Market Urbanism - Latest Comments

Re: “Really Narrow Streets” project in the planning stages in Maine

Northern New England Villages — Sat, 28 Jan 2012 14:46:09 -0000

Maine has a booming population of empty-nesters and retirees to market something like this to . . . they will need creative ideas to overcome these demographic challenges. http://northernnewenglandvilla...

Re: “Upzoning means up yours!” Links

Emily Washington — Sat, 28 Jan 2012 11:11:49 -0000

Benjamin, thanks for providing these details. I'm sure the uncertainty regarding what they will be able to do with their own land has made it difficult for the university to plan for growth.

Re: “Really Narrow Streets” project in the planning stages in Maine

baklazhan — Sat, 28 Jan 2012 05:45:31 -0000

I read the whole thing, and I must say I'm impressed. Good presentation.

As far as jobs go, they can market to retirees, who have no jobs but would be happy to patronize local cafes or shops, which would provide at least some jobs for other residents. Other residents would surely drive to work, but a local elementary school, for example, would still reduce their need for cars significantly.

Of course, one thing which would make it even better would be a train station nearby with good service into a major city center, but that's politically difficult since most areas suitable for this sort of thing are zoned for low-density or occupied by parking lots.

Re: “Upzoning means up yours!” Links

Benjamin Hemric — Fri, 27 Jan 2012 21:18:13 -0000

Emily, Hi! Sorry for the delay in replying.

It's been a while since I've read NYU's materials and attended the community board meetings and open houses -- plus my attention has been focused on certain aspects of the plan. So I'm not really familiar with all of the various particulars, including those for additional student dorms, etc. But, in answer to your question, if I remember correctly, in NYU's "current" plans there is a provision for additional dorms space along the eastern edge of the site in the so-called "zipper" building. (It's called the "zipper" building because in the current plans the building has a somewhat serrated shape.)

However, NYU's plans seem to be pretty flexible, and the main thing seems to be (as they readily admit) to come up with a "government approved" outline of a plan that will allow them to maximize their properties in a flexible way.

Benjamin Hemric
Friday, Jan. 27, 2012, 9:20 p.m.

Re: “Upzoning means up yours!” Links

Emily Washington — Fri, 27 Jan 2012 17:28:54 -0000

It seems like some empirical study of this might not actually be too difficult (for someone better at math than I). Looking at the assessed values of properties in neighborhoods before and after they undergo upzonings compared to nearby areas with no zoning changes could be a way to start getting at the change in the overall value created by "releasing this land from under the boot." However the sample of upzonings might be too small for this study to work.

Re: “Really Narrow Streets” project in the planning stages in Maine

Joseph Eisenberg — Fri, 27 Jan 2012 15:31:34 -0000

This is an interesting idea. But what is the economic justification for a new town in Maine?

Where will the jobs be? If the village is car-free, will everyone just be walking to the parking lots at the edge of town and driving to work?I wish them well, but there are many challenges.

Re: “Upzoning means up yours!” Links

MarketUrbanism — Fri, 27 Jan 2012 15:08:23 -0000

If a cartel is the right way to think about it, then it is possible that upzoning a broad enough area would lower all owners' total property value. Since the purpose of the cartel is too raise profits by limiting supply.

Not exactly. You can consider vacant land as an option to build something of value upon it. Zoning inhibits what can be built on it, thus it limits the value of the option. In the usual cases of zoning, the vested interests (cartel) are the owners of already improved land. (perhaps the owners of poorly located land to some extent too) For the vested interests, their building value gets diminished by additional competition, although the land value goes up. Since demoliting their more valuable building would be the only way to execute on the higher land value, they are stuck and probably hurt by loosened zoning. So, to be more precise, the land value of the properties will certainly go up on a whole as the option is now more valuable. But this will possibly diminish the value of the already built buildings...

If we expected everyone's total property value to rise with upzoning of a large enough area, we would also expect Houston to have some of the highest property values in the world, ceteris paribus.

I think we agree here. Zoning is not the variable that creates value, it only restricts it and pushes it further away from where it is optimal. Value of land is based upon what it could be used for, which is complex and
unique for each site. Zoning only inhibits what can be used and thus
overall inhibits value. One could take the Houston analogy even further,
and say that "thus the most valuable land in the world is under the ocean"
- or even on the moon, where there is no restriction whatsoever....

So, since zoning restrictions serve to push value away from where it is
optimal, loosening of zoning would indeed hurt the land values in locations
where use was only optimal under a zoned regime. But on net, value would
be "created". (for lack of knowing a better word meaning "released from
under the boot")

Re: “Really Narrow Streets” project in the planning stages in Maine

anon — Fri, 27 Jan 2012 14:54:03 -0000

I've kicked around ideas like this for a long time and I find this to be very exciting!

Re: “Upzoning means up yours!” Links

awp — Fri, 27 Jan 2012 14:37:36 -0000

If a cartel is the right way to think about it, then it is possible that upzoning a broad enough area would lower all owners' total property value. Since the purpose of the cartel is too raise profits by limiting supply.

