Notes 5.5.25

There are two components to an effective, democratic planning regime. The first is regionalism: Because labor markets, housing markets, and transportation networks are regional, many planning decisions should happen at the regional level. The United States already has hundreds of metropolitan planning organizations (MPOs), a product of the 1962 Federal-Aid Highway Act, but MPOs tend to have limited authority and are often poorly governed. A new generation of muscular and democratically accountable MPOs could overcome the collective action problems created by localism.

The second component is the rule of law. When the decision over whether to entitle a proposed building is discretionary—that is to say, when local officials have full arbitrary power over the project—planning naturally becomes a more opaque, irrational, and corrupt process. Entitlement decisions should instead be ministerial: Whether a project moves forward or not should be based on whether it complies with clear, objective, and consistently applied statutes and regulations. While this would reduce the role of public meetings in land use planning, it would not make planning itself less democratic; instead, it would ensure that planning is based on the laws enacted by the people’s duly elected representatives.

The guiding principle that unites these two components is not localism but planning. Instead of making land use decisions on an ad hoc, project-by-project basis, governments should develop and stick to comprehensive plans that take the needs of an entire region into account. While there could still be plenty of room for community input in the plan-making process, planners would need to ensure the input was representative of the whole region: Surveys and focus groups that feature representative cross-sections of the local population would likely produce better outcomes than unstructured public meetings.

I have come around to an alternative homevoter hypothesis. Homeowners aren’t exactly motivated by the resale value of their homes. They are motivated by the rental value of their homes. They are motivated by the “character of their neighborhoods” - the neighborhood’s value to them as a resident. Of course, that naturally can feed into the value of their homes, which they also happen to benefit from.

One shorthand I have come to accept in housing politics is that families naturally tend to, and want to, segregate by class and income, for better or worse. In functional urban housing markets of the late 20th century, home values tended to be highly correlated with neighborhood incomes. In most cities before 2008, homes across the whole metropolitan area tended to sell for 3x to 4x the incomes of the neighborhoods’ residents.

Families basically sorted themselves by income across a city, and then maintained and re-invested in their homes at the rate that was appropriate to very local income levels.

[…]

What soured me a bit on the homevoter hypothesis is that all that effort does frequently help maintain the status quo in the neighborhoods that use it. But, as zoning and other NIMBY tools came to dominate the housing marketplace, it wasn’t the protected neighborhoods that gained value. It wasn’t the neighborhoods that low-income residents were excluded from where home values inflated the most. It was the neighborhoods where low-income residents were excluded to where home values inflated the most.

I don’t think the homevoter hypothesis says that homeowners are motivated by inflating the value of other neighborhoods. But, that’s what has happened. So, in a way, I think the “strong version” of the hypothesis has failed. NIMBYs want the lived value of their neighborhoods to be protected. If they were renters, that would increase their costs. Homeowners have that cost hedged. They pre-paid their future rents. But, homeowners aren’t primarily motivated to created windfall gains for themselves. They are motivated to protect the status quo. They are motivated as residents, more than as owners.