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Zoning Out Growth

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Zoning Out Growth

10 Blocks podcast June 23, 2022
Cities
Economy, finance, and budgets

Urban planner and Mercatus Center scholar M. Nolan Gray joins Brian Anderson to discuss municipal zoning’s past, present, and future. His new book, Arbitrary Lines: How Zoning Broke the American City and How to Fix It, is out now.

Audio Transcript

Brian Anderson: Welcome back to the 10 Blocks podcast. This is Brian Anderson, the editor of City Journal. Joining me on the show today is Nolan Gray. Nolan is a professional city planner, an expert in land use regulation, and is obtaining his PhD in urban planning at the University of California, Los Angeles. He's an affiliated scholar with the Mercatus Center at George Mason University. He writes frequently about land use issues for City Journal. And his forthcoming book, due out this month, is called Arbitrary Lines: How Zoning Broke The American City and How To Fix It. So Nolan, great to be talking with you.

Nolan Gray: Thanks so much for having me, Brian. It's a pleasure.

Brian Anderson: Let's begin with this new book. It's partly a history of zoning in the US. It's partly an analysis of the current composition of zoning rules. And partly a call to action, a kind of manifesto. Land use regulations to often take the form of a dizzying array of confusing pseudo-scientific rules, that's your term, that drive up the cost of living and impede innovation in dense cities, while seeking to, basically, freeze suburban life in amber. So what is your basic thesis and how does the book proceed?

Nolan Gray: Yeah. There's been a lot of discussion about zoning. We're in this rare moment where people want to talk about zoning in opinion columns for national papers, presidential candidates are now expected to have a position on zoning. But I found a few things. The first I found, that a lot of people didn't really have a clear idea of what zoning is or where it came from. I found that a lot of people didn't really have a clear idea of some of the costs associated with the way we plan cities in the US. And even less did anyone have a sense of what's going to come next. Right? So there's something like a consensus that the system we have today is dysfunctional, but what's going to come after that?

Zoning, at a basic level, does two things. It breaks the city out into districts, divided on uses. So at a high level, that's residential, commercial, industrial. And then, of course, in most zoning codes, it gets much, much, much more specific. So for example, in some zones, you can have a single family home. While in other zones, you can have apartments. Or in some zones, you can have a supermarket, and other zones, you can only have offices, right? So that's the first half of what zoning is trying to do.

The second half is regulated density. In many cases, zoning places has very strict regulations on how dense buildings can be, how large they can be, how much parking they have to provide. In the book, I argue that all of this has been done in a pretty unsystematic way. And it's worked to make cities more ... or excuse me, less affordable, more inequitable, more unequal, and more sprawling, and I think we can do better.

Brian Anderson: Well, most of the modern zoning rules you're writing about are recent inventions. Past land use regimes from the early 20th century, and prior to that, they tended to be, by today's standards, incredibly lax. "In New York," you write, "The 1916 zoning code is surprisingly liberal. Lacking contemporary restrictions, such as use subcategories or explicit floor area limits. Because the framers of New York zoning ordinance saw themselves as balancing a desire for some control against a natural skepticism of this new institution." So I wonder, to pick up on that, what was land use like in early industrial America, including in New York, and why did it become more restrictive over time?

Nolan Gray: That's a great question. Yeah. I think one of the things, when you're looking at early zoning, that's a bit of a puzzle is zoning offers to do this really incredible thing. It offers to give rational state planners the ability to determine what should go where and at what scale. Right? Of course, at a basic level, this conflicts with a lot of basic American ideals about individual rights and free markets.

Early on, zoning codes, of course, have to be somewhat more constrained. So for example, the early New York City zoning code isn't nearly as comprehensive as the system that the city has today. It's mainly focused on things like heights, things like setbacks, and then keeping industry out of certain posh commercial areas. So as I detail in the book, the main constituency for zoning in the New York context wasn't actually homeowners, it was mainly office landlords who were concerned about too much office space being built, and lowering the rents that they could charge, and the Fifth Avenue Association, which is, and then was in 1916, a very posh shopping district. They were concerned about textile industries moving closer and closer to the district.

