A Not-So-Brief Thought on Zoning

I’m skeptical liberalization will boost density.

It is a truism among urbanists that if we remove onerous zoning and land use rules that density will increase; that is, buildings will get taller, parking less common, and more people will reside in more classically urban spaces. And on its face, that makes sense. The thought experiment here is simple: in a place where construction averages 2 stories, removing a parking space requirement allows only 1–3 stories of plausible construction on that former place. But in an urban area where construcion may run to 20, 30, or more stories, you can really run up the population score by making comparatively small changes in land use.

Where this idea has trouble is in the stylized fact that places with stricter land use policies actually tend to be denser than places with less strict land use rules. Huh, that’s weird, right?

Density data courtesy of Jed Kolko. Includes only MSAs where at least 10 local governments responded to land-use regulation questionnaires.

For this post I’m mostly spit-balling a theory that remains to be proven. But the graph above, and the one below, is the image I have in mind for what I’m trying to puzzle through.

Faced with the graph showing the positive restriction/density correlation, zoning-reduces-density storytellers respond, reasonably enough, that the impact of zoning is quite recent; land use laws didn’t really get going until the 1970s.

The problem with this story is that it is not true. The New York City zoning code of 1916 initiated skycraper setbacks that observably reduced density, and also prevented some neighborhoods from filtering down. The infamous height rules in the District of Columbia date to 1899. Los Angeles prevented industrial sites being placed near residential areas (that is, initiated a use-based zoning code) in 1908. By 1910, Baltimore had a racial zoning ordinance, and by 1917 Louisville’s racial zoning ordinance was being struck down by SCOTUS. That is, zoning was already alive and well by the 1910s, sufficiently so that people were suing over it. For a good account of the racial history of zoning, read on here.

But look, the point here is simple: zoning isn’t new. If zoning is what caused the problem, then we should have felt the impact a lot earlier (and indeed it’s possible we did; we don’t have good housing cost data from 1930, but maybe NYC was higher then too!). Whenever somebody tells you that a major city, like, say, New York, grew up before modern zoning codes could constrain them, smack that person. At the time of the 1916 ordinance, New York City had 5.3 million people. It continued growing strongly until 1938, then WWII, crime, suburbanization, etc all set it flatlining, and you know the rest.

The classic response here is that zoning caused cities to expand: Daniel Kay Hertz reminded me on twitter that NYC had greenfield development into the 1920s. But in that case we have to acknowledge that population growth in NYC stalled in the 1930s. Pray tell: how is it that zoning began its bite in the 1970s or 1980s, when NYC population was declining? Does anybody think NYC’s population decline in the 1970s was a product of zoning? No? Okay. And its current population increases only recently pushed it appreciably over the 1970 population levels.

So let’s consider what’s happening here. Zoning came into existence around 1900 and became widespread by the 1920s. To the extent its impact was not felt, that’s because cities were able to grow expansively, that is, by new greenfield development within city limits.

But here we have a problem. If your theory is that zoning initiated in a much earlier period doesn’t become “felt” in prices until construction runs into physical barriers, then you’ve basically just conceded that what actually caused price increases was physical barriers, that is, lack of greenfields. Because we are human, it’s easy to look and see the anthropogenic factors here, like zoning, but the thing that actually changed to directly trigger higher prices was not zoning. It was the shortage of developable land. Even with loose zoning, you’d (1) eventually hit the same limit and (2) face higher prices before that limit because non-greenfield development is substantially more expensive.

Furthermore, this suggests that some of the key determinants of when development-driven population pressures will bite are not things we conventionally think of as land use restrictions. Conservation areas, parks, green spaces, public plazas, streetspace, these may indeed be the biggest drivers of actual costs.

Say we have an island of 23 square miles and it has 1.7 million people. Say 15 percent of this island is devoted to parks, of which half is land that would otherwise be readily developable. Now say that, oh, 35 percent of the land area is occupied by streets, leaving 50 percent for construction. This makes 148,000 people per developed square mile.

Now let’s do some math. Assume we have reached maximum population density under the current zoning code, and that, if upzoning occurs, population will rise to meet the maximum zoned potential anywhere that construction occurs.

Say we make changes that upzone by 25%; so we raise height limits or something like that. How long will it take for the whole city to be built under this new code?

Well, the answer is, forever. It will never occur. Upzoning will never densify the whole city like this. The cost of knocking down and rebuilding a major skyscraper is too great. Upzoning won’t replace skyscrapers; it can only replace comparatively smaller developments. Bad zoning of the past will stick around for a long time to come.

But let’s say that in the first 5 years, a whopping 10% of the built environment can be replaced by buildings that house 25% more people, and they all fill up. That gives us a final population of 1,742,500 vs initial population of 1,700,000. We added 43,000 people. But keep in mind, this required us to bulldoze 10% of the city.

But maybe we envision something more radical. Say we envision upzoning that allows 500% greater density. Well, that’s gonna be trickier and costlier to implement I’d wager, so let’s assume this far more radical upzoning replaces just 3% of the city’s built environment. This gives us 1.9 million vs. 1.7 million initially; a 12% population increase! That’s impressive!

Or, at least, it looks impressive. I still think bulldozing 3% of a city’s built environment in 5 years time seems extremely unlikely, but YMMV.

Let’s consider an alternative view. Let’s assume that, with no change in rules for development, we simply alter the amount of developable land. We said just 50% of the land area is actually open for development. What if we bumped it up to 55%? Well, that right there gives you 1.87 million. If you can just reduce the amount of non-developable space, you can get more people in. Plus, building on former parks and streets is easier than building on former buildings, and cheaper. This is something more akin to greenfield development.

But hold on: isn’t this just Kowloon Walled City? Am I suggesting some nightmare dystopia where there are no green spaces left?

Kind of, yes. But more simply than that, my suggestion is that (1) land use regulations are in fact quite old, (2) to the extent they have bitten recently, the proximate cause is actually physical land constraints, (3) many of those physical land constraints are in fact socially constructed. We can choose more or fewer parks, more or fewer streets, more or fewer plazas, and these choices are probably not that much more or less contentious than zoning codes themselves in most cities.