This week, Orange County hosted a regional affordable housing summit to allow regional planners, housing experts and developers to share their affordable housing strategies in practice. Recent information from economic watchdogs suggest that rent growth is outpacing salary growth and “soaring housing and rental costs are straining budgets of families in our community.”
But what can local government do?
In his explanation and analysis of why capitalism thrives in some countries but fails in others, Peruvian economist Hernando De Soto in his 2000 book The Mystery of Capital points some of the blame (among other things) on the bureaucratic quagmire created in many developing nations’ land use regulatory schemes. DeSoto examines and gives real world examples of how this over regulation acts as a serious barrier to allowing property owners to fully, quickly and effectively use or maximize their property assets, how it creates antiquated land uses within these areas, how it is a magnet for corruption and inequitable treatment (‘your application can go to the top of the stack if . . .’) and the devastating effect that it can have on the local and national economies, the growth of small business, and safe and affordable housing.
While the US is a long way from that, the ‘take aways’ DeSoto sets forth in his analysis are worth examining in American local government land use schemes as well. In Fact, in case you haven’t seen it yet, in September the White House issued its own white paper on local ordinances and their detrimental effect on growth, particularly as it applies to affordable housing warning certain jurisdictions in the U.S. may be stifling their own growth by complicating development and redevelopment along the lines described by DeSoto.
As the white paper points out:
Local policies acting as barriers to housing supply include land use restrictions that make developable land much more costly than it is inherently, zoning restrictions, off-street parking requirements, arbitrary or antiquated preservation regulations, residential conversion restrictions, and unnecessarily slow permitting processes. The accumulation of these barriers has reduced the ability of many housing markets to respond to growing demand.
Since the landmark decision of City of Euclid v. Ambler Realty held that local government could regulate land use and zoning, some local governments have been checked in the perpetual march towards over-regulation only by limited cases of judicial intervention, primarily when ordinances collide with constitutional protections like freedom of speech or race, origin, sex etc. based zoning. In some places in the country, everything from paint colors to permissible plant species in landscaping to number of pets per household are regulated. Some jurisdictions have vague ordinances or ordinances that directly contradict other ordinances leaving a confusing set of rules for a landowner to sort through and exposing landowners to disparate treatment depending on which staff member with whom they meet. On top of this, land use and zoning restrictions sometimes contradict market forces creating ‘dead zones’ where permissible uses do not correlate with demanded uses. Most practitioners in land use, real estate, development or local government have run across absurd ordinances set in place solely to appease a certain constituency but with no real legitimate tie back to the police powers of health, safety and welfare of the community.
Moreover, there is seldom uniformity across jurisdictions. Here in Florida, two houses next to each other, one within the incorporated city and one outside the city (and therefore within the county’s jurisdiction) can have completely different zoning and land use requirements and setbacks even if they have generally the same use. Take a look here at Municode to see just how many different sets of jurisdictional rules there are just in Florida and how much they differ across the invisible jurisdictional lines.
In fact, as the white paper points out, even the process is creating real problems for housing growth:
Most development today goes through a discretionary review process prior to approval, such as public hearings or local legislative actions. These processes predispose development decisions to become centers of controversy, and can add significant costs to the overall development budget due to the delay and uncertainty they engender. The tradeoffs that developers make to account for those additional costs can result in lost affordability, quality, or quantity of units developed. “As-of-right” or “by-right” development allows projects to be approved administratively when proposals meet local zoning requirements.31 Such streamlining allows for greater certainty and more efficient development and, depending on a locality’s regulatory approach, supports lessening of barriers from density limits and other zoning requirements. It can also be targeted to achieve public goals by making “by-right” approval contingent on increased affordable housing, transit-oriented development, or energy efficiency. A 2014 report by the Urban Land Institute concludes that “municipalities can facilitate more efficient development time frames and reduce costs by enabling more by-right development. This can be accomplished by relaxing restrictions related to density, building height, unit size, and parking minimums, thereby freeing developers from the need to seek waivers, variances, or rezoning.”
The focus by both our local leaders and the White House on governmental impediments to affordable housing, redevelopment and growth is a breath of fresh air and hopefully the beginning of a national dialogue on when local zoning and land use restrictions are warranted, and when they are overreaching to the detriment of the community. We are excited to see what steps local governments, and especially our local governments in Central Florida , will take in seriously examining the land development schemes, ordinances and land use restrictions each has on the books and how we can work together for more uniformity across jurisdictions.