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Does the American Way of Zoning Cause the Suburbs of Metropolitan Areas to Be Too Spread Out?
William A. Fischel
Are American metropolitan areas too spread out? I think the answer is yes. Virtually every measure of metropolitan density indicates that U.S. cities are more spread out than those of the rest of the world (Mieszkowski and Mills, 1993:136). Much of American suburbanization can be accounted for by more-or-less market-driven factors, and there is a smattering of evidence that some other countries' metropolitan areas could use some additional suburbanization. These qualifications notwithstanding, I maintain that the peculiarly American system of local land use controls contributes considerably to sprawl.
Although many writers apply the term sprawl to all suburbanization, I employ it only to a normative judgment that the extent of suburbanization is excessive. The normative bases are economic efficiency and the judgment that, if two institutions are (approximately) equally efficient, the one that is more egalitarian should prevail. Efficient suburbanization—and efficient densities—are achieved when owners who wish to increase the intensity of use of their land cannot do so without causing the aggregate value of land in their neighborhood or (small) community to decrease. This criterion is elaborated in Fischel (1990:47-51), and indirect evidence discussed there as well as in this paper strongly suggests that few American metropolitan areas would meet this test.
This paper is organized as follows. In the next section, I treat the issue of income segregation. Income segregated neighborhoods are not obviously caused by zoning. However, evidence reviewed in this section strongly suggests that the American pattern of homogeneous, high-income suburbs is at least in part the result of our system of local land use controls. With respect to reforming this problem, however, the best has long been the enemy of the good. Reformers'
insistence that the suburbs must develop new housing for the poor invites municipalities to adopt land use policies that democratically exclude everyone. The excessively low densities that result probably do more to isolate most of the poor than would a predevelopment policy that nonetheless tolerated more-or-less homogeneous suburbs.
The following section treats the ''flight to the suburbs'' hypothesis and with it the question of how much suburbanization is caused by market factors rather than by urban public policy failures (to the extent that such distinctions can be maintained). The consensus among urban economists is that central-city problems do contribute to additional movement to the suburbs. I take a very rough guess that perhaps a quarter of modern (post World War II) suburbanization might not have occurred if central-city public amenities (schools, safety, antipollution) were comparable to that of the average suburb.
Although exodus from central cities contributes to suburbanization, it does not necessarily cause the suburbs to develop at excessively low density. Indeed, one would expect higher densities in suburbs if the only cause of sprawl were central-city problems. But suburbs are not passive receptors of development. I describe in the fourth section a process of rational, homeowner-dominated suburban politics that causes their land use controls to become ever tighter in the face of development. The key to this process is the progressive denigration of the rights of owners of undeveloped land, who are the most consistent (and often the only) transmitter of the demands by outsiders to live or work in the community. The spiral of suburban down-zoning sends development ever farther from the central city and may contribute to the formation of satellite "edge cities" that institutionalize the low-density patterns.
The penultimate section considers other public policies and arguable market failures (other than central-city problems) that contribute to the low-density patterns in American suburbs. These seem on balance to be relatively minor as causes of sprawl, although some of them—most notably federal environmental policies—are important supplements to suburban attempts to exclude development.
The final section frames the public policy issue in terms of micro versus macro solutions. The macro solution to zoning-induced sprawl is metropolitan governance. The hazards of this are loss of the desirable features of local self-government and the possibility that metropolitan governance will result in too little suburbanization and excessively high densities and even higher housing prices. The micro solution is to restore the rights of owners of undeveloped land. I believe that there is a manageable standard called "normal behavior" for judges to follow that would significantly reduce sprawl. The hazards of the micro approach are governance by unelected judges and the possible loss of local amenities from too-enthusiastic defense of private property rights.
Income Segregation is Not the Same Problem as Sprawl
Income segregation is a growing problem in American cities. Abramson et al. (1995) studied census tract patterns for the 100 largest metropolitan areas between 1970 and 1990. Their measure of income segregation had increased by 11 percent over that period (1995:70). However, over the same period, their measure of racial segregation declined. This section deals with income segregation issues as they relate to zoning.
The issue of zoning-induced income segregation is often conflated with the question of whether purely market forces in the United States induce high-income people to live predominately in suburban areas. The monocentric urban economics model predicts that, as incomes generally rise (that is, both poor and rich become richer than before), there will be more suburbanization. This is borne out empirically (Mills and Hamilton, 1994:124). But income growth does not necessarily imply that, at any particular moment, high-income people will live in suburbs.
Whether the rich live farther from the center of the city than the poor is an empirical question that involves balancing two offsetting tendencies. Richer people demand more housing (interior space and outside lawns) than poor people, and housing is more cheaply available (per square foot of living space, not per house) in the suburbs. However, people in the suburbs have to commute farther, and time wasted on commuting is more costly for rich people than for poor people. Some evidence suggests that the suburban lure of lower-cost housing offsets the penalty of more commuting time, which means that it is "natural" for wealthier people to settle in the suburbs. But there is questioning of the power of this argument (Wheaton, 1977), and it has been pointed out that it is often not true in other countries and was not true at earlier periods in American history (LeRoy and Sonstelie, 1983).
Historical factors are more likely to account for the pattern of suburbs being settled by the rich in the United States. The stock of housing is both durable and costly to remodel extensively. Housing in central cities was largely constructed for those who in the past were middle- or high-income people. As American incomes generally rose over time, this older housing no longer met the demands of upper-middle-income families. Rather than tear down or extensively remodel older housing to meet the more recent demands, it is cheaper to build from the ground up (Mills and Hamilton, 1994:245). The open ground is in the suburbs.
This long-term filtering process does not necessarily penalize the poor financially. As more people become affluent and move to the suburbs, the price of the older housing in central cities falls. Because of its durability, this housing stock still provides better housing services for a given price than does constructing new housing for the poor (Weicher and Thibodeau, 1988). The problem is that this pattern tends to concentrate the poor in central-city and older suburban neighbor-
hoods. The greater social problems of the poor contribute to declines in neighborhood amenities.
A good deal of American criticism of zoning hinges on the failure of the suburbs to accommodate low-income housing in their midst (Briffault, 1990; Downs, 1973). This focus is valid, but it can create an unrealistic expectation of what would happen if "exclusionary" zoning were somehow eliminated. Most discussions of exclusionary zoning assume that outsiders can distinguish motives for zoning, but few public officials who urge the preservation of open space are stupid enough to say that its chief value is to preclude low-income housing. It is nearly impossible by inference to distinguish more innocent objectives from exclusionary ones (Bogart, 1993; Fischel, 1985:140).
There is little historical evidence that, in the absence of zoning, the rich would be as likely to live next to the poor as to another rich household. Sam Bass Warner's study of Boston's suburban development prior to the use of zoning did not find neighborhood mingling. Land use patterns were income-segregated by neighborhood as independent builders responded to the demands of the market (Warner, 1962:Chap. 6). The same seems to have been true of New Haven. Marketing considerations and informal constraints created uniform housing patterns there well before zoning was even contemplated (Cappell, 1991). Houston, the only large city not to have zoning, is not generally characterized by mixed-income neighborhoods. Houston's suburban development occurs in homogeneous planned communities that are governed by private covenants whose restrictions would be the (unexpressed) envy of the most exclusive municipal planning board (Peiser, 1981).
The problem with misapprehending the settlement patterns that would result in the absence of zoning is that it creates unrealistic expectations for zoning reforms. The state that has carried such reforms the farthest is New Jersey (Haar, 1996). Its supreme court was the first (and, with respect to the vigor with which it pursued the matter, the only) to recognize that zoning desired at the local level is not necessarily desirable for the metropolitan region as a whole. (The case is Southern Burlington County NAACP v. Township of Mount Laurel, 336 A.2d 713 [N.J. 1975].)
The New Jersey court's initial remedy for exclusion was the creation of an obligation for communities to allow "least cost" housing to be developed (Oakwood at Madison v. Township of Madison, 371 A.2d 1192 [N.J. 1977]). I think this was a major and largely positive reform, but the New Jersey supreme court six years later did not regard it as going far enough. The reason was that newly built "least-cost" suburban housing was still relatively expensive. The New Jersey court apparently expected, contrary to most economic evidence, that unleashed private developers would build many units for low-income households. This makes little sense for a capital good, housing, that is highly durable. In order to get enough years of use to justify the high construction cost, it is best
to start with high-quality construction, which is initially affordable only by the nonpoor (Mills and Hamilton, 1994:251).
