Land Use Controls and Zoning

1
Land Use Controls and Zoning

• Chapter 10

2
Why do cities control land use?

• Cities and government limit the location choices
  of residents and firms
• Limit population growth to control
• Pollution
• Congestion
• Crime
• Atmposphere

3
Goal of the Chapter

• Cities use land controls and zoning to
• Limit location choices of households and firms
• Limit population growth
• In this chapter we address 3 questions
• 1)Why do cities control land use?
• 2)What are the markets effects of land use
  controls?
• 3) What are the legal foundations of zoning
  and other land use controls?

4
Controlling Population Growth

• Cities can limit population growth within a
  boundary by either using an Urban Growth Boundary
  or an Urban Service Boundary

SL
Business Bid Rent
Residential Bid Rent
wo
RA
DL
u
N
No
5
Urban Service Boundary

• Suppose that the City refuses to Extend Urban
  Services beyond X miles from city center

SL


SL
w1
wo
RA
DL
u
N
No
X
N1
6
Urban Service Boundary (Cont)

• As the wages rise, due to the negative shock of
  labor demand
• a) the business bid rent function shifts to left
• b) the residential bid rent function shifts to
  the right

RA
X
u
7
Who Gains and who Losses? Why?

• People that own land in CBD?
• People that own land in the Residential District?
• People who own land outside the boundary line?
• Business Firms?
• Households?

8
Building Permits

• Cities may control residential growth by issuing
  building permits

S


S
S
P2
P0
P1
D
D
H
H0
H
H1
9
Building Permits (Cont)

• Why have the costs of building a house decreased?
• How should the City should allocate the permits
• H1 Permits to be allocated
• Value H1(P2-P1)
• City must assign permits to the projects that
  promote their Development Strategy or by auction?

S

S
P2
P1
D
H
H1
10
Land Use Zoning

• A zoning plan designates a set of admissible land
  uses for each plot of lands in the city.
• In theory zoning will promote health, welfare and
  safety by separating land of incompatible uses.
• Three types of zoning
• Nuisance Zoning
• Fiscal Zoning
• Design Zoning

11
Nuisance Zoning Separate incompatible land uses

• Industrial Nuisance Zoning Industries generate
  negative externalities, such as noise and air
  pollution.
• Traditional Industrial Zoning Exclusion from
  zone, reduces amount of pollution(?)
• Performance Industrial Zoning Set limits to
  quantity of pollutants, efficient(?)
• Effluent taxes Economically efficient
• Marginal External CostEffluent Fee
• Spatial Effluent Fee? Different taxes in
  different locations

12
What is more efficient?

• The Effluence Fee or Zoning?

13
Retail and Residential Nuisance Zoning

• Retail Zoning Retail areas generate negative
  externalities such as traffic, noise, parking
  problems.
• Traditional Retail Zoning Zoning map that
  classifies an area as retail zone.
• Performance Retail Zoning Set upper limits for
  the amount of noise, odor, traffic, etc.
• Residential Zoning Residential externalities
  generated mostly by high-density housing.
• Conventional Zoning Exclude the project
• Performance Zoning Actual effects on the
  neighborhood.

14
Fiscal Zoning (Exclusionary Zoning)

• A city excludes households that impose fiscal
  burdens on the local government
• High Density Housing
• Who wins and who looses from High Density
  zoning?
• Owners of apartment land?
• Owners of single family housing land?
• Apartments owners?
• Single family owners?
• Households living in the fringe areas of the city
• New commercial and industrial development

15
The Tiebout Hypothesis

• The Tiebout hypothesis, which states that
  individuals will costlessly sort themselves
  across local communities according to their
  public good preferences, is the workhorse of the
  local public finance literature.
• Inclusionary Zoning local developers have to
  build dwellings for low income households, mostly
  in the form of high density housings.

16
Design Zoning

• Planner designs a city arranging activities to
  promote the efficient use of the citys
  infrastructure
• Direct development
• Transferable Development Rights
• Define a Preservation Zone and a Development
  Zone
• Give some TDR to the owner of the Preservation
  Zone land, and in turn these can be sold to
  people in the development zone for further
  development.

17
Open Space Zoning

• Should a city zone a parcel as open space and
  thus denying the landowner the use of her land?
• Should the city purchase the land for open space?

18
Evenson and Wheaton (2003)

• Why is this paper important?
• Understand how do we organize spatially
• Understand the role of government in reducing
  negative externalities due to imperfect
  assignment of property rights
• Objective of the paper
• Present their dataset
• establish a series of stylized facts about how
  do cities zone

19
Evenson and Wheaton (2003) (Cont)

• 4 stylized facts
• Existing density and developments are crucial
  determinants of zoned density and allowed
  development (market work)
• Future commercial development is permitted in
  high-density/lower-income cities and towns
• Wealthier town more likely to set protected land
  aside (income is related to the extent that town
  allow development at all)
• No significant effect of town income on the
  density of future development (do not supports
  Tiebout Hypothesis)

20
Glasear, Gyourko and Saks (2003)

• Goal Analyze the effects of zoning on prices in
  NYC
• Identification Strategy Households buying
  apartments in NYC pay a Regulatory Tax that
  equals the difference between MC and MR
• (remember in perfect competition MRMC)

21
Glasear, Gyourko and Saks (2003)

• Main assumptions
• Marginal cost is constant and accurately
  calculated
• Market is assumed to be in equilibrium (no demand
  effects)