What to do when main street is legal again: regional land value taxation as a New Urbanist tool.

• Author: Farris, Nathan
• Position: COMMENT

INTRODUCTION I. SUBURBAN SPRAWL AND THE NEW URBANIST RESPONSE II. LAND VALUE TAX A. The History and Theory B. Why Land Value Taxation Accomplishes New Urbanist Goals 1. Infill Development 2. Land Speculation and Farm Land Conversion III. LAND VALUE TAXATION AND THE METROPOLITAN REVOLUTION A. Land Value Taxation as Shield and Fuel of the Metropolitan Revolution B. Land Value Taxation: A Product of the Metropolitan Revolution CONCLUSION INTRODUCTION

For most of the twentieth century, Americans left urban centers for suburban landscapes. (1)

[O]ver the last one hundred years, American land use policy [was] designed to segregate uses of land, reduce population density, and facilitate the use of automobiles.... [S]uburban sprawl has come to represent the American dream, where citizens can own a home, two-car garage, both back and front yards, and if you are truly lucky, a pool. (2) Indeed, an antiurban attitude is ingrained in the American psyche. (3) Americans' deeply rooted desire for independence coupled with an abundant supply of low-priced land created a low-density land use pattern. (4) The growth of affordable automobiles in the twentieth century allowed for satisfaction of the deeply ingrained American desire to spread out. (5) Consequently, Americans fled urban areas for the suburbs. (6) The proliferation of low-density development typified by post-World War II suburbs is called sprawl. (7) Unfortunately, this low-density development is inefficient and causes a host of social and environmental problems. (8)

City planners, environmentalists, and academics alike widely criticize the proliferation of suburban sprawl. These critics argue that sprawl is fundamentally problematic because it is unsustainable and destroys vibrant neighborhoods and communities. (9) "Evidence of sprawl surrounds us.... [S]prawl consume[d] nearly six million acres of farmland annually [from 1954 to 1974]...." (10) Sprawl makes us overly dependent on automobiles, "which imposes enormous costs and degrades our quality of life ... [by] imposing] burdensome infrastructure costs" (11) and creating a society stratified by "income, education, race, and ethnicity." (12)

This Comment assumes suburban sprawl is inimical to the common good and ought to be slowed and, if possible, reversed. My purpose is not to prove that there is a problem, but to explore a potential solution: Land Value Taxation (LVT). Finding a solution, however, begins with identifying the causes of the problem. Accordingly, Part I briefly examines single-use zoning's contribution to the problem of sprawl, and concludes that New Urbanists are making tremendous progress toward reforming single-use zoning. I suggest that our current property tax system is another cause of sprawl and, given the success of zoning reform, ought to be the target of New Urbanist policy advocacy. Part II posits LVT as an alternative to our current single-rate tax system and explores LVT's dual ability to incentivize denser development and disincentive land speculation at the suburban fringe. Part III concludes that LVT can be most effectively implemented at the regional level.

1. SUBURBAN SPRAWL AND THE NEW URBANIST RESPONSE

   While a prolific social phenomenon like suburban sprawl is no doubt caused by a number of complex and overlapping factors, the greatest contributor to sprawl is single-use zoning. Local governments use zoning as the primary means to control land use. (13) American zoning policy in the twentieth century created sprawl by using single-use zoning almost exclusively. Single-use zoning regulates the development of land based on the intended end use. (14) It allows only one kind of use in a specified zone. (15) Residential development is separated from commercial development, which is separated from industrial development. Mixed uses within a zone are prohibited; commercial activity is not permitted in residential zones and vice versa.

   The result of single-use zoning is that "residential zones cover large amounts of thinly populated land, [and] few people can live within walking distance of commercial zones." (16) Single-use zoning's first article of faith is that the best and highest use of land is the single-family detached home, and that all other uses are inferior and thus must be kept separate. (17) The Supreme Court upheld the practice of single-use zoning in its now iconic decision Village of Euclid v. Ambler Realty Co. (13)

   The spread of single-use zoning was aided not only by local zoning ordinances, but also by state and federal policy. For example:

   [T]he federal government created the Federal Housing Administration (FHA)--an agency that subsidized home ownership by insuring private sector loans--but only for homes that met FHA standards. These standards prohibited gridded streets in residential neighborhoods, instead describing cul-de-sacs as "the most attractive form for family dwellings." The FHA also recommended residential streets that were twenty-four to twenty-six feet wide--about 50% larger than some older streets. FHA standards also required long blocks and low densities. Because the majority of American mortgages were FHA-insured, the FHA minimum standards governed most new development. And local governments generally adopted rules based on FHA standards, which meant that even homes not insured by the FHA were governed by FHA rules. (19) So, for much of the twentieth century, American land use policy at the local, state, and federal levels encouraged sprawl, accelerating the decline of walkable, mixed-use neighborhoods and leading to an increasingly stratified and automobile-dependent society.

