Zoned Out

How an effort to protect the health and welfare of neighborhoods has become legally enforced segregation.

Anyone who has spent more than a month observing suburban or small-town politics knows that the vast majority of today's municipal controversies revolve around issues of zoning and planning. Go to a town meeting anywhere in the United States and you are likely to find a virtuous local majority, struggling to protect environmental amenities and "quality of life," pitted against a "greedy developer" whose sole joy in life is to rape and pillage landscapes. As the meeting progresses, a long procession of homeowners will step to the microphone, voices quavering with emotion, to charge that the new development—whatever it may be—will "only bring in more traffic, create pollution, ruin the quality of our lives, and turn this town into another [the name of the nearest large city]."

Public-opinion surveys regularly purport to show that Americans are most concerned about global issues such as the federal deficit and relations with the Soviet Union. Yet I would bet that if a category were included entitled "preserving the quality of life in my neighborhood," it would rank at or near the top as well.

Briefly, here is the way zoning works. A community draws up a map in which each parcel of land is designated for a specific kind of use—residential, commercial, industrial, and so forth. In principle, a town is supposed to be willing to entertain any of these uses but is anxious to keep them in their proper place. Commercial development should occur along major highways, and industrial development should adjoin a freeway interchange or railroad track. Apartments will be clustered near population centers, while single-family homes will spread through the network of residential streets.

In practice, however, what politicians and municipal planners soon discover is that there are some land uses nobody wants to have anywhere. Noisome industries are never popular. A few local stores may be tolerated, but large regional shopping centers are viewed warily. In addition, no suburban community wants any trace of "cheap housing"—apartments, multifamily homes, mobile homes, or anything involving rentals or tenants.

Whenever a developer comes forth with such a proposal, no matter how rational or legal it may be, local officials are put under enormous pressure to prevent it from being built. If the developer needs a zoning change, municipal officials will be urged to reject it. If the use is permitted by the ordinance, officials will be encouraged to "downzone" the property or find some loophole to prevent the development. Another favorite municipal strategy is to zone properties for "light industry," "laboratories," or some other high-sounding but unlikely development. In this way, the community can reject any proposal on the grounds that it is waiting for some "higher" use.

All this has had an enormous impact on housing itself. "Zoning is now the most critical factor in the entire equation of home building," says Shirley McVey Wiseman, 1989 president of the National Association of Homebuilders. "What gets built, where it gets built, how much it's going to cost—all this is now basically determined by the regulatory apparatus at the local level. As these regulations have become more burdensome, housing has become more scarce and expensive."

To take a typical case, let us look at a property in Brookhaven, Long Island, a 349-square-mile township that is the largest in New York state. In 1980 the Suffolk County Interreligious Council on Housing proposed 160 garden apartments on 30 acres of land in the village of East Patchogue. The council's express intent was to provide housing for low- and moderate-income people who were otherwise not able to find housing in the region. The parcel was already zoned for a nursing home. Nobody had ever proposed building a nursing home on the site, but the zoning classification made it seem as if the town were not opposed to all high-density uses.

The town planning board, an appointive body with only advisory powers, approved the zone change. But the town council, which has final authority and is under far more political pressure, rejected the project because of its high density. The Interreligious Council came up with another proposal to put 60 units on a 12-acre site in nearby Setauket, along heavily traveled State Highway 25A.

As word of the second proposal spread through the township, opposition mounted. By the time the town council got around to voting in 1983, there were enormous public pressures against approving the project. Although the planning board also recommended the second proposal, the council voted against it as well. No housing would be allowed. "We don't like low-cost housing because it brings in low-class people," one neighborhood resident told the New York Times. "I don't want those people coming in and degrading my property. I've got my life savings invested here. There's plenty of land elsewhere."

Another area where zoning has had an enormous impact is in the rental of small rooms and apartments in single-family homes. Census data indicate that more than half the homes in the country with five or more rooms are being occupied by people over age 65. The data suggest that many of these people are "overhoused," meaning they have far more room than they need. Property taxes and the difficulty in maintaining such a home often persuade elderly people to move to smaller units. Another alternative would be for these overhoused people to rent out spare bedrooms or small living units.

Zoning laws generally forbid this. Suburban residents in single-family districts are extremely sensitive to the idea of living in "rental" districts. Complaints often center on density or parking space, but the objections obviously have to do with class distinctions as well. This prohibition against rentals is probably the major reason that the suburbs have never been able to provide the variety of housing that city neighborhoods do.