It would also help to be able to think more clearly about the divisions within property values. So that those owners closest to the amenity would most definitely see their land values rise they might still see their total property value fall due to the fall in value of the "right" to have a building of certain size on their land.

If we expected everyone's total property value to rise with upzoning of a large enough area, we would also expect Houston to have some of the highest property values in the world, ceteris paribus.

Re: “Really Narrow Streets” project in the planning stages in Maine

Anon256 — Fri, 27 Jan 2012 10:56:45 -0000

Just like government regulation, covenants can be more or less onerous, and can even be net positive if for example they help compensate for the effects of an existing market distortion (as e.g. parking maximums currently seem to). This doesn't change the fact that they are create an unreasonable amount of 'deadhand control' and restrictions on the rights of current property owners, and should not be part of any proposal for long-term optimal policy.

Re: “Upzoning means up yours!” Links

Emily Washington — Fri, 27 Jan 2012 09:18:08 -0000

This is a great way of framing the problem, as a cartel. As you say, the analysis of which landowners would benefit or be harmed through upzoning is complex, and perhaps many individual property owners are unsure whether or not upzoning would raise their property values.

Re: “Upzoning means up yours!” Links

MarketUrbanism — Thu, 26 Jan 2012 16:19:22 -0000

Right. Those with more desirable locations will benefit. Those with undesirable land will no longer be able to compete, and those who own already-improved property will have more competition.

Re: “Upzoning means up yours!” Links

awp — Thu, 26 Jan 2012 16:09:38 -0000

It seems to be a classic cartel/prisoner's dilemma.

The excess "rent" comes from having a part of a limited SUPPLY. Any one individual would be able to increase their portion of the "rent" by being the only one allowed to increase their supply, while lowering the total "rent" through the increase in SUPPLY. If the zoning is removed there will be no remaining excess "rent". It would take some serious analyses that I have never seen to figure who would benefit the by moving from a zoning regime to a free market regime. My guess would be those whose real estate's spatial properties(i.e. proximity to the amenity) had the greatest value that was underutilized. So that those closest to the park or downtown would see a marked increase in their land values and would increase the density of the built environment on their real estate, while those the farthest away (who before had valuable buildings on their land because of the restrictions on the built environment closer in) could see their property values fall drastically.

Re: Japanese transit and what it can teach us

Lived in Japan — Tue, 24 Jan 2012 23:30:55 -0000

One major difference between mass transit in Japan as opposed to public transit in the US is that they mainly run on a distance fare structure; shorter the ride, the cheaper it costs, the farther the ride, the more you pay. In contrast, most US public transit runs on a flat rate system where there is no distinction made between a passenger that rides the city train for one or two station or ten station away.

Re: A far-too-long rebuttal of Randal O’Toole on parking

metairie sale for homes — Tue, 24 Jan 2012 11:53:29 -0000

Anytime we are discussing the impact of a law lets look at a place where
that law doesn't matter. Since it would be okay in the middle of
nowhere Texas, we should get rid of all laws against randomly shooting
guns. Since I doubt that many, if any, counties in Texas have laws
about maximum density, and they aren't filling up with high-rises, it
wouldn't matter if suburbs and cities dropped their laws about max
density. Hey I like that last idea, still bad logic though.

Re: “Upzoning means up yours!” Links

Emily Washington — Tue, 24 Jan 2012 10:35:28 -0000

This is a great point Scott -- it's not as if industry lobbyists are alwayslooking for the free market solutions. However in this case, it seems to me that anyone who wants to sell property to be redeveloped in the neighborhood with proposed upzonings would benefit by being able to get a higher sale price. I would imagine that many owners of old apartment buildings and single family homes would fall into this group.

Re: “Upzoning means up yours!” Links

Scott Johnson — Sun, 22 Jan 2012 02:15:43 -0000

However, your neighbors--your competitors in the real estate market--are also so permitted.

Many trades LIKE regulatory regimes, especially ones that limit competition.

Re: “Upzoning means up yours!” Links

Emily Washington — Fri, 20 Jan 2012 22:47:47 -0000

Benjamin, thanks for clarifying what's going on with the NYU plans. The plans include space for 1,000 more students, right?

Re: “Upzoning means up yours!” Links

Anon256 — Fri, 20 Jan 2012 20:53:57 -0000

This seems like a good point. But given that municipalities often zone new greenfield developments however the initial developer asks, why don't developers more often ask to have it zoned as unrestrictively as possible?

Re: “Upzoning means up yours!” Links

Benjamin Hemric — Fri, 20 Jan 2012 19:51:08 -0000

Emily Washington wrote:

Once again in New York upszoning is linked with affordable housing. Expanding student housing at NYU also depends on the university providing land and potentially a building for a public school.

Benjamin Hemric writes:

This doesn't really accurately describe an admittedly somewhat complicated situation. If I remember correctly from my attendance at Community Board meetings, etc., NYU's plans -- in essence -- don't really involve true upzoning (i.e., changing the rules to allow a greater floor area ratio [FAR]) but rather they involve an effort to maximize the amount of FAR that already exists. This FAR is not, by the way, particularly high for Manhattan and is, more or less, similar to the areas around it: Greenwich Village to the west, SoHo to the south and NoHo to the east and north.

