Glaeser Stumbles on Regional Governments

A year ago, New York Times Magazine called Harvard economics Professor Edward Glaeser “the most exciting urban researcher in half a century.” Many of Glaeser’s research papers show that land-use regulation, not demand, is the primary cause of unaffordable housing.

This work has made Glaeser something of a hero in the antiplanning movement, and I’ve unsuccessfully tried to persuade him to speak at several of our conferences (although one of his co-authors, Bryce Adam Ward, gave an excellent presentation at the 2006 Preserving the Amercan Dream conference).

So it was with great disappointment that I read his latest paper latest paper, “Do Regional Economies Need Regional Coordination?” He argues that, since local government regulation is driving up housing prices, one solution is a regional government that could give local governments direction or incentives to provide affordable housing. Residents of Portland, Denver, and other cities with strong regional governments will find this bitterly amusing.

The East Coast was famous for the affordabilty of its post-war housing markets. Housing in the New York and Boston regions did not become unaffordable until the 1980s.

In the Boston area, where Glaeser lives, most land-use planning is done by local governments. Last year, Glaeser co-authored a report on Greater Boston showing that those local governments had individually passed increasingly stringent rules that shut down homebuilders and drove up housing prices. So, having experienced the problems created by local government but not having studied the problems created by regional government, Glaeser imagines regional government can solve the problem.
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“Regional land use planning could reduce the costs on localities of maintaining their own land use systems,” speculates Glaeser. “The bigger advantage from regionalism lies in the possibility of pushing localities to better internalize the costs of their land use decisions.” Notice that he is saying these things could happen. But he doesn’t give any reason why they would happen. He gives lots of reasons why local governments make housing unaffordable, but never stops to think that those same forces will apply to regional governments.

The experience we have in Portland, Denver, the Twin Cities, and other urban areas with strong regional governments is that they do exactly the opposite of what Glaeser suggests. First, rather than save money, regional governments impose a whole new set of rules on local governments and thereby drive up their planning costs. Second, rather than push local governments to improve housing affordability, the regional governments are too easily captured by interest groups that want to reduce affordability.

Glaeser correctly recognizes that regional governments can create incentives for local governments. But he fails to realize that they also create incentives for others. If you give someone the power to control housing policy over an entire region, you give lots of interest groups an incentive to try to influence that policy. Homeowners who want to increase the value of their property, environmentalists who want to curb sprawl, and downtown and inner-city property owners who want to reduce suburban competition are just some of the groups who will try to boost housing prices.

If anything, local governments are more likely to maintain housing affordability by competing with one another to attract new residents. When this doesn’t happen, it is usually because some state law motivates local governments to do the opposite. For example, California’s proposition 13 has convinced local city councils and county commissions that residential doesn’t pay for itself, so they zone out new development. Glaeser’s home state of Massachusetts has limited the amount of land available for development by buying agricultural reserves.

Most other places where housing has become unaffordable have various forms of regional governance. Florida passed a growth-management law in 1985 that drove up housing prices in the late 1990s. Washington passed a similar law in 1991. One major exception is Nevada, where land is short because 90 percent of the state is government-owned.

So Glaeser’s idea of regional coordination is likely to be worse than the disease. I hope he will take the time to study the effects of regional governments, and look at the state laws that have contributed to unaffordable housing in Massachusetts and California, before he promotes regional coordination any further.

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

9 Responses to Glaeser Stumbles on Regional Governments

  1. Dan says:

    He argues that, since local government regulation is driving up housing prices, one solution is a regional government that could give local governments direction or incentives to provide affordable housing.

    Glaeser also makes abundantly clear – and you abundantly do not – that it is the homeowners seeking to keep/add value to their property that make the regulations. That is: homeowners don’t want affordable housing next to them so they zone it out.

    I have mentioned this numerous times here.

    DS

  2. Dan says:

    As I was saying about Glaeser:

    ”I’m certainly not advocating the Houston solution — I’m not advocating unfettered growth with no attention to the environment or to Boston’s historic character,” Glaeser said.

    […]

    ”There’s no question that at the local level, the zoning boards and town planners are doing exactly what their citizens want them to do,” said Glaeser, who recently moved to Weston. ”I’m not suggesting that there is anything unethical or morally wrong about what they’re doing. But the region needs to find out how it’s going to accommodate new housing, and it also has to realize that citizens of Lincoln or Weston, or homeowners in any community, don’t have an incentive to create affordable housing.”
    […]

    Glaeser proposes several possible solutions, all of which would give the state a greater role in local development. He says Massachusetts could withhold state money from communities that block development, or create a single entity or regional entities that could overrule local officials. It also might limit lawsuits against developers by forcing losing plaintiffs to pay the developer’s legal costs, or replace local land-use regulations with impact fees — set by the state — that developers would have to pay to cities and towns.

    […]

    Glaeser found that large minimum lot sizes have the most potent impact on price: An additional acre in minimum lot size raised the median sales prices of homes in a given town by 19.5 percent in 2001. When communities increase minimum lot sizes by a quarter of an acre, about 10 percent fewer homes are permitted, Glaeser found.

    [emphases added]

    Houston, we have a problem with using our movement’s poster child for our message.

    DS

  3. Dan says:

    For example, California’s proposition 13 has convinced local city councils and county commissions that residential doesn’t pay for itself, so they zone out new development.

    No it hasn’t.

    The plethora of studies and experience across the country has convinced them.

    This is utterly basic knowledge.

    DS

  4. Dan says:

    So Glaeser’s idea of regional coordination is likely to be worse than the disease. I hope he will take the time to study the effects of regional governments, and look at the state laws that have contributed to unaffordable housing in Massachusetts and California, before he promotes regional coordination any further.

