J.D. Vance Blames Zoning, Immigrants for High Housing Costs

Plus: Texas and Minnesota consider an aggressive suite of housing supply bills, while San Diego tries to ratchet up regulations on ADUs.

Happy Tuesday, and welcome to another edition of Rent Free. This week's stories include:

• Minnesota housing reformers are reintroducing a package of zoning and land-use bills, with a few tweaks.
• Texas lawmakers consider a blitz of housing reforms during their biennial session.
• San Diego starts walking back its successful "ADU bonus" program.

But first, we have our lead item on Vice President J.D. Vance's speech to the National League of Cities.

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J.D. Vance Criticizes Zoning, Immigration at National League of Cities Conference

In a Monday speech at the National League of Cities annual conference being held in Washington, D.C., Vance criticized zoning regulations for driving up the costs of housing.

"Another reason for the elevated [housing] costs comes down to zoning," said Vance, per an emailed transcript of his remarks. Local governments could bring housing costs down by "being a little bit smarter about our local zoning rules."

The vice president made clear he did not think the federal government had a role to play in influencing local and state land-use policies.

He also made clear that he thought immigration was a more serious driver of housing unaffordability than restrictive land-use regimes in recent years.

"While we made it a little bit hard to build homes in this country over the last four years, we've also unfortunately made it way too easy for people to compete against American citizens for the precious homes that are in our country to begin with," he said. A transcript of his remarks notes boos from the audience.

This a common theme in Vance's comments on housing affordability. On the campaign trail, he frequently criticized immigrants for pushing up housing costs and "massively violating" zoning laws by splitting homes between themselves.

The standard view is that Vance is right and immigrants (at least in the short term) do increase housing costs by pushing up demand for a relatively inelastic supply of homes. There is, however, some research arguing that it's immigration enforcement, and not immigration, that drives up housing costs by reducing the home construction work force.

Regardless of where one falls on that question, there need be no inherent conflict between immigrants' and native-born Americans' demand for affordable housing.

Even in the relatively short term, developers will respond to higher demand by building more units, so long as land-use policy is permissive enough to allow additional supply.

Vance acknowledges this point himself in his speech in referencing Austin, Texas.

Said Vance, "In Austin, you saw this massive increase of people moving in. The cost of housing skyrocketed. But then, Austin implemented some pretty smart policies, and that brought down the cost of housing, and it's one of the few major American cities where you see the cost of housing leveling off or even coming down."

If new supply can mitigate the upward housing cost pressure created by population growth in Austin, it can do the same for the country as a whole. That's true even if it's immigrants creating the population growth.

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Lone Star Land-Use Reforms 

Texas' biennial Legislature is back in session this year, and housing is at the top of the agenda.

The Lone Star State already builds a huge amount of housing. But it's hardly a regulatory free-for-all, and its residents haven't been immune to affordability pressures.

In response, lawmakers have introduced a slate of bills to goose production even more.

That includes Senate Bill (S.B.) 15. It would cap minimum lot sizes at 1,400 square feet in new subdivisions of five acres or more, with the idea of enabling more inherently affordable small-lot development.

(The bill is closely modeled on the Arizona Starter Homes Act that passed the Legislature there last year but was infamously vetoed by Arizona Gov. Katie Hobbs.)

Texas Lt. Governor Dan Patrick, who presides over the state Senate, has listed S.B. 15 as one of his priority bills for the session.

Also in the mix in the Texas Senate are S.B. 840 and S.B. 673, which respectively allow mixed-use, multifamily housing to be built in commercial zones and accessory dwelling units (ADUs) to be built in single-family zones.

Texas House Speaker Dustin Burrows (R–Lubbock) has identified two housing bills as priorities as well.

That includes House Bill (H.B.) 23, which would allow builders to have their development applications reviewed and approved by private engineers immediately. Current law requires them to wait 15 days before seeking out third-party reviewers.

H.B. 24, another speaker priority bill, will pare back the state's "valid petition" law. That law allows property owners to protest zoning changes and imposes additional notice and voting threshold requirements for local governments updating their zoning codes.

A number of states have similar petition rights laws. But a Mercatus Center report from 2023 described Texas as the nation's capital for valid petition rights, given how easy state law makes it for petitioners to stop projects and zoning changes.

"If you want to be boring about it, you can call it petition rights. The real word is a tyrant's veto," says Nicole Nosek of Texans for Reasonable Solutions, a pro-housing advocacy group.

She says H.B. 24 would raise the number of property owners required to protest a zoning change, lower the voting threshold local government bodies would need to reject a protest petition, and ease the notice requirements.

A handful of similar housing bills failed in the Texas Legislature last session in the face of opposition from local governments and Democrats who (in Republican-dominated Texas) are wary of state-level preemption bills.

