Tuesday, November 13, 2007

The dark side of zoning

With the Ashby high-rise controversy and the scattered calls for zoning - whether traditional or form-based - Texas Monthly gives us a reminder from Dallas of one of the dark side-effects of strong government control of land-use:
There are no winners in Dallas now that sixteen indictments have been handed down in a massive public-corruption case.

Not the city council, though none of its current members were involved. Not African Americans, who saw so many of their leaders paraded through the Earle Cabell Federal Building. Not investigators, who had been roundly criticized for their lack of progress after a dramatic raid of city hall way back in June 2005. And certainly not Dallas itself, which is doomed to witness the messy details play out in the media and the courtroom. The case boils down to this: Developer Brian Potashnik and his wife, Cheryl, are accused of bribing local officials to obtain permits to build low-income housing units in mostly poor, mostly black South Dallas. The U.S. attorney contends there was no shortage of takers, including Democratic state representative Terri Hodge, former mayor pro tem and recent mayoral candidate Don Hill, his wife and political consultant Sheila Farrington, and former city plan commissioner D’Angelo Lee. (Former city councilman James Fantroy was charged with embezzlement in a separate indictment.)
And, as everybody knows, corruption is like a cockroach: for every one you see, there are dozens or even hundreds you don't...

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24 Comments:

At 10:08 AM, November 13, 2007, Blogger Michael said...

I don't see how this is the "dark side of zoning". Wasn't the developer at least equally corrupt by attempting to bribe officials? Just because people can be motivated by greed does not mean that a system of laws or checks and balances is not a helpful way to ameliorate that natural tendency. It doesn't always work, but to use a story like this to imply that the developer is the "good guy" seems pretty off-base.

 
At 11:03 AM, November 13, 2007, Anonymous RedScare said...

Great post! You really pointed out the evils of zoning in one short clip. I look forward to your next "Dark Side" topics, such as "The Dark Side of Free Markets", starring Enron, and "The Dark Side of Liberating Middle Eastern Nations", featuring the $18 Billion in fraud by US Republican connected companies.

Should make for interesting reading.

 
At 1:29 PM, November 13, 2007, Blogger Tory Gattis said...

As always, no system is perfect, but the free market is "more perfect" than corrupted political processes. If zoning is a scaled down version of post-WW2 communist Russia, and our current system is, well, post-WW2 America, I'll take the later. Both had good intentions - one worked out much, much better than the other.

 
At 2:09 PM, November 13, 2007, Anonymous Mike said...

Living in Dallas for a few months now, and still have not heard one complaint about zoning. If people here are oppressed by a quasi-communist regime, then I'm not expecting the wall to come down anytime soon.

 
At 2:43 PM, November 13, 2007, Blogger Brian Shelley said...

Mike,

"...then I'm not expecting the wall to come down anytime soon."

That's probably because the wall was zoned to go through South Dallas. :)

 
At 4:00 PM, November 13, 2007, Blogger Michael said...

Well, for me this question is not really about "free market" versus "government", but more of what works in this particular case.

As a resident or business owner, I just want to be able to buy property knowing full well what can and cannot be built in my neighborhood - this is called transparency and it is a core principle of the free market. This is fairly complex right now, because I think the answer in many places in Houston is "anything goes" legally speaking, but then you also have to figure "what is most likely" given the market. The average consumer cannot be expected to perform this sort of calculation - so we basically have a non-transparent system, which is not good by free market standards. (Note: a parallel to this lack of transparency is the predatory lending practices now being cited as prelude to the current housing bubble - another ineffeciency of the free market).

If you introduce zoning, then, you will have a one-time adjustment of property values to reflect the new zoning laws, but after that I believe you have a more transparent, and still pretty much free-market system by American standards (there is no such thing as a totally free-market that I have heard of).

Barring someone buying all the residential land inside loop 610 and calling it "The Heights" master-planned community, I think forms-based zoning is the closest that urban Houston is going to get to this form of transparency.

 
At 5:09 PM, November 13, 2007, Anonymous kjb434 said...

Michael,

Your claiming the predatory lending practice is a failure of the free market is very bad analysis.

