The voices of Urban Institute's researchers and staff
August 1, 2017

Finding common ground for land-use regulation reform

This post was also published by the Cato Institute, following our online debate.

Across the country, many people are finding it harder and harder to pay their rent. Among the leading reasons for rising rents is that housing supply isn’t growing fast enough to keep up with demand. The shortage of affordable rental housing has generated surging interest in regulatory reform, especially in California.

Despite that trend, restrictive land-use regulations that reduce housing supply enjoy support from people with a wide range of political attitudes and affiliations, as these regulations promise to accomplish appealing objectives. They can ensure that new residents provide revenue through property taxes or development fees to support schools, roads, parks, open space, and affordable housing. They sometimes reduce gentrification and often control neighborhood aesthetics. And regulations that reduce housing supply enough to raise housing prices benefit residents who own homes.  

Given the breadth of support for restrictions from various corners, any efforts to reform regulation must be correspondingly broad. Results from an online debate last month cofacilitated by experts from the Cato Institute and the Urban Institute hint at the potential for new coalitions.

Where the experts agree

The debaters, whose ideological perspectives varied broadly, agreed that, sometimes, land-use regulations are too rigid, limit growth too much, and create too much uncertainty. Results include higher housing costs, racial and economic segregation, constrained economic opportunity and innovation, and slower economic growth.

Even supporters of regulation conceded that regulations fail to work as advertised. They often expose people to harms instead of protecting them; diminish, rather than enhance, aesthetic and environmental quality; and aggravate public service degradation instead of preventing it.

Reflecting agreement on the problems of regulation, some debaters found common ground on what to do about those problems. Most of the agreement centered on local reforms that loosen or reduce regulation for improvements in efficiency, affordability, and equity. Dana Berliner from the Institute for Justice suggested broadening permitted uses, eliminating parking requirements where parking is abundant, and removing restrictions on home garage uses. Tony Arnold of the University of Louisville favored reducing regulatory requirements for affordable housing and agreed with Berliner on the importance of reducing unnecessary permitting delays. And Robert Dietz of the National Association of Home Builders recommended lowering development impact fees used for general revenue collection.

Some debaters also agreed that state governments are important actors in driving local regulatory reform. Richard Rothstein of the Economic Policy Institute endorsed state “fair share” affordable housing plans. New Jersey’s decades-old approach to battling suburban exclusionary zoning hinges on these plans and is supported by affordable housing advocates, civil rights leaders, and for-profit builders. That support wouldn’t materialize without provisions that override local restrictions and guarantee that builders incorporate affordable housing in their developments. Rothstein, Arnold, and American University’s Derek Hyra supported inclusionary zoning, but without the quid pro quo of increased certainty and density, the policy can generate stiff opposition from for-profit builders.

Why further debate is crucial

Some debaters offered pros and cons of regulations and advocated for policies that others opposed. Many of these items deserve more thought and discussion, even if we don’t reach an agreement now, because they illuminate trade-offs and potential approaches for future policy designs that could ease the housing supply crisis. We hope you’ll come up with some ideas of your own when you read the full Cato Institute and Urban Institute debate.

In this June 2, 2015 file photo a man rides his bike past a new 40-unit Mission District condominium development in San Francisco. Rental rates, especially in the trendier parts of the city run well over $3,000 a month for a one-bedroom flat and nearly $5,000 for two bedrooms. Photo by Eric Risberg/AP.

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