To see what a difference these regulations can make, consider the case of Takoma Park, Maryland, a suburb of Washington right on the District of Columbia border. Takoma Park represents a paradigmatic confrontation of the old streetcar suburbs and the new suburbia based on property values and single-family homes. First incorporated in 1883, Takoma Park was originally connected to Washington by a network of rail lines. Though it became a streetcar suburb, it had small pockets of black freemen, who had settled in the area right after the Civil War.

Most of the original housing was two- and three-family homes, with both owner-occupied units and rentals. During the 1920s and '30s, a number of larger apartment houses were built as well. After World War II, the single-family home became predominant. Today the streets of Takoma Park are a hodgepodge of housing: single-family homes, apartment houses, duplexes, and triplexes, many of them "nonconforming uses" that do not accord with the current zoning plan.

Despite the growing number of single-family homeowners among the population of 16,000, rentals continued to play a large role in the community. When thousands of army and government personnel came to Washington during World War II, homeowners in Takoma Park rented them apartments. When veterans used their G.I. benefits to attend neighboring Columbia Union College, they also became tenants. The demand was so high that many homeowners divided their homes into apartments or rented rooms.

In 1973, however, the more affluent single-family homeowners decided they had had enough. Researching the zoning law, they discovered a 60-year-old Montgomery County statute forbidding rentals in a single-family zone. The homeowners petitioned the county (which controls zoning in Maryland) to enforce the law.

In 1978 the city council adopted a compromise, saying that anyone who had been renting before 1954 could continue for another 10 years. The 10 years expired in 1988 and evictions began. An estimated 1,000 tenants, many of them families with children, are expected to be forced out of their rooms and apartments.

What is the overall result of these zoning practices? Obviously, housing becomes more expensive and harder to find. In 1987 the New York Times reported: "They began arriving 10 days ago, dozens of people on the condominium trail. In warm sun and then cold rain, they lived in a community of cars, campers and trucks, assuring themselves a chance to pay $175,000 and up for one of the 100 town houses that will become Society Hill."

The condominiums—in Mahopac, New York, 90 minutes commuting distance from Manhattan—were still five months from completion. But most buyers said they couldn't find any other housing in the New York metropolitan area. Residents of Mahopac, who for a while had mistaken the temporary campsite for an invasion of homeless people, were not as enthusiastic. "Earlier this week," noted the Times, "over 700 residents signed a petition asking town officials to impose a moratorium on all building permits. Those officials are already considering a plan that will reduce development densities and limit the rate of growth."

The great dilemma is that for people who have already bought homes and are established in the community, the ability to exclude others and raise the price of homes is a cost-free good. The key factor to recognize is that in addition to providing themselves with a place to live, homeowners are also investors, speculating in real-estate prices. Particularly in an inflation-prone economy, people now buy a home as a way of saving and investing money. Once they have their life savings invested in a home—and they often do—homeowners want to do everything possible to protect their investment. That means preventing cheap or undesirable development nearby.

Of course, there are few investors anywhere who do not want to have the power of the government brought to bear to protect their investments. Farmers want agricultural price supports, manufacturers want protection from imports, savers want the federal government to insure their bank accounts. Homeowners are different in that, within any given political jurisdiction, they are likely to be the majority. The voice of each homeowner protecting his or her investment is immediately echoed by the voice of every other homeowner protecting his or her investment. In such a situation, it is only a matter of time before the majority convinces itself it is doing the Lord's work.

Thus, concerns about "affordable housing," when expressed by homeowners, always have a certain disingenuous air. The fact is that for people who already own a home, it does not matter much how high home prices may climb. They are already on the escalator. If prices go up, theirs will go up along with everybody else's. Their ability to trade for a better home is not compromised. It is only people who have not yet gotten their feet on the escalator who see prices vanishing into the empyrean. Because these people are not usually represented in municipal decisions and are generally an unorganized minority, their influence is not felt.

"People always cite the National Association of Realtors affordability index, which says that in California, for example, only about 15 percent of the state's households can afford the median-priced home," says William Fulton, editor of California Planning and Development Report. "What that doesn't tell you is that half the households in California already own a home. They won't benefit if home prices come down. In fact, they'd be just as happy to see prices go up."

As long as this majority is able to control where and how new housing will be built, the situation is unlikely to change. Carl Dahlman, professor of economics at the University of Wisconsin, puts it this way: "The only theory of zoning that is consistent with available knowledge of zoning practices is that zoning is a means for keeping people out, and for sending them away to other communities for the residents there to cope with. Zoning in America today is done not to specifically control land, but primarily to control the migration of people."

