Zoning and Land Use      Control        Wali Memon       walimemon.com                     Wali Memon   walimemon.com   1
Zoning:Adapted from ArthurO’Sullivan, Urban Planning Tools     Land Use                                Lecture 3:Economics...
Land Use Controls Are designed to address market failures Frequently conditions for “perfect market are not met”     Ma...
Land use controls correct for Negative externalities External benefits Public goods Services with big scale economies ...
Four cornerstones of regulation1.    Comprehensive plans (see Burlington MDP)2.    Subdivision ordinances3.    Capital imp...
History of Zoning  Earliest zoning laws were segregationist  New York (1916) zoning law—5th avenue retail   businesses w...
Major Federal Zoning Laws  Standard State Zoning Enabling Act of 1922      Sanctioned dividing of land into zones by loc...
State Response to Federal Laws  In response, many states passed their own enabling legislation   confirming local police ...
Euclid v. Ambler 1926 validity of local police  Supreme Court case on     power for zoning    Euclid was a small commute...
What exactly is zoning?  Purposes: 1) limit overcrowding/ overbuilding   relative to public services and facilities, 2)  ...
Burlington example              Staff                               Review                               projects         ...
What does zoning regulate?  Use: activities permitted within zone  Bulk: envelope in which building must fit—specified t...
Nuisance Zoning Classic example: used to separate heavy industry and  residential zones to protect against externalities ...
Zoning Tools:designation  Zone designation/changes: geographic designation of what places are in   what zone      Genera...
Zoning tools:variances  Variances: gives landowner an exception to break   some zoning rules in a zone.     Use variance...
Variances and planning Variances are often used as a development tool, to get  around established policies Variances cir...
Zoning tools: discretionary review  Attaches conditions to certain uses to make sure uses in a zone are   compatible  Ba...
Other zoning terms Non-conforming uses Inclusionary zoning     Density bonuses Planned Unit Developments     Separate...
Two big problem with zoning1.   Takings2.   Exclusionary or fiscal zoning                                     Wali Memon  ...
Takings question  There were many complaints and lawsuits in the initial period  Argument was that zoning favored some l...
Takings question: three cases  Nollan vs. California Coastal Commission, 1987:   Supreme Court ruled that Commission did ...
Fiscal/exclusionary zoning  Used to exclude households that impose financial burden on city, i.e.   tax burden less than ...
Backlash against exclusionary zoning  South Burlington County NAACP vs. Mount Laurel (1975 and 1983) court   rulings were...
Results of Mt. Laurel  Towns in NJ rewrote ordinances , but only had appearance of complying   with ruling  1983 ruling ...
Later zoning developments Citizen participation requirements for planning (prop 20, CEQA) Performance zoning Inclusiona...
Performance zoning  Intermediate approach; it gives lower impact firms more options in   location  This is often used fo...
Inclusionary zoning Developers get a density or parking bonus, or fast  tracking in return for setting aside a certain po...
Adequate facilities ordinances  Existence of adequate facilities (e.g.   sewer, fire, water, roads, schools) becomes pre-...
Transfer of Development Rights “Macro-architecture.” Example: 50 acres vacant land, 25 N and 25 S City wants to have 50...
Transfer of Development Rights  Instead city could establish a development zone (south)   and preservation zone (north) ...
Impact fees In fringe land, property tax revenue of new housing may be less than cost of  services. This puts a burden o...
Impact fees  Developer compensates local gov’t for fiscal   burden of new development in terms of increased   service use...
A market alternative to zoning: effluent fees An approach that deal with those problems is to “internalize” the costs of ...
Effluent Fees A spatial system of fees should also generate optimum spatial distribution of  external effects As move cl...
Effluent fee example  Assume     residents live in west side, commute to east to polluting mill     The longer the comm...
Optimum location for mill               Cost minimizing location;                               Total                     ...
Effects of effluent fee  Mill moves from 10 miles to 4.2 miles  It moves there because their labor costs are too high if...
Why effluent fees are rarely used  Setting effluent fees in complex because must estimate marginal social   cost for diff...
Thanks Wali Memonwalimemon.com              Wali Memon   walimemon.com   39
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Can Our Zoning Bylaws Withstand The Test of Time?