As a result of its impatience with what the market for new construction was producing, the New Jersey court hit upon a scheme that required suburbs to accept a quota of new, low-income housing for any "market-rate" housing that would be built (Mount Laurel II, 456 A.2d 390 ). These quotas were to be financed by charging developers of market-rate housing for rezonings (required by the courts, not volunteered by the municipalities) that allowed the builders to use more profitable higher densities (Fischel, 1991). This scheme looks generally desirable in terms of mixing population.
An important drawback of Mount Laurel II was that the court focused on the proportion of low- to high-income housing rather than the overall density of housing. Once a community was certified as having a proportion of new housing that satisfied its "fair share" of low-income housing, it was virtually invited by the New Jersey court to be as exclusive with the rest of its undeveloped land as it wanted to be: "Finally, once a community has satisfied its fair share obligation, the Mount Laurel Doctrine will not restrict other measures, including large-lot and open area zoning, that would maintain its beauty and communal character" (456 A.2d at 421). The incentives for the suburbs then became to switch from selective exclusion of the poor to general exclusion of everyone (Fischel, 1991). I have it on local authority that Bedminster Township, for example, has not budged from its multiacre minimum lot sizes since its much-noted (Lamar et al., 1989) quota of Mount Laurel-induced housing was constructed.
The new judicial remedy was sufficiently disturbing to New Jersey's large constituency of suburban voters that the state legislature took on the task of administering the court's order. Under the guise of complying with the decision, the legislature's 1985 Fair Housing Act actually subverted most of its goals (Schill, 1991:847). The New Jersey supreme court acceded to this as part of a deal in which the governor agreed to reappoint the chief justice, according to Kirp et al. (1995:142). This extraordinary pressure—reappointment is historically routine in New Jersey—by the executive on the judicial branch and its equally extraordinary acceptance by Chief Justice Wilentz may explain why Mount Laurel II has not been emulated by other state courts.
What appears to have most disturbed New Jersey opponents of Mount Laurel remedies was not just the fiscal impact of the subsidized housing (although that was certainly important). The more critical issue may have been the neighborhood effects. Many built-up suburbs were actually willing to pay other communities between $10,000 and $20,000 per unit to accept half of their mandated share (Rubin et al., 1990:335). The housing development across the street, not on the other side of town, is most disturbing, and the Mount Laurel approach flew in the face of that anxiety. (I infer this both from numerous newspaper articles and my 10 years experience as a zoning board member in my New Hampshire hometown.)
Although Mount Laurel advocates can point to specific projects that have been built (Lamar et al., 1989), my undergraduate student's search for statewide evidence that it had changed the general pattern of suburban housing development was fruitless. For example, the ratio of new apartment to new single-family home development in New Jersey communities singled out as having Mount Laurel obligations was not appreciably changed during the 1980s compared with earlier periods and compared with nearby Pennsylvania communities, which did not have a similar obligation (Giovannotto, 1994, summarized in Fischel, 1995:338).
Although I regard neighborhood income segregation as likely to occur under almost any mechanism that operates without a strong dose of coercion, it must be emphasized that income segregation is greatly accentuated by modem zoning. It is one thing to observe that the rich and the poor live in different neighborhoods separated by a thoroughfare, a cemetery, or a railroad track. It is something of a greater order of magnitude to observe that they live in entirely different municipalities separated by miles of low-density development or "natural preserves." The larger-area separation surely discourages economic and social interactions that would otherwise be mutually beneficial and that are the cornerstone of a prosperous, democratic society. The spatial mismatch hypothesis, in which central-city youth are said to be unable to plug into job-finding networks because of excessive distances (Holzer et al., 1994), is just one pathology that emerges from excessive distance between people in metropolitan areas. Low-density counties also have lower output per worker (Ciccone and Hall, 1996).
But does zoning actually cause income segregation by municipality? This is an instance in which the conventional wisdom—that exclusionary zoning is a real issue—is confirmed by evidence. The evidence is necessarily indirect because income segregation by neighborhood would, as mentioned earlier, most likely arise without zoning.
The first bit of evidence is that high-income communities almost invariably have more restrictive zoning regulations than others. They impose more stringent regulations on undeveloped land than those that apply to existing, built-up neighborhoods. If market forces alone were sufficient to create exclusive communities, one would expect to see zoning standards such as minimum lot sizes be more uniform among communities. Rudel's excellent study of the evolution of zoning regulations among Connecticut towns (which jibes with my less-systematic observations) found that settlement by higher-income residents nearly always makes them more restrictive (Rudel, 1989:64-68, 81-137).
It is well established that zoning does not simply "follow the market." The evidence is clear that most suburbs are zoned for minimum lot sizes greatly in excess of what the market would generate (McMillen and McDonald, 1991; Peterson, 1974; Wallace, 1988; White, 1988). The common knowledge among developers that a rezoning to allow greater residential densities nearly invariably
raises the value of land indicates that it is zoning, not the market, that constrains the construction of higher-density housing in the suburbs.
Other evidence that is consistent with zoning being an important source of suburban income segregation is a study using a national sample by Hamilton et al. (1975). They found that census tracts within metropolitan areas that had numerous governments—and hence numerous independent zoning authorities—were more homogeneous than the tracts within metropolitan areas that had fewer local governments. Since there is no reason to suppose that the land market operates differently in metropolitan areas with few or many governments, they attributed the sorting of people by income to the existence of independent local governments. This finding is confirmed with different samples by Eberts and Gronberg (1981).
It is theoretically possible for communities to become stratified without zoning, but the conditions for doing so seem unlikely (Epple et al., 1988). Wheaton (1993) found that even under "ideal" conditions for spontaneous income segregation, at least a weak form of zoning for minimum lot size was necessary to obtain such stratification. Without fiscal zoning, developers have a strong incentive to build lower-cost housing in affluent districts to take advantage of the higher-quality services and lower tax rates. Doing so would give them a capital gain at the expense of existing homeowners (Hamilton, 1976). Since homeowners are the most politically effective group in small suburbs, they have the means as well as the incentive to pass zoning laws to protect the value of their major asset, their homes (Rossi and Weber, 1996:23). A determinants study by Rolleston (1987) established that the desires of affluent communities to protect their fiscal advantages were significant and large determinants of suburban zoning restrictiveness.
The motive is not modern; local governments have been concerned about immigration by the poor since there were local governments (Burns, 1994:35). The incorporation of the many small, independent suburbs in Los Angeles County under the post World War II Lakewood Plan was motivated entirely by the desire of homeowners to preclude the invasion of apartments in residential areas, which had been allowed by the more prodevelopment county government (Cion, 1966). A similar motive seems to have been behind the resistance of Pittsburgh's suburbs to annexation by the central city in the 1920s (Lubove, 1969:94-100). The concern that suburban zoning makes low-income housing difficult to develop has been expressed by federal commissions of all political stripes. The National Commission on Urban Problems (1969), chaired by Senator Paul Douglas and commissioned by a Democratic president, regarded local, exclusionary zoning as a major barrier (1969:19). The Advisory Commission on Regulatory Barriers to Affordable Housing (1991), commissioned by a Republican president more than two decades later, came to the same conclusion (1991:2-6). That such similar conclusions should be reached more than two decades later indicates the staying power of localism in zoning.
I think it is important to at least raise the issue of why suburban communities are averse to having low-income residents. Most of the above-mentioned studies have emphasized the desire for fiscal protection and a sense of snobbishness. [The only legislated program requiring a modest proportion of new housing in each community to be for low-income residents is Massachusetts' Anti-Snob Zoning Act (Stockman, 1992).] I believe, however, that these factors do not tell the whole story. An important problem, I believe, is fear of crime and other forms of public disorder such as aggressive begging (Segelhorst and Brady, 1984; Ellickson, 1996a). Disorder is worrisome to homeowners not simply because of personal risk, but because it reduces housing values as well (Taylor, 1995).
These fears are only partly controlled by expenditures on police and courts, which are, in any event, costly and uncertain deterrents (Cassell and Hayman, 1996). The least costly way for middle-class people to obtain more safety is to put some distance between themselves and the poor and to use zoning regulations to maintain that distance (Wilson and Boland, 1976:186; Oates, 1977). The rising crime rates of the 1970s and 1980s have been estimated to cause a significant amount of the flight to the suburbs (Cullen and Levitt, 1996; Skogan, 1990:82). Cullen and Levitt estimate that, for the 1976-1993 period, moderate-to-large U.S. central cities lost more than one resident to the suburbs for each crime committed (1996:9). The effects of crime were particularly large on the out-migration of high-income households with children (p. 4) and did not vary by race (1996:20). This may partly explain the divergent trends over the 1970-1990 period observed by Abramson et al. (1995), in which racial segregation fell but income segregation rose. Higher-income blacks as well as whites respond to rising crime by leaving inner-city neighborhoods.
