Land Use Reform

1.“City planners generally initiate zoning proposals, which then must be approved by city council members. Although some land use regulations are made at the state level in the U.S., most such issues are handled locally. In Canada, there is more provincial involvement, especially in Ontario. On many issues, states tend to make better decisions than local governments because they do not have as many parochial concerns. For example, the state of California tried to restrict cities from implementing onerous parking minimums near public transit, but local mayors killed the proposal.
[…]
It can be difficult for advocates to gain the necessary political support for zoning for midrise buildings. For example, in Los Angeles, politicians tend to push for high-rise towers downtown but single-family residences on, e.g., the west side, and smaller developers, who would want to put up midrise buildings, often lack the lobbying power that they would need to affect zoning. New York City has a similar problem.
[…]
[I]nefficient minimum parking requirements […] are ubiquitous in nearly every U.S. city; San Francisco and Manhattan are exceptions.” GiveWell’s non-verbatim summary of a conversation with Stephen Smith, March 13, 2014

2.

GiveWell’s non-verbatim summary of a conversation with Gabriel Metcalf, March 31, 2014: “Zoning and other regulatory limits on construction are the main reason that there has not been more construction in response to the demand for housing in the Bay Area.”

GiveWell’s non-verbatim summary of a conversation with Stephen Smith, March 13, 2014: “Midrise (i.e. 3-8 story) buildings are the source of most density in growing cities. Advocacy for midrise buildings in both commercial/industrial areas and residential neighborhoods is important for growth.
It can be difficult for advocates to gain the necessary political support for zoning for midrise buildings. For example, in Los Angeles, politicians tend to push for high-rise towers downtown but single-family residences on, e.g., the west side, and smaller developers, who would want to put up midrise buildings, often lack the lobbying power that they would need to affect zoning. New York City has a similar problem.”

3.

Glaeser and Gyourko 2008, Pg 79: “[B]asic economics and the data are consistent with local land-use regulations having a dramatic impact on U.S. housing markets. Places with high housing demand and abundant land-use restrictions have limited supply and high prices. Places that have met high housing demand with much less restriction on development have become the fastest growing regions of the country. […]
While local land-use decisions do have a major impact on U.S. housing prices, eliminating those restrictions entirely still would not result in uniform prices across the country. Demand would still be higher in some places than others. Construction costs would also vary, and as land became scarcer in denser areas, prices would rise in those places. Yet the differences in prices would still be far less stark.”

GiveWell’s non-verbatim summary of a conversation with David Schleicher, May 15, 2014: “Liberalizing land use could have three major effects on the economy:
1. Producing a large amount of new housing and reducing rents.
[…]
3. “Reducing house prices, which have contributed substantially to the rise in wealth
inequality documented by Thomas Piketty. In a recent review of Piketty’s book,
Larry Summers noted that ‘Probably the two most important steps that public
policy can take with respect to wealth inequality are the strengthening of financial
regulation to more fully eliminate implicit and explicit subsidies to financial activity,
and an easing of land-use restrictions that cause the real estate of the rich in major
metropolitan areas to keep rising in value.’ The extent to which American wealth
inequality is due to property policy is unclear and should be studied further.”

4.

GiveWell’s non-verbatim summary of a conversation with David Schleicher, May 15, 2014:

One of the major effects of liberalizing land use would be: “Accelerating the rate of economic growth by allowing people to cluster more densely in highly productive places and share ideas. This effect could be larger than the tens of billions of dollars that would be spent on housing construction in the absence of zoning restrictions.”

“The effects of urban density on economic growth are not completely understood. Wages increase for people who move from rural areas to cities, but the reason is unclear. Economists have proposed three possibilities for why this occurs:

• People who move to cities may learn from their neighbors, increasing their economic value.
• Cities may create incentives for more specialization or investment in human capital.
• People who move to cities may be self-selected and would have higher incomes eventually in rural areas as well.

The first two possibilities imply that increasing urban density would promote economic growth, but the third possibility implies that the growth would have occurred even if those people had not moved to cities.”

