The new exclusionary zoning.

• Author: Mangin, John

INTRODUCTION I. LOOKING AT HOUSING MARKETS SCHEMATICALLY II. POLICY AND POLITICS OF THE NEW EXCLUSION III. TWO TAKES ON RISING HOUSING COSTS IV. FIGHTING THE NEW EXCLUSION INTRODUCTION

The term "exclusionary zoning" is understood to apply only to suburbs, where municipalities dominated by homeowner cartels anxious about property values and taxes demand land use regulations that prevent certain kinds of development and raise housing costs above what low-income families can afford to pay. (1) ("Housing costs" are just "property values" viewed from a different angle.) Decades of scholarship--legal and sociological--outline how these policies left low-income families stranded in faltering cities whose abandonment by suburban homeowners-to-be at least left behind a large supply of low-cost housing. (2) In cities, where renters predominate, and whose size and heterogeneity opened the door to special interest politics, developers had more power and a much freer hand. To the extent they wanted to build, they could. (3) In the 1960s, '70s, and beyond, many cities were desperate for any development they could get.

A separate and newer strain of scholarship--primarily economic--has complicated and updated this story. Urban populations and incomes grew as people of relative means trickled back in to certain cities starting in the 1970s and '80s, then streamed in as urban crime subsided and the economy boomed into the 2000s. These new residents expected to exert a measure of control over their cities and neighborhoods, and demand for development controls increased as cities got denser and richer. (4) Starting with San Francisco and Los Angeles, and later Boston, New York, and Washington, D.C., and now spreading to the interior, development is not keeping pace with the number of people who want to live in these regions.

As in the suburbs, cities began to employ land use restrictions to limit the density of housing, impose lengthy approvals processes that provide ample hooks for NIMBYs, and mandate expensive forms of housing. (5) Many of the country's most desirable and most economically vibrant cities are no longer "Growth Machines." They may be getting richer, and in that sense "growing," but an emphasis on building housing and adding population is a thing of the past. Consequently, housing prices in these post-Growth Machine cities have risen much faster than the national average. (6) The effect has been the same as in the exclusionary suburbs: The anti-development orientation of certain cities is turning them into preserves for the wealthy as housing costs increase beyond what lower-income families can afford to pay. The phenomenon deserves a similar name--the New Exclusionary Zoning.

If low-income families can't afford the suburbs and they can't afford the cities, where should they go? For the first time in American history, it makes sense to talk about whole regions of the country "gentrifying"--whole metropolitan areas whose high housing costs have rendered them inhospitable to low-income families, who, along with solidly middle class families, also feeling the crunch, have been paying higher housing costs or migrating to low-housing cost (and low-wage) areas like Texas, Arizona, or North Carolina. (7)

Underlying both of these phenomena--high housing costs in the suburbs and high housing costs in the cities--is a relatively straightforward problem of supply and demand. As demand to live in a particular suburb or city outstrips the existing housing stock, two things can happen: more housing gets built to meet the demand, or prices get bid up to ration the existing stock. In the regions that form this Article's focus, the second effect predominates.

This is uncontroversial among urban economists but not broadly understood by low-income families, advocates for low-income families, housing activists, and their allies in academia, policy, and government--in short, the housing advocacy community. In the face of higher housing costs, the housing advocacy community tends to argue for a "kludgy" (9) set of policies that can actually prevent new development and end up increasing housing prices--campaigns to impose building moratoria, for example, or downzonings, community benefits agreements and other exactions, lengthy approvals procedures that disadvantage developers relative to NIMBYs, various forms of rent control, and a focus on affordable housing to the exclusion of other types of development. (10) Many of these tools have their uses--many low-income families continue to need subsidies even where housing is cheap--but they should be considered in light of broader drivers of housing costs--namely, supply and demand.