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Can Our Zoning Bylaws Withstand The Test of Time?

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Can Our Zoning Bylaws Withstand The Test of Time?

  1. 1. Zoning and Land Use Control Wali Memon walimemon.com Wali Memon walimemon.com 1
  2. 2. Zoning:Adapted from ArthurO’Sullivan, Urban Planning Tools Land Use Lecture 3:Economics, chapters 10 (5th edition)and Economics Guide to from Bill Fulton’s of ZoningCalifornia PlanningNotes by Austin Troy Wali Memon walimemon.com 2
  3. 3. Land Use Controls Are designed to address market failures Frequently conditions for “perfect market are not met”  Many buyers and sellers, ability to exclude, homogeneous products, costless entry and exit in markets, perfect information, inputs and outputs fully divisible, full internalization of consequences of production and consumption, constant returns to scale Wali Memon walimemon.com 3
  4. 4. Land use controls correct for Negative externalities External benefits Public goods Services with big scale economies (natural monopoly) Merit goods Equity and distribution We’ll talk about these next week Wali Memon walimemon.com 4
  5. 5. Four cornerstones of regulation1. Comprehensive plans (see Burlington MDP)2. Subdivision ordinances3. Capital improvement planning4. ZoningWe’ll focus on the last mainly Wali Memon walimemon.com 5
  6. 6. History of Zoning  Earliest zoning laws were segregationist  New York (1916) zoning law—5th avenue retail businesses wanted to limit garment workers; law limited growth of office buildings and garment factories; ostensibly to reduce negative effects of tall buildings  San Francisco- zoned out laundries from certain neighborhoods, which happened mostly to be owned by Chinese.  Later zoning became a means for growth management: keep new development in line with available facilities Wali Memon walimemon.com 6
  7. 7. Major Federal Zoning Laws  Standard State Zoning Enabling Act of 1922  Sanctioned dividing of land into zones by local governments, with uniform codes for each  City Planning Enabling Act of 1928.  Created model ordinance of the general plan process, including recommended powers of planning commissions  These laid out model ordinances, but did not make any requirements Wali Memon walimemon.com 7
  8. 8. State Response to Federal Laws  In response, many states passed their own enabling legislation confirming local police powers  Many states also passed comprehensive planning laws, requiring local comprehensive plans  Problem in early years: planning and zoning were often not coordinated, with different people doing each Wali Memon walimemon.com 8
  9. 9. Euclid v. Ambler 1926 validity of local police  Supreme Court case on power for zoning  Euclid was a small commuter suburb that wanted to forestall encroachment of Cleveland’s industry  Ambler owned real estate, mostly zoned industrial/commercial, but some was zoned residential .  Ambler claimed a taking without due process.  Court upheld city’s right to zone based on two criteria: legitimate public interest and due process Wali Memon walimemon.com 9
  10. 10. What exactly is zoning?  Purposes: 1) limit overcrowding/ overbuilding relative to public services and facilities, 2) ‘stabilization’ of neighborhoods, 3)segregating incompatible land uses  Types: nuisance zoning, fiscal zoning, design zoning  Tools: ordinance and map (see Burlington’s map)  Players: Elected officials, planning commission, development review board, Zoning staff Wali Memon walimemon.com 10
  11. 11. Burlington example Staff Review projects Dev. Review DPZ Staff Board Review Major projects Comments on and appeals and approves to small projects ordinance Planning Writes Environmental ordinance Comm. Court City Council major appeals Wali Memon walimemon.com 11
  12. 12. What does zoning regulate?  Use: activities permitted within zone  Bulk: envelope in which building must fit—specified through setbacks, building coverage, building heights, floor area ratio (ratio of building to lot square footage)  Performance/impact: performance standards, or impacts a building is allowed to produce; biggest example is parking spaces Wali Memon walimemon.com 12
  13. 13. Nuisance Zoning Classic example: used to separate heavy industry and residential zones to protect against externalities (noise, smell, pollution) Separation is most simplistic way of dealing with external effects of industry Problems:  Doesn’t reduce these effects—just moves them around  Spillover: an industrial zone may be far from residents in the municipality to which it belongs, but close to residents over the border Wali Memon walimemon.com 13
