Deep Dive Episode 157 – Regulating Land Use During a Pandemic

Regulatory Transparency Project's Fourth Branch Podcast

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The COVID-19 pandemic has caused significant changes in urban land use. Where possible, companies have shifted to partial or full remote work, leaving some office buildings to sit empty. Firms in the service industry have sought to move dining, working out, and other activities outdoors where possible. It remains to be seen whether some of all of these changes in behavior will be permanent. What role do policymakers have to play in facilitating efficient land use during this uncertain time?

Featuring:

  • Yonah Freemark, Senior Research Associate, Urban Institute
  • Emily Hamilton, Senior Research Fellow, Mercatus Center, George Mason University
  • [Moderator] Luke Wake, Attorney, Pacific Legal Foundation

Visit our website – www.RegProject.org – to learn more, view all of our content, and connect with us on social media.

Event Transcript

[Music and Narration]

 

Introduction:  Welcome to the Regulatory Transparency Project’s Fourth Branch podcast series. All expressions of opinion are those of the speaker.

 

Jack Derwin:  Hello, and welcome to The Federalist Society's Fourth Branch podcast for the Regulatory Transparency Project. My name is Jack Derwin, and I'm Assistant Director of RTP at The Federalist Society.

 

As always, please note that all expressions of opinion are those of the guest speakers on today's call. If you'd like to learn more about each of our speakers and their work, you can visit regproject.org to view their full bios.

 

After opening remarks and discussion between our panelists, we will go to audience Q&A, so please be thinking of any questions you'd like to ask our speakers.

 

Today, we're pleased to host a conversation on "Regulating Land Use During a Pandemic." To discuss this great topic, we're pleased to feature Yonah Freemark, Emily Hamilton, and our moderator, Luke Wake. Luke, who'll introduce our other speakers in just a moment, is an Attorney at the Pacific Legal Foundation. Luke, the floor is yours.

 

Luke Wake:  Thank you for that, and always happy to talk with Federalist Society here and to, in this case, moderate what looks will be a great conversation between Emily Hamilton and Yonah Freemark about land use regulation in this moment.

 

I'll just preface this conversation very briefly by saying that I am a chair of this Regulatory Transparency Project's state and local regulation working group. This working group recently released a white paper over the fall, last fall, recommending opportunities for ten regulatory reforms in response to the pandemic.

 

The paper, I think, is worth checking out because there really are some good policy ideas there. You can quickly hone in -- if there's a specific subject matter that you're especially interested in, you can do that very quickly. There's ten chapters divided by subjects.

 

For example, the first chapter addresses the immediate issue at hand for a lot of businesses, i.e. to what extent should states and localities be regulating business activity during the pandemic. And, then, other chapters focus on such things as regulations that inhibit entrepreneurialism. For example, restrictions on independent contracting and others recommend that states hit the pause on new regulatory mandates during this time of crisis.

 

But here today, we're focused on one particular chapter of this paper. Specifically, recommendations relating to, again, land use regulations, and, I think, specifically the question of whether and to what extent the current pandemic should prompt policymakers to reevaluate land use regulation.

 

I would say, in some sense, this feeds into a long-running debate that really precedes the pandemic. In fact, for that matter, I would note that the RTP published a paper in early 2020, before the pandemic came to the United States, making a more general case for liberalization of zoning codes that restrict commercial activity and also for streamlining permit applications processes.

 

There really is a lot to say about this issue, but I'm going to leave the talking through the rest of this presentation to our speakers.

 

Without further ado, let me introduce Yonah Freemark and Emily Hamilton. Yonah is a Senior Research Associate in the Metropolitan Housing and Communities at the Urban Institute. He studies and focuses quite a bit on the intersection of land use, affordable housing, and transportation. He's going to be a great speaker today. He holds a PhD and a master's in both city planning and transportation from MIT.

 

Also, Emily Hamilton is a Senior Research Fellow at the Mercatus Center at George Mason, and she focuses in her research on urban economics and land use policy. Both very well qualified to talk about this subject. Emily has her PhD in economics from George Mason.