Noah 2013: “Why are Americans by and large moving away from economic opportunity rather than toward it? It all starts to make sense when you think about “push” rather than “pull.” […]A far more plausible push factor is the cost of housing.Consider the mystery of the “San Berdoo” population boom. Between 2005 and 2009 the nation’s biggest county-to-county migration was from Los Angeles County to San Bernardino County. These counties are both in Southern California, but they’re sufficiently far apart (sixty miles) that they constitute separate labor markets. Before the recession, unemployment in San Bernardino and Los Angeles Counties was about the same. After the recession hit, unemployment in San Bernardino County rose higher, topping out at about 15 percent compared to LA County’s 13 percent.Moving from LA to San Bernardino would not have improved your chances of finding a job. We’re talking about a city that declared bankruptcy last year. Nor would San Berdoo be the place to escape big-city crime; after it laid off cops in droves, it experienced a 50 percent increase in its homicide rate. Among the white population aged sixteen to twenty-four, 18 percent are neither in school nor have a job, a number that rises to 19 percent for Latinos and 25 percent for African Americans. Yet a huge flow of migrants continues from LA. Why? Mainly because housing is cheaper. Gloria Santellan recently wrote on the Facebook page of the Victorville Daily Press, a local paper, “I was paying $750 for a studio in the San Gabriel Valley area, and out here I was in a two-bedroom for $25 less!”Exclusionary zoning at the local level is one way people like Santellan get priced out of those parts of the country where jobs are most lucrative and plentiful. This is the theme of two recent e-books, The Gated City by the Economist’s Ryan Avent and The Rent Is Too Damn High by Slate’s Matthew Yglesias. Here’s a brief rundown by Avent:‘In some cases, there are explicit zoning limits. Buildings can only be so tall or can only be used for commercial or industrial purposes.… In many cases, neighbors opposed to new developments in their neighborhood lobby the government to change either the zoning rules or historical designations in order to block development projects. And in some situations, no actual law or regulation is necessary to limit redevelopment—community opposition is sufficient to do the work of curtailing supply.’San Jose, the de facto capital of Silicon Valley, has a metropolitan-area population of 1.7 million inhabiting about 1,300 square miles. But in 2005 the metro area approved permits for only 5,700 new units. The city’s tallest building, Yglesias notes, is a mere twenty-two stories high. Average earnings in the valley grew by nearly 40 percent between 1997 and 2000. That’s a lot. But home prices in nearby San Francisco grew even faster, doubling during the same period.

Tight restrictions on housing construction don’t keep out the affluent (who continue to migrate to places like Boston and New York and San Francisco). But they do reduce available housing for working people. In its most extreme form, zoning has, in certain gaudily affluent neighborhoods, become a tool for maximizing the size of single-family McMansions. In Dallas’s luxury gated community of Enchanted Hill, for example, you aren’t allowed to build a house that’s less than 4,000 square feet, according to Affluent magazine. Bungalows need not apply.”

Avent 2013: “One striking fact is that even among the best performing metropolitan areas, overall increases in output per capita have been hard to come by. They have been limited to a handful of very brainy cities, especially West Coast tech centres. In general, growth has been a product of population increase large enough to offset falling output per person. Through 2011 lots of Sunbelt bubble metros were on the wrong side of that calculation. Increasingly they are back on the right side.But there is a qualitative gap between the top performers and bottom performers on this list; the level of per capita GDP (which isn’t shown) is generally quite different at the top and the bottom. Average real per capita GDP in the top cities is $58,426, to $38,724 in the bottom. (The median for the top cities is $58,058 to $40,804 in the bottom; it isn’t one or two outliers driving the gap.) And so we find ourselves confronting a very interesting question: why were Americans moving in droves to metropolitan areas with low income levels and high unemployment rates?In a 2007 paper Edward Glaeser and Kristina Tobio pinned growth in the Sunbelt from 1980 on the relative affordability of its housing, which was itself due to rapid construction in Sunbelt metros. Some readers may question that hypothesis. What about coastal California, for instance, where NIMBYism runs rampant? A good point: coastal metro areas in California became very restrictive in the 1980s and 1990s, a change which sent housing and office costs there soaring. That brings us to another potential hackle: how could Sunbelt cities with soaring prices, like Las Vegas and Phoenix, have been attractive on the basis of cost? Well, despite rapid housing price growth in those metros they remained vastly cheaper relative to coastal California, which was the source of many migrants to those areas.The argument, it’s worth clarifying, is not simply that cheap housing makes a metro area attractive; if that were true the Midwest would be booming. It is that a very elastic housing supply in the face of steady demand will allow for massive population growth.”

5.“Because the degree of housing market regulation is so difficult to measure, we adopt an alternative approach that is based on neoclassical economic theory. With or without regulation, that theory predicts that competition among builders will ensure that prices equal average costs. In unregulated markets, building heights will rise to the point where the marginal cost of adding an additional floor equals average costs (which will equal the market price). If market restrictions limit the size of a building, free entry of firms still will keep price equal to average cost. However, under the standard assumption of an increasing marginal cost function, both prices and average costs will be above marginal costs. Hence, the key difference between a regulated and an unregulated market is the gap between prices and marginal costs, and we use this difference to measure the extent of housing supply restrictions.” Glaeser et al. 2005, Pg 333.

6.