The Texas Tribune reports that some Democrats appear to be more open to state-led zoning reform this time around and that a handful of Democratic senators have already signed on to S.B. 15 as co-authors.

In his State of the State address in February, Texas Gov. Greg Abbott said, "We must also make housing more affordable. To do that, we need to make it easier to build, slash regulations, and speed up permitting."

Perhaps the stars are aligning in the Lone Star State.

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Minnesota Zoning Reformers Try Again

Last year, Minnesota's housing reformers introduced an aggressive slate of bills that almost all failed to become law in the face of opposition from local governments and their allies in the Democratic-controlled Legislature.

This session, reformers are trying again with the hope that more targeted bills, concessions to localities, and a more evenly divided Legislature with more housing champions on key committees will get more policies over the finish line.

Lawmakers have introduced, or will introduce, bills that will remove local regulations on duplexes and small-lot starter homes, allow residential development in commercial zones, pare back localities' minimum parking requirements, and ban aesthetic mandates on new housing.

"This is trying to put the private market back to work in diversifying our housing stock," says Rep. Spencer Igo (R–Wabana Township), the current chair of the House's Housing Finance and Policy Committee, who is sponsoring the Minnesota Starter Home Act.

Currently, Republicans have a majority of one in the Minnesota House, although a special election scheduled for today is expected to return it to an even split between Rs and Ds. Democrats have a one-person majority in the Minnesota Senate.

A consequence of the partisan reshuffle is that more pro-housing legislators will end up being chairs and co-chairs of key committees, says Nick Erickson, the senior director of housing policy at Housing First Minnesota.

"We're seeing many more of our housing reform champions on critical committees," Erickson tells Reason.

Erickson says that housing reformers have made some concessions to localities, including amending their bills to allow for public meetings for state-legalized projects and limiting the applicability of reforms to areas with inadequate infrastructure.

"That was a critical piece" to get legislators sensitive to concerns about local control on board, he says. These bills also give local governments more flexibility to restrict housing development in areas with less infrastructure.

Igo says he's been meeting with city groups on a weekly basis and is optimistic that the infrastructure-related amendments will address a lot of localities' concerns.

"Our local municipalities get their control and ability to make [local zoning] rules from the state of Minnesota," says Igo. Given the state's housing deficit, state intervention is warranted.

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San Diego Rolls Back ADU Bonus Program That Was a Little Too Productive

The arc of history is long, and it doesn't necessarily bend toward more housing.

This past week, the San Diego City Council passed a resolution directing planning staff to begin the preliminary work of rolling back the city's productive but controversial ADU Bonus program.

Since 2021, the program has allowed property owners to build two "bonus" ADUs (on top of the two ADUs state law already allows), provided one is deed-restricted to be affordable to people of moderate incomes.

It also allows an unlimited number of ADUs to be built within a mile of transit stops, provided the development complies with existing lot coverage rules, height limits, and floor-to-area ratios.

Estimates of the program's yield vary. The most recent numbers reported by the city show that 239 ADUs have been permitted under the program from 2021 through 2023, per a city memo posted online by KPBS.

That's a small share of overall housing units and even of ADUs permitted in the city. According to the city's permitting dashboard, roughly 5,000 ADUs have been permitted from 2021 through 2024.

Nevertheless, neighborhood activists objected to the way that the program effectively enabled apartment buildings to be built on larger lots in single-family neighborhoods. A local newspaper even ran a "worst ADU" contest to criticize the new developments.

In response, the City Council has been considering a number of ways of paring back the program. In January, it toyed with a full repeal of the ADU Bonus Program, but the city's planning director warned that wholesale repeal would likely violate state law.

Instead, the City Council has directed planning staff to draft an ordinance that would limit the applicability of the ADU Bonus Program in some of the city's single-family zoning districts.

Saad Asad, an activist with YIMBY Democrats of San Diego, says that such an ordinance would still leave the ADU Bonus program in effect in most of the city's single-family areas.

Asad says the greater risk to the program comes from the second provision of the resolution passed by the City Council last week. That directs city staff to propose more sweeping revisions to the program that could see fees increased, off-street parking requirements, and tighter density restrictions.

"The worse-case path is [a law leaves the ADU program alive] on paper, but there's so much red tape added to it that it's functionally dead," he says.

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Quick Links

• Vox on the Trump administration's move away from a "housing first" approach to homelessness.
• An iconic Los Angeles tree house is dismantled by city officials who definitely have their priorities right.
• San Francisco homeowners have to cover the costs of a city inspector's fraud, reports the San Francisco Chronicle.
• Columbus, Ohio, got a shout-out in Vance's aforementioned speech. It's also streamlining its zoning code.
• The Nebraska Legislature is considering a bill to restrict local rent control policies.