  14. 14. Zoning Tools:designation  Zone designation/changes: geographic designation of what places are in what zone  Generally requires legislative approval and public hearing at local level  Spot zoning: grants one parcel of land a zoning different from rest of a neighborhood  Strengthening of general plans in many states makes it harder to manipulate zones because change must be consistent with GP Wali Memon walimemon.com 14
  15. 15. Zoning tools:variances  Variances: gives landowner an exception to break some zoning rules in a zone.  Use variances: permits otherwise unacceptable use without change of zone  Variance from standards: allows use that doesn’t meet standards that others must meet  Ostensibly for “hardship” exemption: if some feature of land makes it impossible to make use of it under existing zoning (e.g. big boulder)  Courts are divided as to what is “hardship” Wali Memon walimemon.com 15
  16. 16. Variances and planning Variances are often used as a development tool, to get around established policies Variances circumvent government decision making process and vests quasi-judicial powers in planning body because it is construed as administrative and not policy Insidious way of shielding policy decision from public input and debate; it is really a disguised zoning change without the legislative approval Wali Memon walimemon.com 16
  17. 17. Zoning tools: discretionary review  Attaches conditions to certain uses to make sure uses in a zone are compatible  Based on conditional use permitting: triggers planning or design commission review of project  Generally requires some public input  Used to get more leverage over developers  Sometimes “conditions” of use are really more like exactions Wali Memon walimemon.com 17
  18. 18. Other zoning terms Non-conforming uses Inclusionary zoning  Density bonuses Planned Unit Developments  Separate zoning ordinance written for one specific development; standards appropriate to that particular project  Often used interchangeably with “specific plan,” which is both a planning and implementation tool Wali Memon walimemon.com 18
  19. 19. Two big problem with zoning1. Takings2. Exclusionary or fiscal zoning Wali Memon walimemon.com 19
  20. 20. Takings question  There were many complaints and lawsuits in the initial period  Argument was that zoning favored some landowners over others, hence not equal protection under the law  Also, just compensation argument, claimed that zoning violated Fifth Amendment, which prohibits “taking” by the government without just compensation Wali Memon walimemon.com 20
  21. 21. Takings question: three cases  Nollan vs. California Coastal Commission, 1987: Supreme Court ruled that Commission did not establish link between restriction and public interest in beach access case  Lucas vs. South Carolina 1992: Supreme Court said taking occurred, damages due to plaintiff because beachfront development regs denied owner of ALL value on property; hence must leave some value.  First English Evangelical Lutheran Church vs. County of Los Angeles 1987:Property owner whose land was taken by regulation is entitled to just compensation Wali Memon walimemon.com 21
  22. 22. Fiscal/exclusionary zoning  Used to exclude households that impose financial burden on city, i.e. tax burden less than services consumed.  This is often the case for high density households, households on the fringe and new commercial/industrial development  Dense housing contributes less in property tax because housing is worth less  Exclusionary tools: setbacks, min lot size Wali Memon walimemon.com 22
  23. 23. Backlash against exclusionary zoning  South Burlington County NAACP vs. Mount Laurel (1975 and 1983) court rulings were two landmark cases in exclusionary zoning  The first case contended that the large lot zoning policy of Mt. Laurel zoned out poor  Court agreed and said towns had “presumtive obligation” to zone and plan for housing accommodating variety of income groups Wali Memon walimemon.com 23
  24. 24. Results of Mt. Laurel  Towns in NJ rewrote ordinances , but only had appearance of complying with ruling  1983 ruling issued specific rules about how towns should be providing affordable housing; 20% of units must be for low and moderate income people—empowered a body to oversee  Has not been repeated in many other states Wali Memon walimemon.com 24
  25. 25. Later zoning developments Citizen participation requirements for planning (prop 20, CEQA) Performance zoning Inclusionary zoning Transfer of development rights Adequate facilities ordinances Impact fees Wali Memon walimemon.com 25
  26. 26. Performance zoning  Intermediate approach; it gives lower impact firms more options in location  This is often used for retailers or large apartment buildings to reduce their impacts on mixed-used residential neighborhoods  E.g. requiring parking spaces to reduce off-street parking, noise control, landscaping, street improvements to offset congestion. Wali Memon walimemon.com 26