The focus on crime as a cause of excessive suburbanization actually is cause for some guarded optimism. Crime rates in nearly all large central cities have been falling rapidly in the last few years to levels that are nearly those of the 1960s (New York Times, December 20, 1996, p. A1.) If this trend continues, middle-class people may reverse some of their out-migration. More important, if crime reduction is a uniform trend (and not simply the result of extraordinary and costly efforts by cities), suburban homeowners may be less inclined to resist development of lower-cost housing.
Reductions in sprawl would reduce the physical distance between people of all income classes and thereby decrease the degree of isolation of the poor from the job market and other forms of social capital (Schill, 1991). Indeed, research on peer group effects in neighborhoods and schools suggests very strongly that social isolation is bad for the economy as a whole, not just the poor (Benabou, 1993; Case and Katz, 1991; Cutler and Glaeser, 1997; Henderson et al., 1978). (For a less pessimistic view of the effects of spatial isolation on income distribution, see Kremer, 1997.) The problem, as Tony Downs has persistently pointed out, is how to get the population as a whole to cooperate to break down the social
isolation of the poor (Downs, 1973, 1994). Breaking down the spatial isolation of the poor by discouraging excessively low-density suburbs would seem to be an important first start.
Flight From Central Cities Could Result in High-Density Suburbs
The problem of sprawl raises at least two distinct issues related to excessive suburbanization. One asks whether American central cities are being depopulated for reasons besides otherwise benign and probably unstoppable economic trends and technological changes. The second asks whether the population density of suburbs is artificially low. These are not the same issue, nor are they necessarily related. On one hand, central cities could be depopulated as the result of suboptimal public policies, with people moving to the suburbs and causing suburban densities to be too high. On the other hand, central-city depopulation trends could be natural, but suburbs could have artificially low densities, spreading the population out too far into the countryside. To put it another way, one trend (city depopulation) does not have to imply the other trend (low-density suburbs).
Although this essay dwells on the possibility of the second trend (unduly low-density suburbs), it may be useful to review what is known about the first (city depopulation). The issue was recently reviewed in the Journal of Economic Perspectives by two distinguished urban economists, Peter Mieszkowski and Edwin Mills (1993). Mills in particular has been concerned over much of his career with the causes of suburbanization. He has done this by advancing both theoretical models and empirical evidence that address suburban growth.
As a result of his focus on the standard urban economics model's location predictions (described in the previous section), Mills has emphasized the "natural" causes of suburbanization as being improvements in transportation infrastructure (which reduce the costs of commuting), technological changes that allow employment decentralization, and, most important, long-term increases in household incomes. Even if all households had exactly the same income, city growth in an era of rising personal incomes would be disproportionately located in the suburbs.
Mills's empirical work pushed the date for the beginning of American suburbanization back to the 1880s (Mills, 1972:48). Using the concept of population density gradients (the percentage increase in population density as one moves closer to the center of a city), Mills showed that the decades following World War II were not unusual in their suburbanization trends. Indeed, the major surge of suburbanization (which otherwise seems to have been going on uniformly since 1880) appears to have begun in 1920, not 1950 (Mieszkowski and Mills, 1993:140). It is notable that the number of communities that adopted
zoning was very large in the 1920s, but I have argued that suburbanization was more likely a cause of zoning's popularity than vice versa (Fischel, 1995:280).
Because of Mills's long-time emphasis on the "natural market" factors, it came as something of a surprise to me that Mieszkowski and Mills concluded that social (chiefly racial) and political factors accounted for a large amount of American suburbanization: "Our judgment is that both the natural evolution and fiscal-social approaches are important" (1993:144). They did not attempt to quantify the relative importance of each, but an article in the Journal of Urban Economics by Robert Margo (1992) does suggest some insights.
Margo used a rough-and-ready version of the urban economics model to estimate how much suburban growth in the 1950-1980 period could be accounted for by the rising household incomes during the period. His method was to estimate metropolitan household location patterns for 1950 and then project 1980 incomes onto this pattern to see how many more households would have lived outside central cities with the higher incomes. His point estimate of how much suburban growth was accounted for by rising incomes was 43 percent (1992:301). That leaves more than half of suburbanization to be accounted for by other factors. I shall speculate in a very rough way about the relative proportions of these other factors.
Aside from growth of personal income, the other "natural evolution" factors of the last century are technological changes and highway building, which is the chief innovation in transportation. [Every society in the world undertakes a system of public transportation (Ellickson, 1993:1381), and in this sense highways are a natural product of American economic development.] The technological changes that most economists believe have contributed to suburbanization are the development of over-the-road track transport (displacing the railroads, whose intersections once formed the centers of many cities) and the development of continuous-processing manufacturing, which is land-intensive. Large-scale manufacturing is becoming so decentralized that in a few decades it may no longer be classified as an urban activity (Schmenner, 1981). Technical changes in communications also seem to promote decentralization. Examples include telephones, faxes, electronic mail, and rapid package delivery systems.
These other "natural" factors seem unlikely to account for as much suburbanization as long-term growth of personal income. Although it has become decentralized, manufacturing has long been a declining fraction of American (and other high-income nations') employment. The importance of decentralizing inventions likewise seems moderate. Instant communication is nothing new; telephones have been around for more than 100 years. The faster speeds achieved by automobile commuting are partly offset by road congestion and by the fact that higher incomes make the opportunity cost of transportation higher. The reason that Americans complain so much about congestion is not that average automobile trip times have increased (the evidence suggests that they have not—
Gordon et al., 1989), but that people with higher incomes regard even short waits as more costly.
If the foregoing "natural" trends are less important than income in explaining suburbanization, they must account for less than 43 percent (Margo's income effect) of modern suburbanization. Suppose they independently account for 33 percent of suburbanization, so that the aforementioned factors—income growth, transportation development, and technological change—account for three-quarters of American suburbanization. Thus it seems reasonable to guess that perhaps a quarter of Americans' move, beyond the limits of central cities may be accounted for by factors other than mostly benign, "natural" economic trends. I offer this guess solely to attempt to put the issue of excessive suburbanization in perspective on an order-of-magnitude scale. Saying that U.S. cities might be 25 percent too suburbanized means that the problem is not trivial, as it would seem to be if cities were 2.5 percent too suburbanized, and not completely unmanageable, as it would be if cities were 250 percent too suburbanized.
Mieszkowski and Mills describe the alternative factors as social and fiscal, and their examples cover a wide range of items that are predominantly, if not uniquely, American. Primary are the problems of the central cities: high local taxes, high crime rates, poor public schools, racial conflict, automobile congestion, and low-quality environment (1993:137). Mills found in earlier work that race was especially robust in explaining suburbanization (Mills and Price, 1984). These factors suggest that large numbers of households are repelled from central cities as the result of factors that most people would want to discourage by public policies.
As I suggested at the outset of this essay, however, it is logically possible that the suburban development that results from an exodus from central cities could still be highly compact. It is evident from informal observation of privately developed "planned communities" such as Reston, Virginia; Columbia, Maryland; and Foster City, California, that suburbanites are willing to live in relatively high-density communities as long as they get good public amenities, especially safety. Their gross densities—including all land uses, not just housing—range from about 4,000 (Reston and Columbia at its projected completion) to 7,000 (Foster City) persons per square mile. These are on the order of twice the gross density of the suburban parts of most urbanized areas. At the lower-end density—Reston and Columbia—this implies about two-fifths of an acre per household. By the usual rule of thumb that has residential as half of all uses, this works out to a net density of one-fifth acre per household.
The relatively high densities of these very affluent places might, with further investigation, form a useful benchmark for calculating efficient suburban densities. This is because the developers of such communities have a strong incentive to internalize all spillover effects (Fischel, 1994). I am not the only person to have had this thought. Joel Garreau points out that, if the Boston metropolitan statistical area (MSA) were developed at Reston densities, built-up uses would
take up less than one-fifth the land area (Garreau, 1991:86). (In support of Garreau's observation, I would add that New England MSAs are delineated by town boundaries rather than counties, so their land area is already much smaller than MSAs in the rest of the United States.) Furthermore, most of the open spaces of Reston, Columbia, and Foster City are actually open to the public, in contrast to the mostly privately owned open spaces in low-density suburbs.
