John William Girsang // Paramita Estihandayani

Ekonomi Perkotaan02.11.2012

CHAPTER 9:

ZONING AND GROWTH CONTROLS

Zoning and Growth Controls: Introduction

Does land go to the highest bidder? Government role in urban land market—maybe

not if regulated. Zoning to separate different land uses into

separate zones. Commercial, industrial, and residential (low and high density)

Growth controls limit population growth Tax new development (impact fees); limit building permits;

limit urban services to selected areas; urban growth boundaries

Who wins and who loses?—what are the trade-offs

The Early History of Zoning

Comprehensive zoning started in 1916 (in New York City and 8 other cities)—and by 1936, zoning had spread to over 1,300 cities. The basic idea of zoning is to separate land uses that are

‘incompatible’ in some senses

Innovations in transportation increased the location options for business, setting the stage for industrial zoning. Truck: replaced horse cart, causing industry to move out of central

city to suburbs near residential areas. Bus: before bus flexibility—low income (high density) households

between streetcar spokes; after workers could locate elsewhere. Zoning to exclude industry and high-density housing?

Zoning as Environmental Policy

Industrial Pollution Zoning separates residents from

pollution Zoning doesn’t reduce pollution but

moves it around buffer Economic approach: internalize

externality with pollution tax Retail Externalities: congestion,

noise, parking conflicts. High-density housing:

congestion, parking, blocked views Alternatives: performance

standards for traffic, noise, parking views.

Fiscal Zoning

Some communities eagerly host

firms that generate fiscal surplus. Fiscal deficit: tax contribution

less than cost of public services. Minimum lot size zoning (MLS):

Large household in a small dwelling is more likely to generate a fiscal deficit for the local govt.

MLS exploits complementarity of housing and land As a rule—market value of the property is about 5

times the value of land: v* = 5 • r• s Target lot size: v* = target property value; r = price of land/acre; s =

lot size (in acres) Example: s = $200,000 / (5 x $ 80,000) = 0.50

r

vs

5

*

Minimum Lot Zoning and the Space Externality

Externality: larger lot generates more space and higher utility for neighbors (i.e. your large lot increases the value of your neighbor’s house)

External benefit means that privately determined lot sizes are smaller than socially efficient size; people ignore benefits to their neighbors Externalities cause inefficiencies

MLS: increase space and enforce reciprocity in space decisions

Provision for Open Space

Public land: parks and greenbelts Restrictions on private land:

preservation of farm or forest land—through restrictions on subdivision for residential or commercial uses.

What is the efficient level of open space? Marginal benefit: marginal cost ( in this

case MC=marginal value of the next acre of land)

How does zoning affect the efficiency of the land market? Or should the govt. buy the land? Pay full cost of the land? Or shift the

cost of open space provision to private land owner?

deadweight loss

Legitimate exercise of the police power of local government—60 years of legal decisions. Substantive Due Process Equal Protection Just Compensation

The Legal Environment of Zoning

Legal Environment: Substantive Due Process

Law must serve legitimate public purpose using reasonable means.

Ambler 1924: Zoning promotes health, safety, morals, and general welfare

No consideration of cost, only benefit Benefit analysis—can be monetary, physical,

spiritual, and aesthetic benefits. Example: 1880—San Francisco passed

laws to explicitly segregate the Chinese; when declared unconstitutional – passed zoning law banning laundries in certain neighborhoods. Chinese laundries in SF segregated—public

welfare.

Legal Environment: Equal Protection

Law must be applied in non-discriminatory fashion

Does exclusionary zoning constitute discrimination? Euclid: effects of zoning on outsiders unimportant Los Altos: discrimination on basis of income are legal

State courts adopt more activist role Mount Laurel (NJ): City accommodates “fair share” of

low-income residents Livermore (CA): consider interests of insiders and

outsiders.

Legal Environment: Just Compensation

Should property owners be compensated for losses in value from zoning? Taking clause if govt converts land from private to public use owners should be compensate.

