Schleicher, David, The Yale Law Journal
ARTICLE CONTENTS INTRODUCTION I. THE LAW AND ECONOMICS OF CITY PLANNING: A REVIEW A. Economic Theory and Zoning B. Changes in Zoning Regimes over Time II. LAND-USE LAW AND THE POLITICAL ECONOMY OF CITY PLANNING A. The Role of Procedure in the Absence of Local Party Politics B. How Land-Use Procedure Produces Strict Land-Use Policy III. LAND-USE LAW AND THE POLITICAL ECONOMY OF CITY UN PLANNING A. Using Land-Use Law To Change the Shape of Interest Group Competition: Balancing the "Zoning Budget" B. Using Land-Use Law To Bring Consumer Interests to the Table: Standing on TILTs C. Using Land-Use Law To Insure Against Developers' Broken Promises: Political "Safeguards" CONCLUSION
There is something stale about most public debates about land use. Year after year, we see the same rhetoric coming from the same players. Developers of skyscrapers promise jobs and growth when they debate plucky community groups worried about gentrification or access to sunlight. Environmental groups denounce minimum lot requirements for generating sprawl, while suburban homeowners claim these rules help preserve the character of their communities. And so on. The frequent use of shorthand and acronyms--NIMBY, LULU, BANANA, etc. (1)--reminds all involved that this year's controversy is not much different from last year's. While there have been new movements among city planners, like "New Urbanism," (2) and some new tools for getting political approval of new projects, like community benefits agreements (CBAs), (3) the rhetoric in today's debates about zoning differs little from the rhetoric in similar fights decades earlier.
Law and economics scholarship about the efficiency of zoning has been quite consistent as well, the basic shape of the debate having taken its modern form around thirty years ago. Supporters of a community property-rights theory of zoning, like Robert Nelson and William Fischel, argue that zoning regimes give local governments the right to prevent new development but allow landowners to negotiate for permission to build. This is efficient, as it reduces the transaction costs for negotiations between builders and incumbent residents over the effect new projects have on property values in a jurisdiction. As long as transaction costs are low, assigning the right to permit development to the local government instead of giving landowners the ability to build as of right should not matter. (4) On the other hand, the classic critique of zoning, by Robert Ellickson and Bernard Siegan among others, maintains that zoning restricts the supply of housing and office space, artificially pushing property prices upward and separating land uses. Further, zoning regimes do not do much better in practice than the market, courts, or private contracts at minimizing nuisances. (5) While there has been much excellent work in the field, the terms of the debate have not shifted substantially in some time.
One might take from this that little about zoning has changed in the last few decades, either on the ground or intellectually. This would be wrong on both counts. The major intellectual development has been the rise of agglomeration economics, most notably the work of Paul Krugman, Robert Lucas, and Edward Glaeser. Their work explores exactly what benefits individuals and businesses get from colocating, or existing in close physical proximity to others. (6) This research, largely unincorporated into legal scholarship until quite recently, has shown that urban density provides individuals with reduced shipping costs, the benefits of market depth, and information spillovers. Further, certain agglomerative factors--particularly information spillovers between highly educated residents--have become increasingly important in the modern economy. As zoning regimes reduce density and separate individuals and businesses that would like to be near one another, the increasing empirical validation of the importance of agglomeration economies has helped explain how strict zoning regimes harm the efficiency of property markets and regional economies. …