I submit that sprawl is not simply the result of a push of population out from the central cities. It results at least as much from the nearby suburbs' unwillingness to accommodate moderate-density housing. Mieszkowski and Mills did mention suburban zoning as a factor contributing to metropolitan suburbanization, but primarily as a device to promote social and income homogeneity, not to control density. That is, they seem to accept that, once people choose to move to the suburbs and find a homogeneous community, suburban densities are not unnaturally reduced. It is here that I part company with them both in description and (implied) prescription.
The Political Dynamics of Zoning Create Suburban Sprawl
The peculiar fact of American metropolitan areas is that many suburbs that are quite close to downtown have preserved large amounts of undeveloped, open space, and most of their residential development has been at relatively low densities. The typical suburban development is not like that of Arlington County, Virginia, which has become a high-rise, high-density suburb of Washington. (The outward push on office development is most likely due to the height limitations on buildings in the District of Columbia, which prevent office towers from overshadowing the Capitol.)
The more typical suburb is Marin County, California, the area immediately north of the Golden Gate Bridge from San Francisco. It has large amounts of open space on which development could easily occur but does not (Dowall, 1984:92; Schwartz et al., 1981; Frieden, 1979). Tens of thousands of commuters from far-away suburbs and exurbs pass through the Marin County corridor on U.S. Route 101 on their way to work in San Francisco. Marin's open space is an asset for those who live near it, and it probably provides some pleasures for those who drive through it daily. But it also represents an enormous waste in the form of excessive commuting and displacement of economic activities to less productive areas. (The same might be true of the height limits of the nation's capital, but, in this case, the national benefits of a historically scenic city would have to be weighed against the costs of the height limit.)
Having many close-in suburbs develop at low densities does not necessarily mean that the metropolitan area as a whole will become less dense. It could be—and this seems to be the case for English and European cities—that rendering suburban land off-limits to development would force developers back into the
central cities (Cheshire and Sheppard, 1989). A strict policy of low-density (verging on no-density) suburbs could thus result in higher-density cities. (This assumes that would-be suburbanites do not migrate to other cities that have a more permissive policy with regard to suburban development.) The zone-them-back-to-the-city scenario would be most likely to apply in areas in which basic land use regulation was done by a national or regional political body.
The compacting effect of low-density suburban zoning is less likely to occur in the United States. Basic land use controls are undertaken by local governments. In most metropolitan areas with populations in excess of 1 million (which contain about half of the U.S. population), there are scores if not hundreds of independent local governments surrounding central cities (Fischel, 1981). Developers who are frustrated by regulations in one municipality can skip to another.
Municipal choice by itself does not necessarily imply sprawl. Within any given distance from the central city, there could be suburbs with densities that are excessively high as well as low. I believe, however, that the political ontogeny of zoning within any given suburban community tends toward excessively low-density zoning (Fischel, 1985:Chap. 7). Thus even the relatively accommodating suburbs will not compensate for the zoning in those that are more eager to maintain open space and low-density development. The pervasiveness of this pattern of zoning and the absence of an offsetting impetus toward higher-density development are among the reasons that I strongly suspect that U.S. metropolitan areas are developing at excessively low densities. Land use regulation is pervasive in the suburbs, and its biases are, as I shall describe, almost always in the direction of lower-than-efficient densities.
Most rural townships and villages (or, in much of the West and the South, unincorporated county settlements) at the edge of metropolitan areas are not initially antidevelopment. Many rural residents, even if they are not owners of undeveloped land, stand to gain more from development than they would lose (Rudel, 1989:59). Surveys generally show that rural folk are seldom antigrowth (Hahn, 1970). As a result, the zoning in these communities, when it exists at all, is usually permissive (Siegan, 1976:52; International City Managers' Association, 1960). Rural townships often zone land for agriculture, but only as a kind of holding zone. Rezonings to more intensive activities (housing, industry) are expected to occur when a reasonable proposal comes along.
Once such communities become partially developed with suburban homes, however, a change in the political climate takes place. The new residents eventually become a political majority, and, in such communities, the new homeowner majority rules (Ellickson, 1977:405). They have a different frame of economic reference than that of the traditionally rural, small-town residents. Because suburbanites typically own land only for their own homes, most new residents do not stand to gain directly from further development. Because they work elsewhere in the metropolitan area, further residential development in their own community does not offer spillover wage or employment benefits. Because suburbanites
have moved to the area from somewhere else, they are less concerned about jobs, housing, and other local economic advantages for family members and others with whom they have long-term personal ties. [I found that all of these factors—potential land development, job prospects, and family ties—were important among rural New Hampshire residents who favored a pulp mill development in their town (Fischel, 1979).]
This shift in the economic and social profile of the exurban community does not instantly translate itself into political action. But eventually some event galvanizes the new majority to seize the political reins. This change occurs well before the municipality itself is filled up in any meaningful sense. There is much undeveloped land left, and the new majority changes the zoning, usually by stages, to see to it that it will remain undeveloped or developed at far lower densities than the tracts in which they themselves live (Pyle, 1985:43).
Agricultural zoning in the newly suburban areas is converted from a holding zone to a permanent constraint. Of one such farmland preservation program, a suburban county official observed, ''We're creating problems for the counties that are just outside the metro area [of Minneapolis/St. Paul]. They don't have this type of ordinance, and we're creating a leapfrog development effect into these counties'' (Toner, 1978:14). One might ask why developers do not anticipate such events and subdivide in advance of the more stringent regulations, thus vesting their right to build. Some developers do anticipate and act (Dana, 1995; Riddiough, 1997), but such foresight is rare.
Although minimum lot size is the workhorse of zoning, many other regulations constrain development. One in particular can leave observers of suburban development with the erroneous impression that a community is developing normal-density housing. Many communities with low-density zoning allow or encourage developers to cluster their housing (Whyte, 1964). The owner of a 30-acre tract that is zoned for a minimum of 3-acre lots may be able to cluster the 10 allowable houses in a smaller area of, say, 5 acres. Developers often prefer this because the saving on infrastructure costs exceeds the revenue they could obtain by marketing the larger lot. The net residential density is thus a half acre per home, which appears to be only a moderate constraint. Half-acre residential lot development in fact appears to be the observed norm, as determined by Vesterby and Heimlich (1991:285).
Observing such net residential densities (the 10 houses on 5 acres in my foregoing example), one might conclude that "beyond a doubt, suburban-zoning provisions are consistent with the demands of most of the people who would live there, even in the absence of zoning regulations" (Mills and Hamilton, 1994:414). But the local planning board in my example would not let the remaining 25 acres be developed. To obtain the cluster zoning, the developer would have to agree to keep the remaining acreage in open space. Although local planners might proudly point to the cluster as an example of how they have prevented sprawl-type development, the effect on metropolitan-area development is exactly the same as if
each home had been built on a 3-acre lot. There are still only 10 houses on the 30-acre tract. This is why it is important not just to look at the densities in areas in which development is allowed, but to pay attention to the land on which development is entirely precluded (see Box 1).
One might ask how the political system of land use regulation gives rise to the inefficient patterns of sprawl. Modern political economy emphasizes how frequently people with concentrated economic interests manage to prevail over the interests of the majority. With this model in mind, one would expect that owners of undeveloped land and their allies in the development industry would not find their minority status to be any disadvantage (Denzau and Weingast, 1982). But small, local governments are not convincing examples of interest group politics at work. Nearly all empirical evidence on the subject—not just that pertaining to land use controls—indicates that the majority-rule model applies far better in small towns (Bloom and Ladd, 1982; Holcombe, 1989; Holtz-Eakin and Rosen, 1989). Low-density suburban zoning is not the result of the failure of democratic processes. It is a result of its success. The median voter in such places is a homeowner, and elected officials are at considerable pains to pay attention to her concerns about the single largest asset she owns.
A development-minded landowner faced with inefficiently low-density zoning that he cannot change through the political process has two options. One is to attempt to get the courts on his side. The owner could argue that the low-density zoning of his land makes development so uneconomical that most of the economic sticks in his bundle of property rights are missing. Under this premise, his attorney might argue that he has been deprived of his property rights without due process of law. Alternatively, the attorney might invoke the regulatory takings doctrine, arguing that the deprivation of use is tantamount to public acquisition of his property for which just compensation is due (Ellickson, 1977:468).