To see how things could be different, it is only necessary to look at Houston, America's fourth-largest city. Because of the city's wild-west atmosphere and anti government attitudes, zoning has never been adopted in Houston. City officials rejected zoning several times during the 1920s and '30s. It was also voted down in two nonbinding public referenda in 1948 and 1962. Although people on the East and West coasts often find it hard to believe, property owners in Houston can do anything they please with their property.

Well, perhaps it isn't all that easy. In fact, as Bernard Siegan discovered in his landmark study of Houston's no-zoning policies in 1972, property owners are often severely restricted—not by public ordinances, but by private covenants and deed restrictions. Typically, the developer of a suburban subdivision will write deed restrictions saying the property cannot be used for anything but single-family residences for 30 to 50 years. (In fact, banks won't even lend money for such developments unless the restrictions are in the agreement.) As a result, Houston has its own exclusive residential enclaves such as River Oaks and Sharpston. The difference is that people in these ritzy developments cannot prevent someone else from putting up cheap housing on the other side of town.

Thus, while Houston's exclusive subdivisions compare for snob appeal with any other enclave in the country, the city is bursting at the seams with every other kind of housing as well. In 1982, in the teeth of the recession, the Houston area built 60,000 new homes—one of every 15 new units in the country. Despite enormous population growth, rental vacancies have remained above 15 percent for more than a decade. Condominiums and starter homes still sell for $30,000 (that's the asking price, not the down payment), and homelessness has been extremely low, although not nonexistent. In fact, one of the major housing problems in Houston has been vacant suburban homes, which have led people to worry about "suburban slums."

One other interesting observation is that whenever there has been a ground swell in Houston for imposing zoning, it has always come out of the most affluent neighborhoods. In the 1962 referendum, 75 percent of the black population voted against zoning, while its only support came from exclusive suburbs.

Another city that has at least relaxed its zoning effort and seen a payoff in housing is San Diego. The nation's seventh-largest city, San Diego has experienced tremendous growth over the last two decades, expanding from 334,000 inhabitants in 1950 to 960,000 today. Almost 15 percent of the population is Hispanic, due largely to its location right across the border from Tijuana—with 1 million people of its own—which makes San Diego a center for illegal immigration.

During the recession of the early 1980s, building slowed and rental vacancies dropped to 4 percent. In 1985 there was a referendum campaign to adopt rent control, as more than a dozen other California cities had already done. San Diego voters rejected it 2-to-1, and builders responded in 1986 by putting up 20,000 new apartments, most of them in the luxury category. The results were quickly felt in the lowest income groups. The proportion of vacancies among apartments renting for less than $250 a month doubled between 1985 and 1986, from 1.8 percent to 3.6 percent. The filtration process worked extremely rapidly.

Still, the gentrification of the old Gaslight District downtown threatened to create a wave of homelessness. "Several SRO hotels were lost, and the charitable organizations serving the indigent were really getting kicked around down there," recalls Frank Landerville, director of the Regional Task Force on the Homeless.

At first, the city responded with a law saying that when builders knocked down one SRO unit they had to put up another. This requirement expired after three years, however, and served only as a stopgap. By that time, city officials had decided that the real problem was zoning.

"We realized our zoning law had created a gap in the kind of housing builders could provide," says Judy Lenthal, senior planner for the city government. "An SRO unit is too small for permanent accommodations, while a studio apartment is more than many people can afford.

"So we changed the zoning ordinance to allow a new 'living unit'—an apartment that contains either a kitchen or a bathroom, but not both. You have to share one or the other in a common area. But it's a real home—something both landlords and tenants can afford."

As a result, San Diego has experienced what Lenthal calls "the only miniboom of new SRO construction in the country." In one year, private developers built four new hotels and rehabilitated 15 old ones, creating 565 new units. Plans for 1,500 more units were on the drawing boards. San Diego legislators also sponsored a state law to enable other California cities to do the same thing.

"Altogether, I'd say the most important thing we've done in providing housing for the poor is not alienate the development community," says Landerville. "Builders are still enthusiastic about San Diego and that helps provide housing at all levels." Perhaps not coincidentally, San Diego has one of the lowest rates of homelessness among the nation's 20 largest cities.

In most other parts of the country, however, the trend has been in the opposite direction—toward greater restriction of the housing market through tighter zoning.

