Planning an Affordable City

• Author: Roderick M. Hills & David Schleicher
• Position: William T. Comfort, III, Professor of Law, New York University Law School/Associate Professor, Yale Law School
• Pages: 91-136

91

Planning an Affordable City

Roderick M. Hills, Jr. & David Schleicher

ABSTRACT: In many of the biggest and richest cities in America, there is a

housing affordability crisis. Housing prices in these cities have appreciated

well beyond the cost of construction and even faster than rising incomes. These

price increases are a direct result of zoning rules that limit the ability of new

supply to meet rising demand. The high cost of housing imposes a heavy

burden on poorer and younger residents and, by forcing residents away from

these human capital rich areas, has even reduced regional and national

economic growth. While scholars have done a great deal to identify the

problem, solutions are hard to come by, particularly given the strong influence

of neighborhood “NIMBY” groups in the land-use process that resist any

relaxation of zoning limits on housing supply.

In this Article, we argue that binding and comprehensive urban planning,

one of the most criticized ideas in land-use law, could be part of an antidote

for regulatory barriers strangling our housing supply. In the middle of the last

century, several prominent scholars argued that courts should find zoning

amendments that were contrary to city plans u ltra vires. This idea was,

however, largely rejected by courts and scholars alike, with leading academic

figures arguing that parcel-specific zoning amendments, or “deals,” provide

space for the give-and-take of democracy and lead to an efficient amount of

development by encouraging negotiations between developers and residents

regarding externalities from new building projects.

We argue, by contrast, that the dismissal of plans contributed to the excessive

strictness of zoning in our richest and most productive cities and regions. In

contrast with both planning’s critics and supporters, we argue that plans and

comprehensive remappings are best understood as citywide deals that promote

housing. Plans and remappings facilitate trades between city councilmembers

who understand the need for new development but refuse to have their

 William T. Comfort, III, Professor of Law, New York University Law School.

 Associate Professor, Yale Law School.

Many thanks are due to Vicki Been, Annie Decker, Bob Ellickson, Chris Elmendorf, David

Fontana, Heather Gerken, John Mangin, Carol Rose, Kenneth Stahl, John Witt, Thomas Witt,

Katrina Wyman, and participants at workshops at Yale Law School and the Furman Center for

Real Estate and Urban Policy for their comments. Also to Jeremy Greenberg, Daniel Rauch, and

Bryn Williams for their terrific research assistance.

92 IOWA LAW REVIEW [Vol. 101:91

neighborhoods be dumping grounds for all new construction. Further, by

setting forth what can be constructed as of right, plans reduce the information

costs borne by purchasers of land and developers, broadening the market for

new construction. We argue that land-use law should embrace binding plans

that package together policies and sets of zoning changes in a number of

neighborhoods simultaneously, making such packages difficult to unwind.

The ironic result of such greater centralization of land-use procedure will be

more liberal land-use law and lower housing prices.

I. INTRODUCTION ............................................................................... 93

II. THE DEBATE OVER PLANS AS IMPERMANENT CONSTITUTIONS ....... 96

A. CHARLES HAAR’S CASE FOR THE “IMPERMANENT CONSTITUTIONS”

OF PLANNING ............................................................................ 97

B. THE LAW’S EQUIVOCAL ADOPTION OF THE PLAN AS IMPERMANENT

CONSTITUTION........................................................................ 100

C. THE CASE AGAINST PLANS AS “IMPERMANENT

CONSTITUTIONS” .................................................................... 104

1. Carol Rose and the Case Against the Politics of

Planning ......................................................................... 104

2. Fischel, Nelson, and the Economic Case Against

Planning ......................................................................... 106

III. A REVISED CASE FOR PLANS: PLANS AS CITYWIDE BARGAINS TO

INCREASE THE MARKETABILITY OF URBAN PROPERTY ................... 108

A. PLANS AS A MECHANISM FOR ENFORCING CITYWIDE DEALS ....... 111

1. Distributive Politics in Land Use .................................. 111

2. Plans as a Solution to the “Ironclad Rule of Aldermanic

Privilege” ........................................................................ 112

