Tuesday, April 29, 2014

Zoning's self-defense mechanism: when local democracy is local tyranny

I already described, through an example, how typical North American zoning works in a previous post (click to read it if you haven't). Now, people may wonder "if it's so bad, why is it so enduring?". I have an explanation for that.

These typical practices don't only segregate uses, they also dictate what kind of housing can be built and where, how big they can be, how big the lots must be, how far apart buildings must be from the limits of the lot, etc... Essentially, this zoning imposes certain types of housing in certain neighborhoods. The most evident impact this has is quite simply socio-economic segregation. Yes, it does deserve to be in bold.

For instance, take a neighborhood zoned for single-family houses, so one unit per lot. The lot is a minimum of 500 square meters (around 5 000 square feet), the house must be at least 100 square meters big (1 000 square feet). If land is priced at 200$ per square meter and building the house costs 1 500$ per square meter (which seems to be realistic from what I've seen in suburbs), it means that buying the lot will cost 100 000$ and building the smallest house possible will cost 150 000$. For a total of 250 000$, minimum. So everyone who cannot afford a 250 000$ house cannot afford to live in the area. 

Meanwhile, there are some limits also on how big a house can be, if a zone is split in 500-square-meter-lots and merging lots is not allowed, then the very rich who want bigger lots or very big homes will also be pushed out of the area, as they are not allowed to have these homes.

The result is segregation by socio-economic class, the proxy through which zoning was used to segregate races in the United States. Each neighborhood will not only tend to have people of similar wealth levels, which has always been the case in history, but it will only offer housing to certain classes of people and exclude legally a lot of people by making housing unaffordable to them.

For instance, imagine a city zoned so that housing in different neighborhoods are between these prices:
Example of zoning and the prices of the housing they allow
So you have a large swath of the city that will be middle-class only, with the rich in one corner and the poor all put in another. The houses in the blue area will generally not be good enough for the taste of the rich, but over what the poor can afford.

Certain cities can zone to promote some kind of mixity by having zones of different income levels close to each other, but each of these zones is still segregated.

But the segregation doesn't stop there. Since you can't build condos in single-family home areas and vice versa, it means that, for instance, single young professionals don't find housing that suits their needs in the middle-class area. So you have singles zoned with singles, poor with the poor, rich families with rich families, etc, etc...

Segregation leads to uniformity. And uniformity leads to fear what is different and most of all, change. So zoned cities like these are small enclaves of homogeneous communities, maintained by a careful segregation of housing types and prices.

But what about attempts to reform this?

Self-defense mechanism of zoning

Any attempt to change this segregation in a zoned city must take the form of a change in zoning. And in the vast majority of cities, any attempts to change zoning is submitted through a careful process including local democracy. Local residents have input on whether or not the zoning change goes through. That might seem like a good idea: give the community some control on their development. However, in practice this works much less well than in theory.

When there's a new project, people tend to ask two questions that will determine their general outlook:
1- Will I benefit?
2- Will it harm me?

Depending on their answers to the two questions, a population will be grouped in more or less 4 different categories:
Simplified decision chart for support/opposition to projects
Supporters and opponents are self-explanatory. The undecided are people who see advantages and disadvantages to the project, and can't decide if the benefits outweigh the costs. The uninterested are just that, they don't see how the project involves them in any way, so they will steer clear and not participate in the debates or votes, if it comes to that. 

Yes, in reality it's a bit more complicated than that, some people support or oppose projects for ideological and/or altruistic reasons. But largely, people tend to favor their own interests first.

The first major problem here is that most projects that require zoning changes are actually private projects, projects that aim to satisfy the needs of a few people. All housing are private projects, even public housing, because their benefits concern only a few people (directly). Not only that, but housing that needs zoning changes to be built is probably the type of housing that current residents don't want to live in (currently).

For example, introducing low-rise condos in single-family homes. Most of the families currently in the area are not likely to be interested in the low-rise condos, especially if they're the smaller kind for young professionals. And the people who would be interested in them don't currently live in the area because... well... there is no housing that fits their needs currently in the area as it's illegal to build it.

In short, what it means if that the vast majority of people will say NO to the first question. The people who would be the main beneficiaries of the change do not actually reside there, and so do not get a voice in the debate. If you look at the chart, it largely means that people will split in only two groups: the OPPONENTS and the... UNINTERESTED.

So when you have town halls, what voice will you hear? Those opposed. The local councilors will receive letters and phone calls from whom? Those opposed. If there is a vote, who will turn out to vote? Those opposed. In all cases, the uninterested won't bother, they feel like they have no skin in the game.

But still, their preference, I think, deserves to be acknowledged, the uninterested actually say "I don't care" or "do whatever you want". I think personally that's a form of support for the change, just a tacit one.

But no matter, the opposed, who in general are a minority,  just a vocal one, are the only ones involved in the debate. And it doesn't take a lot to get some people opposed and to perceive harm from any given project. In Québec City, there has been a project to build a mixed-use project on an old gas station's lot.
The lot

The project
It's already a mixed-use area with a lot of multifamily apartments, so shouldn't be a problem, right? Wrong, the project committed a capital sin, it had 6 stories when the local zoning said 4 maximum. So you had protests and organized opposition to the project. 