In 1974 the U.S. Supreme Court reaffirmed zoning powers in its first comprehensive zoning decision since 1926. The village of Belle Terre, Long Island, had passed an ordinance forbidding three or more unrelated people from renting detached homes. The ordinance was aimed at students from the nearby State University of New York at Stony Brook who had pooled their resources to rent homes in the area. A group of students challenged the ordinance.

In a decision that united liberal Justice William O. Douglas and conservative Chief Justice Warren Burger, Justice Douglas wrote: "A quiet place where yards are wide, people few, and motor vehicles restricted are legitimate guidelines in a land use project addressed to family needs.…The police power is not confined to elimination of filth, stench, and unhealthy places. It is ample to lay out zones where family values, youth values, and the blessings of quiet seclusion and clean air make the area a sanctuary for people."

As Carl Dahlman, of the University of Wisconsin, puts it: "[The courts] have…wrapped many residential neighborhoods consisting of single-family homes in a protective blanket that effectively has eliminated much or perhaps all of the pecuniary risks associated with the ownership of a home."

Since 1975, however, there has been one successful challenge to exclusionary zoning, in the New Jersey courts, that has served as an example for other states. The case involved Mt. Laurel, a 22-square-mile suburb of Camden about 15 minutes from Philadelphia. Still largely rural, the town does not yet have a main street or a supermarket. Its first post office was constructed in 1983. In 1965, the township contained only 8,000 people. Interstate 295 opened up suburban development, however, and the population grew to 17,000 by 1980. More than 3,000 new housing units—all single-family homes—were built in that 15-year period. In addition, the town sited 50 acres of new offices and industrial parks on land adjacent to the intersection of Interstate 295 and the New Jersey Turnpike.

Mt. Laurel also has a small black settlement that traces its origins to the Civil War. For decades the blacks worked as tenant farmers. As suburban development ate up farmland, they retreated to a small community of summer cottages in the Springville section. By 1969, only 120 people remained there. The town refused to extend sewer lines, water service, or paved roads into the area. The houses were labeled "nonconforming uses," meaning they could not be remodeled, replaced, or repaired if significantly damaged. Occasionally, the town would condemn a building. Springville residents saw quite clearly that they were being driven out of town.

In 1969 a group of them formed the Springville Action Committee. Securing a state grant, they proposed building 100 apartments on a three-acre parcel in Springville to house most of the black population. The town turned down the proposal on the grounds that it violated the zoning ordinance, which allowed only single-family homes on half-acre lots. The Burlington County NAACP sued the town in state court.

In 1975 the New Jersey Supreme Court overturned Mt. Laurel's ordinance and ordered the town to zone some of its land for apartments. Moreover, the court extended its decision to cover all "developing" communities in the state and said that they would have to make similar provisions for low-income housing as well.

Mt. Laurel's response was typical of municipalities in similar positions. It rezoned three small parcels for apartments, but not the property of the successful litigant. One of the parcels was already being subdivided for homes. The other two were swampy and inaccessible. All three owners said they had no interest in building apartments or cheap housing.

Meanwhile, other towns around the state began resisting the Mt. Laurel decision by arguing that they were not "developing" communities but were either already developed or not even considering development. As a result, eight years after the first Mt. Laurel decision, no new housing had been built.

Springville Action went back into court. In 1983, after two years of deliberation, the New Jersey Supreme Court handed down "Mt. Laurel II," a case that has been called the most significant zoning decision since Ambler Realty v. Euclid, the 1924 case in which the U.S. Supreme Court upheld zoning as an exercise of the state's "police power." The New Jersey court wrote: "The constitutional power to zone, delegated to the municipalities, subject to legislation, is but one portion of the police power and, as such, must be exercised for the general welfare.

"When the exercise of this power by a municipality affects something as fundamental as housing, the general welfare includes more than the welfare of that municipality and its citizens: it also includes the general welfare—in this case the housing needs—of those residing outside of the municipality but within the region that contributes to the housing demand within the municipality."

The court conjured up an image of what the state would eventually look like if exclusionary practices were allowed to go unchecked: "poor people forever zoned out of substantial areas of the state, not because housing could not be built for them but because they are not wanted; poor people forced to live in urban slums forever not because suburbia, developing rural areas, fully developed residential sections, seashore resorts, and other attractive locations could not accommodate them, but simply because they are not wanted."