Three Rules to determine if compensation needed:1. Compensation required for physical invasion

(occupation) of land (i.e. not just restricting private use)

2. Harm prevention rule: Compensation not required if zoning promotes public welfare.

3. Diminution of value and reasonable beneficial use Compensation required if property value drops by sufficiently

large amount No guidance on what’s large enough Rule is not widely applied

Houston: City Without Zoning

Land use controlled by voluntary agreements among landowners (covenants) incentive to negotiate restrictions Coase Theorem—will develop and enforce voluntary agreement

(contract) if externalities are large enough and property rights assigned to solve externalities problem

Residential: detailed restrictions on design, appearance, maintenance

Industrial: limit activities

How does Houston compare to zoned cities? Similar distribution of industry and retailers More strip development along arterial routes Wide range of densities of apartments Larger supply of low income (high density)

housing (smaller lots)

Houston Land Use - 2008

Growth Control: Urban Growth Boundaries

Policies to restrict the amount of developed land and thus their population.

To simplify matters we will assume that all city residents are renter, and land is owned by the absentee landowners.

1991 survey: One quarter of cities used urban service boundaries to limit their land areas. Restrict urban services such as

roads, water, and sewers to certain areas beyond a certain point

Growth Control: Urban Growth Boundaries

Precise Growth Control:

Limiting Land Area and Lot Size Growth control in one city displaces workers to the other city The immediate effect of the policy is to generate a utility gap

between the two cities Prices adjust to generate locational equilibrium (the first axiom

of urban economics). Each uncontrolled city would experience a smaller increase in

its workforce and thus a smaller decrease in utility.

Jakarta Urban Growth (1976 – 1989 – 2004)

Source: http://earthobservatory.nasa.gov/

Growth Control: Urban Growth Boundaries

Growth Control Policy, decreases the utility of workers throughout the region

The workers in the uncontrolled city lose, because their city grows, moving further downward along the negatively sloped utility curve.

Obviously, landowners who owned land just outside the boundaries are losers, and in contrast, people who owned land inside the boundary are winners

Urban Growth Boundary and Density

Suppose the city uses a growth boundary, but does not restrict lot size

As before, The utility gap increase the price of land in the control city.

A growth boundary is a blunt tool to deal with distortion for 2 reasons: Although a growth boundary

may change density in the correct direction, it may go too far or not far enough

A growth boundary creates distortions of its own

Portland’s Urban Growth Boundary

Portland growth boundary differ from the growth- boundary policy we have discussed, The Portland boundary is extended at the population of the metropolitan increases.

The boundary is combined with a number of policies that promote rather than inhibit increases in density.

In other words, the growth boundary is an integral part of urban planning, the set of policies that determine the spatial arrangement of activities in metropolitan

Municipal vs. Metropolitan Growth Boundaries

The basic logic of growth boundaries doesn’t change with the level of geography.

There are two difference between a municipal and metropolitan boundary: People are more mobile between municipalities

than between metropolitan areas. Some of the people displaced by a municipal

boundary will relocate to other municipalities in the same metropolitan area

Trade- Offs with Growth Boundaries and Open Space

How does a growth boundary affect homeowners?

How do the benefits of growth compare to the cost?

The trade-off is that the limited supply of developable land leads to higher prices and higher density--less private space

The authors conclude that a modest relaxation of the open space and boundary policies of Reading, England would generate a net gain of $384 per household per year, about 2% of annual income.

Sourcce: http://www.sightline.org

Seattle Area Growth Boundary1991-2001

Other Growth—Control Policies

Limiting Building Permits: Like growth boundary, a

limit on building permits displaces households from one city to another.

Development Fees Although a growth

boundary may change density in the correct direction, it may go too far or not far enough

A growth boundary creates distortions of its own

SUMMARY

1. Zoning is a blunt policy to control pollution because it just move the pollution around. An alternative policy is to combine pollution taxes with zoning

2. Local government can use minimum lot-size zoning to exclude land user who would generate a fiscal deficit – paying less in taxes than they get in public services

3. The use of zoning to provide open space generates excessive amount of open space because voters don’t bear the full cost of the public good

4. In two-city region, an urban growth boundary in one city decreases utility in both cities and increases land rent in the city with boundary

5. A limit of building permits increases the equilibrium price housing and decreases the price of vacant land.

Sekian dan Terima Kasih© 02.11.12