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Guide 2009 Home Page

Land Use
and Zoning

Recommendation

Elected officials in cities and
counties should reform current land-use and zoning
regulations to minimize detailed regulatory control and
maximize market trends.

Background

Zoning to control land use originated
in Germany in the late 1800s and was adopted and
expanded upon by many parts of the U.S. in the 1920s.
Complaints about sprawl and other current land-use
patterns can be traced to already existing zoning
regulations, which strictly separated residential,
commercial, and industrial uses of land. That being the
case, planners who turn to even more use of zoning to
solve those problems are likely only to make the
problems even worse. Planners should instead consider
comprehensive reform of city and county land-use
regulations.

Zoning myth and reality

Supporters tout zoning as an
objective, professional, and efficient process that
controls land uses in ways that benefit the entire
community. But as anyone who has experienced it
firsthand knows, the zoning process is in reality a
highly politicized process where those with power in the
community often gain advantages at the expense of those
who lack it.

The result of many of these zoning
regulations is to raise the value of existing property
and enrich homeowners by reducing the supply of
buildable land. Zoning is a way to increase an
individual's wealth by voting for restrictive policies
that result in higher home values.

Back to basics

To reform land-use and zoning
regulations in ways beneficial to the entire community,
local planners should adhere to the following
principles.

Principle No. 1. Modern
land use must be based on simple, flexible rules.

For example, one residential, one
commercial, and one industrial zone could be
established. Any broadly defined use would be permitted
in those zones. Mixed use within the zones would be
permitted by allowing residential in commercial zones
and commercial in industrial zones.

By simplifying its land-use
regulations, Anaheim, California, was able to redevelop
successfully a rundown light industrial zone. The city
added an overlay zone that allowed residential and
commercial uses. The city also streamlined its permit
and environmental processes to attract developers. These
reforms spurred economic development of the
area.

Cities and counties should also
remove zoning limitations to land-use innovations such
as coving and bay home developments. When developers use
coving, they build homes in a pattern separate from the
pattern of the streets. Coving allows for larger lot
sizes without using more land. Other benefits of coving
include reduced road lengths, less erosion from runoff,
as well as greater privacy for homeowners.

Bay homes are another way to reduce
infrastructure costs and create more open space. Bay
homes are arranged so that families share the spaces
outside the homes with other members of a homeowners
association. Government hurdles such as specified
minimum distances between home and streets often keep
developers from building bay homes. Local governments
that present developers with such limitations make it
hard for them to use these and other innovative
techniques. Removing these zoning barriers would be
beneficial to many communities.

Principle No. 2.
Depoliticize decisions.

Elected leaders should also move to
depoliticize the zoning process by allowing only those
parties directly harmed by the land-use decisions to
comment on them. Officials should restructure the
process to reflect its original goal of preventing one
landowner from using his land directly to harm
another's. Only those landowners who can show they will
be directly and identifiably affected should be granted
"standing" to comment on land-use decisions. This reform
would go a long way toward taking the politics out of
zoning and land-use decisions.

Principle No. 3.
Moratoriums, impact fees, and adequate public
facilities ordinances (APFOs) don't solve growth-related
problems; they create them.

Moratoriums can be devastating to the
livelihoods of people whose employment is related to
construction. They hurt developers, construction
workers, bankers, lawyers, and people looking to sell
their land. The negative consequences outweigh the
proposed benefits.

Impact fees and APFOs are designed to
compensate for the costs associated with increased
growth. They are often unfairly applied, however,
driving up the cost of housing. These fees should
represent the difference between the public costs of
growth (new schools, access roads, police and fire
protection, solid waste disposal, water and sewer
services, and utility line extensions) and the public
benefits of growth (increased public revenues from
construction activities and from property taxes, local
sales taxes, utility excise taxes, inspection and permit
fees, and motor vehicle taxes paid by new residents).
Currently, impact fee and APFO studies calculate only
the costs without comparing them with the
benefits.

Ignoring the benefits of growth means
missing the bigger picture. In 2005, N.C. State
Economics Professor Michael Walden, published "Economic
Impacts of Construction of Owner Occupied Residential
Housing in the Triangle, North Carolina," which
calculated the total economic impact of
constructing 100 new single-family homes and 100
multi-family housing units in the Triangle. He found
that, with some minor technical caveats, local city and
county tax revenues outpaced the public costs by nearly
$77,000 per year over a 10-year period, and the
construction produced $64.7 million in new economic
activity and almost 600 new jobs. As Walden noted, "from
the point of view of the local public fiscal ledger,
owner occupied residential construction in the Triangle
'pays for itself.'"

APFOs force developers to pay
"voluntary" fees to cover public service costs -- costs
that are later passed on to homebuyers. Through this
process, housing costs are further increased. The result
of impact fees and APFOs is that homebuyers are forced
to pay their local governments twice for the costs the
city supposedly incurs from growth. Buyers pay in the
form of higher housing costs and property and sales
taxes.

Instead of forcing developers to pay
impact fees and APFOs, counties and cities should use
marginal-cost pricing for public services. Developers
should cover only the direct costs of extending
infrastructure to new housing. For example, if a new
housing development is located far away from the city's
water and sewage lines, the developer should cover the
costs associated with connecting the development to the
system. This approach will save homebuyers from
unnecessarily increased housing prices that result from
impact fees and APFOs. It will also help prevent sprawl
by making it more beneficial for developers to build
closer to the city's existing facilities.

Principle No. 4.
Re-establish the rule of law.

Too many land-use regulations allow
too much discretion on the part of the planning staff,
planning boards, and elected bodies. A time-consuming
process and public input drive up housing costs. Cities
and counties must establish a clear set of simple,
flexible written rules. Once a development meets those
requirements, the approval should be automatic. By
simplifying land-use and zoning regulations, local
governments can avoid many of the costly negative
effects of excessive government regulation, as well as
allow greater freedom for developers and property
owners.

Author: Dr. Michael
Sanera
Research Director and Local Government
Analyst

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