The chances of either argument succeeding vary by state. On one side is Pennsylvania, whose supreme court has been generally receptive to pro-development due process arguments (Coyle, 1993:54). On the other side is California, where, since the late 1960s, it has arguably been malpractice for an attorney to charge a client for making any such claim (Coyle, 1993:112; DiMento et al., 1980). I suspect such differences account in part for the vast differences in housing prices between California and the rest of the country (Fischel, 1995:Chap. 6). But the rule in most states has been that such claims will help the developer only in unusually stringent circumstances. Most courts defer to the decisions of local government as long as there is some apparent public benefit from the regulation and as long as the landowner has some residuum of value left in the affected parcel. The eyes of the courts are almost always trained on the broadly conceived benefits of the regulation to the community, not on the financial opportunity cost of the regulation to the owner of undeveloped land.
The foregoing observation will seem peculiar to many European observers. In their minds (and in the minds of some American scholars), the United States is
the bastion of property rights, with courts reviewing regulations in ways that never occur elsewhere. They are correct that American courts are unusual in their willingness to review the products of legislative regulation of the economy (Ogus, 1990). But they overlook the fact that the local legislature almost always wins in the United States (Briffault, 1990).
Much has been written (some by myself) about the revival of the regulatory takings doctrine (Fischel, 1995). I shall in the final section of this paper suggest that disinterested institutions can make a useful contribution to the spread of this doctrine in the name of reducing metropolitan sprawl. But it would be remiss of me not to note that regulatory takings have so far barely rumpled the fabric of local land use regulation. By far the greater source of difference between the United States and Europe is that American regulations emerge from more or less autonomous local governments (Cullingworth, 1993). In a few states, a state or regional body can review the products of local regulation (Popper, 1988), but this usually just gives antidevelopment forces another shot at the proposal. Few of the higher-government review bodies tell a local government that it must accept a development it does not want (Healy and Rosenberg, 1979:189).
The other option for the developer who regards his land as excessively regulated is to bargain with the community. Such bargains do occur, but they happen at a rate that is much lower than is optimal (Fischel, 1985:Chap. 4). This is partly because the usual transaction costs of deal-making are greatly increased when they are undertaken in the public sector. Many parties must be satisfied, and judicial hostility to contract zoning is widespread, so that third parties (usually private antidevelopment groups) can upset deals between landowners and the duly elected representatives of the public sector (Fischel, 1985:78; Lassar, 1990).
More important is the sense of entitlement that is promoted by American localism. Localism encourages the newly arrived suburban residents of exurban communities to regard the status quo in land use as their personal property (Nelson, 1979). This has important consequences. It is well known in experimental economics and psychology that it takes much more to persuade people to trade away that which they possess (or have a sense of entitlement to) than to get them to purchase the same thing from a range of choices (Knetsch and Sinden, 1984; Hoffman and Spitzer, 1993). The reluctance to trade that which you already own is called the endowment effect.
Endowment effects are not themselves causes of economic inefficiency. Economic efficiency is simply about voluntary gains from trade, and reluctance to trade is itself a voluntary decision. Hence an important reason that suburban zoning is restrictive has nothing to do with conventional efficiency considerations. Nor does reluctance to trade necessarily favor the rich; the poor may be as attached to what they own as anyone else.
One might respond to this defense of exclusion by noting that the legitimacy of political arrangements might better be posed as an ex ante choice of institutions rather than choices made after the institutions had evolved (Fischel,
1995:198). One might stand in a Rawlsian "veil of ignorance" and ask what constraints on land use should be allowed. A golden rule (of which Rawls, 1971, exposited a sophisticated variation) would ask current suburban residents what sorts of regulations their towns should have if they themselves were outsiders (Fischel, 1995:359). Rather than expand on that rarefied exercise, however, I prefer to invoke a simpler standard invoked in the discussion above: if two systems are (approximately) equally efficient, the more egalitarian system should prevail.
It should be clear that the usual pattern of suburban development regulation favors wealthy people over others. The early suburban residents (as distinct from rural-agricultural old-timers) are usually among the wealthiest stratum in our society (Rudel, 1989:62; Vesterby and Heimlich, 1991:288). They are the voters who remold the local land use laws to favor their interests by demanding lot sizes and other standards that preserve the low-density status quo of the partially developed suburb (Baldassare and Wilson, 1996:467). Thus two powerful economic restraints on trade—transaction costs and the endowment effect—work to perpetuate suburban densities that are "too low" within the standard of efficiency and modest egalitarianism. This standard is modest in that it does not seek to use the public sector to take things from the wealthy; it only asks them to pay for what they get.
In response to the observation that such zoning has been around a long time, so that most current suburban residents have already paid for their exclusivity, I would observe that any status quo, no matter how undesirable, can be capitalized in housing prices. For example, unfair property tax assessments that assess new homebuyers more than long-time residents, are clearly capitalized into property values, thus seeming to equalize total payments from housing and taxes (Yinger et al., 1988:135; Do and Sirmans, 1994). But this in itself is a poor justification for perpetuating an inefficient and unfair system of taxation. Capitalization allows reformers to gauge the depth of opposition and perhaps arrange for transitional relief, but to concede it as a decisive argument against reform is to give up the game entirely.
Subsidies and Speculation are not Important Causes of Sprawl
I have so far shown that well-informed urban economists think that American central cities are being depopulated as a result of a bundle of social and fiscal ills. I then submitted that the American institution of local zoning has a systematic bias toward low-density residential uses caused in part by a desire to keep new, low-income housing out. The net result of this is a metropolitan area that is excessively spread out. As the close-in suburbs raise the drawbridge, developers vault to municipalities farther away from the city, where the welcome is warmer, at least for a while. It is well known, for example, that San Francisco Bay area
growth controls have forced development into the remote Central Valley and induced commuting distances that have become modern legends (Garreau, 1991:310-317).
Some remote but newly developed places in which the jilted developers land recapitulate the experience of the exclusive close-in suburbs. After an initial spate of development, they become more exclusive. Others, oftentimes once-remote satellite cities with a declining economic base, may blossom into "edge city" complexes. These places harden the low-density zoning patterns by making long-distance commutes less necessary for residents of once-remote suburbs (Garreau, 1991:129). The metropolitan patterns of settlement, however, are lower densities of employment and residences than they would have been without this leapfrog process.
As I mentioned in the introduction, the clearest evidence of American sprawl comes from international comparisons. Virtually every measure of metropolitan density indicates that U.S. cities are more spread out than those of the rest of the world. It is not simply higher incomes that account for this. The large urban areas of other high-income countries' are more compact. But it is reasonable to ask whether other American-specific conditions might better explain our tendency to spread out.
Lack of Mass Transit
Whereas other countries have more mass transit (intraurban rail) facilities, the low densities of American metropolitan areas are more likely a cause of our reliance on automobiles than the reverse (Mills and Hamilton, 1994:300). When modern American commuter rail facilities are constructed, ridership is almost always low and less than was projected (Gordon and Richardson, 1989). This is not the result of high fares; all of these rail transit systems are at least as heavily subsidized as the automobile network. The only American metropolitan densities that can support such systems are in cities that have had rail lines for many years (Small, 1992:106).
U.S. Land Area
A factor that is often mentioned as accounting for American sprawl is the greater land area of the United States. Competent urban economists mention this repeatedly, but it seems contrary to economic reasoning. It is not the amount of undeveloped land that constrains the outer development of cities, but the price of land. The land on which development might occur is owned by people who have to be persuaded to sell it at a price in excess of its value in nonurban uses. The most common nonurban use is agriculture. Of course, much agricultural land on the urban fringe is purchased by speculators—and usually kept in farming—prior
to development, but that transaction does not nullify the fact that the speculator must consider the value of competing uses (Peterson, 1978).
It is well established that higher farmland prices cause higher-density residential development (Brueckner and Fansler, 1983; Pyle, 1985). Given the extensive world trade in agricultural products, the cost of farmland (adjusted for crop-growing quality) and hence the opportunity cost of suburban sprawl ought to be about the same in Belgium as it is in Michigan. (Of course, the Belgians may subsidize their farmers and thus keep the price of farmland artificially high, but American subsidies are of a similar order of magnitude—Sanderson, 1990.) Hence the larger amount of land in the United States does not give a convincing account of why our cities should be more spread out. Moreover, Canada offers an obvious counterexample. Its cities are more densely populated by the usual measures than those of comparable size in the United States (Mills and Mieszkowski, 1993:142).
Housing Ownership Subsidy
An alternative reason for sprawl is said to be the special subsidy for single-family housing in the United States. The chief subsidy to housing, which dwarfs all of the rest (including federal mortgage subsidies), is the failure to tax the implicit rent on owner-occupied housing (Aaron, 1972:54, 62). The net value to homeowners from the present system undoubtedly causes them to purchase more housing than they otherwise would, and this has to be regarded as a contributor to suburban sprawl.