They weren't so much worried about, what we might think of today, externalities like smoke or noise or anything like that. They were worried about the factory workers coming out and scaring away their posh clientele. But of course, as you observe, these codes have become exponentially more strict in the 100 years or so since they were adopted. Particularly over the last 50 years. So for example, in the New York City context, of course the city would go on to rewrite its zoning code in 1961. It would become much more complex. By that point, we had things like floor area ratios, which put really strict limits on the amount of floor area you could build on any given lot. By that point, the city had adopted things like minimum parking requirements, which forced developers to build maybe giant parking garages or large surface lots that they wouldn't otherwise have built. And over time, it's become a system that's become very complicated, very unruly, fairly unpredictable, and it's made cities like New York City very difficult to build in, of course, which has had knock-on effects for housing affordability.

Brian Anderson: And economic growth generally, I would say.

Nolan Gray: Absolutely. Yeah. Yeah.

Brian Anderson: The upshot of your argument is that these kind of land use restrictions have gone too far and they should be eased. Not just in New York, but in suburbs and dense municipalities alike. So this call to action, the manifesto side of your book might give pause to some listeners who reside in such places, who actually like the small town feel of their suburban communities. But you believe that zoning constitutes both an assault on property rights and, as we just noted, a kind of damper on economic growth. So I wonder if you could elaborate a little bit more on that. And as a political matter, do you believe a respect for property rights and economic growth can ever overcome the builtin desire that many feel to keep their communities from changing rapidly, or whether it should? What would you say to someone who's skeptical that they'd be better off in a zoning-free world?

Nolan Gray: Yeah. Two things that flow, I think, from the last part of the book. I would say the first is, I think people have understandable concerns about growth, right? There are things like traditional negative externalities, like noise, or maybe even traffic that people have concerns about. And completely rightfully so. I think people have fears. They don't know what's going to come in next door, and they know that maybe the noise ordinance or they know that there's no real tax on generating a bunch of traffic or taking on street parking. So naturally what they do is they go to zoning and they try to block future growth. I would say that if cities can do a better job of actually regulating and/or managing the things that people are concerned about, those traditional negative externalities or those issues of managing the public realm, you know, on street parking, then a lot of the impetus for exclusionary zoning goes away.

Now, in those suburbs you mentioned, that's a really interesting case. Because I don't sell cities as morally superior to suburbs, and I perfectly respect that a lot of people want to live in a suburban type context. The question is, what's the appropriate level to have that form of regulation enforced, right? So for example, if you look at a city like Houston. Houston's the fourth largest city in the country. And it's one of the only large US cities that did not adopt zoning. Unlike every other US city, they actually put it to a referendum, and voters said, "No, we don't want this." But what you have in Houston is that people then turn to private forms of regulations. So this is things like deed restrictions, or maybe familiar to some listeners as homeowners associations. They voluntarily opt into a set of rules that says, "Hey, if you want to live in this neighborhood, if you want to live in this community, here are some restrictions on what you can and can't do. We're doing this because we're all voluntarily opting into this lifestyle."

You see that quite a lot in Houston. That's actually the compromise that I think makes non-zoning in Houston work. Is the people who want that lifestyle can still have it, but they have to voluntarily opt into it and they have to at least play some role in enforcing it and in paying for those preferences. As opposed to in a zoned city, where it's essentially going to come down to, whoever can yell the loudest at a public hearing is going to get to set the land use rules for their area, and nobody actually has to pay for their preferences. And the government, in many cases, is picking and choosing winners and losers.

Brian Anderson: Well, perhaps you've started to answer the next question, which is an aesthetic one. The policy analyst, Patrick Brown, wrote for us recently that advocates of new housing should focus on building stock that matches the kind of existing character of a neighborhood, whether an urban or suburban environment. The idea is that bringing down housing costs is certainly going to be popular with many people, but if you insist on unappealing, brutalist style housing blocks, for example, well, that's going to turn a lot of people off from supporting the idea of building housing in their neighborhood. So to ask that question, how important in your view is aesthetics to creating a more permissive land use regime?

Nolan Gray: Yeah. I think that's a really great and complicated question. Of course, everyone loves beautiful buildings. People, to a certain extent, agree on what buildings are and are not beautiful, but there's some general consensus. I would say, how do you operationalize that? How do you set up institutions that make developers build prettier buildings? I would say, at least at the outset, there's some market pressure, right? So if a developer builds a truly ugly building, he or she is going to have at least somewhat more difficulty rinsing it out or potentially selling off those units.

