When States Should Blow the Whistle

(cross-posted from planetizen.com)

Generally, states limit local governments’ means of raising tax revenue. Both Democratic and Republican governors consider it their duty to micromanage the property tax rates of local governments, and local governments can rarely institute a new type of tax without state consent. On the other hand, local governments tend to have free rein in land use matters; even relatively activist state governments tend to allow cities to choke off housing supply without state interference. Is this really the right way to do things?

Just as we ask ourselves, “When does the state have any business interfering with individual rights?”, we should also ask ourselves, “When does the state have any business interfering with a municipal government?” And just as states are most likely to get involved where an individual hurts other individuals, a state should be most willing to get involved where a city’s action affects people living outside the city—for example, the “tragedy of the commons” situation where a policy is rational for each individual city, but is not rational for the region as a whole.

Applying this principle, I am not sure why states should limit municipal taxing powers. When a city raises taxes, it only hurts itself, because it takes the risk that people will flee that city in search of less restrictive cities. And if several cities and towns in a region raise taxes, such tax increases become even less rational for a town that refuses to raise taxes, since that town can gain residents by being a tax haven.

By contrast, environmental issues are especially well suited for state (and for that matter, federal) regulation, because one city’s policies might harm residents of nearby municipalities. For example, suppose that a suburb allows unlimited development of wetlands within its borders. If the absence of wetlands causes increased flooding, the resulting damage may cross municipal borders and harm residents of nearby towns. Or if a suburb decides to build high-speed stroads and starve public transit so that its jobs are inaccessible by public transit, reverse commuters in other municipalities will have to drive to reach those jobs, causing pollution not just in the suburb in question, but also in their own neighborhoods. Thus, states should be responsible for wetlands regulation, and should perhaps play some rule in ensuring that suburban employment centers are transit-accessible.

What about zoning? It might, at first glance, seem that a community that chooses to radically limit new construction (as, for example, San Francisco has a habit of doing) only harms itself. But zoning might be a “tragedy of the commons” situation—where if each individual municipality does what is best for its existing citizens, it harms not just itself, but also the entire region. From the standpoint of an individual municipality’s homeowners, restrictive zoning makes sense: constricting the housing supply raises property values, avoids the perceived externalities caused by new residents, and keeps out poor people who can’t afford to pay for the town’s houses. By contrast, a town that fails to play the game of exclusion has lower property values and attracts more poor people, thus causing the town to have a smaller tax base and worse schools, thus making the town less desirable in all kinds of ways. So if enough cities overuse their power to zone, every other town in the region is forced to do the same or face ruin.

But when every town engages in restrictive zoning, housing prices throughout the region explode; the poor sleep on the streets, while the middle class moves to cheaper regions. In fact, the national economy may suffer: if an expensive region is one of the nation’s more productive regions, that region’s loss of talent may diminish national economic output by making it harder for businesses to attract non-wealthy employees.

In such situations, zoning becomes an all or nothing game: the only way for the state to prevent the regional and national harms resulting from high housing prices is to limit everyone’s capacity to zone.

Conservative Cities? Yes, in the UK

(cross-posted from cnu.org)

In the United States, central cities lean towards left-wing parties (even in affluent areas like the Upper West Side of New York) while suburbs and exurbs lean right.  But as we learned this week in the United Kingdom, this is not true everywhere.  London’s urban core is the Cities of London and Westminister district, which gave the governing Conservatives 54 percent of their vote this week, and almost as much in 2010.  Next-door Chelsea gave the Tories an even larger majority.  Why is this the case?  I defer to the knowledge of people more familiar with U.K politics than I.

Private Investment in the Public Realm

by James A. Bacon

The American suburbs built since World War II have many deficiencies, not the least of which are expensive, fiscally unsustainable infrastructure and a proclivity toward traffic congestion. But the greatest drawback of all gets the least attention: the poverty of the public realm. Outside of shopping malls, there really is no public realm in the post-World War II suburbs. Streets are not designed for walking. There are no plazas. Parks are accessibly mainly by automobile. The only gathering places are found indoors — libraries, churches, fitness clubs and the like.

But tastes are changing, and a new generation of real estate developers understands that creating quality public spaces — particularly streets, sidewalks and parks — allows them to charge premium prices for their buildings. The key insight they have grasped is that humans are social creatures. Yes, people like their privacy of their homes, but they also enjoy being around other people. They like to walk. They like to watch other people. They like gathering in groups. Continue reading

How to lead a walking tour

by Michael Lewyn

On Sunday May 3, I led my first Jane’s Walk. Jane’s Walk (named after Jane Jacobs) is an international movement of walking tours, usually held in the first week of May. In case some of you are thinking of getting involved next year, I am writing to show how you can lead a walk without an enormous amount of research.