But not much. The tax advantages of home ownership are not greatly enhanced by having a multiacre lot. The reason is that, after the first quarter-acre or so, additional land adds very little to the value of a suburban home (Asabere, 1985). The additional tax advantage that a homeowner gets for buying a larger lot is actually quite small. The problem with suburban sprawl is not that residences are mostly owner-occupied, single-family homes. The problem is with the land that is left open as either excess lot size or entirely undeveloped land.
Many of the arguments against urban sprawl take the view that the only cure is to develop multifamily housing. Yet the raw statistics do not give much credence to that. Here is a heuristic calculation that continues to surprise my students (and all other audiences except land developers): take the U.S. population—a quarter of a billion—and divide it into families of four. Give each family an acre of land to live on, an acre being (I tell them) a shade less than the area between the goal lines of a football field. How much of the land area of the 48-contiguous states would be thereby taken up? I poll the students for their guesses (no area figures are given), and the median guess is almost always between 30 and 40 percent. The correct figure is 4 percent.
Since residential land is about half of all urban and built-up land, a half-acre lot size for most households would not cause much sprawl, given that existing
urban and built-up areas occupy less than 4 percent of the 48-state land mass (U.S. Department of Agriculture, 1984). A nationally established maximum of quarter-acre lot sizes (which is still not as small as the average of the uncrowded, affluent, planned communities of Reston and Columbia) would result in quite compact suburbs, provided that the area between developments was not excessively large, as noted in the discussion preceding Box 1. This is not an argument against multifamily housing units. It is intended to suggest that restrictions on sprawl densities would still leave most of the population of the United States able to live in single-family homes, an option clearly preferred long before the federal income tax made homeownership especially attractive (Barrows, 1983:398). Antisprawl policies would be more palatable if they did not always conjure up images of high-rise housing in the suburbs.
A neglected factor in the housing-subsidies-cause-sprawl argument is the offsetting effect of agricultural subsidies. The only sector of the economy more favored by government subsidies than homeownership is agriculture (Gardner, 1992). Farmers and other rural landowners barely pay property taxes in most states as a result of various "current-use" assessment programs, in which land is taxed not for its market value, but for its (usually much lower) value as farmland. Inheritance taxes for farmers are also low, and most crops get direct or indirect subsidies from both state and federal governments. The fixed factor that absorbs these benefits is land (Henneberry and Barrows, 1990; Reinsel and Reinsel, 1979). It is thus that much more difficult for developers to purchase exurban land, and this effect offsets at least some of the subsidies to housing.
Another factor that is often said to cause excessively low densities is land speculation. The story, which is an old one (Fisher, 1933), goes like this. Owners of undeveloped land in the suburbs often decline to develop it, even when there is a bona fide builder at hand. The owner speculates that the land's value will be greater if she waits a few years. As a result, the builders bypass the land and erect houses in locations even more remote from urban centers. This pattern of leap-frog development is said to contribute to suburban sprawl, and a number of land use regulations—some actually put into practice, such as the Portland program, described below—have been devised to discourage it.
The trouble with this scenario is that it ends too soon. It does not ask why the land speculator might reasonably assume that the first offer, which she turns down, will be upped by a later developer. The reason is that the later developer will find it profitable to put up higher-density housing. The eventual pattern is leapfrog-with-infill, in which the infill development has a greater density (Ohls and Pines, 1975; D. Mills, 1981). Thus successful land speculation ultimately causes less suburban sprawl, not more.
If the later, higher-density builder does not materialize with a greater finan-
cial offer (which at least compensates for the cost of waiting), the speculator has caused some sprawl. But in that case, the speculator has lost money (in the sense of foregone profits) by waiting too long. Thus the main way by which land speculators contribute to sprawl is by losing money. This may happen, but poor speculators are soon just plain poor and are driven from the market. In any case, empirical studies confirm that later infill development tends to occur at higher densities than that of nearby, earlier-developed subdivisions (Peiser, 1989; Vesterby and Heimlich, 1991).
Land speculators as a group may also find their socially optimal decision rules distorted by taxes (McMillen, 1990). Income taxes raise interest rates, which makes speculators inclined to sell their land too soon. But this is a problem with all investment decisions, not just land. However, the special antispeculation taxes that have occasionally been imposed by some states and provinces (Smith, 1976) are especially distorting. They tend to encourage farmers not to sell to speculators and instead hold the land themselves until a developer arrives. Farmers are not foolish, but one has to assume they are somewhat less sophisticated than professional speculators and so may hold the land too long or sell to developers too soon. (Ironically, these antispeculation taxes are often imposed in order to discourage sprawl.)
Perhaps the strongest evidence that zoning, not the behavior of speculators, causes low density comes from studies of land values. If undeveloped land that has been bypassed by development were simply being held by speculators, its current market value would be nearly equal to that of already-developed land. There would, of course, be some cost to subdividing the land, so vacant land held by speculators would be slightly lower in price than land that was already subdivided and ready to sell. However, even when subdivision costs are taken into account, econometric evidence consistently shows that restrictively zoned, undeveloped land in the suburbs of metropolitan areas has a much lower sale value than land on which development has been permitted (Brownstone and DeVany, 1991; Fischel, 1990:21; White, 1988). Buyers of restrictively zoned, undeveloped land are consistently paying less for it than otherwise comparable land. Such differences can exist only if buyers of the undeveloped land anticipate that there are very large transaction costs to obtaining development permission. Low-density zoning is not a paper tiger, and its existence is pervasive in the suburbs.
Property Taxes and Exactions
The penultimate alternative cause of sprawl (alternative to zoning, that is) is said to be the property tax system. Because of tax uniformity laws, new development with higher infrastructure costs is said to be subsidized by having its cost averaged among all taxpayers in a community (Real Estate Research Corporation, 1974). Under property tax financing, the infrastructure costs of suburban
development are said to be perceived as being too low, and developers undertake too much new development rather than using older infrastructure.
This is an example of an argument that is correct in its arithmetic but wrong in its behavioral assumptions. If it really were true that existing residents subsidized new development (without receiving offsetting localized benefits, such as employment), suburban voters and public officials would do even more to stop it. Instead, most communities exact payments from developers that cover at least the difference between the marginal costs of development and its anticipated average property tax payments. (For a collection of articles on this, see Babcock, 1987). These exactions may simply be requirements that the developer put in his own water, sewer, and roads, but, in more sophisticated districts, the developer is asked for cash exactions to compensate the community for any such costs. The legality of this practice was established long ago (Heyman and Gilhool, 1964).
I submit that it is a rare community in which the costs of sprawl are not covered by exactions (cash or in-kind) and anticipated property tax payments. The more controversial issue is whether the community can exact more than the actual marginal cost of infrastructure (Altshuler and Gómez-Ibáñez, 1993). A few court decisions have attempted to limit the range of exactions, and some studies have concluded that exactions and impact fees add to the cost of housing (Singell and Lillydahl, 1990), although a nicely nuanced study of California exactions showed that they were passed forward to homebuyers only partially, and then only when housing prices were generally rising (Dresch and Sheffrin, 1997).
Elimination of exactions would make suburban housing even more costly if it caused (as I would predict) the suburbs to retreat to even more exclusive zoning practices (Fischel, 1995:346; Dresch and Sheffrin, 1997:73). The excessive (more than net marginal cost) exactions that some communities are able to extract from developers are enabled in the first instance by highly restrictive zoning. It may be desirable to limit the terms of trade to avoid what some courts regard as legalized extortion, but to restrict trade in discretionary land use permits by sharply curtailing exactions would most likely harm development interests and encourage even more restrictive zoning practices (Gyourko, 1991).
The property tax in most states also finances schools, and it is here that low-income families are most obviously a drag on the local fisc. Although it is true that higher tax rates are capitalized by lowering house values (Oates, 1969), it is exactly that capital loss that most existing suburban residents (poor homeowners as well as rich) seek to avoid. The direction in school finance reform since 1970 has been to reduce reliance on local property taxes (Bahl et al., 1990). To the extent that this is successful, the fiscal motives for excluding low-income housing from communities should diminish (Schill, 1991:851). There is little evidence on this issue as yet, but the fact that exclusionary zoning remains a pressing issue in states like New Jersey, whose supreme court ordered school finance
reform decades ago (Harrison and Tart, 1996), suggests that the effect may be modest.