In the 80s, lending to anybody with less than perfect credit was unheard of. Congress intervened and force lending companies and banks to make available what we now term as sub-prime loans. Lending companies making all of these products available to people with bad credit histories was required as an anti-discrimination to low income persons.

Now, the problem this created is coming back to bite everyone, but somehow the government is blaming the lending companies for doing what they were told to do.

The free market told these companies not to lend in the first place, government screwed with the free market and caused problems as usual.

In reality, all of the foreclosures are a direct result of the government messing with free markets.

 
At 6:34 PM, November 13, 2007, Blogger Tory Gattis said...

The route to better protection and transparency is freely agreed-upon deed restrictions. If they're truly good for the neighborhood, there should be no problem getting them passed by 70+%.

 
At 8:27 PM, November 13, 2007, Anonymous Anonymous said...

Deed restrictions are an absolute joke in Houston. The city rubber stamps most all proposed projects regardless of deed restrictions. My inner-loop neighborhood has street and garage setback requirements. It seems like every month we are fighting a developer ignoring these rules by having the city approve plans with blatent disregard to existing deed restrictions. We pay taxes to have the city enforce the few development rules we have but they cannot even do that correctly.

 
At 9:10 PM, November 13, 2007, Blogger Michael said...

No, what we will do is vote for zoning. That will pass in this city at some point - you can mark my words.

I've lived in several cities - granted some were a bit smaller than Houston - but not significantly so - but all had zoning and none had significantly higher housing prices or any disadvantages that I could see. The downside in Houston is most of the city is horribly ugly, and I wouldn't want to live in about 80% of it (with West U and Bellaire being the exceptions). The only benefit to lack of zoning is there does seem to be a little more interaction among the different socio-economic classes.

This is a quality of life issue, and unfortunately people like Tory choosing to live in zoned areas is the "got mine" argument this time. The majority of people don't have zoning but would like it, as there is no real alternative.

 
At 10:45 PM, November 13, 2007, Blogger Tory Gattis said...

If the majority wanted zoning, they would have voted for it the *three* previous times it was brought up.

I live in Meyerland. No zoning. Just deed restrictions. And it works just fine.

Houston has the lowest cost-of-living - and esp. housing - of any of the 20+ largest metros in the country.

 
At 11:57 PM, November 13, 2007, Anonymous Neal said...

Michael said:

"As a resident or business owner, I just want to be able to buy property knowing full well what can and cannot be built in my neighborhood - this is called transparency and it is a core principle of the free market."

It is also called swiping away the property rights from neighboring landowners and that is one of the reasons why zoning is very attractive to certain people. Zoning gives organized groups vastly greater control over land nearby that isn't theirs. That is what is at the heart of what is going on at the Bissonnet highrise.

The Bissonnet situation could could be diffused in a number of ways, including possibly compensating those who (may) lose appraised value on their homes by those moving into the highrise via selling those units at a greater price, then taking the extra monies and giving it to those whom experience actual loss of valuation on their homes. Another idea would be for the highrise to hire an off duty police officer to direct traffic on Bissonnett to alleviate the alleged traffic problems and charging that cost in the monthly maintenance fees. As it is, it looks as though the Southampton folks don't care to listen to anything of the sort.

Back to the subject at hand, what is interesting is that zoning doesn't even stop the fighting over land use, but in fact can make it much worse precisely because others can exert control over property that in some instances can be some distance away from them. A while back, in the only part of Houston that has zoning, St. George Place in the Galleria, the Houston Chronicle carried a story where the people living there were fighting the fact that a developer was trying to put up some townhomes or condos (I cannot remember which) on a vacant lot. A similar situation was described to me by my supervisor in Pearland, where his wife is a member of a group which is fighting the development of some vacant land which was bought by a church, which in turn has decided to offer some of its parceled land to a commercial developer. Though my supervisor told me that the development is about one half mile away from the edge of their subdivision, the upper middle class types in the area don't want it anyway and made their intentions clear in the public hearings. People exerting control what gets (or does not get) developed on vacant land that doesn't belong to them is one of the characteristics of zoning. So is bribery so that the authorities will (or will not) rezone land, since land use becomes much more overtly politicized.

