Court's Wild Zoning Decision Blocks 'Montana Miracle'
Plus: More local "missing middle" reforms pass in Maine and Virginia, Colorado court blesses crackdown on student housing, and Florida tries to escape its slow growth past.
With a new year comes new opportunities, and lots of new zoning news. But on Day 2 of 2024, there's still a lot of old business to wrap up. This week's edition of Rent Free includes:
- Portland, Maine, and Charlottesville, Virginia, pass "missing middle" reforms in the final days of 2023.
- A Colorado Court blesses a local ordinance cracking down on student housing.
- Florida tries to dig its way out of its slow-growth legacy.
But first, we have a story on a truly bizarre court decision blocking zoning reform in Montana.
Court Says Legalizing Duplexes, Granny Flats Likely Violates Equal Protection
In an eyebrow-raising decision, a Montana judge has halted the implementation of two laws legalizing duplexes and accessory dwelling units on residential land across the state, writing that they'd likely do "irreparable" damage to residents of single-family neighborhoods.
"With the 'top-down' imposition of these measures, Montana's citizens…stand to suffer. They dread waking up in the morning, with no notice, and a new, more dense, building is being erected in their family neighborhood," wrote Gallatin County Judge Mike Salvagni in a Friday opinion granting suing homeowners a requested preliminary injunction against the new laws.
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Large majorities in the Montana Legislature had passed duplex and Accessory Dwelling Units (ADU) laws last year as part of a package of reforms that also allowed housing in commercial zones and restricted individuals' ability to challenge the approval of general plan-compliant housing projects.
Dubbed the "Montana Miracle" by CityLab, the reforms rank as some of the more ambitious housing bills passed by any state legislature last year.
Throughout the process, these reforms attracted the opposition of some local governments and homeowner groups who argued they would spoil existing single-family neighborhoods with rampant development.
This past month, homeowners organized under the group Montanans Against Irresponsible Densification (MAID) sued the state to overturn the new laws.
The group argued that the state's zoning reforms violated constitutional guarantees of equal protection by only allowing ADUs and duplexes in single-family areas that are not covered by restrictive private covenants that ban this type of housing. MAID said this would unfairly funnel development into areas without protective covenants, and produce arbitrary results whereby duplexes could be built on one side of a street, but not on the other side.
The group also argued that the new duplex and ADU laws, by requiring local governments to approve this type of housing, violated provisions of the Montana Constitution guaranteeing citizens' right to participate in government decision-making.
It's an odd idea indeed that people have a constitutional right to the protection of private covenants they didn't opt into. One commenter on X (formerly Twitter) noted that existing zoning laws produce equally arbitrary results of allowing duplexes on one side of a street but only single-family homes on another.
Nevertheless, Salvagni reasoned that MAID's arguments were likely to prevail.
In regards to the group's equal protection claims, he writes that "the result of the new laws is that two different sets of people, one protected by restrictive covenants, the other not, results in an arbitrary application of Montana law which is unrelated to any legitimate governmental purpose."
Salvagni also agreed with MAID that citizens' right to participate in government decision-making was likely violated. He rejected the state's argument that the public's ability to participate in the legislative process through which the ADU and duplex laws were passed sufficient public participation.
It's an inevitability that as more supply-side Yes in My Backyard (YIMBY) zoning reforms are passed, more will end up getting challenged in court.
In September 2023, a Minnesota judge overturned Minneapolis' first-in-the-nation abolition of single-family-only zoning (in addition to other zoning reforms), citing the city's failure to conduct a proper state-required environmental analysis of increased allowable density.
Last month, a court in Texas also shot down zoning reforms passed by the city of Austin, siding with homeowners who'd argued the city failed to provide adequate individualized notice of the zoning changes to affected property owners.
These decisions invalidated reforms on largely procedural grounds. Salvagni's decision appears more sweeping by blocking zoning reforms because of their substance. Any law limiting public hearings on individual projects or legalizing more housing than what's allowed under existing private covenants would seem to be vulnerable under the logic of his decision.
Lawyer and Mercatus Scholar Charles Gardner has a thread on X highlighting the more novel parts of Salvagni's opinion and arguing that his decision is vulnerable to being overturned on appeal. Time will tell.
Missing Middle Reform Marches On
Charlottesville, Virginia, and Portland, Maine closed out the year by passing "missing middle" reforms that allow smaller multi-unit developments in formerly single-family-only areas.
Charlottesville
On December 18, the Charlottesville City Council unanimously approved a major overhaul of its zoning code that's been several years in the making.
The changes include liberalizing rules in low-density residential zones to allow at least three units by-right almost everywhere in the city, and up to eight units by-right in some residential zones. Preservation and affordability bonuses would allow builders to add up to 12 units on some parcels.