Glaeser et al. 2005 Pg 359, Table 4

7.We estimated this figure by multiplying Glaeser et al. 2005’s estimates of the zoning tax for five major metro areas which we guess account for the majority of the problem by estimates for the total amount of rent paid in these cities, from Total Rent Paid 2013 and 2014, Zillow:

Total Rent Paid 2013 and 2014, Zillow

8.According to Combined Value of US Homes to Top $25 Trillion in 2013, Zillow, the total value of housing stock in the five large supply-restricted metropolitan areas (Boston, LA, DC, SF, NY) is $6.5 trillion. We did not conduct a thorough search for data on the price elasticity of supply that would allow us to calculate the implied deadweight loss from the Glaeser et al. 2005 “regulatory tax” figures. In a cursory review we found Hanushek and Quigley 1980 which reported an elasticity of roughly -.40:“The estimated price elasticities in the more general formulation of equation (5) are -0.36 in Pittsburgh and -0.41 in Phoenix. […] For the simple models of stock adjustment, the 95% confidence interval for the price elasticity of housing demand is (-0.33 to -0.95) for Pittsburgh households and is (-0.20 to -0.71) for Phoenix households. For the expanded models the confidence intervals are (-0.22 to -0.71) and (-0.19 to -0.63) in Pittsburgh and Phoenix respectively. […]
By way of comparison, Muth (1971) estimates the price elasticity from the production function for new housing and reports three estimates of the price elasticity with 95% confidence intervals of (-0.51 to -0.99). Polinsky and Ellwood (1977), using an identical methodology, report two estimates, with a confidence interval of (-0.56 to -0.86). Again, these studies are for national samples of households and are confined to the purchasers of new single detached, FHA insured housing. This more direct analysis suggests that renters are somewhat less responsive to price variation and that responses do vary across housing markets.” Hanushek and Quigley 1980, Pg 452-3.Combining these figures implies over $600 billion of foregone construction in the five large supply-restricted metropolitan areas, and a current deadweight loss of around $100 billion. Chen 2007 has a simple description of how to calculate the deadweight loss due to supply restrictions.Assuming constant elasticity of -0.4, an effective price decrease of 27% increases demand to 0.73^-0.4=1.13 times current demand, a 13% increase. Treating the current volume of housing stock as a unit, the unit price of housing after this price drop is 73% * $6.5 trillion = $4.8 trillion, and the extra housing built would be worth $4.8 trillion * 0.13 = $620 billion.The above implies that the price of housing stock in these cities is currently artificially high by a total of $1.7 trillion. Assuming the marginal cost of housing does not change (in other words, assuming that the supply curve is effectively flat for changes of this magnitude), and treating the demand curve as approximately linear, we get a deadweight loss “triangle” of 0.13 * $1.7 trillion / 2 = $110 billion. In practice, the supply curve is not flat, which means we are overcounting the consumer surplus but undercounting the producer surplus on the extra production.

9.“Empirical results are summarized in Table 4. We begin in Panel A with an extreme counterfactual: we consider how much larger total US output would be if the nominal wage was equalized across all metro areas in 2009. Column 1 indicates that equalizing nominal wages would increase US GDP by 17.2% percent. Given that US GDP in 2009 was 14.5 trillion, this implies an additional annual aggregate income of $2.76 trillion. Given a labor share of .65, this amounts to an increase of $1.9 trillion in the wage bill. Column 2 indicates that 66.9% of US workers would live in a MSA different from their current one under this counterfactual.
[…]
Table 4. First Counterfactual – The Effect of Changes in the Dispersion of Relative Wages

” Hsieh and Moretti 2014

Note that this is from a preliminary paper currently undergoing revision, and a new version is expected to come out soon.

10.“Professor Schleicher proposed several political mechanisms to improve the effectiveness of the zoning process:

• Municipal governments, rather than housing developers, could offer financial compensation to people adversely affected by new development, out of tax revenues from new development.
• The city council could vote on a “zoning budget”. In a recent paper, Dr. Schleicher defines this as a “targeted growth (or shrinkage) in the number of available housing units”. Every year, the city council would have to ensure that the net change in housing due to zoning laws matches the goal of the zoning budget.
• The municipal government could provide legal guarantees that zoning laws would be changed if specific negative effects were to result from the laws.”

GiveWell’s non-verbatim summary of a conversation with David Schleicher, May 15, 2014

11.State legislatures are less subject to the extremely local pressure that often drives restrictive land use regulation:

GiveWell’s non-verbatim summary of a conversation with David Schleicher, May 15, 2014: “Influencing policyIt may be effective to create an organization to draft pro-development legislation, similar to how the American Legislative Exchange Council (ALEC) drafts legislation for conservative state legislators. It is unclear why land developers have not funded this type of organization. In general, politicians tend to favor greater local control, which means greater local ability to restrict development.GiveWell asked about the possibility that Republicans at the state level might be interested in liberalizing urban land use.Professor Schleicher believes that it is unlikely that Republican state governments will change urban zoning laws to promote more development. Many Republican legislators are opposed to efforts to prevent suburban sprawl. For example, there is strong opposition among some Republicans to Agenda 21, a United Nations action plan to promote sustainable development that warns of the negative effects of suburban sprawl. On the other hand, states with limited zoning laws, such as Texas, tend to be Republican.”

