“Last week, the Republican-controlled North Carolina Legislature overrode Democratic Gov. Roy Cooper’s veto of Senate Bill (S.B.) 382—an omnibus bill that paired millions in hurricane relief funding with restrictions on the powers of incoming elected Democratic state officers…. A short provision tacked on to the end of S.B. 382 gives North Carolina property owners perhaps the nation’s strongest protections against local governments tightening zoning regulations on their land,” reports Reason magazine.
“No amendment to zoning regulations or a zoning map that down-zones property shall be initiated, enacted, or enforced without the written consent of all property owners whose property is the subject of the down-zoning,” says that short provision, found on the last page of the 131-page bill. The legislation defines downzoning as any decrease in the allowable density of development, any reduction in permitted uses, or any creation of a “nonconforming” use, lot, or structure.
So in effect, explains Reason,
if you have a right to do something or build something on your land right now—whether that’s operate a gas station or build an apartment complex—S.B. 382 says you’ll always be allowed to do that unless you give express written consent to the local government to take that right away from you….this is a far-reaching restriction on local governments’ ability to regulate development….The state’s homebuilders are certainly pleased with the new law. They argue it will prevent local governments from getting around existing state prohibitions on development-killing policies…
North Carolina law already forbids local governments from imposing aesthetic design requirements, inclusionary zoning policies (which mandate builders include below-market-rate units in their projects), impact fees, and other policies known to drive up the cost of home building. But local governments can still evade these prohibitions by downzoning a developer’s property and then conditioning any upzoning on the developer paying impact fees, building affordable units, or adopting certain design requirements. By banning downzoning, S.B. 382 would prevent these games, says [says Steven Webb of the North Carolina Home Builders Association]. He says it will be a powerful protection for homebuilders trying to meet demand in the rapidly growing state….
But the provision could backfire by discouraging municipalities from doing comprehensive updates to land use regulations that contain both a lot of upzoning (allowing more uses of your property), along with a smaller amount of downzoning (such as restrictions on uses deemed unsuitable). When cities do comprehensive zoning code rewrites, that usually involves a mix of downzoning and upzoning. For example, Raleigh recently made changes to its zoning code that allowed denser housing near transit stops but also restricted the construction of new gas stations and drive-thrus. If cities and counties can’t do even a little bit of downzoning when they upzone, they may be more reluctant to upzone at all. Scott Mooneyham of the North Carolina League of Municipalities claims that S.B. 382’s provisions will effectively prevent local governments from doing comprehensive updates to their land use regulations. The law’s expansive definition of downzoning and its mandate that all affected property owners receive individual notice of code changes and give individual written consent is a huge procedural hurdle, Mooneyham says. “That’s going to essentially mean that no cities are going to make those changes right now.”
His claims might be overstated, the product of antipathy to state preemption, says Jennifer Truman, a planner working in private practice. “Some of the uncertainty and honestly panic on the part of planning departments that I’ve heard is ‘they’re touching our thing, this is supposed to be the thing we’re supposed to have control over’,” she says. Still, Truman says S.B. 382 could discourage some zoning code rewrites that on balance, allow more housing construction, but also contain some new limits on land use.
Downzoning is usually bad, and can make it more costly and difficult for some people to find a place to live. Recent studies show that zoning restrictions make it harder for people to move to prosperous areas with good jobs. That increases unemployment, and also increases consumer prices in prosperous areas by fueling labor shortages and higher labor costs.
Zoning makes housing less affordable, to the point where economists support getting rid of many zoning regulations. As Law Professor Ilya Somin observes,
The case for cutting back on zoning restrictions unites economists and housing policy experts across the political spectrum. That includes both pro-free market experts and prominent left-liberals such as Nobel Prize-winning economist Paul Krugman…and Jason Furman, Chair of President Obama’s Council of Economic Advisers.
Japan is very densely populated and poorer than the United States. It has three times as many people as California, but less space. But even in Japan’s capital Tokyo—the center of the world’s most populous metropolitan area—people are able to afford housing. Why? Fewer zoning restrictions.
As Nolan Gray notes at Market Urbanism:
Japanese zoning is relatively liberal, with few bulk and density controls, limited use segregation, and no regulatory distinction between apartments and single-family homes. Most development in Japan happens “as-of-right,” meaning that securing permits doesn’t require a lengthy review process. Taken as a whole, Japan’s zoning system makes it easy to build walkable, mixed-use neighborhoods, which is why cities like Tokyo are among the most affordable in the developed world.
As the Wall Street Journal notes, although housing has gotten much more expensive in 32 major cities across the globe,
one major city has had stable housing prices as a result of pumping out housing supply to keep up with rising demand. Tokyo is one of the few cities in which supply has kept up with demand, keeping a crisis from developing. But that is due largely to deregulated housing policies that other countries would have a hard time reproducing.
As another article in the Journal notes,
In the past two decades, home prices in some leading North American and European cities have skyrocketed. In Tokyo, however, they’ve flatlined. So why no affordable-housing crisis in Japan? A big factor, experts say, is the country’s relatively deregulated housing policies, which have allowed housing supply to keep up with demand in the 21st century. With no rent controls and fewer restrictions on height and density, Tokyo appears to be a city where the market is under control—where supply is keeping home prices from rising as drastically as they have in many other major world cities.….The Japanese government began relaxing regulations that had restricted supply, allowing taller and denser buildings in Japan’s capital. Private consultants were given permission to issue building permits to speed up construction.