The city did retain a small single-family-only district (covering 4 percent of city land), but even here builders will have the option of adding two additional homes if they preserve the existing house on the property.
The city also created new "inclusionary zoning" standards requiring developers of projects that contain more than 10 units in mixed-use zones to offer 10 percent of those new units at rates that are affordable to people making 60 percent of the area median income. That's a pretty burdensome affordability requirement that will likely make a lot of smaller-scale apartment construction infeasible.
Charlottesville Planning Commissioner Rory Stolzenberg has a helpful thread summarizing the zoning changes. The full draft ordinance, which does not include some amendments made at the December 18 meeting, can be found here.
Portland
Also on December 18, the city council of Portland, Maine, passed a slew of zoning reforms that allow up to four units of housing on most residential properties in the city.
The reforms are intended to bring Portland into compliance with a 2022 state law requiring localities to allow "middle housing" in all residential zones. The deadline for compliance with the state law was January 1, 2024.
Portland already allowed one primary unit and two accessory dwelling units in all residential zones, plus duplexes and triplexes in select areas of the city. The new reforms allow up to four primary residences as well as two accessory ADUs on all residential lots on the mainland and up to three units (plus two ADUs) on islands within Portland's jurisdiction.
The city also eliminated parking requirements for four-unit homes.
Colorado Court Allows Crackdown on Student Housing
In Montana, equal protection entitles you to be covered by restrictive covenants you didn't opt into. In Colorado, equal protection apparently doesn't protect you from cities from writing zoning ordinances that only apply to you and no one else.
The Colorado Court of Appeals has given its blessing to a Lakewood, Colorado, ordinance that bans colleges from owning off-campus student housing. The Colorado Christian University—which had converted several off-campus homes it owned into student housing—challenged the ordinance in 2021. The university argued that, as the only entity covered by the law, it was being unfairly singled out.
The appeals court rejected those arguments, finding instead that the law was a legitimate way for the city to protect residential neighborhoods being turned into "university residential life centers."
Turning Historic Hotels into Residential High-Rises
I have a new feature for Reason covering Florida's efforts to overcome its legacy of slow growth laws. That includes recent reforms allowing property owners to build residential projects in commercial areas, much to the chagrin of local officials. A snippet:
For years now, Miami Beach officials have talked and acted like the historic Clevelander hotel was the worst thing to ever happen to the city. That was until they saw the business's plans for shutting down.
Over the past decade, the adults-only hotel, bar, and restaurant on Ocean Drive has been beefing with the city over whether it is an iconic pillar of South Beach's world-famous nightlife or a bad actor whose late-night operations are bringing crime and out-of-control revelers to the area.
"It's been a very contentious seven or eight years just to stay open," says Alexander Tachmes, a lawyer and spokesperson for the Clevelander. He estimates that the business has spent $1 million challenging restrictions the city has slapped on its nighttime concerts and alcohol sales.
Tiring of fighting continuous, expensive court cases, the Clevelander's owners decided to do something different.
In September 2023, they announced a plan to redevelop the five-story hotel into a 30-story residential tower. Most of the new homes would be luxury beachside condos. But 40 percent would be below–market rate, affordable units. The redevelopment would be a way to get out of the politically controversial bar business while cashing in on the growing demand for housing in ultra-expensive Miami Beach.
As a bonus, it really pisses off the city.
"I was hoping that it was simply a joke, but I don't think it is," says Miami Beach Mayor Dan Gelber. While he'd be happy to see the Clevelander replaced, he says the owners are scoring zero points with their "hideously out-of-scale" proposal.
"It's absurd," the mayor tells Reason. "It's like the kids that kill their parents and say, 'Have mercy on us, we're orphans.'"
You can read the whole thing here.
Quick Links
- Newburgh, New York, is the latest jurisdiction in the Empire State to adopt rent stabilization. Before 2019, rent regulation was only allowed in communities within the greater New York City area.
- Another 18 cities eliminated all parking mandates in 2023, according to data collected by the Parking Reform Network, including 13 cities in Oregon responding to new state legislation requiring the ending of parking mandates.
- Residents of Milton, Massachusetts, have managed to put a resolution on the town ballot overturning zoning changes made by the town government to allow new apartments near local rail stops. If passed, the city would be out of compliance with a 2020 state law requiring cities with rail service to allow by-right multifamily housing near rail stops.
- Home prices increased 5.6 percent year-over-year as of November 2023, according to the American Enterprise Institute's Home Price Appreciation Index. AEI pins the price increases on "historically tight supply."
Regulation of the Week
New York City's zoning code allows entertainment venues to allow patrons to dance in all manufacturing districts. The code nevertheless prohibits customer dancing in C-1 and C-5 commercial districts.