GiveWell’s non-verbatim summary of a conversation with Stephen Smith, March 13, 2014: “Political processCity planners generally initiate zoning proposals, which then must be approved by city council members. Although some land use regulations are made at the state level in the U.S., most such issues are handled locally. In Canada, there is more provincial involvement, especially in Ontario.
On many issues, states tend to make better decisions than local governments because they do not have as many parochial concerns. For example, the state of California tried to restrict cities from implementing onerous parking minimums near public transit, but local mayors killed the proposal.”

12.“Another strategy is to fund community organizers to create coalitions to changing zoning laws in cities. This type of strategy has previously been used for housing issues.” GiveWell’s non-verbatim summary of a conversation with David Schleicher, May 15, 2014

13.See our blog post on passive and active funding for a discussion of this distinction.

14.

GiveWell’s non-verbatim summary of a conversation with David Schleicher, May 15, 2014: “Funding basic research on the effects of land use policy would be very important. There are some academic research centers that would do this, such as the Taubman Center and New York University’s Furman Center for Real Estate and Urban Policy. (The Furman Center focuses on issues related to New York City.)
[…]
Connecting economists and plannersEconomists have limited communication with urban planners, which has led to some problems. For example, some urban planners were unhappy about Professor Glaeser’s criticism of historic preservation. Many urban planners view their role as protecting public spaces, and they do not necessarily make the same distinctions between public and private property that economists or lawyers would.A conference on zoning laws involving lawyers, economists, and planners could potentially help address some of these issues. Professor Glaeser, Professor Shoag, and Professor Kahn could be useful in organizing this type of conference.”

GiveWell’s non-verbatim summary of a conversation with Gabriel Metcalf, March 31, 2014: “Foundations and philanthropistsThere is a lot of opportunity to support broad-based civic work at the local level, similar to the SPUR model. The keys for funders are to understand that policy change has a longer time horizon and is sometimes less quantifiable than some other investments. Funders need to be patient, and to find organizations (or people) they trust.”

15.“Research questions on the effects of land use policyFunding basic research on the effects of land use policy would be very important. There are some academic research centers that would do this, such as the Taubman Center and New York University’s Furman Center for Real Estate and Urban Policy. (The Furman Center focuses on issues related to New York City.)Why wages increase for people who move to metropolitan areasThe effects of urban density on economic growth are not completely understood. Wages increase for people who move from rural areas to cities, but the reason is unclear. Economists have proposed three possibilities for why this occurs:

• People who move to cities may learn from their neighbors, increasing their economic value.
• Cities may create incentives for more specialization or investment in human capital.
• People who move to cities may be self-selected and would have higher incomes eventually in rural areas as well.

The first two possibilities imply that increasing urban density would promote economic growth, but the third possibility implies that the growth would have occurred even if those people had not moved to cities.

Determining the effects of land-use restrictions

It is difficult to determine the optimal amount of land-use restrictions. Restricting construction generally increase the value of surrounding property. This can be due to positive effects of these restrictions, such as improving the quality of a neighborhood, or to the reduction in the housing supply, which is an undesirable outcome of these restrictions. This means that it is difficult to use property values to determine whether land-use restrictions are having a positive effect or a negative effect.

Calculating the value of land

Though Professor Glaeser and Professor Gyourko have demonstrated that land use restrictions have some negative effects, the magnitude of the problem is unclear. To understand the magnitude of the negative impacts, it would be useful to know the total value of land in a region and to be able to see how land use regulations affect that. However, this is a very difficult empirical problem.

Projecting effects of proposed zoning changes

Projecting the effects of increasing the housing supply in a city requires knowledge of the slope of the demand curve for housing in that city. This is often unknown and is difficult to determine.” GiveWell’s non-verbatim summary of a conversation with David Schleicher, May 15, 2014

16.

GiveWell’s non-verbatim summary of a conversation with David Schleicher, May 15, 2014: “The creation of a zoning law involves a large number of people, each of whom has different preferences on which developments should occur. Given this set of preferences, there can be many different outcomes depending on how the issues are presented. The processes by which zoning is typically done in large cities lead to a more restricted set of outcomes than many other processes would. This is particularly a problem because large cities lack partisan competition.
[…]
Some advocates for increased urban density criticize people opposed to new development for being “NIMBYs” (“NIMBY” is an acronym for “not in my backyard”) and try to explain to them the merits of development. Professor Schleicher believes that this type of criticism tends to be ineffective. NIMBYism generally results from people wanting to preserve the value of their home, which is often their largest investment, and is typically a rational form of self-interest given the current land use restrictions.
[…]
Professor Schleicher believes that it is unlikely that Republican state governments will change urban zoning laws to promote more development. Many Republican legislators are opposed to efforts to prevent suburban sprawl. For example, there is strong opposition among some Republicans to Agenda 21, a United Nations action plan to promote sustainable development that warns of the negative effects of suburban sprawl. On the other hand, states with limited zoning laws, such as Texas, tend to be Republican.”