    He’s been studying and publishing on these effects for about 15 years, thus his solutions (are you sure you want the word ‘economist’ describing you in bios** anywhere?).

    Indeed, the places which lodge land use controls in the hands of county governments appear to be friendlier to growth than the places where segregated suburbs empower homeowners to block new building. (pg 4)

    Shocking that you didn’t tell your readers about this. But, taken with the rather large number of misstatements in this post, not surprising.

    DS

    **http://www.freemarketnews.com/Writers-Bio-Analysis.asp?wid=98

  5. johngalt says:

    I’m not sure I totally agree with you on this one Randal. While it is a lesser of two evils argument, my experience in the Portland area has often led me to wonder if we would be better off if all the local planning departments would close and we could all just have Metro do it under a single set of rules.

    The way it is now with Metro and LCDC setting general policy that small municipalities try to incorporate with their own spin and other goals makes things difficult for land owners, developers and residents. This is often made worse by amature planning commissions and city councils working off of false assumptions and beliefs. Some suburbs do the job pretty well (Hillsboro, Gresham) and some are really lost (West Linn, Rivergrove, Milwaukie).

  6. StevePlunk says:

    I think Dan is missing a portion of why regulations controlling growth are so common. He points to current homeowners wanting such regulations and elected officials reacting to those wants but ignores the planning staffs who generally are the proponents of antigrowth regulations pushing elected officials in that direction.

    The citizens who oppose usually do so in a NIMBY fashion with only a few complaining about each particular project. You will not see these people down at the comp plan update meetings or hear from them when discussing current land inventories and future growth needs. This is where planning staff manipulates the decisions. Even things as mundane as minor plan amendments can have lasting effects on availble land and how it developes but citizen input is nonexistent. Staff input just follows the fashion of the day which is restricted growth and grand central planning.

    Homeowners may want to preserve value in their homes but generally don’t look to add to it by denying others. Having experience with Medford’s citizen planning advisory committee I have seen that almost all restrictive planning regulations came from staff based upon theoretical planning goals.

    On the issue of regional governments I can’t see how adding another layer can produce much of anything good. Many of these regional entities are not directl elected so accountability is lacking.

  7. Dan says:

    The reason why ‘growth restrictions’ are emplaced is because not everyone thinks rapid growth is just ducky.

    That is: look at where these restrictions are enacted – that’s right! Rapidly-growing communities who are seeing their quality of life degrade. Hmmm…maybe there’s a correlation…hmmm…rapid growth and declining quality of life…hmmm…

    And I have seen that almost all restrictive planning regulations came from staff based upon theoretical planning goals means things such as water quality protection – very theoretical that folks would want clean water. Quality of life is theoretical too. Surely you learned while either participating or watching the citizen advisory committee that not all folks want the same thing, and many of the publics know that there are things like tradeoffs and you don’t get everything you want. Folks want open space and no traffic and good schools and most don’t mind growth restrictions.

    Lots of folks don’t like growth and if they were angry enough, you’d hear them, as most folks don’t come to meetings unless they’re angry about something.

    DS

  8. StevePlunk says:

    Dan,

    You’re right about most folks not coming unless they are mad about something. Staff, on the otherhand, is usually always there offering up some new fad and the unintended consequences that follow.

    I have also seen quality of life issues way overblown. Traffic, not water quality, is the usual issue but it seems to be those who have moved here recently that complain and now wanting to slam that door behind them. Staff likes to bring out things like level of service at peak hour to quantify quality of life. Peak hour congestion is a poor measure especially when denying others the opportunity to have a home. That’s a quality of life issue in my book.

    It’s the wrong way to run a city or county if you base our decisions on what the angry people have to say. Relying solely on staff is the wrong way as well. Looking to all points of view and the logical merits of each argument makes a lot of sense.

    Too many cities are treating home ownership akin to country club membership. Pay an initiation fee and we’ll limit the number of members so the club stays as it is. That’s wrong. Everyone deserves the opportunity to have a home and build financial security. To deny young people that is to deny them what it’s like to be American.

  9. Dan says:

    I think you have a number of valid points in there, Steve. I especially focused on your it seems to be those who have moved here recently that complain and now [want] to slam that door behind them . Yes, exactly, and amen to your initiation fee point. This is exactly what I’ve been saying and quoting of Glaeser. This is human nature and what happens all over our country. I lectured to an undergrad planning class about this very thing recently, stating my thesis as: NIMBY is normal human behavior. An earlier link described the numerous ways residents stop growth, as most don’t like it; my previous town didn’t like it either and now all the businesses are going down the road as they can’t grow and the people are lamenting all the businesses leaving.

    I don’t know about your planning staff, but I’ve never heard of using one metric to quantify quality of life. Glaeser, in the paper Randal linked to, mentioned numerous metrics generally categorized as ‘human capital’ (one of Glaeser’s foci) and ‘natural capital’, and there are numerous subsets such as economic growth, length of commute, number of social clubs, number of restaurants, average temperature or cloudiness, amount of open space or number of nonattainment days used to quantify QOL.

    Lastly, if this summer’s weather is gloomy and keeps me inside, I’ll have a series of papers out in late fall that highlight different aspects of the decisionmaking process for attaining certain goals. But the the point of this paragraph is: few decisionmakers rely solely on planning staff or logical (rational) process for decisions. The teeth-gnashing I hear around here every day is testament to that, and this place is typical.

    Decisionmaking uses different ways of knowing and bounded rationality may or may not carry the day; nonetheless, this is how decisions are made, ever day, around the world (and rational for whom: BushCo may be rational actors in their minds – IOW, power relations).

    DS

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