Zoning and "Bigness"

Back in April, Daniel Herriges at Strong Towns wrote an excellent article called “Pretextual Planning is Absolutely Everywhere.” What does that mean? Essentially, the article is about zoning rules that are written into the code not because the requirement itself is considered important, but because it’s seen as increasing the bargaining power of the municipality vis-à-vis the developer. This bit explains the overall idea well:

The specific notion that local government needs bargaining chips in order to extract concessions from developers is a harmful one that has become more and more prevalent in recent decades. Inclusionary zoning requirements, for example, are often written with this mindset. A city will offer a density or height bonus—allowing the developer of a market-rate apartment building to add more units or an additional story—if the developer agrees to set aside a certain percentage of units for low-income tenants, or pay into a fund (an in-lieu fee) for such housing.

I am ambivalent on the outcomes of such policies, and the existing research doesn't support firm conclusions in every case. But the whole premise of the policy does beg the question: If no vital public interest is harmed by allowing the developer to build a denser or taller building, then why was the density or height restriction in place, to begin with? If the functional answer is, “As a pretext to bring the developer to the negotiating table,” then I think we have a problem.

I’m not sure I understand the heat “developers” get, in general. It’s been a very long time since anyone’s great-grandfather built a cabin in the woods. Almost everything built today is built by developers, so to single out “developer” as something negative doesn’t make much sense.

However, as I’ve learned more about how planning and zoning work in the real world, I’ve begun to understand a dynamic here. Complicated zoning codes that regulate everything you can imagine are probably understood (to the extent that anyone understands them) as restricting or controlling developers. In other words, more zoning means more municipal control over development. To some extent, of course, that is how it works; zoning absolutely shapes the built environment. But there’s something else going on.

Think about how big business often embraces regulation, perhaps quietly, because at the end of the day, it’s the biggest players who can afford the army of lawyers to figure out the compliance (and the loopholes). Financial and environment regulation come to mind. This is not because they like regulation, of course. It adds real costs to doing business. But it also has the effect of squeezing smaller competitors, who can’t afford the army of lawyers.

More generally, a similar dynamic takes place with regard to taxes and college admissions and funding. It even takes place with government benefits, where the people most in need are those who have the most trouble figuring out the system. And health insurance needs no explanation at all.

The key insight is that regulatory complexity benefits the largest, richest incumbents. This line of argument is often associated with libertarianism, but you don’t have to be a libertarian to see its usefulness.

So what does this have to do with developers and zoning? Complicated and overbearing zoning requirements have the same effect. They can make it essentially impossible for ordinary people to engage in the kind of projects that built America. Want to restore an old building on Main Street? Uh-oh: the lot is nonconforming to the current code, which triggers all sorts of expensive compliance issues when you go to make any changes; the parking requirement is impossible to fulfill without bankrupting the project. Etc., etc. A homeowner who wants to add an ADU or a small business owner who wants to fix up that Main Street building will run into this kind of thing pretty quickly. Many will give up. Most will never even start.

A larger developer, on the other hand, can play the game, as it were. They can endure the time and the red tape, they can apply for variances, they can offer concessions, they can even apply for a rezoning. Ordinary people can do all of this, but it’s out of reach, practically speaking. More likely, however, a developer will ditch the small Main Street project and simply build something much bigger from scratch, where the expense of all that red tape becomes worthwhile. More likely, instead of ADUs and duplexes organically filling in underutilized space in existing neighborhoods, large, “boxy” apartment buildings go up.

So it’s not that developers like complicated zoning, or that such codes don’t substantially shape what gets built. It’s rather that big, complicated zoning codes ratchet up the scale of development—and thus, in a way, indirectly give developers more clout. They artificially price out small-scale projects, and artificially enhance the practicality of mass projects (like those I critiqued here).

The result is that ordinary people feel like developers are running wild. But the reality is that this state of affairs is largely the result of a land-use regulatory regime that gives developers no smaller-scale competition. More of that competition—and a fine-grained complexity in our places and not in our regulatory schemes—is exactly what our cities, towns, and neighborhoods need.

Addison Del Mastro writes on urbanism and cultural history. He tweets at @ad_mastro and writes daily at Substack.