3. Why Sorting Doesn’t Solve the Problems of Excessive

Land-Use Restriction ..................................................... 115

B. PLANS AS A MEANS TO INCREASE THE MARKET FOR PROPERTY: THE

ROLE OF PLANS IN REDUCING INFORMATION COSTS FOR

BUYERS ................................................................................... 116

1. Property Law and Information Costs: From Bundles of

Sticks to the Greatest Grid ............................................ 117

2. The Case for Plans as a Method of Reducing

Information Costs and Increasing the Marketability of

Land ............................................................................... 120

2015] PLANNING AN AFFORDABLE CITY 93

IV. MECHANISMS FOR CITYWIDE DEALS AND GREATER CERTAINTY IN

LAND USE ...................................................................................... 123

A. THE PLAN AS A CITYWIDE DEAL: BUDGETING PRINCIPLES FOR

PLANNERS ............................................................................... 124

B. STANDARD “PRICE SHEET” FOR DENSITY INCREASES .................. 129

V. CONCLUSION: WHAT HAPPENED TO REAL PROPERTY IN MODERN

PROPERTY LAW THEORY? .............................................................. 134

“Plans are worthless, but planning is everything.”—Dwight D. Eisenhower1

I. INTRODUCTION

America faces a housing affordability crisis in its most economically

dynamic cities, including metropolises like New York City, San Francisco, Los

Angeles, and Boston where prices are rising faster than construction costs.2

Over the past three decades, the price of housing and office space in many of

the biggest and richest cities in America has increased wildly, a result of both

increasing demand and substantial zoning and other restrictions on new

construction.3 Such cities increasingly look like collections of exclusive

suburbs, with neighborhoods filled with homeowners stopping the

construction of needed commercial and residential development.4 The result

is that working- and middle-class citizens cannot afford to live where their

labor would be most productive, instead settling for cities where housing is

cheaper but human capital spillovers are lower and jobs are less plentiful and

less remunerative.5 Moreover, accumulating evidence demonstrates that these

1. Pres ident Dwight Eisenhower, Speech to the National Def ense Executive Reserve

Conference in Washington, D.C. (Nov. 14, 1957), in NAT’L ARCHIVES & RECORDS SERV., PUBLIC

PAPERS OF THE PRESIDENTS OF THE UNITED STATES: DWIGHT D. EISENHOWER 818 (1957).

2. See EDWARD GLAESER, TRIUMPH OF THE CITY: HOW OUR GREATEST INVENTION MAKES US

RICHER, SMARTER, GREENER, HEALTHIER, AND HAPPIER 184–93, 240–42 (2011); Edward L. Glaeser

et al., Why Is Manhattan So Expensive? Regulation and the Rise in Housing Prices, 48 J.L. & ECON. 331,

331–33 (2005); David Schleicher, City Unplanning, 122 YALE L.J. 1670, 1692–98 (201 3).

3. See RYAN AVENT, THE GATED CITY loc. 860–81 (2011) (ebook); Roderick M. Hills, Jr. &

David N. Schleicher, Balancing the “Zoning Budget,” 62 CASE W. RES. L. REV. 81, 85 (2011);

Schleicher, supra note 2, at 1692–98.

4. This is stark contrast with the long-dominant belief that big cities are dominated by

“growth machine” coalitions of developers and allies in labor and elsewhere, as famously argued

by Harvey Molotch. See Harvey Molotch, The City as a Growth Machine: Toward a Political Economy of

Place, 82 AM. J. SOC. 309, 309–10 (1976). Molotch’s view was pretty universally held until a few

years ago. See Schleicher, supra note 2, at 1672–73. For empirical evidence that many big cities

do not look like growth machines, see generally Vicki Been et al., Urban Land-Use Regulation: Are

Homevoters Overtaking the Growth Machine?, 11 J. EMPIRICAL LEGAL STUD. 227 (2014).

5. See AVENT, supra note 3, at loc. 883–98; Schleicher, supra note 2, at 1692–98; Peter

Ganong & Daniel Shoag, Why Has Regional Income Convergence in the U.S. Declined? 1 (Harvard