The court decided that the state government would be the ultimate authority on zoning. "The state controls the use of land, all of the land. In exercising that control, it cannot favor the rich over the poor. It cannot legislatively set aside dilapidated housing in urban ghettos for the poor and decent housing elsewhere for everyone else. The government that controls this land represents everyone. While the state may not have the ability to eliminate poverty, it cannot use that condition as the basis for imposing further disadvantages."

As specific remedies, the court stated that municipalities must follow one of three strategies: 1) encourage or require the use of available federal and state housing subsidies for the construction of low-income housing; 2) provide incentives for or require developers to set aside a portion of their developments for low-income housing; or 3) zone areas for mobile homes or extremely small units that can be sold to low-income people.

In 1985 the New Jersey State Legislature responded to all this prodding by adopting the Fair Housing Act. The law set up the New Jersey Council on Affordable Housing, which asked all 567 municipalities to send in proposals on how they planned to comply with Mt. Laurel II.

Thus, the Mt. Laurel decision, although it addressed some of the effects of zoning, was not really a frontal attack on the whole concept. There was no inclination to allow housing transactions between willing buyers and willing sellers without municipal interference, as Houston has done. Instead, a deliberately cumbersome local process used to resist new housing construction was replaced with an even more cumbersome state process that might create some low-income housing (although it should be remembered that even at the state level the poor are a distinct minority).

Progress has been painfully slow. As of 1989, only 161 of the state's 567 municipalities had even submitted plans to conform with the state law. The housing council does not have any real powers of enforcement, and the prospects for widespread cooperation are not encouraging. Overall, about 2,000 new units have been built in 14 communities since the 1983 decision.

The favored technique for conforming with Mt. Laurel II has been something called "inclusionary zoning." The process was invented in California and has since been adopted by many cities and smaller municipalities. It is particularly popular with jurisdictions that are practicing exclusionary zoning but don't want to give the impression that they are trying to wall out the poor.

Under inclusionary zoning, a builder is allowed a density bonus (usually 20 percent more units) in exchange for a promise that the additional units will be sold at "low-income" prices. The municipality then sets up a selection process, often including a lottery, whereby a few local applicants get to buy or rent the new units.

Much to the consternation of housing advocates (and the quiet relief of suburban officials), these units have not fallen into the hands of the urban poor. Instead, they have attracted what might be called "subsidy hunters"—young couples, divorced single mothers, the elderly, and other middle-class people who are knowledgeable enough to take advantage of the system. One town official called the new residents "junior yuppies, young professionals in entry-level positions [who only] qualify by the numbers."

This outcome should not surprise anyone. One problem is that the case upon which the whole effort is modeled—Mt. Laurel itself—was unusual in that there was already a small community of poor people living in the municipality. Given the information required to take advantage of Mt. Laurel housing, the urban poor are not likely to participate.

Mt. Laurel is not going to produce the "diaspora of the urban poor" that some observers anticipated. Nor are the benefits of the Court's decision likely to filter down to the poor very quickly. In reality, it makes absolutely no difference whether the few winners of subsidized units are "low-income," "middle-income," or even "upper-income." Housing is housing, and the only way to have more of it is to build more of it. The only real benefits of Mt. Laurel will come from the density bonuses, which will allow more housing units to be built.

Yet even this advantage is likely to be limited because the new housing will not circulate. The new owners, after all, are subsidized and cannot move without losing their subsidies. They are usually not allowed to sell without giving up a significant portion of their capital appreciation, either to the municipality or to the next owner. Thus, they will stay in their units long after they have ceased to suit them and long after the residents have ceased to be "low-income." By attaching subsidies to housing units, rather than the people who might live in them, governments effectively take these units off the market.

The only truly promising feature of Mt. Laurel and the Fair Housing Act is the provision that if a town does not wish to accept its "fair share" of housing, it can still meet its quota by paying to have apartments built in towns willing to accept them. Because this housing will undoubtedly end up in the hands of deserving people, it will do far more good than housing snapped up by subsidy hunters.

The great attraction of exclusionary zoning has always been that it is a free good. A town could zone out whatever housing it didn't want without having to pay a price. Indeed, it rewarded itself by raising property values and avoiding social spending. Under Mt. Laurel, towns will finally be held financially accountable for their exclusionary practices, since they will have to support housing elsewhere. That, at least, is an accomplishment.

Contributing Editor William Tucker is the author of Progress and Privilege and Vigilante. Copyright © by William Tucker. All rights reserved. Reprinted from The Excluded Americans by special permission from Regnery Gateway Inc., Washington, D.C.