I chose to lead a walk in Brookside, my current neighborhood in Kansas City, Missouri, (\where I am finishing up a one-year visitorship at the University of Missouri at Kansas City’s school of law. Since I haven’t lived in Kansas City long enough to be an expert on neighborhood history, I chose to focus on Brookside as an example of a streetcar suburb—that is, a neighborhood, usually built between 1900 and 1930, that is more walkable than postwar suburbia but not quite as dense as urban parts of New York or Chicago. I hoped to show how Brookside differs both from more downtowns and from sprawling suburbs.

I began in the neighborhood’s richest residential blocks; I pointed out one major difference between these blocks and newer suburbs. Brookside has a grid of short, interconnected streets; north-south streets are about 400 feet long, one-third the length of some suburban streets. (East-west streets are somewhat longer). As a result, pedestrians have many different options, and can reach a residential street without having to walk out of their way or spend unnecessary time on a busier street. Continue reading

Airbnb and affordable housing

by Michael Lewyn

Over the past few years, the growth of Airbnb.com has made it much easier for people to rent out rooms in their houses and apartments. Before Airbnb, a traveler who wanted an alternative to hotels (which tend to be (a) quite expensive or (b) located in desolate-looking suburban arterials), would most easily be able to find a room through a temporary listing on Craigslist. However, these travelers had no way of knowing anything about their hosts, and would-be hosts had no way of knowing anything about their renters. By contrast, Airbnb, by providing a forum for hosts to review guests and vice versa, does allow some screening to take place.*

However, Airbnb has become politically controversial in high-priced, regulation-obsessed cities like Los Angeles and New York. Hotels and hotel unions quite understandably see Airbnb as competition in the short-term lodging industry, and wish to regulate it intensively (if not to destroy it). One common anti-Airbnb argument** is that Airbnb, by making short-term lodging more affordable, actually reduces the supply of traditional apartments—that is, apartments leased for a month or more at a time. The argument runs as follows: units that are on Airbnb for a few days at a time would, in the absence of Airbnb, be rented out as traditional apartments. Thus, Airbnb reduces the housing supply and raises rents.

This argument rests on an essentially unprovable claim: that Airbnb units would otherwise be rented out as traditional apartments. More importantly, the argument proves too much. If Airbnb hosts reduce the supply of apartments by not using their houses and spare rooms as traditional apartments, why isn’t this equally true of hotels who are not using their rooms as apartments, or homeowners who are not renting out every spare room? And if homeowners and hotels are reducing the rental housing supply, why shoudn’t they be forced to rent out their units as traditional apartments? Continue reading

The Geography of NYC’s Children: More Evidence of Urban Popularity

by Michael Lewyn

Conventional wisdom is that making urban cores stronger and more pedestrian-friendly is irrelevant to the interests of American parents, who supposedly want to live in suburbs or faux-suburbs at the edge of cities. But when I looked at the Furman Center’s new report on New York City, I discovered a very interesting table on page 43: The only places in New York City where the percentage of children grew (albeit often from a low base) were (a) the well-off parts of Manhattan and (b) the parts of Brooklyn closest to Manhattan (that is, the least suburb-ish parts of the borough). The more suburb-like, traditionally child-heavy places at the city’s edge (as well as some of the city’s poorer areas in the South Bronx and northeastern Brooklyn) either lost children or gained children more slowly than they gained adults.

(Cross-posted from cnu.org with minor modifications)

Too much open space?

by Michael Lewyn

Prof. Robert Ellickson of Yale Law School has an interesting paper up on the Social Science Research Network (SSRN) website. He critciizes widespread popular support for open space, pointing out that too much open space reduces population density and thus accelerates sprawl and reduces housing supply.

Although Ellickson’s paper is not primarily focused on remedies, he does have a couple of interesting ideas. First, he suggests that a reform-minded state legislature could pass a law “that limited to 1/4 acre the maximum lot size that a locality could impose without incurring presumptive liability for both a regulatory taking and the complainant’s attorney fees.” I suspect that smart growth supporters would generally like this idea but might prefer slightly different numbers: for example, prohibiting local governments from mandating any densities too low to support public transit (thus, 1/8 or 1/10 of an acre rather than 1/4). In addition, smart growth supporters might favor limiting this rule to more urbanized areas, rather than allowing medium-density development to sprawl throughout the region.

Ellickson also addresses the overuse of conservation easements, pointing out that cities indirectly coerce such easements by downzoning property, which in turn reduces the property’s value, which in turn makes the conservation easement option more tempting than development.  Ellickson proposes that denying tax benefits for gifts of open space where “the area of undeveloped land exceeds a certain percentage of the total land area” — that is, where a region is already drowning in undeveloped land.

(Cross-posted from cnu.org, with modifications.)