A third aspect of the property tax system that is said to cause sprawl is its effect on the timing of undeveloped land. Taxing farmland and open space at full market value is said to encourage premature development (Bentick, 1979). The theoretical merits of this proposition continue to be fiercely debated (Tideman, 1982), but in practice the point is moot. Nearly every state authorizes—and often requires—local governments to assess open land (farmland and forests) at its current-use value for tax purposes (Popp, 1989).
State legislatures seem undeterred by research that finds at most a modest effect of current-use taxation on development patterns (Anderson, 1993). The peace treaty has been signed without any evidence of hostility. I suspect that modern current-use programs in fact formalize what local assessors in rural communities always did before property valuation became a more exact science, as the discussion with practicing assessors in Holland (1970) suggests.
The last cause of sprawl considered in this section is federal government regulation. Although I think the wellspring of low-density zoning is the preferences of suburban voters, their ability to control large areas of undeveloped land is sometimes limited by political considerations and occasional judicial hostility to multiacre minimum lot size. Federal government environmental regulations (often administered by parallel state programs) have since 1970 added significantly to the weapons by which suburban residents can ward off development (Frieden, 1979).
Federal wetlands preservation is an especially powerful tool to stop development. Most cities are developed along bodies of water, so much of their conveniently located land is arguably wetland. But excluding development from these areas sends it out to rural areas that are not wet but are more remote from central cities. As Garreau observed, ''wetlands are also an acute example of how 'insurmountability' [his term for land scarcity] can be created by citizen action'' (1991:83). The Endangered Species Act has been a less systematic but often effective tool for suburban antidevelopment interests (Thompson, 1997). This is partly because it takes some political pressure to put the less cuddly creatures on the list, and the local political pressures are greatest in suburban areas. For example, opponents of low-income rental housing in Mount Laurel, New Jersey (still!) raised vague concerns about endangered species and Indian artifacts that might be located at the proposed site (New York Times, March 3, 1997, p. A19).
Farmland preservation is likewise a highly selective cause that has been embraced by exclusionary interests, although here the states have been more active, and its effect is tempered by the political influence of farmers. The spurious idea that suburban development is a threat to agricultural production has
been a mainstay of exclusionary interests (Fischel, 1982; Kline and Wichelns, 1994:231). Although all of these environmental programs have amenity value (farmland looks pleasant), the legislative hostility to paying attention to their economic costs—benefit-cost analysis being specifically forbidden by much environmental regulation—has made them a potent means of excluding normal-density housing in metropolitan suburbs. It is worth keeping in mind such effects in considering whether federalization of local land use controls would promote more compact development. The Goliath recruited to help your cause can turn into a liability.
Metropolitan Governments and Landowners Can Represent the Excluded
If a major cause of sprawl is, as I have argued, that local governments do not adequately perceive the opportunity cost of excessively low-density zoning, one reform might be metropolitan government. The reason for the excessive low-density zoning that I have dwelt on is that the "insiders" do not include those who are potentially excluded. A government that included all of the metropolitan population would represent the majority of the potential residents who would make use of the undeveloped land. Political pressures might reduce the incidence of exclusionary zoning. Anthony Downs is too much a realist to promote this explicitly, yet his current program for suburban reform recommends steps in that direction (1994:198). (Downs's term is metropolitan governance, a more modest term that may evoke less opposition). Metropolitanism in land use is also endorsed by a variety of reformers, such as Jerry Frug (1993) and David Rusk (1993).
There is indirect evidence that larger, more inclusive governments are more prodevelopment than smaller ones. The perennial attempts by state governments to promote employment growth with tax breaks and other policies are one example (Bartik, 1991). Smaller units of government seldom pay much attention to employment issues because most of the benefits of success would be enjoyed by people outside their political borders. Most proindustry local governments, with the exception of depressed central cities, have their eyes trained on fiscal benefits.
Another manifestation of the inclusionary effect of size is that big cities tend to be less exclusionary in their zoning than their suburbs (Clingemeyer, 1993; Linneman and Summers, 1990:22). It is not a coincidence, I submit, that the largest (and virtually only) city in the United States not to have zoning, Houston, is one of the few whose municipal boundaries encompass almost all of its metropolitan population. Judging from the analyses of several plebiscites on zoning, Houston would probably have adopted it if its suburbs were separate from its downtown so that more homogeneous groups could be formed. Polls in Houston found that low-income voters and Hispanics generally opposed zoning in part because of their anxiety of being dominated by middle-class suburban interests (McDonald, 1995). Thus there is some reason to believe that shifting land use
controls to metropolitan government would make zoning—if it were adopted—more sensitive to the demands of potential homeowners.
The problem with metropolitan government is that it is more likely to be captured by special interests and less likely to respond to legitimate local concerns. Special interests are apt to go too far in either direction. On one hand, special-interest politics can result in excessive development. At the state level, where job creation often dominates political concerns, there are numerous examples of excessive fiscal giveaways to potential employers (Tannenwald, 1996). Large metropolitan cities whose politics are dominated by construction firms and their unions may sometimes discount objections that the megadevelopment stadium or convention center will disrupt traditional neighborhoods (Lassar, 1990:53).
On the other hand, the experience of statewide land use controls in places like Hawaii and Vermont suggests that state-appointed commissions, instead of representing the demands of potential residents and would-be consumers, act as yet another constraint on development in response to local environmental groups (Callies, 1994:Chap 2; Healy and Rosenberg, 1979:Chap. 3). I have observed that Vermont's Act 250 commissions provide a useful lever for entrenched businesses to exclude potential competitors (Fischel, 1985:224). There is also reasonably convincing evidence that larger units of local government in metropolitan areas can function (perhaps inadvertently) as cartel organizers to keep housing prices artificially high (Rose, 1989; Thorson, 1996).
Portland, Oregon, has an interesting (and rare) example of a metropolitan government that has taken over a great deal of land use control (Knaap and Nelson, 1992:51). It is one of the few that is willing to override local zoning to promote infill development. The problem is that Portland shows signs of behaving like an exclusionary suburb with respect to the rest of the world (Fischel, 1997). Its original plan, implemented in the early 1970s, had urban growth boundaries that were intended to contain urban sprawl (Knaap, 1985). This did little harm and perhaps some good as long as growth was moderate and there was plenty of land within the boundaries. (Dresch and Sheffrin, 1997:34, note that Contra Costa County, California, also has urban growth boundaries, but they are drawn sufficiently large that they do not appear to affect housing prices.)
Portland's recent decision not to expand the growth boundary in the face of more rapid immigration to the city, however, seems to account for its sudden and rapid rise in housing prices (Mildner et al., 1996). Portland planners have responded to this with plans to require development at what I would regard as unrealistically high densities within the city. Such housing plans are in principle admirably inclusionary, but for immigrants to Portland who want to live in moderate-density suburban houses, the existing stock is what they must bid for. In a sense, the unrealistically high-density development plans are as exclusionary as unrealistically low-density development, since both make accessible but undeveloped land off limits to normal suburban development. Similar situations of
metropolitan governance causing housing price inflation by excessively limiting suburban development are Seoul, South Korea (Hannah et al., 1993), Kuala Lumpur, Malaysia (Mayo and Sheppard, 1996), and Reading, England (Cheshire and Sheppard, 1989).
The alternative to metropolitan government as a means of including the demands of outsiders is to restore the development rights of owners of undeveloped land and owners of land ripe for redevelopment (Fischel, 1985:175; 1995:351). These owners are representatives of people not resident in the community who would constitute net additions to the population. Owners of existing homes have plenty of incentive to pay attention to the demands of people who want to live in their own houses, but these immigrants would not be net additions to the population.
Attention to the demands of outsiders by owners of developable land is not caused by their beneficence, of course. Outsiders are their most likely customers. In one respect, though, landowners are more democratic than metropolitan governments. Landowners do not care whether their prospective customers currently live and vote within the metropolitan area. Potential immigrants from other parts of the country, or other parts of the world, are as much a part of their market as those existing residents who want to relocate within the metropolitan area.
Although my preferred approach would restore the rights of development-minded landowners, I would not simply give them the right to develop what they wanted. Developers should be allowed the right to develop at normal suburban densities, normal being a reflective standard of what the existing residents of the community actually do. (This standard was developed first by Ellickson, 1977, and I have most recently elaborated on it in Fischel, 1995:Chap. 9.) If nearby land is actually developed on quarter-acre lots, then nearby landowners should be allowed to do. the same thing.
