the fears of the local community.

So, for instance, maybe the local community can still charge impact fees if any development on that parcel, then requires upgrades to public infrastructure, maybe you can say that, “Hey, you have to have, like, a 50ft buffer all the way around your parcel where public land use regulation would still apply. And, but within that area, then you can do what you want and in talking to folks about this idea, some pro-housing folks get an immediate negative reaction. “Well, aren’t private communities inherently exclusionary?” And my view is we observe that often in this country because typically, private land use governance is layered on top of public land use covenants, right? And so there’s a selection effect. The people who want to move to private communities tend to be those who really highly value lots of land use governance. But if you allow private land use governance instead of public land use governance, you’re telling me there’s not a developer with a 100 acre parcel out there who wouldn’t want to build an urban village? This would be a way of actually moving areas out of that kind of central planning of land use permanently and moving them into a kind of more dynamic, market oriented, flexible form of land use governance.

And if you’re the owner of a large parcel, you have every incentive to kind of set up whatever governance rules for that parcel will maximize its value, right? You’re going to earn rent from the people who live there, who work there, who rent commercial space there, so you’re going to want to actually maximize the value that you’re providing to them, whether that’s the infrastructure you’re providing or the rules for what they can do with the land that they’re renting from you.

And by the way, I think, to deal with the fiscal zoning aspect of this, I mentioned impact fees, but you can also just exempt these communities from municipal taxation to the extent that they are creating that public infrastructure on their own parcel. , some states do have a legal framework already for private communities to do this. This would be a way of holding the community harmless. , we’re not going to subsidize your development. You pay your own way, you set up whatever infrastructure and rules are going to work for you. Seems like a potential win-win here.

Yeah, it’s an interesting idea. I think in the smallest version of this, and you get at this a little bit, this is something that Robert Ellickson has written a lot about, is the tricky governance of these private associations or community associations, the most obvious being a sort of HOA, right? And as I’ve written about and you discussed this one. In Houston, the HOA’s do the deed restrictions, do a lot of the heavy lifting on governance. If you want R-1 zoning, you can have it, but you have to opt into it. And at least on some theoretical level, you could say at a certain point, “Okay, there’s overwhelming market pressure for us to collectively scrap these rules. Let’s scrap them.” The issue is that in many cases, these rules are written in perpetuity, or opting out of them requires unanimity. And of course, after 2 or 3 generations, unanimity is basically an impossible standard to clear. And so the- I mean, the governance of these community associations is really, really key. So maybe, solving one problem by creating a new and exciting set of problems for social scientists. This is like the long play of this paper. Maybe?

Yeah, exactly. And I do make that case in the paper that we need to have good legal rules for private communities. So allowing these restrictive covenants to expire every 40 years or so, for example, seems to be according to Bob Ellickson’s work. Anyway, that seems to be kind of the sweet spot for when a lot of these lose their utility. So require landowners to then positively opt back into it, to extend its life. Something like that would help ensure that we don’t end up freezing land use too much through private land use governance the way we have through public land use governance.

The paper is Unbundling Zoning. It’s a really great paper and I think is seriously contending with the bigger picture idea of what it would actually look like to build an alternative to zoning. I think you really reckon with some of the major challenges and offer interesting solutions. So I appreciate your writing it. I did want to talk about the work in New Hampshire. The motto is live free or die. So I assume there’s no zoning in New Hampshire. You can do whatever you want on your property anywhere. Is that an accurate characterization?

Unfortunately, no. So live free or die, except land use. That’s maybe the biggest area where live free or die does not apply. We are a very decentralized state. So I mentioned that local services depend heavily on local property taxes. And that’s still the case, even with schools, much more than any other state. , your schools funded mostly out of your town’s property tax base. But that tradition of decentralization has unfortunately also meant that we’ve decentralized land use to the municipal level. And so counties have no land use governance authority and nearly the entire land area of the state is incorporated. And so these municipalities can basically do whatever they want, or at least they could, up until really this century, the early years of this century, is when the state government started setting guardrails on local, land use authority and you get a massive array of zoning rules. And it’s really interesting that this is the one area in American political economy where local governments  can have radically different policy regimes. And you have- you do still have a few places with virtually no public land use governance at all. , the town of Pittsburgh, which is the far northernmost town in New Hampshire bordering Canada, has essentially no rules. You can build whatever you want. It has a planning board that deals with, I think maybe floodplains or something like that, but otherwise you can basically do whatever you want. That’s at one end of the spectrum.

And then you get some places that will allow development according to a point system. And so different features of the development accrue points. And if you accrue enough points, then something is allowed, under a discretionary permit or a lot more points and it might be allowed by right. And not enough points is just prohibited.

