Land Use Prof Blog

Dangerous Ideas for Land Use Laboratories #2: Train Infill Developers...for Free

Land use law almost always focuses on regulations and incentives related to growth.  Perhaps because of my past as an attorney representing developers in California, I have always thought that land use law did not spend enough time thinking about how we build a strong real estate community that is committed to the common good.  One take-away from those years of practice was that the developer clients I respected the most were those willing to do the brain damage of an infill project.  The financing on infill projects is tough, especially if there is anything unusual about the project like trying to do affordable units, preserve historic structures, or do green building.  Moreover, infill developers are those most likely to suffer from regulatory delay because of existing neighborhood NIMBYism, environmental problems from previous users, and heightened costs of demolition and removal of things like underground storage tanks.  It is much, much easier to be a greenfield developer.  

That said, urban cities increasingly are engaging land use policies that seek to encourage infill like never before.  California wants to build 3.5 million new houses in five years, according to Governor Newsom.  And retrofitting of existing single-family neighborhoods has support from both liberals and conservative factions in the land use battle...when does that happen?!

There is just one problem:  who is going to build those infill homes?  Even if every existing single-family neighborhood were re-zoned for fourplexes, there would still be a problem of finding competent developers who were committed to retaining fine-scale development at a higher urban density.  The reality is that we have never trained that person in earnest, except at elite real estate programs at institutions like MIT, Harvard, or Berkeley.  If we want to make that happen en masse, we need to commodify that knowledge and make it very, very accessible.  This flies in the face of how the real estate industry usually works, though, which is built on relationships that are often acquired over time and through families or, as noted above, elite programs in real estate development or design.

My idea is simple:  cities offer a year-long--free--real estate boot camp.  I saw a much smaller version of this when I was in practice, as San Francisco rolled out its first green building ordinance.  There were a lot of questions and concerns about the ordinance that were forestalled by excellent sessions run by the building and planning departments that did simple things like help retrain plumbers for green fixtures.  Why can't we do this with development?

What would it take?  What should be in the class?  Several thoughts I have include the following:  how to create a pro forma for an infill project that will get funded; invite banks to meet prospective infill developers; help train developers on programs like Low Income Housing Tax Credits and other credit schemes; introduce developers to architects that understand infill and committed to reasonably priced-plans that can be easily replicated rather than bespoke infill mansions; permitting assistance to understand how permits like PUDs might permit better long-term development of a property that is not evident from base zoning; and what else?

Above all, I think that cities interested in building housing need to think about how they build a committed developer community.  That means a city investment in building that community.  Might those developers go on to make some nice profits?  Sure.  Good for them.  But we must acknowledge that real estate is always an inherently risky business because of the amount of capital involved, and that upfront capital investment also serves as a barrier to entry to many would-be developers that do not have that access through elite connections.  Cities need to help develop this diverse community of developers that are committed to infill if they are serious about seeing new infill built.  Changing the code alone won't affect the process and social barriers that keep new infill from being built.

Prior posts in this series:

Ban Single-family Residential Covenants

 

Cal LAO: Preparing for Rising Seas: How the State Can Help Support Local Coastal Adaptation Efforts

For those interested in the interplay between sea-level rise and housing, the California Legislative Analyst's Office has a great new report available here.

Dangerous Ideas for Land Use Laboratories #1: Preempt the Single-Family Residence Restrictive Covenant

Preamble:  Where I've Been the Last Couple of Years

For the last several years, a lot of my time has been consumed by being an associate dean.  Rather than thinking big ideas about land use law, I've been worrying about course schedules and whatever issue had unexpectedly blown up when I came into the office that day.  With my stint in administration now past, I am delighted to get back to thinking about land use issues.  I find that I have a lot of ideas stacked up, many of which I haven't had time to fully research, and life being what it is, I may never have the chance to do so.  I also realize that the world of land use is changing dramatically, and there are some ideas I want to get out there before the moment passes.  I also realize that it seems the whole academic world has moved to Twitter, but I find that medium completely unappealing (even though I will link these posts to my Twitter account), and so I am returning to this blog for this series.  I don't know if anyone still reads it, but I'm hoping this series will give me a chance to start contributing again in a meaningful way.

The Dangerous Ideas series

For awhile, I've been thinking about the fact that the 39,000 local governments in the United States with land use authority utilize the same basic approach, almost all derived from enabling statutes themselves derived from the common origin of the SZEA.  It's remarkable, nonetheless, especially when you think of the idea that states--just 50 in number--are supposedly the laboratories of democracy.  My idea was, well, if you wanted to shake up land use law in the twenty-first century to address the major issues of the time...what would that look like?  There are certainly lots of discussions right now that are new and novel, but it interesting to me how quickly the novelty of the new idea becomes fetishized, and the invention stops as sides are taken and ideas politicized.  Bucking the norm of the SZEA-based approach is legally and politically dangerous.  But some places are going to want to try, and for those who are willing to think about things in a new way, what should they think about?  If folks are tired of the SZEA / Euclidean model, is their only option form-based codes?  New urbanism?  What else is there?  What can folks do now without hundreds of thousands of dollars of consultant fees? 