 
At 1:09 AM, November 14, 2007, Anonymous Anonymous said...

micheal,

Except for along the freeways, I don't see where you can believe that Houston is any less visually pleasant than any other city, and the development along the freeways is not a zoning issue.

Let me add to your list, Bellaire, West U., Along Memorial, Washington, the Heights, Along Kirby anywhere between downtown and Breaswood, Montrose, Midtown, Downtown, Meyerland. I can promise you there are large parts of any city where I definitely would not want to live, but I would love to live in any of these areas, instead of out in suburbia(pearland) where I am stuck now. I really find the suburbs unappealling. Same damn shit block after block, cause the zoning and deed restrictions don't allow any variety.


Before anyone gets on my back, I am not anti-suburbs, they just are not for me, and I am scrimping and saving so I can hurry up and move into the city.

 
At 10:26 AM, November 14, 2007, Blogger Michael said...

The last vote on zoning was in 1993which was a long time ago. As I've analyzed before, the trends are that zoning has increasing favorability.

Houston housing prices are not significantly different than many other metros, and differences are based far more on location (ie the coasts versus the midwest and south) versus land-use regulation. Also, differences are based on the fact that in many other metros, what is "Houston" is actually 20-30 separate municipalities.

Neal, I agree that zoning is not going to magically solve our problems, but I do believe it creates more a recourse for property owners in the event that they believe that they are being wronged.

I believe having some basic form of zoning would be much better than the knee-jerk reactions and messes like the Ashby high rise debate that are only going to increase as Houston densifies.

As for Houston's ugliness - I looked at homes in the Heights, and frankly I would not want to live there. The homes we looked at were in some cases right next to lumber mills, factories, etc. Or a nice townhome would be overshadowed by a 4-5 story townhome right next door.

I think the trends are on my side. Zoning started in this country in NYC over a similar issue to the Ashby high rise.

I am not a huge fan of zoning, but I think it solves the problems at hand better than anything else I've heard.

Also, KJB, where's your analysis coming from? Last I heard it was "power corrupts and absolute power corrupts absolutely". Not "government power corrupts and absolute government power corrupts absolutely" - any entity can be corrupt. Here's an article comparing the housing mess to Enron:

http://tinyurl.com/23uhpc

 
At 10:48 AM, November 14, 2007, Blogger Michael said...

Another difference in housing affordability is property tax rates. Houstonians have a strong incentive to keep their appraised values as low as possible and to buy homes that are covered by the homestead exemption, instead of paying something like 4% per year on $300K property. In other areas, this is often more like a 1% tax. So to say "Houston has lower home prices" misses one of the key reasons - most of us do not want to and cannot pay $10-15K per year in property taxes, where in other areas this is a non-issue - they can buy a $350 K house and the tax rates are similar to what a Houstonian would have to pay for a $180 K house.

If someone in Missouri, let's say, wanted to buy a $200 K house, they could do so. But the reasoning for doing so is not as strong, property-tax wise. So, Texans have some control over their "state income tax" - which is the property tax - and choose to go smaller and more affordable. In other states, there is no real choice to avoid taxation on income, and they choose to buy nicer homes with their money since they are not getting hit with exorbitant property taxes. (Or, they can choose to move somewhere else like Texas if they don't want to pay state income tax ;) )

My point here is this has *ZERO* to do with land-use regulation issues. And I would argue that this is a much stronger reason for any housing price discrepancies between Texas and the rest of the nation than land-use regulations, which I really don't see as much of a factor at all (having lived in various suburbs / urban areas in several of these cities).

 
At 12:21 PM, November 14, 2007, Anonymous Mike said...

I think the quote was "All power tends to corrupt, and absolute power corrupts absolutely." Lord Acton

If you look at the fact that zoning only lost 52-48 in 1993, and since that time we have gotten progressive enough to accept rail transit and protections for historic buildings, I would guess that it's only a matter of time before zoning passes. We have come a long way since the days of the 1930's debate over zoning in Houston, when crowds could be rallied by demagogues shouting "That's what Joe Stalin wants!" and the debate was stifled before it started.

 
At 1:24 PM, November 14, 2007, Anonymous kjb434 said...

I hope you pro-zoning folks realize that zoning wont' change the existing conditions in the inner city.