GiveWell’s non-verbatim summary of a conversation with Stephen Smith, March 13, 2014: “In San Francisco, the research and advocacy organization SPUR appears to conduct effective communication campaigns and to have the ear of Supervisor Scott Weiner. Its main constituency seems to be young creative and tech professionals. Its work has provoked some backlash from anti-gentrification protesters.
[…]
On many issues, states tend to make better decisions than local governments because they do not have as many parochial concerns. For example, the state of California tried to restrict cities from implementing onerous parking minimums near public transit, but local mayors killed the proposal.”

17.Thinkers and writers from the both left (Larry Summers, Matt Yglesias) and right (Ed Glaeser and Joseph Gyourko, Reihan Salam) have written in support of reform:

Summers 2014: “Probably the two most important steps that public policy can take with respect to wealth inequality are the strengthening of financial regulation to more fully eliminate implicit and explicit subsidies to financial activity, and an easing of land-use restrictions that cause the real estate of the rich in major metropolitan areas to keep rising in value.”

Matthew Yglesias has published a book on this subject, called The Rent is Too Damn High:
“[M]y new e-book original […] The Rent Is Too Damn High [… is] about the high cost of housing in America’s coastal metropolises and downtowns everywhere, but more broadly it’s about the crucial role that dense urban development and barriers to its creation matter in a service economy.” Yglesias 2012

Glaeser and Gyourko 2008, Pg xv-vi: “We argue for a clearer diagnosis of the underlying problem, which inevitably leads to a focus on local government restrictions on new building that limit supply and help push prices up in our most expensive markets. […] We propose a specific new policy designed to counter the overly restrictive building policies of many local governments—one, we hope, upon which new policies for a recovering housing and mortgage market may be built.”

Salam 2014: “There is a growing recognition that stringent local land-use regulations are one of the main barriers to upward mobility for low- and middle-income Americans.”

18.

According to research by economists Glaeser, Gyourko, and Saks, the “zoning tax” is mainly high in Boston, Los Angeles, New York, the San Francisco Bay area, and Washington, DC. Estimates for other major metropolitan areas are much smaller.
Glaeser et al. 2005 Pg 359, Table 4

According to research by UC Berkeley economist Enrico Moretti and University of Chicago economist Chang-Tai Hsieh, a handful of regions–Boston, New York, the San Francisco Bay Area, Seattle, and Washington, D.C.–account for the majority of the negative impact of restrictive zoning on growth.
“Going back to Table 4, in the second row of panel B, we set the distribution of nominal wages in 2009 equal to its 1964 level only in the six innovation clusters (New York, San Jose, San Francisco, Boston, Washington, DC, and Seattle.) Remember that the distance from the average wage increased from 1964 to 2009 in these cities. In addition, these cities are among the largest cities in the US in terms of TFP. These six cities account for 15% of total employment and 20% of the total wage bill in the country in 2009. The effect on aggregate output of changing the distance from the average wage in these six cities is therefore likely to be large because the distance from the average wage has increased by a lot in these cities and because these are large cities. Column 1 in Row 2 shows that aggregate output would increase by 14.1% if the distance from the average wage in only these six cities is set to their 1964 gap. Note that this number is larger than the 13.7% gain in aggregate output when we set the distance from the average wage to the 1964 gap for all cities. […]
We draw two main conclusions. First, output gains from spatial reallocation of labor are substantial. If wages were set back to their 1964 levels, US GDP would increase by 13%. This amounts to $1.8 trillion annually. The salary of the average worker would increase by $7,400. These gains are mostly explained by six key “innovation clusters”: NY, DC, Boston, San Francisco, San Jose and Seattle. The housing market in all these six metro areas is supply constrained.
Second, amenities appear to account for only a small fraction of the increase. By contrast, an increase in the elasticity of housing supply in 6 innovation clusters accounts for two thirds of the increase in output. We conclude that welfare gains from spatial reallocation of labor are likely to be substantial.” Hsieh and Moretti 2014

GiveWell’s non-verbatim summary of a conversation with Gabriel Metcalf, March 31, 2014: “Many of the issues facing the San Francisco Bay Area, especially housing affordability concerns, stem from its economic strength. Many other urban areas in the rest of the country, especially the Rust Belt, face the opposite problems. Relative to other areas dealing with problems associated with strong economic growth, the Bay Area is an extreme case, although there are comparable problems in many of the economically strong cities of the country (Washington DC, Seattle, New York, etc.). What makes San Francisco’s affordability problem so extreme is the combination of so much job growth, coupled with pervasive anti-growth sentiments that make it hard to add to the housing supply.
[…]
Taking a national view, it’s sometimes helpful to think about two groups of cities: those in regions with strong economies, and those in regions with weak economies. If jobs in the region are growing, then the challenge for fighting poverty is to connect people with those jobs. If jobs in the region are declining, then no amount of workforce development is going to help people get work.
Regions that are growing need help managing the growth – directing it into the right places (and away from the wrong places), making sure everyone benefits from that growth. Regions that are shrinking tend to have much more fundamental problems and many of the standard urban planning interventions don’t work very well.”

