Four Ways to Improve Land Use Without Upzoning

Prolonged periods of high rents, as many American cities have experienced for the last decade, are a sign that the city hasn’t permitted enough potential building space in its most desirable areas. The typical policy response—upzoning to legalize more potential space—comes as a natural solution. Yet upzoning can be a daunting political lift, as homevoter and NIMBY forces often dominate local politics.

The question for local policymakers who wish to improve their land-use regulatory environment, then, is how to liberalize rules that make development of new businesses and homes more difficult, as well as rules that limit what can be done with existing buildings, without resorting to upzoning. They have several options, ranging from changing procurement rules to improving parking charge rates.

Make Infrastructure Cheaper with Performance-Based Rules

Many existing regulations rely on prescriptive rules that state how infrastructure must be constructed rather than how it must perform. This increases costs, deterring both new construction and maintenance of existing structures. Worse still, prescriptive rules lock in old technologies, even as materials advance and new construction methods are developed to lower costs while maintaining or improving the life span of what is built.

One common instance where these rules are a problem is municipal water, wastewater, and sewer infrastructure. American water agencies use a range of materials when they build or replace new mains, but options vary by municipality, with some towns paying more than they need to. Other rules that cause problems are those that mandate the use of locally-hired staff or contractors, limiting the competition for infrastructure projects. These rules are particularly problematic, as they create captive local infrastructure construction markets that insulate contractors from fallout when a structure fails.

A better path forward would be replacing rules about how infrastructure is to be constructed with rules about how the infrastructure must perform. Such rules would make building cheaper and increase the likelihood that contractors optimize their work to deliver assets that operate as local officials hope.

Remove Materials Mandates

Materials mandates aren’t only a problem for infrastructure managers, but for property owners as well. In some cases, the difference may only be cosmetic. But a variety of seemingly cosmetic land-use regulations cause real problems for certain subsets of local residents.

Take for example a rule mandating that all fences and outbuildings in a residential area be made of wood rather than stone, concrete, vinyl or any other substance. This helps unify the look of the neighborhood and might even increase property values if people prefer its appearance to that of other neighborhoods in the area.

Yet the reality is usually different. A mandate that every fence or outbuilding be wooden is a mandate that every homeowner maintain a wooden fence or outbuilding. This maintenance may not be particularly expensive for most, but it can be a challenge for the elderly, the disabled, and the time-and-money-poor. Staining or painting wood may be an errand and an afternoon to some, but it can be a costly favor to ask of people unable to do the task themselves. A rule to make the neighborhood prettier might only make the differences between the haves and have-nots starker when such asks fall on deaf ears.

Materials mandates make maintenance more costly in terms of both time and money, which harms those with little of either to spare. Repealing them offers one option for local policymakers that would make neighborhoods more adaptable to the needs of diverse property owners.

Protect the Right to Operate Home-Based Businesses

Municipal rules vary dramatically in how they treat businesses that operate from personal homes. Some municipalities have broad-based protections for those who work from home. Others ban home-based businesses almost entirely. But the norm is somewhere in the middle, with some uses allowed—often with stipulations. Rules may also differ over space, not only from town to town but from zone to zone within towns. This creates confusion that makes starting a new business from home more challenging than it needs to be. The rules can even strangle some businesses entirely, including the Midwest’s burgeoning farm and barn wedding industry.

One answer includes adopting more general standards about what constitutes a home-based business and how municipalities may regulate their activities. Arizona considered a bill last year that would have done just that. Similar but narrower protections can be found in existing laws elsewhere, including protections for operating small home-based daycare facilities in Vermont and the ability to operate accessory dwelling units in California.

Statewide rules should encourage entrepreneurs to get started without fear that angry neighbors might shut down a company that would be legal in the next town over. Arizona set the gold standard for how to draft a bill that protects home-based entrepreneurs in a way that makes local land-use regulation simpler. Policymakers elsewhere might benefit from similar rules, should their state choose to follow Arizona’s example.

Fix Parking Problems with (Accurate) Prices

Availability of appropriately-located parking remains one of the premier political issues in municipal government. Businesses rely on space being reliably available, both for allowing customers to park and for sending and receiving deliveries. Problems come when there is a mismatch between parking availability and parking demand.

Politicians have every reason to underprice parking to please both residents and businesses. Yet nothing comes for free, and with underpriced parking comes demand that exceeds parking supply. Spots that don’t open up quite fast enough create traffic when drivers have to spend time circling the block (often while stewing over the perceived failure of their elected officials). They also cause businesses to lose customers and the town as a whole to show a little less economic vitality.

These problems lead to constituent demand for more space without any promise of enough new dollars to cover the cost of adding it. While the town could widen roads, build new city-owned parking lots or garages, or mandate parking for homes and businesses, none of these changes get at the fundamental mismatch between parking prices and parking demand.

Allowing parking prices that are higher at times of peak demand can help solve this costly feedback loop. In Washington, D.C.’s Chinatown neighborhood, the city has been testing just such a mechanism for years now, with general success. There, parking rates are higher on times and days of peak demand. Other places, such as shore towns, set parking prices higher during peak tourist season, a more rudimentary version of the rule that has shown mixed success.

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Each of these types of changes could improve the economic vitality of towns by removing ancillary problems that hold back commerce and redevelopment. With improved infrastructure procurement, fewer materials mandates, more lenient home-based business rules, and adequately priced parking, towns have plenty of options for improving land use even if legalizing more built space isn’t a viable option.