Beyond that, I think it gets kind of murky. This is where I think private solutions might actually be the better avenue to go here. Other than a really, really small community, aesthetic preferences are going to vary a lot. It's not clear to me that the right way to regulate that is with the government coming in and saying, "Okay, everything in this community has to be federalist style, all brick, and has to look like XYZ." I think this is again an area where if communities want to voluntarily opt into rules like that, and in many cases they do all across America. There are communities that say, "If you buy a home in this neighborhood, there are limits on the architectural style of the structure." I think that's perfectly legitimate. Absolutely. It's when the government comes in and starts imposing one vision that I start to have questions.

In my experience, too, when I go to these ... working as a planner, when I go to these meetings, you definitely hear design raised. But more often than not, the quote unquote design issues that people have are, they're saying, "There's too many units, or you just need to shave a few stories off of the building." It doesn't really so much seem to me like design concerns that people have about new housing. I don't doubt that's sometimes the case, but it seems more often than not it's actually just additional housing being built that people don't want.

Brian Anderson: Your book focuses on the US, but many other developed countries are facing similar problems with housing supply. Housing costs in New Zealand, for example, are astronomical. London has an enormous problem. The government in New Zealand, by the way, has struggled to boost supply, even though citizens are very, very frustrated. In the UK, there's been efforts to address this, but they've only gotten so far. I wonder, what your view is about how America compares to some of these other environments on housing. Is it just something about the political economy of wealthy developed democracies that creates this kind of supply issue?

Nolan Gray: Yeah. Well, this is definitely an issue kind of all across the Anglosphere. The UK, Canada, Australia, New Zealand, and the US all struggle with these issues. Right? I think with countries, as with cities, the case I always make is this is kind of a good problem to have, in a certain sense. When housing is expensive, of course, you can do things to mitigate that, but at the end of the day, it means that a lot of people want to live in a certain place. That a certain place is very desirable. Right? So for example, within the US, it's much easier to solve a problem like a lot of people want to live in New York City, but we just don't have enough housing. It's much easier to solve that problem than it is to solve the problem of, "Hey, a city like Detroit has a lot of excess housing and we need to convince people to move there." So that's kind of how I would start to frame the issue.

You're exactly right, that all of these countries are struggling with it. In the book, I point to Japan as a really interesting case study. Japan has fairly liberal land use regulations. They look somewhat like US zoning, but in many cases, they lack a lot of the fine use distinctions, or they lack a lot of the really, really strict density rules, or things like parking mandates. What you get in a city like Tokyo, is you have a city where it's very, very easy to build additional housing, as demand for housing increases. I saw one figure that suggested that the average home, the average building in Tokyo is older than the average resident. Which speaks both to Japan as an aging country, and Japan as a country that makes it very easy to build new housing that fits changing demands. I would say that's really a model to follow, is to say, "What are the rules and regulations that are standing in the way of re-adapting our cities to meet current needs? And, can we move past these rules and build a better system?"

Brian Anderson: Your book is very lively for this subject. I wonder, as a final question, who you're aiming it at. What's the audience for this book?

Nolan Gray: Yeah. Kind of to circle back to the top of the conversation. I'm writing this for the people who are kind of hearing about zoning in editorials or in political debates, maybe that are happening in their community, and just want a good explanation of, "What is this policy? Where is it come from? What are the critiques that people level against it? What is it supposed to do? And how we could make it better." So I think anyone ... Of course, you don't have to be a planner, or you don't have to be a professional economist, or you don't have to have a public policy masters to come into it. I tried to write something that I could hand to a curious layperson who wants to just get an understanding on what this issue is facing their community.

Brian Anderson: Well, it's a tremendous book. I do encourage listeners to check it out. It does provide a good kind of overview education on zoning issues in the US. Don't forget to check out Nolan Gray's work on the City Journal website. We'll link to his author page in the description. You can also find City Journal on Twitter, @CityJournal, and on Instagram, @cityjournal_mi. And as usual, if you like what you've heard on today's podcast, please give us a nice ratings on iTunes. So Nolan, great to talk with you, and congrats on the very interesting book.

Nolan Gray: Thanks so much, Brian

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Photo: MattGush/iStock

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