GiveWell’s non-verbatim summary of a conversation with Stephen Smith, March 13, 2014: “San Francisco and New York are two of the most productive cities in the U.S. yet have some of the worst housing crises.”

19.“Public employee unions have some incentives to support population growth in cities, just as exporters support free trade. A higher population in a city means that there are more public services to provide, so more public employees are hired. It also means greater tax revenue, so public service providers would receive larger budgets. Thus far, public employee unions have not been significantly involved in zoning issues. It may be effective to try to mobilize public employees to influence zoning politics” GiveWell’s non-verbatim summary of a conversation with David Schleicher, May 15, 2014

20.“There has been disagreement within environmental organizations over whether to support increased urban density. Environmentalist organizations have traditionally been opposed to increasing density, due to local effects such as the removal of trees. Others believe that increased urban density benefits the environment by reducing greenhouse gas emissions. Environmentalists need to weigh issues of local harm and global benefit caused by increasing urban density.” GiveWell’s non-verbatim summary of a conversation with David Schleicher, May 15, 2014

21.Saiz 2010 argues that geographic barriers to development in some major metropolitan areas increase prices, which in turn increases the incentive to homeowners to favor laws that protect the values of their homes:“I process satellite-generated data on terrain elevation and presence of water bodies to precisely estimate the amount of developable land in U.S. metropolitan areas. The data show that residential development is effectively curtailed by the presence of steep-sloped terrain. I also find that most areas in which housing supply is regarded as inelastic are severely land-constrained by their geography. Econometrically, supply elasticities can be well characterized as functions of both physical and regulatory constraints, which in turn are endogenous to prices and demographic growth. ”[…]
@Saiz 2010, Abstract.“I first develop a conceptual framework that relates land availability to urban growth and housing prices. Using a variation of the Alonso–Muth–Mills model (Alonso 1964; Mills 1967; Muth 1969), I show that land-constrained cities not only should be more expensive ceteris paribus, but also should display lower housing supply elasticities with respect to citywide demand shocks, a somewhat ad hoc claim in the existing literature. I also show that, in equilibrium, consumers in geographically constrained metropolitan areas should require higher wages or higher amenities to compensate them for more expensive housing.
Empirically, all of these facts are corroborated by the data. I find that most areas that are widely regarded as supply-inelastic are, in fact, severely land-constrained by their geography. Rose (1989b) showed a positive correlation between coastal constraints and housing prices for a limited sample of forty-five cities. Here I show that restrictive geography, including the presence of mountainous areas and internal water, was a very strong predictor of housing price levels and growth for all metropolitan statistical areas (MSA) during the period 1970–2000, even after controlling for regional effects. […]
Homeowners have stronger incentives to protect their housing investments where land values are high initially. The homevoter hypothesis (Fischel 2001) implies a reverse causal relationship from initially high land values to increased regulations. Empirically, I find that antigrowth local land policies are more likely to arise in growing, land-constrained metropolitan areas and in cities where preexisting land values were high and worth protecting.”
Saiz 2010, Pg 1254-5.

22.

The Ford Foundation has a Metropolitan Opportunity program that primarily focuses on affordable housing, transit-oriented development and smart growth, which gave out about $31 million in grants in 2014. Roughly $9M has gone to a strategy around “land use innovation” that includes a number of efforts to support affordable housing measures in “thriving” regions and redevelopment efforts in struggling ones.

Grants Database Search Results: Metropolitan Opportunity Program, Ford Foundation

“We are working across the United States to support efforts that reach beyond individual neighborhoods and cities to connect residents with opportunities in their broader metropolitan economies. We support organizations that pursue integrated approaches to housing, land use and environmental planning, public transportation and community infrastructure, and aligned workforce opportunities.
Our work promotes smarter public policy and planning, and links regional efforts to build economic growth and competitiveness over the long term with emerging national efforts to coordinate funding streams among cabinet agencies. We believe this approach advances a new vision of smart, regional development that integrates key elements of metropolitan life to build strong and sustainable communities.” Metropolitan Opportunity, Ford Foundation

“To revitalize struggling metropolitan areas and to strengthen more stable regions across the United States, we support efforts that advocate for effective “cross-silo” national policies that connect the efforts of multiple cabinet-level agencies. At the same time, we work in a manageable number of metropolitan regions to develop concurrent innovative land use, community planning, and infrastructure development strategies that drive regional development efforts.
In thriving metropolitan regions, we focus on securing well-located properties for affordable housing development through inclusionary housing ordinances, density bonuses for affordable housing, and targeted land-acquisition measures.
In declining areas, we focus on eliminating blight by acquiring abandoned properties for community-driven redevelopment and helping cities to make better use of available land.” Promoting Metropolitan Land-Use Innovation, Ford Foundation

The MacArthur Foundation has a housing program that generally focuses on affordable housing and the impact of housing on education, health, and economic opportunities. This program made about $13 million in grants in 2013.

