Biden's Plan To Link Federal Transportation Spending to Zoning Reform Could Make the Housing Shortage Worse
The administration is encouraging counterproductive "inclusionary zoning" policies that often raise housing prices and reduce supply.
President Joe Biden has a new idea for reducing regulatory barriers to new housing construction. Contained within the White House's expansive new Housing Supply Action Plan is a proposal to tie federal transportation grants to state and local governments reforming their zoning codes.
Proponents of this approach argue that the massive amounts of money that the feds spend on transportation give them a lot of helpful leverage over the most overregulated jurisdictions. Conditioning that money on the elimination of barriers to new housing could get exclusive communities, or their respective state governments, to start slashing red tape if they want funding for new roads, bridges, or bike lanes.
But critics argue that even in its best form, getting transportation bureaucrats into the weeds of local land use policy is federal overreach.
The details released from the White House so far suggest that they are not adopting the best form of this idea. In fact, Biden could end up incentivizing counterproductive housing reform that will probably raise costs and reduce supply.
The Biden administration's Housing Supply Action Plan, which was released Monday, certainly sounds the right notes on zoning reform when it says that "exclusionary land use and zoning policies constrain land use, artificially inflate prices, perpetuate historical patterns of segregation, keep workers in lower productivity regions, and limit economic growth."
To fix the problem, it proposes a grab bag of policies; from easing federal regulations on manufactured homes to streamlining the applications for federal affordable housing funds.
Included is a plan to use discretionary transportation grant programs funded by 2021's Infrastructure Investment and Jobs Act (IIJA)—costing $1.2 trillion—to encourage "locally driven land-use reform, density, rural main street revitalization, and transit-oriented development."
The IIJA provides $150 billion in funding for discretionary grant programs. Beginning this year, the White House says that the Department of Transportation (DOT) has released three notices of available funding, totaling $6 billion in grants, that have policies promoting "density and rural main street revitalization."
Salim Furth, an economist at George Mason University's Mercatus Center, says more closely tying local land use policy and federal transportation spending is "broadly logical."
"You shouldn't build infrastructure where people ain't or where [housing] densification can't follow the [transit] investment if you're adding a lot of capacity," Furth tells Reason.
But he cautions that trying to incentivize land use reform through discretionary grant programs—which give the administration a lot of freedom to set grant conditions and pick who ultimately gets the money—opens the door to a lot of counterproductive political manipulation.
"When it's a Democratic administration, they are going to look for Democratic-friendly policies, even when they don't have a big impact on housing production," he says. "You might get points for having a strong inclusionary zoning ordinance even if that ends up backfiring and creating less housing than a Texas suburb that is really generous about zoning for multifamily" housing.
Inclusionary zoning refers to policies that require or incentivize developers to offer some of the new units they build at below-market rates to lower-income renters or buyers. Close to a thousand jurisdictions in the country have some form of inclusionary zoning.
The policy has a poor track record of creating new affordable housing. Research is increasingly finding that requiring developers to build below-market-rate units acts as a tax on new housing, which has the effect of either raising prices or reducing new supply. There's one active lawsuit out of Pittsburgh, Pennsylvania, arguing the whole scheme is unconstitutional.
And inclusionary zoning appears to be precisely the kind of thing that the Biden administration's changes to discretionary transportation grant programs are encouraging.
Per a DOT spokesperson, the administration has thus far used three "notices of funding opportunity" that include language promoting density and land use reform.
That includes a January-issued grant solicitation for $2.2 billion in Rebuilding American Infrastructure with Sustainability and Equity (RAISE) grant money. These grants can pay for projects ranging from bus lanes and port improvements to recreational trails.
In March, DOT released another "multimodal project" notice of funding opportunity covering three grant programs totaling $2.9 billion that also asks applicants to talk about how their project relates to land use and housing development. Those grant programs fund major infrastructure projects and infrastructure projects in rural areas.
On Monday, a notice of funding opportunity for $1 billion in Safe Streets for All grants—a new program that pays for safety improvement projects—also looks at applicants' land use policies.
The first two notices of funding opportunity make frequent mention of rewarding grant applicants that have policies encouraging "mixed-income residential development near public transportation." And the primary way an applicant would create those mixed-income residential developments would be through having an inclusionary zoning policy.
Elsewhere, these notices of funding opportunity express preferences for rewarding projects in areas with "fiscally responsible land use" or "location-efficient housing." Those terms could plausibly be read as references to more deregulatory zoning policies that allow market-rate multifamily housing. They're nevertheless pretty vague.
Those references also come sandwiched between a lot of other factors that DOT staff will consider when scoring grant applications. For instance, the notice of funding for the RAISE grant program asks applicants to detail how their project will improve economic growth. In particular, applicants are asked to:
describe the extent to which the project and local and regional policies related to the project will contribute to the functioning and growth of the economy, including the extent to which the project addresses congestion or freight connectivity, bridges service gaps in rural areas, or promotes greater public and private investments in land-use productivity, including rural main street revitalization or locally-driven density decisions that support equitable commercial and mixed-income residential development.