You get places that allow unlimited density in the urban core and then strictly regulate anything outside of that. , you get just a wild range of land use regulations. But what we do see is a lot of suburban restrictions on residential density. Minimum lot sizes that by the standards of the rest of the country, outside New England anyway, would be considered enormous, right? So, in my town, the smallest minimum lot size is two acres. It runs all the way up to five acres. We have towns in our state with minimum lot sizes of ten acres. There’s a district with a minimum lot size of 50 acres. So we do have these extreme density restrictions, and people say it’s to preserve rural character, but in reality, it encourages sprawl because you get that kind of leapfrog pattern of development where the development moves to actually the rural – the truly rural areas – which are less regulated because the median voter there is still a farmer, right? Who has a lot of land that they want to develop, right? And so they don’t have many rules on development. The places that are no longer really rural, that claim that they’re protecting rural character, are these kinds of suburban areas that’s tightly regulated development, so the development actually just moves out and out to less and less regulated areas.

And I saw this when I lived in the Upper Valley region right around Dartmouth College. The town that Dartmouth is in, Hanover, is incredibly strictly regulated and half the land area is just off limits to development entirely. And then you’ve got this town about 30 minutes away that has no zoning at all. And that’s where all the kind of service workers for Dartmouth College and the restaurants in town and all that, that’s where they live. And they commute into town. It’s not a rational pattern of land use regulation, but that’s where we are. So, we definitely have some issues, but the state legislature has been getting involved more and more.

There was a workforce housing statute enacted in 2008, which says basically that every single municipality has to allow reasonable and realistic opportunities for the development of workforce housing. And it defines that in terms of housing that’s affordable to families of median income according to the whatever micropolitan labor market area you’re a part of.

And unfortunately, the way towns have interpreted that is that they can satisfy that requirement by having some sort of ordinance that allows deed restricted affordable housing with very strict requirements for what qualifies as deed restricted affordable housing. And so, very few developments actually get built under those ordinances and so I’m not sure that statute has done a whole lot of good. But, more recently, in 2016, the state enacted an accessory dwelling unit law. So all single family zones in the state must allow ADUs. They can require a discretionary permit, and they can require owner occupancy. So you would think that, maybe these would be loopholes you could drive a truck through, but it turns out that, according to Emily Hamilton, who’s done some research on this, actually, thousands of areas have been built under the statute. So that’s been a positive move. And there’s a very active discussion in the legislature. There was an attempt, just this year, to expand that statute and require that the first ADU be allowed by right and that, you can also build a second ADU, and towns do require a conditional use permit for that. That bill passed the House and unfortunately died in the Senate, but we’re definitely going to see something like that again next year. 

And we also saw a bill that sailed through the House on what’s called the consent calendar. So it was unanimously agreed to, that would have eliminated any parking minimum above one space per dwelling unit, which would have been pretty neat statewide parking reform, just blanket statewide. Again, the Senate amended that one so now it’s 1.5 spaces in workforce developments or large multifamily developments. I think we’re going to see more action on that. Hopefully we can get parking reform across the line. There’s an active discussion about a starter home act that would require towns to allow for starter home subdivisions. So there’s definitely consistent action here.

Oh, and there’s one interesting innovation, actually, in New Hampshire that usually we’re more of a follower than a leader on this stuff, but we passed something called the Housing Appeals Board and it’s appointed by the Supreme Court, and it has kind of simplified rules of evidence and an expedited calendar. So it’s a way for either property owners or municipalities or anyone to appeal land use decisions of local land use boards, but typically it’s been a tool for developers and property owners to appeal regulatory denials and get quick, cheap judgments, typically within three months. And the HAB has turned out to be fairly positive for housing. So, something that other states may want to take a look at.

So much great stuff there. I mean, it’s remarkable what’s passing, considering that, as I understand, you guys have a legislature that’s the size of the Star Wars Galactic Senate, right? Or the platforms, like. Okay, sorry. It’s great to hear that. I didn’t realize that the ADU law was already kicking in. And the Housing Appeals Board I know is something that a lot of states are considering as they deal with this problem of, okay, we passed a law, but how do you actually make sure that the entitlements happen and that local governments follow the law?

So, a lot of exciting stuff there. We haven’t even scratched the surface on some of what you all are getting up to up in New Hampshire. But certainly a region that needs a lot more housing options and housing choice. So I appreciate the advocacy work that you’re doing in addition to all the great research. But we’ll have you on maybe at the end of next legislative session to talk about all the wins that will, I’m sure, roll in, in future sessions.

Yeah, that’d be great.

Jason, thanks for joining the Abundance Podcast.

Yeah, thanks for having me, Nolan.