To better understand the controversy it's important to remember that the blocks that NYU wants to build upon were once almost entirely built up with pre-zoning (i.e., pre-1916) loft buildings, similar to those that still exist today in SoHo to the south and NoHo to the east and north. As part of the 1950s urban "renewal," these buildings were demolished for, essentially, tower-in-the-park apartment houses that do not fully utilize the existing allowable FAR. However, given other elements of the zoning laws (e.g., required amounts of open space for buildings that are used for residential purposes), and given various urban renewal regulations and city actions (e.g., city ownership of open space along the eastern and western edges of the superblocks), it is difficult for NYU to maximize the site's existing FAR (at least in the near future, and especially in a way that wouldn't be "ugly" and unpopular) without relaxing or changing government rules and regulations and ownership that currently helps "preserve" the site's anti-city, low-density, "tower-in-the-park" form.

The provision of open space and a building for a public school are meant meant as inducements to gain community approval of NYU's proposed changes.

Benjamin Hemric
Friday, January 20, 2012, 7:45 p.m.

Re: “Upzoning means up yours!” Links

Evan Gould — Fri, 20 Jan 2012 16:14:53 -0000

Hey, Scoop. Developers want to maximize every single square foot of their property. Any change in zoning that allows them to do so is gladly welcomed.

Re: “Upzoning means up yours!” Links

MarketUrbanism — Fri, 20 Jan 2012 13:38:29 -0000

If you own 200 acres out of 100,000 undeveloped acres that are upzoned from 1 to 100 houses per acre in that same region, you're furious.

I don't agree with what you are saying. As a developer, I can't think of many scenarios where I would be furious that I am now permitted to do more with my raw land. I can easily think of scenarios where I would be elated. All I can think of is that I would be disappointed if I have a little crappy piece of land among a large undeveloped (and less crappy) area where I'll now have to wait longer before my land is desirable.

Also, see my post on how zoning doesn't force developers to build densely - developers simply build to a density that is most economical: http://marketurbanism.com/2008...

Re: “Upzoning means up yours!” Links

aka_Scoop — Fri, 20 Jan 2012 13:22:00 -0000

There are very few situations in which you, as a landowner, want any upzoning that is anything other than tiny when compared to overall demand for built space in the area.

If you own 200 acres of 1000 undeveloped acres that are upzoned from 1 to four homes per acre in a growing region with 120,000 people, you're happy.

If you own 200 acres out of 100,000 undeveloped acres that are upzoned from 1 to 100 houses per acre in that same region, you're furious.

(Of course, the first scenario is infinitely more common than the second because the overwhelming majority of upzoning is about political payoff rather than urbanism.)

Still, the simple fact is that we live in a massive country with not all that many people. Without extreme restraints on development, land in all but the most desirable parts of the most desirable areas would be worth very, very little.

Any serious upzoning — permitting real density (30k residents per square mile or more) over any real area (1 square mile or more) that had been suburban or undeveloped — is terrible for land owners, unless the area in question is held by one person or a small number of people.

But of course, landowners do not allow any such upzoning to occur, anywhere, ever, which is why no one has built anything resembling a real city since landowners passed that law in 1916 and figured out that they could use political power to generate value for themselves by making an abundant resource seem scarce.

Re: “Upzoning means up yours!” Links

MarketUrbanism — Fri, 20 Jan 2012 13:03:53 -0000

The difference is who the owner is:

If you own land in an area that is upzoned, you are generally happy. Only unless you have a less desirable piece of land among an area that is not yet undergoing development - thus it will take longer for competitors land to absorb.

If you own land that is already improved, you don't want upzoning in the short run. It brings more competiting space to the market, and there is little opportunity to capitalize on the loosening. Think of a large building in Manhattan. The owner is aware that he cannot economically tear down his building and build a bigger one, yet now his neighbor can build twice as big.

Of course, these stakeholders rarely consider the Jacobsian outlook that bringing more density makes the location more vibrant and may actually boost value....

Re: “Upzoning means up yours!” Links

aka_Scoop — Fri, 20 Jan 2012 12:51:25 -0000

If you upzone a small piece of land, it makes the land more valuable because you can build more units but not so many more that you put real downward pressure on prices. If you upzone large chunks of land, you can make it less valuable by allowing the equilibrium price to fall so far that it overrides the ability to sell additional units.

Demand for Manhattan real estate is huge, but if you doubled the amount of permissible development, prices would almost certainly fall by more than half, making land owners far worse off than they are now.

In general, it is landowners who are the biggest supporters for zoning laws because they are the only thing that make land worth much of anything. The first zoning laws in the nation, passed in New York after the construction of the Equitable Building in 1916, had far less to do with popular outrage over lack of light then landholder terror over the idea that — with new technology for building up — one acre provided office space for something like 30,000 people (See "Form Follows Finance"). At that rate, less than 100 Manhattan acres, in the most prime locations, could provide all the needed office space and another few hundred acres most of the housing. The rest of the land in the city would be worth very little.

Landowners hate major upzoning.