   New Urbanism (20) emerged as an anti-sprawl movement. (21) Jane Jacobs, one of the earliest and harshest critics of single-use zoning, is in many ways the mother of New Urbanism. (22) Jacobs argued single-use zoning destroys vibrant cities by "stifling the cross-fertilization of ideas and experiences that is so important to a city's economic and social health" (23) and that arises naturally in a dense and diverse city. Today, New Urbanists strongly criticize single-use zoning and urge a switch to mixed-use zoning, which "allows people to work and shop within walking distance of their homes...." (24) New Urbanists' proposed pattern of development promotes a sense of community and reduces dependence on automobiles. (25) New Urbanism seeks to create human-scaled, walkable, mixed-use development in which spontaneous human interaction is possible. (26)

   Not surprisingly, New Urbanists fought sprawl by attacking its wellspring: single-use zoning. (27) New Urbanism categorically rejected the foundational value judgment of single-use zoning, namely, "that the appropriate way to order different land uses is to separate them from one another into single-use zones." (28) Instead, New Urbanists sought to regulate density rather than use by creating the "SmartCode": (29)

   While ordinary zoning codes regulate a building's character (e.g., its height, building and lot size, and parking facilities) by its use, the SmartCode regulates a building's character by the urban intensity of its zone--it sets up one set of rules for buildings in each zone, regardless of whether the buildings are being used for residential or commercial purposes. (30) Surprisingly, New Urbanists have been successful in fighting single-use zoning and implementing the SmartCode. (31) Indeed, "[d]uring the past forty years, the lessons taught by Jane Jacobs about urban form have largely been incorporated into land-use regulation." (32) The role of zoning is transforming. Rather than separating uses, zoning is now most often used "in the service of promoting walkable, mixed-use neighborhoods connected by transit." (33) Cities are now "permitting greater mixing of uses on a single site.... This trend now culminates in form-based coding...." (34)

   That zoning is decreasingly an impediment to New Urbanism is astounding given that less than twenty years ago, "virtually everything [New Urbanists] want[ed] to do [was].... illegal." (35) Indeed, in 2006, Chad Emerson wrote his now seminal article Making Main Street Legal Again: The SmartCode Solution to Sprawls In his opening line, Emerson boldly claimed:

   Under zoning codes in much of the United States today, building a project similar to classic American communities such as Charleston, Savannah, Key West, or Alexandria, would be illegal. Many zoning codes also prohibit the creation of a neighborhood with a traditional corner store or a classic American main street where the shopkeeper lived above her shop. (37) It is therefore truly amazing that less than a decade later, the SmartCode has made so much progress in American land use planning.

   Zoning reform, however, is a necessary but not sufficient element in achieving the New Urbanist agenda. (38) In fact, it is only the frontier. As municipalities and communities across America continue to adopt form-based codes, the New Urbanist movement should look to new policy initiatives that can create a better built environment. Now is the time to start planning for a future in which zoning codes are not an impediment to New Urbanism. Accordingly, this Comment proposes the Land Value Tax (LVT) as the next major initiative New Urbanists should pursue. The Land Value Tax is not a new concept; it is not even a new concept for New Urbanists. (39) This Comment, however, makes the additional argument that LVT is most effectively implemented at the regional or metropolitan level. Given the success of New Urbanist zoning reforms, the time is ripe to plan the future of the movement, and a Land Value Tax is a key component in a comprehensive New Urbanist legal regime. Land Value Taxation must become a club in the bag of New Urbanist policy.

2. LAND VALUE TAX (40)

   1. The History and Theory

      Nearly every jurisdiction in the United States employs a single-rate property tax system--that is, they tax land and improvements to land (i.e...