Affordable Housing Institute : US

As the Supreme Court considers the takings case Kelo v. New London, which commentators on all sides are calling potentially the most important in the last fifty years, I find it remarkable that:

 

Both sides are fighting the wrong fight on the wrong terrain.

Judging by the briefs I’ve read, plaintiffs and defendants are jousting over the ‘wrong’ question:

 

“Is urban renewal a valid ‘public use’ authorizing eminent domain?”

When they should be tussling the right question:

 

“In urban renewal, what is the right measure of ‘just compensation’?

 

A. Land use law and policy

Land-use law and policy lie at the heart of urban development, which in turn lies at the heart of creating healthy cities. With the world rapidly urbanizing — globally, we passed the 50% threshold not long ago — land-use questions become critical, and with it, questions about the government’s authority to take property, zone land, or otherwise define land use.

 

In the affordable housing context, questions arise in:

1. Zoning. What may I build on my property? Who decides what zoning goes where? When can we change/ override the zoning?
2. Conservation. Which land may we collectively decide will never be developed?
3. Inclusionary zoning. Under what circumstances may a higher level of government (e.g. a state) cram a particular use on a lower level (e.g. a town) that has enacted zoning barriers? Massachusetts Chapter 40B and New Jersey’s Mount Laurel line of cases provide ample stories and evidence.
4. Real estate taxation (called ‘rates’ in the UK) and its corollary, use of real estate taxes. May we tax property as developed, as it could be developed, or as it might be developable with new entitlements? (The UK is toying with just such ‘potential-value’ taxation in yet another urban-rural clash that bids too be as contentious as the fox-hunting ban.)
5. Land-use planning. How broadly may government sweep in its visions of the future city? How much prescription may it impose on the wonderful chaos of human interactions?
6. Eminent domain. If government needs private property, under what circumstances may it use its police power to take the property, and for what consideration?

B. Individual and collective benefits

These issues are tricky because each of them pits individual rights against collective benefits.

But before you think we are about to flop in socialist goo, we need to be very clear: the benefits we secure through collective action benefit largely the same individuals whose property rights we may have trimmed.

 

In other words, this isn’t so much about redistribution — rob from the poor to give to the rich — but rather about maximizing aggregate value. It’s not altruism, it’s synergy: the positive-sum-game arising from a well-diversified community.

Consider:

 

• Everyone wants to abut a park, nobody wants it taken from his own back yard.
• We love living on a crystal-blue lake, or an unspoiled wetlands … but not letting anyone else in.
• Everyone benefits from nearby airport; no one wants to be in the flight path.
• We all like zoning but we all want to build any addition we want onto our house.
• Don’t even get me started on beaches, and access thereto ….

And — near and dear to my heart — the community as a whole benefits from affordable housing … but few residents want ‘those people’ living next door. NIMBY, meet BANANA.

 

For those of you who doubt affordable housing’s benefits

· Urban diversity. It creates a diverse urban habitat.

· Diverse employment. Every economy has an jobs and income distribution. Without access to moderate and low-wage earners, even an Aspen or a Palo Alto struggles.

· Traffic congestion. If the poor live far from their jobs, twice a day they clog the highways.

· Health. Slums breed disease.

· Crime. Slums also breed crime.

· Raising strong families. Good housing incubates good families, and good families incubate good future adults.

We now resume our regularly scheduled programming.

 

Our affection for certain environments has a financial expression: land is valuable only insofar as developed property atop it is valuable, and that in turn depends on scarcity and locational positives, nearly all of which come within the purview of property rights and land-use regulation.

In other words, if your urban land is valuable, government investment, and government policy, contributed materially to its value. (Else why is San Francisco land much more valuable than Beaumont?) And to what say does that investment entitle government?

 

 

C. The case for owners’ property rights

Without respect for private property, there is no wealth creation (sorry, Karl, it was no fun while it lasted),

 

“Who knew?”

 

no entrepreneurial engine, no innovation. We are primates, we mark and possess our territory. Ownership and defense of property are wired into our gene pool (”a man’s home is his castle”) and the American pioneering heritage (”forty acres and a mule“). We build respect for property into the fundamentals of our Constitution (the Fifth Amendment), and jurisprudence (citizens’ ability to sue the government). Respect for the citizen’s property is among our fundamental defenses against tyranny.

Thus, individual property rights must be respected. But there’s another case too.

 

 

D. The case for land-use regulation

Acting by ourselves, we will not produce the urban environments we desire because our interests compete. We may individually despoil the habitat (dumping garbage) or collectively overrun its resources (the “tragedy of the commons”). Cities are complex organisms that need a mixture of uses, tenures, incomes, cultures … yet it is in our nature too cluster by sameness. A little mixing is good for us. The free Rousseau state of nature is by turns a dump, an enclave, or a ghetto.

Thus, collective property rights must be balanced.

Which leads to …

 

 

[Continue to Part 2]

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