A city's ability to remain affordable depends most crucially on its ability to expand housing supply in the face of increased demand. Among the people who care most about high housing costs there is a lack of understanding of the main causes and the policy approaches that can address them. The central message of this Article is that the housing advocacy community--from the shoe-leather organizer to the academic theoretician--needs to abandon its reflexively anti-development sentiments and embrace an agenda that accepts and advocates for increased housing development of all types as a way to blunt rising housing costs in the country's most expensive markets.

In the suburbs, the politics of exclusionary policies are hopeless: the cartel-like interests of suburban "homevoters" are well-served by current exclusionary policies, state and federal courts for the most part won't intervene, and there is very little interest among state legislators to impose regional or state-wide solutions. (11) The picture is less bleak in exclusionary cities: renters, who would directly benefit from lower housing prices, are a majority in many of these cities, and advocates for affordable housing already form a politically influential. (12) bloc--but they use their power to ends that are often counterproductive. While there are other serious obstacles to expanding housing supply, the housing advocacy community could and should become an important part of the fight against urban land use regimes that systematically privilege a city's wealthiest and most powerful residents. (13)

This Article considers these issues through the lens of housing costs in gentrifying neighborhoods, defined as low-income neighborhoods experiencing an increase in demand and a consequent rise in housing costs and average incomes. (14) There are a couple reasons to shift down in scale. First, gentrification and exclusion are intimately related at a neighborhood level. If a high-demand, high-cost neighborhood won't build, developers and people looking for housing will be diverted to the nearest low-cost neighborhoods. That increases demand and development and leads to gentrification. (Don't blame in-movers or developers for gentrification--they'd rather be in the high-cost neighborhoods. Blame the exclusionary practices of people in the high-cost neighborhoods.) Second, gentrifying neighborhoods are the most contentious and perhaps the most important front of the affordable housing wars--they are the areas where costs are rising the fastest and most consequentially. For the universe of people concerned with the ability of low-income families to house themselves, gentrifying neighborhoods present the starkest picture of the problem.

This Article uses economics as a positive analytic tool to think through the causes and potential solutions of some of the problems that attend gentrification in low-income neighborhoods. It does not use economics as a source of normative commitments. (15) The proposals in this Article do not seek to maximize economic efficiency, land values, consumer surplus, welfare, (16) or similar topics. This Article also makes no arguments (despite their considerable merits!) about the benefits of agglomeration to individual productivity or about the benefits of density for local, regional, and national economic output, (17) locational efficiency, (18) and the environment. (19) Much of the voluminous qualitative and social-theoretical work on gentrification is indispensable, but this Article proceeds in the belief that when studying the consequences of various policy prescriptions one should not ignore economics. (20)

1. LOOKING AT HOUSING MARKETS SCHEMATICALLY

   Housing markets, like other markets, are fundamentally a function of supply and demand. To say so is not an attempt to minimize the extraordinary degree to which housing markets are structured and influenced by non-quantitative, affective, not-strictly-economic factors like racial prejudice or senses of identity, belonging, and personhood. (21) Both supply and demand in housing markets are dynamic and influenced by factors that range from the extremely local--neighborhood cachet or a nuisance next door--to the national and global--credit markets or the state of the world economy. (22)

   It is important also to keep in mind that housing is a composite good whose price reflects the house itself and the land it sits on, but also a full range of locational amenities and disamenities. A good school district, pleasant weather, and access to a booming economy are capitalized into housing prices, as are high crime rates or proximity to a waste transfer station. (23) Housing markets have a dependent relationship with mortgage markets, as well--looser lending, as during the boom years, can have a dramatic effect on the supply of and demand for housing, as can a credit crunch. (24)

   Eliding all that for a moment, it will be helpful to take a schematic look at the typical functioning of housing markets before delving into the particular pathologies of housing markets in the areas of concern to this Article.

   In most of the country, geographically speaking, demand for housing and supply of housing maintain a rough balance. (25) In a typical region, an increase in demand for housing will...