If the goal is to use transportation dollars to incentivize productive housing reforms, making land use just one of many factors to consider weakens that incentive.
Other Biden White House-endorsed plans to spend money incentivizing local zoning reform have received similar criticism: they focus on too many different policy priorities all at once. They, therefore, become less a means of increasing housing supply through deregulation and more of a general subsidy to local governments.
Indeed, legislative efforts to use federal transportation dollars on spurring local land use reform have been more explicit about the land use policies they are trying to encourage.
Rep. Scott Peters (D–Calif.)'s More Housing Near Transit Act, for instance, rewards jurisdictions that don't give local bureaucrats discretion to shoot down housing projects near transit stops. The 2019 HOME Act, sponsored by Sen. Cory Booker (D–N.J.) and Rep. Jim Clyburn (D–S.C.), explicitly details the "transformative activities" jurisdictions receiving federal road and rail funding could adopt.
On the campaign trail, then-candidate Joe Biden explicitly endorsed Booker's bill.
Marc Scribner, a transportation researcher at the Reason Foundation (which publishes this website), says that competitive grant programs that give the executive branch a lot of discretion in picking awardees have a storied history of sending pork to political allies.
A report from earlier this year from the Reason Foundation found that 41 of the 90 RAISE grants awarded in 2021 went to districts or states represented by lawmakers on Congress' various transportation and finance committees. The Trump administration used the same program to shower money on rural Republican areas.
Scribner says that the Biden administration's consideration of land use policies when steering this money is just another way for Democrats to funnel money to areas where their supporters live.
"I expect dense urban cores are going to receive a disproportionate share" of transportation funds, he says. "These are earmarks by another name."
Scribner is skeptical of explicitly tying federal transportation dollars to local land use policies. Prioritizing transportation projects with higher ridership projections will already send money to roads and rail being built in areas that are favorable to development, he says.
The Biden administration has been remarkably consistent in criticizing local and state barriers to housing construction. On that point, they're in agreement with libertarian policy wonks.
Whether the federal government can be a force for good in trying to fix that problem all hinges on the details of its policy problems.
And the details released thus far on the White House's plans to link federal transportation spending and local land use aren't particularly encouraging.
Rent Free is a weekly newsletter from Christian Britschgi on urbanism and the fight for less regulation, more housing, more property rights, and more freedom in America's cities.
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The zoning unification plan – – – – – –
Well that’s a stark turnaround from literally every other Reason article on federally imposed zoning ever. What happened?
Reason deserves credit for being one of the voices critical of our current approach of local zoning control. Local Progressive, Democrat, and Republican politicians all strongly support local control, as it allows them an easy means to court homeowners who support whomever will block new housing in their neighborhoods.
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And lefty assholes like you do not deserve credit for proposing a national regulatory effort, allowing the national candidates to do exactly what you claim locals will do.
Hint (since an ignoramus like you seems to need it): Housing issues in Detroit =/= housing issues in Los Angeles.
Please read that until you understand it.
I doubt 100 readings could make him understand it.
Nothing says “libertarianism” like the jackboot of the state/federal government telling local home owners how to live! /sarc
But, hey, if zoning won’t do it, people will just join together in HOAs and impose far more draconian restrictions than a zoning ordinance ever could. Let Biden try to regulate that.
Insofar as this policy does encourage Inclusionary Zoning (IZ), it is a horrible piece of legislation. But at least from this article’s summary, it does not seem to explicitly endorse IZ. If Biden does endorse IZ, I will not be voting for him.
In general, I am a proponent of local control, but local control of housing is a demonstrated policy failure. Our current approach to zoning is an example of ‘hyper-local socialism’ where a small contingent of nearby homeowners exercise near veto power on other people’s property. They wield this power to block badly needed new homes. This limits the supply of new homes and thus forces bidding wars on the existing housing stock, raising prices for all.
In essence we have homeowner cartel that aims to limit supply and artificially prop up the price of old homes.
IZ will not fix this fundamental issue, and will work to make housing less affordable for all but a few lucky lottery winners who get a spot in a subsidized building.
You mean with all the horseshit Biden has done, this is the issue that would make you vote against him?
Or is this one of many?
US housing policy is estimated to have reduced our GDP growth by 36 percent from 1964 to 2009. (1)
It is a massive problem, dwarfing nearly all other government fiascos.
(1) https://eml.berkeley.edu/~moretti/growth.pdf
Please tell me those Berkeley guys are not the ones that have been wrong on every weather model in the last 60 years.
The Berkeley economists are Elizabeth Warrens campaign advisors- seriously.
Regardless of any ‘weather’ issues, housing policy is not mentioned anywhere in the constitution, and this steaming pile of shit is suggesting that droolin’ Joe’s inflation is of less impact than an issue for which the fedgov has no business addressing?
Stupid? Likely.
Sophistry? Perhaps, but hoping it flies still leads to stupid.
Eat shit and die, lefty asshole.
“…It is a massive problem, dwarfing nearly all other government fiascos…”
You.
Are.
Full.
Of.
Shit.
“US housing policy is estimated to have reduced our GDP growth by 36 percent from 1964 to 2009.”