I welcome your thoughts and ideas.  In this series, I will share a few of mine.  I do not claim that the ideas in this series are not being done anywhere; surely, with 39,000 local governments in the US, almost everything I plan to discuss has been tried...somewhere.  My goal, though, is to try to broaden the conversation and, perhaps, convince some local governments out there to experiment a little, try something dangerous, and maybe build a better city while they're at it.  If folks know of cities or states working on these issues, I welcome thoughts.  And so, without further ado, here we go...

Dangerous Idea 1:  Preempt Restrictive Covenants for Single-Family Residences

There is plenty of discussion out there right now about places like Minneapolis and Oregon that have made strides to create more equitable and affordable neighborhoods by permitting duplexes, triplexes and fourplexes in existing single-family zoning districts.  I very much support this.

That said, this regulation primarily affects existing housing stock and only changes public regulation of that existing housing stock.  In many parts of the country, a significant percentage of housing stock is covered by private CC&Rs and an even higher percentage of new housing stock is covered by private CC&Rs.  One of the most common CC&Rs in residential subdivisions restricts those subdivisions to single-family residences.  If we are serious about affordable housing, those areas where CC&Rs are prevalent will prevent any meaningful retrofitting of single-family zones and mean our new housing will all still be single-family.  

The extent of this was made evident by this recent article:  Wyatt Clarke & Matthew Freedman, The rise and effects of homeowners associations, 112 Journal of Urban Economics 1 (2019).  The article estimates that 60% of all new housing construction is in an HOA, while 80% of new greenfield housing construction is in an HOA.  The article found significant class segregation between HOA ($83,401) and non-HOA ($59,656) household incomes.  Staggeringly, they found that 86% of new homes in the Mountain West, where I live, are covered by HOAs with all of the country above 40% of new housing stock in HOAs.  In the Mountain West, 40% of all housing is in an HOA, according to the article, and while that is the highest of any region, other regions have similar patterns.

My point is this:  if we are serious about addressing disparities in neighborhoods--and I think sociological studies tell us we should be--then we can't just address the public system of segregating neighborhoods through single-family zoning.  We must also contemplate pre-empting enforcement of single-family residence covenants in HOA CC&Rs through either state statute or local ordinance.

Dangerous idea?  You bet.  But how serious are we?  If we are really trying to build residential neighborhoods that are equitable, we can't congratulate ourselves for eliminating public barriers to more integrated neighborhoods through zoning while permitting the same thing by private means of the restrictive covenant.

Finally, I recognize some will say that it is the urban neighborhoods that are most important to address now because they are the most likely to be retrofit with density that would permit transit-rich options.  I disagree.  If developers know that they cannot enforce single-family residence CC&Rs, I believe they are more likely to engage in dense greenfield development that could yield meaningful density for future transportation nodes.  Moreover, such greenfield density is cheaper than infill density, which requires purchase of the existing structure and a demolition of the existing structure, which is time intensive and expensive.

 

CFP reminder: Innovations in Affordable Housing: ABA Journal of Affordable Housing & Community Development Law

A reminder of this call for papers on affordable housing topics.  Feel free to contact me ([email protected]) if you have questions.

 

ABA Journal of Affordable Housing & Community Development Law

Call for Papers

Innovation and Change in Affordable Housing and Community Development

Drafts due  in February, 2020 (final drafts due March 1, 2010)

 

The Journal of Affordable Housing & Community Development Law (the Journal) invites articles and essays on the theme of innovation and change in affordable housing and community development law.  How are established forms of financing affordable housing changing?  Are project types changing and, if so, how?  How are community organizing strategies changing in light of technological and social shifts?  What should we make of corporate efforts to address affordable housing when governmental and market efforts do not work?  What other innovations and changes are occurring that the affordable housing and community development community must confront and address?

The Journal welcomes essays (typically 2,500–6,200 words) or articles (typically 7,000-10,000 words). In addition, the Journal welcomes articles and essays on any of the Journal’s traditional subjects: affordable housing, fair housing and community/economic development. Topics could include important developments in the field; federal, state, local and/or private funding sources; statutes, policies or regulations; and empirical studies.

The Journal is the nation’s only law journal dedicated to affordable housing and community development law.  The Journal educates readers and provides a forum for discussion and resolution of problems in these fields by publishing articles from distinguished law professors, policy advocates and practitioners.

Interested authors are encouraged to send an abstract describing their proposals. Submissions of final articles and essays are due by February 1, 2020. Please email abstracts and final drafts to the Journal’s Editor-in-Chief, Stephen R. Miller, at [email protected]. The Journal also accepts submissions on a rolling basis. Please do not hesitate to contact the Editor with any questions.

Land Regulation without Zoning (the Houston Way)

William Fulton (Rice) has a great article explaining how Houston regulates land--quite substantially, in fact--without use regulation in this month's APA Planning.  Read it here.