Federal Land Use Intervention as Market Restoration

By Sterk, Stewart E. | Boston University Law Review, September 2019 | Go to article overview

Federal Land Use Intervention as Market Restoration


Sterk, Stewart E., Boston University Law Review


Introduction

Local regulation-particularly zoning-shapes real estate markets throughout the United States. By determining what a landowner may and may not do on a parcel of land, zoning affects both the value of the land and the character of the community. For decades, scholars and practitioners have debated whether zoning improves the shape of the real estate market or makes it worse. On the plus side, by excluding uses that impose external costs on neighboring homeowners, zoning has contributed to neighborhood stability and protected home values.1 On the minus side, zoning has increased housing costs,2 contributed to economic and racial segregation,3 and facilitated NIMBYism.4

Both the advantages and the disadvantages associated with zoning arise, in large measure, because local governments bear the primary responsibility for land-use regulation. Local governments are in the best position to assess the impact new development will have on existing residents-in part because those residents are most likely to have a voice in local politics.5 Conversely, because local voices predominate in local politics, outsiders' interests often receive short shrift.6 To compensate, when land uses have a broader impact, state and federal governments sometimes superimpose their own regulations on those adopted by local government.7

In a number of other areas, however, federal constitutional or statutory law operates differently-not by imposing more onerous regulations on land use, but instead by overriding local regulations in order to allow freer operation of market forces. The Federal Constitution's Takings Clause8 is the most prominent example, but not the only one. The Telecommunications Act of 1996 limits local power to regulate the siting of cell phone facilities.9 The Religious Land Use and Institutionalized Persons Act of 2000 ("RLUIPA") constrains local authority to regulate a variety of religiously oriented uses.10 The Fair Housing Act prohibits local regulation that reduces the availability of housing to members of protected groups.11 The First Amendment protects adult entertainment from local regulation.12

These seemingly disparate areas of federal intervention raise common issues. Although a body of excellent scholarship has developed in each area,13 that scholarship has not explored the common foundations of federal limits on local regulation.14 In each area, federal intervention is premised on a perceived defect in the local decision-making process: failure to consider externalities generated by the regulation itself or insufficient regard for nonmajoritarian values. The federal limits operate not by mandating any particular development, but by invalidating certain types of regulation. In effect, federal regulation operates to limit local suppression of market forces in each of these areas.

The failure of municipalities to consider externalities extends well beyond these discrete areas of federal intervention. Overwhelming empirical evidence establishes that in a number of areas of the country, local land-use regulation is responsible for the high cost of housing and the consequent inability of outsiders to move to areas in which they might be most productive.15 Federal regulation has eschewed a global approach to the problem of housing cost, focusing instead on resuscitation of market forces in narrow areas of federal concern while otherwise leaving local regulation intact.

The general deference to local regulation reflects widespread support for zoning among its primary beneficiaries: existing homeowners seeking to preserve the values of their homes against the effect of development that might change neighborhood character.16 When homeowner interests, effectuated through the local governments they dominate, are pitted against the interests of diffuse housing consumers across the country, it should not be surprising that homeowner interests prevail. However conclusive the economic data on the impact of local regulation on the housing market, the absence of tangible harm to identifiable victims has generally not energized Congress or state regulators to displace local zoning regimes. …

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