Property Rights

Cory Booker Proposes Bill to Curb Exclusionary Zoning

He deserves credit for being one of the very few national politicians to focus on this enormous problem. If enacted, his proposal would be a step in the right direction, though it is likely to have only a modest impact.

|The Volokh Conspiracy |

Senator Corey Booker (D-New Jersey).

Democratic Senator and possible 2020 presidential candidate Cory Booker has proposed a bill to curb exclusionary zoning, a practice that massively increases the price of housing in many cities and cuts off millions of people from job opportunities. Booker deserves credit for being one of the very few national politicians to highlight this enormously important issue. If enacted, his proposal would be a step in the right direction, thought it would probably have only a modest effect.

Richard Kahlenberg summarizes Booker's plan and the problem it is intended to address, in the American Prospect:

Local ordinances that ban apartment buildings from certain residential areas, or designate a minimum lot size for single family homes, don't explicitly discriminate by race, but they effectively exclude families of modest means from entire neighborhoods—and school districts. These laws promote economic segregation by government fiat. People of color are hit especially hard…

Moreover, exclusionary zoning feeds the affordable housing crisis. Restrictive zoning laws drive up prices by artificially restricting the supply of housing. When developers are limited in the number of new units they can build on a particular parcel of land, the basic laws of supply and demand suggest existing housing will become more expensive.

[On August 1], Booker introduced federal legislation—the Housing, Opportunity, Mobility and Equity (HOME) Act—to address this key piece of the Fair Housing Act's unfinished business. The bill would promote more inclusive zoning policies in order to make housing more affordable and less segregated.

Under Booker's proposal, states, cities and counties receiving funding under the $3.3 billion federal Community Development Block Grant program for public infrastructure and housing would be required to develop strategies to reduce barriers to housing development and increase the supply of housing. Plans could include authorizing more high density and multifamily zoning and relaxing lot size restrictions. The goal is for affordable housing units to comprise not less than 20 percent of new housing stock….

Exclusionary zoning is one of the great underappreciated issues of our time. Economists and housing policy experts across the political spectrum recognize that it prices the poor and lower-middle class out of many areas, thereby cutting them off from valuable job opportunities. It also greatly reduces economic growth, harming even many people who are not directly affected by the exclusions. Increasing mobility by cutting back on zoning is an important common interest of both the minority poor and the white working class, but one that is largely ignored by both major political parties. Broad agreement among policy experts has so far failed to generate much in the way of momentum for reform—in part because most ordinary voters probably don't understand the counterintuitive links between zoning restrictions, job opportunities, and economic growth. Inadequate public understanding of the problem was one of the causes of the recent defeat of California Bill 827, a major effort to liberalize zoning restrictions in the nation's most populous state.

Booker's plan could help alleviate the problem. If the federal government is going to subsidize local development, it should at least deny such subsidies to jurisdictions that are shooting development in the foot through exclusionary zoning. But the effects are likely to be modest because the $3.3 billion in CDBG subsidies is only a tiny fraction of federal grants to state and local governments (estimated to be some $728 billion in fiscal year 2018). Many cities—particularly the big ones whose particularly severe restrictions inflict the most harm—are likely to prefer to do without these funds rather than reforming zoning policies backed by powerful interest groups.

Still, Booker's HOME Act would likely lead to beneficial policy changes in at least some areas, and his advocacy could help attract much-needed attention to this problem. At the very least, Booker's recognition of the importance of reducing obstacles to building new housing is far preferable to the housing policy proposed by one of his likely 2020 rivals: Sen. Kamala Harris' badly flawed plan to reduce housing costs by providing federal subsidies for renters, an idea that will inflict costs on taxpayers without actually doing anything to alleviate housing shortages (though, unfortunately, Booker's plan also includes a tax credit for renters).

Some on the right might object to the HOME Act on federalism grounds. Why should the federal government have the power to use grant conditions to incentivize changes in local housing policy? I am no fan of most federal grants to state and local governments, and have long advocated tighter enforcement of constitutional restrictions on them. But if CDBG and similar grant programs are going to continue (and it is unlikely they will be abolished in the near future), it makes sense to use them to curb local policies that harm large numbers of people and undermine the purposes of the grant programs themselves. Moreover, in my view, many severe zoning restrictions are themselves violations of constitutional property rights, because they are uncompensated takings that violate the Takings Clause of the Fifth Amendment. To the extent this is true, Section 5 of the Fourteenth Amendment gives Congress the authority to curb them. The power to enact "appropriate" legislation to enforce the Fourteenth Amendment, also includes authority to enforce the Fifth Amendment and the rest of the Bill of Rights, which the Fourteenth Amendment "incorporated" against state and local governments.

Finally, decentralization of power to states and localities works best when people have the ability to "vote with their feet" against harmful policies and in favor of good ones. Decentralization without mobility often causes more harm than good. Exclusionary zoning is a particularly pernicious example of that problem. It simultaneously imposes burdens on owners of an immobile asset (property in land) that cannot use exit rights to escape them, and severely restricts foot voting by people who are priced out of the regional housing market as a result. There is good reason to use federal power to protect property rights in land from local exploitation, and also to protect mobility against locally-imposed restrictions. To the extent that loosening zoning restrictions enables property owners to exercise greater control over the use of their own land, it actually facilitates a greater degree of decentralization than the status quo. Letting owners make their own decisions is a more decentralized approach to land use than concentrating that power in the hands of state and local governments.