Grant Search: Housing – MacArthur Foundation

“We support practice-driven, evidence-based, and policy-focused efforts that will make stable affordable housing available for more families nationwide. Our grantmaking priorities are to:

• Seed and disseminate rigorous research to understand the social and economic value of housing beyond shelter and to inform sound, cost-effective policy solutions
• Develop innovative, pragmatic housing policy solutions to address key housing challenges driven by economic pressures and demographic trends
• Support nonprofit owners to increase construction and preservation of affordable rental housing
• Build organizational capacity and financial strength in the affordable housing sector
• Help balance the goals of energy conservation and affordability through research, policy, and practice
• Explore the intersection between health and housing policies”

Housing, MacArthur Foundation

The Knight Foundation has supported some work around affordable housing, smart growth, and “lean urbanism” in some of the cities in which they work:
“The Project for Lean Urbanism

• Lean Urbanism is open-access, allowing more people to participate in the building of their homes, businesses, and communities.
• Lean Urbanism is open-source, creating tools and techniques for all to use.
• Lean Urbanism is open-ended, focusing on incremental and ongoing improvement.
• The Project for Lean Urbanism will restore common sense to the processes of development, building, starting small businesses, community engagement, and acquiring the necessary skills.
• The Project will devise tools so that community-building takes less time, reduces the resources required for compliance, and frustrates fewer well-intentioned entrepreneurs, by providing ways to work around onerous financial, bureaucratic, and regulatory processes.
• The tools will be made freely available to governments and organizations seeking to get things done, to entrepreneurs without the knowhow to overcome hurdles, and to small builders or homeowners who could build well in an economical, low-tech way.
• The Seven Platforms of the Project for Lean Urbanism are: Lean Building, Lean Development, Lean Business, Lean Green, Lean Regulation, Lean Infrastructure, and Lean Education
• Lean Urbanism occupies the emerging seam between the pilot projects of Tactical Urbanism and the policy-focused agenda of Smart Growth and New Urbanism.
• The Project is conceived as a three-year effort to include research, publication, formulation of tools, pilot projects, and projection.
• The Project for Lean Urbanism is managed by the Center for Applied Transect Studies. The Project has received generous funding from the John S. and James L. Knight Foundation.”

Lean Urbanism: About

The Rockefeller Foundation does some related work on resilience and public transportation:
“Current Work:

• Climate Change Resilience
  Catalyze attention, funding and action to promote resilience to climate change in Asian urban environments, African agriculture, and U.S. policy.
• Transportation
  Push the U.S. over the tipping point toward transportation planning and infrastructure policy that serves the needs of 21st century America.”

Transform Cities, The Rockefeller Foundation

The Surdna Foundation does some related work on green building in cities:
“The Sustainable Environments Program is working to overhaul our country’s outdated and crumbling infrastructure with a new approach that will foster healthier, sustainable, and just communities. We believe in the potential of what we call ‘next generation infrastructure’ to improve transit systems, make buildings more energy efficient, better manage our water systems and rebuild regional food systems. Focusing on urban areas and their surrounding suburbs, we seek solutions that connect and improve these infrastructure systems in ways that maximize positive impacts and minimize negative environmental, economic and social consequences.” Sustainable Environments, Surdna Foundation

Numerous other foundations are involved to some extent, particularly in their local communities. GiveWell’s non-verbatim summary of a conversation with Gabriel Metcalf, March 31, 2014: “Other organizations involved in this work include:

The Rockefeller Foundation, which is funding Chief Resilience Officers (top-level advisors to city mayors) in 100 cities as part of its 100 Resilient Cities Centennial Challenge.

Bloomberg Philanthropies, which has convened mayors.

The Lincoln Institute of Land Policy, which convenes city planning directors on an annual basis.

The Knight Foundation, which convenes civic leaders in their eight core cities where Knight Ridder used to own newspapers.

CEOs for Cities, a national network of urban leaders.”

23.

GiveWell’s non-verbatim summary of a conversation with Stephen Smith, March 13, 2014: “Advocacy and research organizations
Mr. Smith believes that public interest in effective zoning, land use, city planning, and transit is growing, but that it is very difficult to pinpoint organizations that have done effective advocacy work on these issues. This is due both to a lack of concerted advocacy on the topic and to the difficulty of ascertaining which organizations effectively influence policy.
San Francisco and New York are two of the most productive cities in the U.S. yet have
some of the worst housing crises. In San Francisco, the research and advocacy
organization SPUR appears to conduct effective communication campaigns and to have
the ear of Supervisor Scott Weiner. Its main constituency seems to be young creative and
tech professionals. Its work has provoked some backlash from anti-gentrification
protesters. In New York, the Furman Center for Real Estate and Urban Policy at New
York University produces high-quality research primarily focused on land use issues,
though it does not do advocacy per se.
Mr. Smith also pointed to several blogs that seem to have a significant audience and draw
attention to the importance of effective zoning and transportation policies:

• Greater Greater Washington (D.C.): An advocacy and opinion site primarily
  focused on growth and transit issues.
• PubliCola (Seattle): A news site that raises awareness of zoning and housing
  issues.
• Streetsblog (New York): A news blog about transportation policy.

