Zoning: Tradeoffs of Localized and Centralized Decision-Making

There’s a stereotypical hero in any number of movies and books, who is standing alone against the big project that is going to ruin the environment, ruin the community, or both. (In a slightly alternative version, the big project has already started to ruin the environment or the neighborhood.) If the hero is not already a lawyer or a journalist, they often ally with a lawyer or journalist in exposing the truth, before it’s too late. My point here is that the hero is blocking something from happening, and the US legal and regulatory system is decentralized in a way that creates multiple potential blocking points: multiple regulatory agencies, multiple levels of courts, multiple options for media communication.

But what happens if the storyline requires a hero who can get something built? For example, someone who can build a dramatic expansion of solar and wind-power, or electrical transmission lines, or housing that is more dense and affordable, or a mass transit system? A US-based hero of this story will now be pinned down and tormented by multiple blocking points.

The tradeoff here is clear-cut. A decentralized system makes it harder to build, whether the project is desirable or not. A centralized system makes it easier to build, whether the project is desirable or not. Cityscape, published by the US Department of Housing and Urban Development, has a symposium on “100 Years of Federal Model Zoning” (2024, 25:3).

The introductory essay, by Pamela M. Blumenthal, discusses what happened 100 years ago when the federal government recognized that communities had the power to impose zoning rules (“It’s Not Only Hoover’s Fault: Reflections and Opportunities on the Centennial of the State Zoning Enabling Act”):

In 1921, the U.S. Department of Commerce, under its then-Secretary Herbert Hoover, supported the formation of an Advisory Committee on Zoning. The Advisory Committee’s charge included aiding communities interested in the “promotion of the public welfare and the protection of property values” … The Committee published two documents in 1922: A Zoning Primer (Primer) and A Standard State Zoning Enabling Act, Under Which Municipalities May Adopt Zoning Regulations (Enabling Act; U.S. Dept of Commerce, Advisory Committee on Zoning, 1922). … Fischel states, “Before 1910, there was not a single zoning ordinance in the United States. By 1930, it had spread to all sections of the country” (2015: 170). Zoning ordinances had been adopted in 8 cities by the end of 1916, another 68 cities by 1926, and an additional 1,246 municipalities by 1936, constituting 70 percent of the U.S. population (Fischel, 2015: 171).

The phrase that Hoover’s commission wanted to act in support of “promotion of the public welfare and the protection of property values” is of course thought-provoking, because it does not seem to acknowledge that there may be cases where these goals could conflict. Most of the symposium involves papers with a US focus about housing regulation. But I found myself especially interested in the final essay by Paul Cheshire, “An International Perspective on the U.S. Zoning System.” Here’s the overall perspective:

Zoning (or planning) has important functions. Markets play a fundamental role in efficiently allocating urban land (Bertaud, 2018), but there are endemic problems of market failure. There are also conflicts of interest in land use—between owners of undeveloped and developed land and between local interests and the wider society. If ‘rule-based,’ planning can also reduce uncertainty and development risks. In planning systems, the level to which decisions are rule-based, discretionary, or reflect local or wider societal interests varies globally. Internationally, the U.S. system is among the most locally controlled but significantly rule-based because of the use of zoning. In contrast, in the United Kingdom and a range of other countries, local politicians largely decide on development on a case-by-case basis. More local control and discretionary decisions increase the power of the “not in my backyard,” or NIMBY, interest because development costs are highly localized, but benefits range over a wide area, even a whole country. This process tends to end with generally restricted development, resulting in higher housing and land costs. This problem is increasingly visible on both U.S. coasts. Local control also enables zoning systems to protect the interests of insiders and exclude those below the poverty line, for example, by applying extravagant minimum lot sizes or zoning for
single-family housing. More recently, attempts have been made to use planning to reduce carbon emissions or force mixed communities. The evidence suggests that zoning is unsuited for achieving either objective. …

The planning system common to Continental Europe, the Master Planning system, is more clearly rule-based, prescriptive, and detailed than the U.S. zoning system. Uses for every parcel are planned, and permission to develop is virtually automatic if the plan and any other relevant regulations are followed. In countries such as Germany, France, or the Netherlands, plan formulation and decision control has an important element, which is national, or at least regional. The U.S. and U.K. systems are at the local end of the spectrum—the U.S. system by design and legal foundation and the U.K. system because an elected committee of the lowest tier of government, the Local Authority Planning Committee (LAPC), is the primary decision-making body. A national policy framework and often local plans exist, but the reality is that enforcement is weak to absent, so any local decision not flagrantly in breach of national policies is likely to stick.

These differences in zoning regulations, and the degree to which they are rule-based or discretionary, and local or national, will be reflected in the cities that emerge. Cheshire offered this interesting comparison of skyscraper heights:

Lake Michigan may constrain Chicago on one side, but a rigid growth boundary and height restrictions have constrained London wholly since at least 1955. Per head of population, however, there were nearly seven times as many skyscrapers—buildings more than 100 meters—in Chicago than in London. Even Paris has significantly more skyscrapers per capita than London. The only tall-building league London tops is the proportion of its skyscrapers designed by Trophy Architects (TA), architects who have won one of the internationally recognized lifetime achievement awards in architecture. Of London’s skyscrapers, 25 percent were TA-designed compared with 3 percent in Chicago and zero in flexibly regulated and rule-based Brussels.

Careful analysis demonstrates that although Chicago may have been the birthplace of great modern architecture, any competent architect can get permission to build a skyscraper there if it meets the zoning regulations and building standards (Cheshire and Dericks, 2020). With London’s discretionary planning, employing a TA seems to help developers generate a powerful signal of design quality, providing a passport to political approval and a bigger building. In London, TA-designed buildings are 17 stories taller than non-TA-designed buildings, increasing a representative site value by 144 percent. Also, buildings designed by an architect after winning a lifetime achievement award increased between 13 to 17 floors (depending on model specification) compared with those the same architect had designed before receiving the award. In Chicago, an architect gaining TA status did not affect the height of their buildings.

This analysis might not seem to be important, but it represents a serious, albeit difficult to observe, deadweight economic cost—estimated as £59 million ($75 million) for a representative site in the City of London—an extra cost symptomatic of an unpredictable planning system that injects opportunities for gaming the system (rent-seeking) and additional risk into the development process.

Of course, what we would all prefer is a perfect process by which any and all building projects can be clearly divided into the desirable and the undesirable, and our zoning rules will sort them out accurately. But back here on planet Earth, the practical questions involve a generalized willingness to block or to allow changes, when in many cases there is unlikely ever to be a consensus about desirability. In the US context, the question is whether we are ready–at least in some cases–to give up the narrative that the blockers of projects are necessarily also the heros.

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