Also, zoning will be seen as a green light for developers to mow down poor neighborhoods. Many developers love zoning because individual citizens have a LOT LESS power then in the current situation.

If a neighborhood is not that active, they can get re-zoned without notice. Zoning also creates a bureaucracy that can be navigated by developers much easier than individuals. It also allows for the use of the precedent of the Kelo vs New Haven decision to occur much easier. Even though the Victory Project in Dallas was started before Kelo, the concept used was the same. Existing businesses and residents were re-zoned out of their property.

Also, I really don't like the idea of a few people objecting to what i do to my property means that it render my property useless.

 
At 1:59 PM, November 14, 2007, Blogger Brian Shelley said...

Michael,

If zoning prevents the loss of property value by stopping bad development, doesn’t it also prevent the gain of property value by stopping good development? Near my house they recently tore down an old gas station turned used car lot and built a McDonalds. Don’t I want that to happen? Don’t I want it to be as easy as possible for developers to tear down eyesores and build new buildings?

 
At 2:27 PM, November 14, 2007, Blogger Michael said...

Brian,

I imagine that in the situation you are referring to, if it was already a gas station, it would be zoned for commercial use, and a McDonald's or various other businesses could use that property. The difference is your next door neighbor, if it is currently zoned as a residence, could not be transformed into a skyscraper, McDonald's, factory, etc next year.

Within the commercial zoning, I don't really think it would be any more difficult than it is today to tear down eyesores than it is today. Historic preservation issues - while sort of related - are probably best left to a separate topic. It's probably also best to have a zoning expert weigh in, since I am no zoning guru - but the case you mention sounds relatively straight-forward.

-Mike

 
At 2:42 PM, November 14, 2007, Anonymous kjb434 said...

Brian, you bring a good point: the word "eyesore".

In zoning, a board or a small group of residents gets to deem what they don't like in a city and re-zone it. In your case you sighted, the free market decided that the site was more viable and took out the eyesore.

If we had zoning back in late eighties, I think much of the Heights would be been torn down. Back then, the neighborhood was fairly crime ridden. All of the old cottages would have been seen an eyesore and re-zoned to attract new development.

Luckily, zoning didn't exist. Brave residents moving in early and gradually changed the neighborhood having breathed new life and created a very politically active area of town that enforces deed restrictions.

Also, when I say Heights, I'm including Woodland Height, Norhill Heights, and Heights proper.

The revitalization of this area occurred through redevelopment and through new residents in old homes cleaning up the place.

Zoning would have labeled the area as blighted. The citizens wouldn't have fought it because it wasn't politically active yet to stop it.

 
At 3:20 PM, November 14, 2007, Anonymous Mike said...

Funny kjb, the old charming bungalow neighborhoods that went down in the 70's/80's didn't all get torn down in cities that have zoning. In fact, I'm willing to bet that most of them came through a lot better than the Heights did (i.e. few eyesores).

 
At 5:22 PM, November 14, 2007, Blogger Brian Shelley said...

Michael,

Maybe a bad example to explain my point. There's a shopping center near the McDonalds that has a vacant anchor tenant and the other stores are low brow sorts. The center obviously has not been remodeled in decades. If an apartment developer wanted to bulldoze it that would make me happy. With zoning this would be harder to accomplish.

It seems to me that to protect against the downside of development with zoning you are giving up the upside of redevelopment.

 
At 10:40 PM, November 14, 2007, Blogger Michael said...

Brian,

Yes, I agree - it would probably be more difficult to get an area re-zoned - but I think it would be possible. Or we could go with forms-based zoning which would be somewhat less restrictive. In either case you are going to have cases where it makes sense to re-evaluate the property and possibly re-zone the land, but I feel more confident when that decision is made by developer and community as opposed to just the developer.

-Mike

 
At 9:29 AM, November 15, 2007, Anonymous kjb434 said...

Form Based Zoning = more powerful zoning board.

I've researched this from a lot of the pro-Form Based Zoning groups.

In order for the flexibility to exist, the zoning board has to have the full power to decide when to be flexible. That to me leaves it open for a developer to influence a board member to change the status of land use to build their project.

 

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