How Land-Use Planning Benefits Big Business over Small

By Benson, Bruce L. | Freeman, May 2008 | Go to article overview

How Land-Use Planning Benefits Big Business over Small


Benson, Bruce L., Freeman


It is widely recognized that central-government attempts to completely plan economies (that is, totally eliminate private property rights) are destined to fail. But even lower levels of government can have debilitating impacts on an economy by undermining private property rights through planning and regulation.

Indeed, as urban-policy analyst Sam Staley explains, the implications of the "socialist calculation debate" between Austrian economists Ludwig von Mises and F. A. Hayek and socialists Oskar Lange and Abba Lerner also apply to state and local development planning and land-use regulation. The planners' knowledge deficiencies, however, are not the only reason that planning is destined to fail. Planning and regulation are inevitably destabilizing because the government's rules continuously change in the face of a spiraling process of competition to influence the allocation of property "rights." Consider an example.

The Oregon legislature created a new state agency in 1973, the Department of Land Conservation and Development, headed by the Land Conservation and Development Commission (LCDC). This department was vested with the power to establish statewide landuse policy and established 19 goals over a three-year period. However, H. Jeffrey Leonard points out that three goals intended to limit the geographic scope of growth have dominated: establishment of urban-growth boundaries, preservation of farm lands, and preservation of forest lands. All local governments were ordered to develop comprehensive land-use plans, to be approved by the LCDC, that implemented the statewide policy goals.

With this legislation, Oregon established itself as the leader in statewide land-use planning, serving as a model for other states that have followed. Arthur Nelson and James Duncan contend that "Oregon's planning program is widely considered one of the most comprehensive and effective in the nation." Presumably, planners in other states aspire to be just as effective. So an examination of Oregon's record should provide a reasonably good prediction of what other states that have started down the planning path can expect. Just what has the effect been?

Edward Sullivan contends that land-use planning and regulations in Oregon resulted in "uniformity and relative predictability in land-use decision making." But in reality, as David Hunnicutt points out, "[D]efenders of Oregon's land-use planning system seem to forget that Senate Bill 100 (1973) [which set up a system of mandatory statewide planning], amended countless times over the years due to vagaries in the original language, has spawned endless litigation, and has resulted in the creation of two separate state agencies, costing taxpayers millions of dollars annually to staff and operate." Consequently, as Steven Giesler, Leslie Marshall Lewallen, and Timothy Sandefur explain, "Oregon's land-use regulation system had become a labyrinth of unreasonably restrictive regulations that made no allowances for the costs and burdens imposed on property owners."

Regulation Is Destabilizing

The primary reason for the destabilizing impact of planning is that regulation to implement the plans involves the assignment of property "rights" and enforcement of those assignments. Property rights dictate the distribution of both material and nonmaterial wealth. Therefore, whenever regulation alters the assignment of property rights, some individuals lose; wealth is in fact taken.

One of thousands of examples from Oregon involves a 40-acre parcel of land zoned for forest use in Hood River County. When the owners purchased the land in 1983 for $33,000, the applicable land-use regulations allowed construction of a single-family dwelling. Following the purchase, Hood River County adopted new regulations to bring its comprehensive plan into compliance with statewide goals. Construction of a dwelling on the property was now prohibited. The owners submitted applications for a number of permits and changes (land-use permit, condition-use permit, zoning and comprehensive-plan changes) to allow them to build the home they had planned. …

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