Let’s kick BenF in the nuts one more time; the asshole deserves it:
I’m not going to waste time reading the paper; if it were really worthwhile, you’d have selected and pasted some pull quotes as honest (and intelligent) people do to suggest it supported your claims
You didn’t. You linked a paper hoping the (authority of the) link alone would support your bullshit. So, prima facie, you’ve already failed to support your bullshit.
And then, regardless of any statements in the paper, you add the bullshit that “US housing policy” has had this result, hoping, in your stupidity, that we, here will conflate that with “NATIONAL” policy.
Eat shit and die, asshole.
Weather? Moretti studies labor and urban economics.
https://eml.berkeley.edu/~moretti/
Stuff it up your ass, lefty shitpile.
“…If Biden does endorse IZ, I will not be voting for him…”
This says a whole hell of a lot about you and none of it is complementary.
Eat shit as die, lefty asshole.
You’re very cute.
You’re fucking stupid, lefty shitpile.
Our neighborhood is single family homes on fairly large plots of land and we are making sure that it stays that way. Biden can go suck a lemon.
Where do you see the “policy failure”?
It always astounds me when government goes to new lengths to simulate the markets they denigrate so much. “Market failure”, they scream, then double down with the government regulations which were the real culprit, and meanwhile, markets continue getting things done, albeit slower than before, what with the nee regulations and all.
Everyone screaming “market failure” really means “government failure” but can’t admit it, because that would open up the possible cure of rolling back the government actions which failed.
Even worse, it would admit, publicly, that governments are not always correct.
Some ignoramus was here earlier today claiming the ’08 disaster was a result of ‘the market’, ignoring the gov’t regulations requiring sub-prime loans and the (resultant) assumed bailouts. Not surprisingly, turd has been posting this lie ever since.
’08 was an experiment to discover how far a market could be distorted by regulation before it collapsed.
It is as if anyone here believes the current administration has any concern about actually doing something to help anyone. The typical political position is to propose something that sounds good for political purposes, while all the while knowing the policy will fail.
And if it fails, sycophants like Paul Krugman or Thomas Friedman will just blame people for not behaving as expected.
For all their lip service to “science”, they completely ignore the science of human action.
No federal transport money to any R1 (single family residential) zone. Shouldn’t be any anyway beyond interstates and exit ramps every 15 miles or so.
No federal transport money anywhere; it’s a pork barrel, but we all recognize that you are entirely too stupid to understand that.
Eat shit and die, lefty asshole.
Biden’s plan to do A will make B worse.
For all A, B: Biden’s plan to do A will make B worse.
FTFY 🙂
Isn’t this great….
1) The ‘feds’ will STEAL all the citizens money
2) The ‘feds’ will use the citizens of that State’s money to BRIBE the state.
Talk about crony NATIONAL socialism (syn; Nazism)!!!
Course that’s what the Democrats are selling — Nazism…
For the benefit of BenF and other lefty shits, let’s be clear here: There is NO housing crisis, nor shortage. None.
Anyone desiring housing can travel to where housing is affordable at local pay scales, and be ‘housed’.
This is an invented “crisis”, like many others, invented by pundits living in urban areas which pay bums to show up there, and then claim the resultant bum population represents a “crisis”.
Hint to BenF and other lefty shits: Buying a bus ticket to LA or SF in no way entitles you to living quarters there. Please go find a place to live which the earnings from your ‘skills’ provides a roof.
Many people are following this path. They are moving to the South where there is more sprawl and affordable housing. The two go hand in hand. I wish the Northeast would allow more sprawl so houses would be more affordable here.
Gee, BenF, what happened to an ignoramus like you? If you are hoping to support your idiotic claims, please do.
I am not alone in my enjoyment of taking the arguments of lefty shit’s apart; so far you’re going zero-for-something; exactly what you deserve.
Fuck off, lefty shit! doubt we’ll ever see you again!
Just checking back. The lefty asshole Benf seems to have disappeared!
Called on too much bullshit? Hoping to find sone new bullshit to get jammed down his throat?
Who knows?
Eat shit and die, asshole.
Reagan said it best: “The nine most terrifying words in the English language are ‘I’m from the government and I’m here to help.’”
The law of unintended consequences always rears it’s ugly head when the government dictates what can happen.
Barack Obama – “Never underestimate Joe’s ability to f%^$ things up!”
It seems so ridiculous for the feds to tax its citizens so heavily and then to recycle that money back to the states for funding various projects, and passing through various sticky fingers along the way. The feds should tax less and let the states fund most of their own projects through their own taxation. It would lessen the temptation of the feds saying “ if you want that bridge repaired you’ve also got to do this”.
Is he going to rezone where he lives?
Yes, that is the objective of Biden’s housing policies: to make the housing shortage worse. That’s how Democrats gain power.
Idk, but i like the idea ppl could have a shoppet infront of their house. I can understand it’s a bad idea to run a residential nightclub or a gas station next to your damn house but no one should stop you from selling little things.
Is this the turning point when Reason realized Zoning Reform wasn’t Libertarian?