This right should not be not absolute. The community can impose exactions to account for higher infrastructure costs, and it can purchase a lower-density development standard for any tract by paying the difference between value at normal density and value at the community's desired density. On the other side of the equation, developers should be able to assert that the pattern of existing development was caused by unreasonably stringent zoning in the past. If this can be proved, development should be permitted at more intensive densities than those that reflect the existing pattern. (This caveat is due to comments from Tony Downs.)
Existing suburban residents can thus raise the drawbridge if they are collectively willing to pay for it, and I do not doubt that some would. But I also have no doubt that the impassioned pleas by neighbors who now oppose development at land use hearings would be greatly muted if, to get their desires, they would have to pay more in property taxes to finance the "just compensation" due the landowner. Requiring the local governments that want to preserve open space to buy that space (or the development fights) would make existing voters pay atten-
tion to the opportunity cost of exclusion and, for the most part, deter inefficient and inequitable low-density zoning.
A supposed drawback of restoring property rights as a method of controlling sprawl is that it still excludes the poor. But this is an instance in which the market is probably more accommodating to the poor than the local political process. Suburban zoning laws regulate the market in part because the market would give existing suburbs more poor people than current residents would like. The owner of undeveloped land, however, does not care whether the high bidder for her 10-acre tract proposes to put up 2 mansions or 40 bungalows. In many places, the developer of the higher-intensity use, which will usually serve lower-income people, can outbid others. The major problem for most developers of subsidized, low-income housing units is not the cost of land, but the web of regulatory barriers, as numerous national commissions have amply demonstrated (National Commission on Urban Problems, 1969; Advisory Commission on Regulatory Barriers to Affordable Housing, 1991).
Restoration of landowner rights along the lines I propose can be accomplished along two complementary lines, one by judicial decisions and the other by state legislation. My suggestions here are not for a detailed plan of action but for an educational mission along lines other than changing government structure. (For more details about implementation, see Fischel, 1995:Chap. 9, and Ellickson, 1977.) There is no doubt that these suggestions have some flavor of, as Tony Downs put it in a critique of an earlier draft, "piously urging the world to overcome sin by behaving virtuously." My response is that preachers have in fact urged that for many centuries, and it seems to do at least some good. That there remains much sin after their best work is done is hardly reason for them to stop doing it.
The preaching that social scientists undertake has value largely because of its aspiration for objectivity. Being beholden to one's scientific peers rather than commercial or political interests makes their pronouncements more believable. For this reason, I would urge bodies such as the National Research Council to point out that restoration of landowner fights has social value. The audiences to whom this should be directed are judges (both federal and state) and state legislators. Before discussing what good such information would do for each of these audiences, let me offer an example of the kind of statement that would be useful:
Owners of developable tracts of land that have reasonable access to metropolitan employment should be accorded legal protection of the fight to develop at normal suburban densities. Such densities should be determined by comparisons to what has gone before in the same community and to existing well-planned and socially diverse developments at comparable locations within the metropolitan area. Developing municipalities should not be permitted to use local land use laws or invoke unreasonable environmental review to maintain artificially low densities or exclude a large segment of housing types. Protec-
tion of landowner rights in these situations is consistent with traditional understandings of property rights and prevention of excessive decentralization and social fragmentation of metropolitan areas. Landowner rights should be viewed not as a grudging concession to tradition but as a positive means to promote economical and environmentally sound use of land in metropolitan areas.
Property rights are traditionally a judicial matter, and, as I have noted earlier, most judges are wary of treading on the prerogatives of local governments. Judges are aware that their enterprise has an undemocratic odor to it. For this reason, many judges who are in fact offended by the unfair treatment of owners of undeveloped land are reluctant to intervene, except in the most egregious cases.
This reluctance is gradually changing, however, with the rise of the regulatory takings doctrine and the realization that development-minded landowners are not the social parasites they have often been made out to be. An increasing number of federal and state decisions have made local governments with overly restrictive land use controls liable for monetary damages (Eagle, 1996:Chap. 7). The judiciary is a ready and appropriate vehicle for change in this area.
For these changes to proceed, however, judges need to get objective advice about the social benefits of private property. External sources are needed because one of the litigants who appear before them in local land use disputes is obviously self-interested. Development-minded parties clearly hope to make money by overturning the down-zoning (for instance) that they or their predecessors were subject to. The possibility that they actually represent a larger public interest is, if not entirely absent, easily discounted. This is especially true in land use disputes because the opposing party is usually a local government agency. It is duly qualified to determine the "public interest." That such public interest may be for only a small part of the public may sometimes occur to the judge in the case, but it would be a much larger stretch for her to realize that it is the developer who serves the larger public interest (the demands of outsiders to live in the community).
State legislation is the other means by which landowner rights can be restored. With the demise of the regulatory takings bills in Congress in 1995 (bills that I believe were badly flawed because of overinclusiveness), the action has switched to state legislatures and state courts. Several states have in recent years passed laws that expand the regulatory takings doctrine beyond what most courts of law have traditionally held it to be. (For current information in this rapidly evolving area, see the web site http://www.arin.org/arin/states.html. Useful cautionary information on the design of takings bills is in Ellickson, 1996b.)
Some of the successful bills, most notably Florida's, offer a balanced approach to resolving disputes between landowners and regulators (Powell et al., 1995). Florida's act requires negotiation and mediation between regulators and landowners prior to trial, and, perhaps most important, that the loser at a trial must pay the other party's legal costs. (I was told at a conference in October 1996
that the total number of cases adjudicated during the first year of the law was six, which suggests that negotiation was usually successful.)
Regulatory takings is not the only legal doctrine that might be invoked to help landowners develop at normal densities. Several state courts have continued the substantive review of local legislation that the federal courts nominally discarded in the 1930s (Friedman, 1988). The problem with substantive review is how to set the appropriate standards. If 4-acre minimum lot sizes are unconstitutional, as was decided by the Pennsylvania supreme court in 1965 (Coyle, 1993:54), what about 3-acre minimum lot sizes?
Once again, encouragement of courts and legislatures from bodies other than the obviously (even if usefully) self-interested development industry would have a beneficial effect. The least-cost housing standard initially adopted (and later impatiently abandoned) by the New Jersey supreme court in Oakwood at Madison (cited above) is a good candidate. It appears to be consistent with the writings of Tony Downs, who has spent much of his career grappling with these problems (Downs, 1969; 1991). The Oakwood least-cost housing doctrine is more modest in its goals than the Mount Laurel II doctrine, but the latter clearly upset voters' sense of established entitlements and proved to be judicially unmanageable.
One might reasonably ask whether, given that a few states are doing something, development interests actually need the endorsement of more neutral bodies. As I have pointed out elsewhere (Fischel, 1995:Chap. 8), state legislatures have been induced to protect specific groups from excessive regulation. For example, siting of mobile homes and group homes has received special protection in many states, and excessive exactions have often been reined in. In the halls of the state legislatures, developers' interests seem not to have fared so badly.
There is a difference, however, between developers' interests and landowners' interests. Developers are often unconcerned with metropolitan location. Many buy only land that is zoned for the use they want. Some large developers have told me that they are indifferent to zoning, except when the rules are changed after they have purchased the land. As a result, the party most sensitive to the location demands of otherwise-excluded outsiders are the owners of developable land. But these owners are not easily organized, since their situations differ from one place to another and since their battles over rezoning tend to be episodic rather than ongoing.
Landowning interests are not entirely alone in the political arena, of course. Aside from the developers who do take ownership positions in land not zoned for what they want, a newly vigorous property rights movement has advocated a return to landowner rights (Yandle, 1995). The problem is that much of this movement tends to be driven by a larger ideological agenda that is viewed with suspicion by the mainstream of academics, news media, judges, and legislators. The utilitarian notion that increasing the rights of landowners might lead to net gains for society at large tends to be lost in debates about the welfare state, big
government, the New Deal, and the meaning of the Cold War. Some words of endorsement for development-minded landowners in the suburbs by neutral and scientifically responsible bodies might go a long way. It does not seem all that costly to try.
American metropolitan areas are both excessively spread out and segregated by income class. This essay has argued that the major cause of both of these problems is the attenuation of market forces by local land use regulation. Demands by outsiders are systematically thwarted by local governments in suburban areas that seek to preserve the status quo. Development-minded landowners, whether for-profit, charitable, or private nonprofit, are often prevented from developing their land at densities and for uses that are considered normal by metropolitan area-wide standards. The better way to open up the suburbs, I submit, is not to have yet another layer of government, but to improve the rights of landowners.
I have benefited from written comments by Anthony Downs and an anonymous referee and from oral comments by members of the committee responsible for this volume.
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