In general, people who believe in “market urbanism” do not seem to be highly organized.
There are relatively few local groups that fit that description, and no national coalition or
regular conference.”

GiveWell’s non-verbatim summary of a conversation with David Schleicher, May 15, 2014: “Other people and organizations working on land use issues

SPUR – a civic planning organization based in San Francisco

Congress for the New Urbanism (CNU) – CNU is similar to SPUR but works at a national level. CNU provides more specific guidance on zoning than Professor Schleicher would and supports greater regulation of building design than he would, but it also supports greater urban density. CNU is active in mobilizing political support for “new urbanism.”

Smart Growth America (SGA) – SGA is a coalition that supports “smart growth” and includes CNU as a member.

A number of academic researchers:

Vicki Been – Former director of the Furman Center at NYU, recently
appointed commissioner of housing in New York City.

Robert Ellickson – Professor of Law at Yale

Christopher Serkin – Professor of Law at Vanderbilt

Roderick Hills – Professor of Law at NYU

Streetsblog – Streetsblog groups are more influential than other similar interest groups.

Yes In My Backyard (YIMBY) organizations – These organizations are relatively small, consisting mostly of websites, and seem not to have been very influential to date. Examples include:

New York YIMBY, a blog focused on new development in NYC

In My Backyard – DC (funded by the R Street Institute)

Donald Shoup – Dr. Shoup has successfully promoted minimum fees for parking in some cities, with the help of local interest groups, such as SPUR and Streetsblog.

Sam Sullivan – Member of a Legislative Assembly (MLA) in Vancouver and former mayor of Vancouver

Brent Toderian – former Director of City Planning for Vancouver, which has been prominently successful in promoting downtown development. He has encouraged cities to become denser.”

GiveWell’s non-verbatim summary of a conversation with Gabriel Metcalf, March 31, 2014: “SPURSPUR convenes people to figure out what to do about urban policy problems. (Although the media often refers to SPUR as a ‘think tank.’) The organization identifies problems, selects and convenes experts to develop solutions, produces material about problems and solutions, and does advocacy. SPUR has identified policy solutions to problems such as how to make housing in the Bay Area more affordable, how to make transit work better, what to do to prepare for sea level rise, how to structure the business tax, how to make the city resilient in the face of earthquakes, and how to structure economic development activities to be most successful.
SPUR’s major successes in the city of San Francisco include:

• Re-starting neighborhood planning in 1999, which became the Better Neighborhoods program – which ultimately led to a series of major neighborhood plans that more or less achieved agreement among all parties about where growth should go.
• Writing the ballot measure that successfully called for the creation of the San Francisco Municipal Transportation Agency (SFMTA) in 1999 through the merging of the Municipal Railway (Muni) and the Department of Parking and Traffic. That measure also re-wrote the City’s ‘transit-first’ policy, which serves as the guiding policy for transportation investments and priorities.
• Contributing to the passage of a reform that gave the San Francisco Public Utilities Commission (SFPUC) the authority to set its own rates, in addition to other powers and duties. The reform led to more than six billion dollars in spending to rebuild the Hetch Hetchy water system, which had been on the verge of collapse.

SPUR has also had plenty of losses, including:

• The down-zoning of the Mission Street BART stations as part of the Eastern Neighborhoods plan.
• The failure to add a North Beach station to the Central Subway system. It will end in Chinatown.
• And more fundamentally, the failure to change the city’s planning process to be more welcoming of well-designed, well-located housing.

SPUR opened an office in San Jose several years ago, and is now working on Oakland—as part of its strategy to work in the three ‘central cities’ of the Bay Area.

Other groups in this space

Groups somewhat similar to SPUR in other cities include the Regional Plan Association and the Municipal Art Society in New York City and the Center for Neighborhood Technology and the Metropolitan Planning Council in Chicago. Relatively few cities currently have a group like SPUR. Mr. Metcalf believes that the SPUR model would be useful in other cities, and has done some consulting to help other groups from time to time.

Learning communities

The creation of ‘learning communities,’ or peer groups of urban leaders, can help build civic capacity. In some cities, community foundations and universities are involved in convening these groups.

Other organizations involved in this work include […] CEOs for Cities, a national network of urban leaders.”

The San Francisco Bay Area also has SFBARF, a new advocacy organization dedicated to increasing the supply of housing:
“SFBARF are people who believe SF’s housing crisis can be mitigated by increasing the housing supply. We organize renters to testify in favor of new building projects at neighborhood meetings and hearings.”
SFBARF, Mission Statement.