It didn't matter that its only difference with the rest of the neighborhood was that it had 2 stories more and that it had a more modern look to it. It didn't matter either that 250 meters to the east, there are these buildings that seem to disturb no one:
250 meters to the east: 14-story tower to the left, 7-story building to the right
The opposition managed to get a local referendum going, and the zoning change that would have allowed the project was rejected by 77% of voters!... out of the 39% who actually voted... out of the couple of blocks that had the right to vote. So about 30% of opponents, 10% of supporters... and a good 60% of people who didn't care either way Overall, 266 people voted against. To my mind, the "don't care either way" should have won and the zoning change let through, but I don't get to make the rules, to everyone's chagrin I'm sure.

This demonstrates how little it takes for some people to feel that their quality of life is threatened. And these people were passionate about this! Like the fact that the building had two stories would have given them cancer!

This is classical NIMBY-ism, opposition to any change, even the slightest one.

The result: when local democracy is local tyranny of a vocal minority

So let's sum up all these factors:

1- Zoning creates homogeneous neighborhoods where people learn to be afraid of difference and change
2- To satisfy the housing needs of people who don't have the housing they want and can afford, you need to change the zoning
3- Since changing the zoning to introduce new types of housing benefits non-residents and they don't have a voice in the discussion following local democracy rules, the project often has little to no local supporters who can participate in the debate.
4- Since local residents don't benefit directly from the project, they split up between an opponent group and a disinterested group.
5- Much of the opposition is actually quite irrational and reinforced by a fear of difference coming from the segregated homogeneous neighborhoods imposed by zoning.
6- The only local voices in the debate will tend to be opposed to the project, the supporters are not current residents and can't participate, even if the opponents are a minority, since the majority are not in support but uninterested, they win by default...
7- Hence, the game is biased to block any type of zoning change (unless people are poor and lack influence and rich developers want the zoning change)

The result is a well-oiled system that successfully blocks zoning changes to densify a lot of areas. Though the change may be largely desired, it is almost always locally opposed and proponents of these changes have to exert a lot of pressure on local politicians to surmount this local opposition, which often leads to corruption attempts.

Alternatively, project leaders may try to buy off local residents by offering them goodies, like building parks or plazas in exchange for being allowed to build what they want. Though some may be attracted by the idea, in reality it means nothing less that a public good is being funded from the pockets of the residents of just one project, which means all new housing will be unaffordable as the cost of building these public improvements that all benefit from is borne by those who buy in to the project. Which is all utterly insane.

The solution

Disarm the NIMBYs, make differentiating between residential types illegal at a regional or national level. 

Yes, I know, it's the nuclear option because it deprives "local democracy" of power. But with all I've explained, can we really talk of democracy? I think not. It's just local tyranny being built up to protect the status quo. I'm still in favor of local democracy if people actually PROPOSE something instead of opposing. For instance, if people want to turn a vacant lot into a park, let them organize a drive to propose this, including a contribution asked of local residents to fund the initiative. In other words, positive local democracy, not negative local democracy that's all about blocking any and all projects.


  1. Zoning power can pretty much be boiled down to rent-seeking. Give people disproportionate power, and they will use it to extract disproportionate economic benefit. Facilitating rent-seeking perpetuates socio-economic inequality.

    1. I can see how zoning may help create a housing shortage and thus drive speculation and a bubble on house prices, making homeowners profit from simply having their houses. However, it's a very indirect way to seek a rent from one's property, so I'm not sure it's a major factor.

      I would say it is more about the human need for safety and stability. Once someone is comfortable, they become afraid of change. I would say most NIMBYs are motivated more by the fear of change than rent-seeking. There is also a fear that they will lose money on their property if zoning changes go through (there goes the neighborhood), which is a bit similar to rent-seeking but I'd argue is fundamentally different. Rent-seeking is a desire for the value of your property to increase to provide you with an income without having to work for it, fear of devaluation is a fear that your property's value will decline, that you will lose money.

      Furthermore, opposition to upzoning is actually often counter-productive to rent-seeking behavior. When you upzone a lot, you may in fact increase the value of housing because some developers will want to buy current buildings not for the building itself, but for the lot and what it allows. For instance, if a house is worth 400 000$ but in an upzoned area where it can be replaced with a low-rise condo building with each condo costing 100 000$ to build but being sold for 250 000$, then the developer may be willing to pay 500 000 or 600 000$ for the house, much more than what people who want to live in it would be willing to pay for it.

    2. I meant rent-seeking in the more generic economic sense, not in the literal renting-out-property sense. For example, NIMBYs who insist that all new construction have high parking minimums so that the cost of parking does not go up for existing residents are rent-seeking. NIMBYs who insist that new construction provide public amenities to current residents at the cost of future residents are rent-seeking.

      Rent-seeking behavior is anything that existing stakeholders do to funnel wealth to themselves from future stakeholders. In general rent-seeking causes economic inequality and stagnation because it creates an increasing overhead for new investment.