  27. 27. Inclusionary zoning Developers get a density or parking bonus, or fast tracking in return for setting aside a certain portion of units in a development as “affordable” or below- market price. Affordability defined often as less than 1/3 of income of someone earning somewhere between 50 and 80% of median income Usually the affordability clause gets passed on with the title to the house, or included as a deed restriction Wali Memon walimemon.com 27
  28. 28. Adequate facilities ordinances  Existence of adequate facilities (e.g. sewer, fire, water, roads, schools) becomes pre- condition for development approval  Often requires complex modeling to determine capacities and impacts  Report details where facilities are ready and where development must wait  Problem: what is adequate? Hard to monitor and assess consumer demand; hard to assess capacities and marginal impacts; always changing;  See Montgomery County, MD Wali Memon walimemon.com 28
  29. 29. Transfer of Development Rights “Macro-architecture.” Example: 50 acres vacant land, 25 N and 25 S City wants to have 500 new households Initially, both areas are zoned for 10 units/acre Policy alternative: zone south for 20 units per acre= 500 units; zone north for open space Southern landowners gain at the expense of northern, because N land is nearly worthless Wali Memon walimemon.com 29
  30. 30. Transfer of Development Rights  Instead city could establish a development zone (south) and preservation zone (north)  The south owner can develop 10/acre in the south. The north owner cannot develop on their land but has development coupons worth 250 units, which can be used to override zoning restrictions in south.  Then south owner can buy the coupons at market rate to put in denser development  This helps compensate north owner for reduction of market value of land Wali Memon walimemon.com 30
  31. 31. Impact fees In fringe land, property tax revenue of new housing may be less than cost of services. This puts a burden on non-fringe residents Policy options:  Zone vacant land agricultural  Impose a tax surcharge for new development  Levy a one-time impact fee Wali Memon walimemon.com 31
  32. 32. Impact fees  Developer compensates local gov’t for fiscal burden of new development in terms of increased service use  If market is competitive and developer makes zero profit, cost is passed on to homebuyers, through higher housing prices, and to landowners, through lower land price  Often imposed for water, sewer, roads, parks, fire  Pricing of fees regulates type and magnitude of development Wali Memon walimemon.com 32
  33. 33. A market alternative to zoning: effluent fees An approach that deal with those problems is to “internalize” the costs of externalities—that hidden costs to society—using effluent fees Fee should equal marginal social cost; if it does, then have efficient pollution level; firms reduce their pollution output based on fee, until optimal Wali Memon walimemon.com 33
  34. 34. Effluent Fees A spatial system of fees should also generate optimum spatial distribution of external effects As move closer to houses, marginal external cost increases, and so fees do too Therefore firm chooses location that minimizes their pollution impact relative to the added transportation costs for workers Wali Memon walimemon.com 34
  35. 35. Effluent fee example  Assume  residents live in west side, commute to east to polluting mill  The longer the commute distance, the higher the wage, because of compensation for commuting cost  The further from the mill, the lower the effluent fee for the factory  Initial state: zoning policy where mill is 10 miles from residential area Wali Memon walimemon.com 35
  36. 36. Optimum location for mill Cost minimizing location; Total cost Pollution cost= effluent fee Laborcost cost $53 Firm will locate here Pollution cost 4.2 Distance from residential area Wali Memon walimemon.com 36
  37. 37. Effects of effluent fee  Mill moves from 10 miles to 4.2 miles  It moves there because their labor costs are too high if they are farther away than 4.2 miles and their effluent fee gets to high if they move any closer.  So under zoning, they were inefficiently far from the residential area.  Firm will stay far out if pollution cost curve is steeper than the labor cost curve. Wali Memon walimemon.com 37
  38. 38. Why effluent fees are rarely used  Setting effluent fees in complex because must estimate marginal social cost for different locations in city and must monitor pollution/externalities  Effluent fees may result in increased pollution in some neighborhoods  Zoning is simpler Wali Memon walimemon.com 38
  39. 39. Thanks Wali Memonwalimemon.com Wali Memon walimemon.com 39

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