 

With that, I'd like to hand things over to both Emily and Yonah to make some opening comments, and then they'll each have a chance to respond to each other. Then we'll go to more open conversation with questions, and I'd appreciate that.

 

Emily, would you be willing to start off today?

 

Emily Hamilton:  Yeah. Thank you, Luke. Thanks to everyone who's joining the conversation today and to the Regulatory Transparency Project for hosting this discussion.

 

Luke mentioned the recent white paper that our group published. Kim Hermann and I—Kim's from the Southeastern Legal Foundation—contributed the land use section. I'll be talking about some of the recommendations that we made there today.

 

First off, in the immediate response to the pandemic, restaurants were one of the hardest-hit industries, as we've all seen and experienced. Land use regulations -- many localities provided models for adapting those rules to make it easier for restaurants to continue to provide their services to the extent feasible.

 

Typical zoning restrictions provide a lot of barriers to businesses that need to adapt in quickly changing situations, as we've seen in the pandemic. For example, commercial use restrictions might limit a block to having only restaurants or retail locations. They might stand in the way of restaurants selling groceries or offering catering services. In some cases, we saw localities adapt those rules to make it easier for businesses to continue serving their customers in rapidly changing conditions.

 

Some of these adaptations are likely temporary. For example, localities have closed entire streets to allow restaurants or bars to serve their patrons outdoors, as has become so important in the pandemic response. But in some cases, these streeteries, as they're sometimes called, have been huge successes and might be worth keeping permanently, at least on weekends, in some of the restaurant rows that have really seen them work well during the pandemic.

 

Other responses, like restaurants providing take-out windows or serving their food as a catering service, have been impeded in some cases by land use restrictions that have not adapted to changing climates, and in other cases, have allowed restaurants to stay in business and weather this storm.

 

Secondly, the pandemic has revealed some needed long-term changes to introducing flexibility to commercial land use restrictions. As we're seeing a lot of businesses, unfortunately, unable to stay in business throughout the pandemic, there's likely going to be a lot of commercial vacancy and a need for rules that allow new business to enter the market more easily than is feasible under a lot of current restrictions.

 

Houston provides an interesting example. As one of the country's most liberally regulated land use market, it nonetheless has restrictions that are going to be serious barriers to new businesses opening during the pandemic recovery. Houston, for example, has 14 different types of parking requirements for different types of restaurants and bars. If a specific type of restaurant currently requires less parking than a new type of a business that might replace it requires, the property wouldn't be able to be repurposed in the new type of restaurant that might be feasible during the pandemic recovery because parking restrictions will prevent that physical space from being reused in a new way.

 

Further, as we've all gotten used to working remotely, there may be offices that don't reopen in their physical location or that offer some of their employees the opportunity to work remotely permanently or at least for much of their work week.

 

Given this, commercial space may be oversupplied during the pandemic recovery, and there are opportunities for repurposing some of that space as residential or other types of use. But again, commercial use restrictions may be standing in the way during the pandemic recovery.

 

Finally, the pandemic revealed a real need for flexible housing markets and housing situations. We saw healthcare workers traveling across the country at the beginning of the pandemic to New York City, for example, where the outbreak was most severe. While these healthcare workers were bravely offering their services where it was most needed, many of them faced serious barriers in being able to find housing once they got there.

 

Short-term rentals, like Airbnb or HomeAway, can offer an important service to, in this case, healthcare workers who need a short-term housing solution. But in all times, short-term rentals can provide an important source of housing for people who are moving to a location for work and need somewhere to stay while they find somewhere more permanent, but local restrictions, as in New York City, often prevent this important source of housing from serving those who need it.

 

Opponents to short-term rentals often raise concerns about affordability, arguing that taking supply off of the long-term rental market causes affordability problems for permanent tenants. But relative to other barriers on new housing construction and housing supply, short-term rental restrictions are a small part of the puzzle that can reduce housing supply from that permanent-tenant market.

 

Rather than restricting housing for those who only need it on a short-term basis, local policymakers should look at reforming their regulations that prevent multi-family housing and housing in general from being built in the places where people want to live.

 

Thanks a lot. I will now turn it over to Yonah and look forward to talking further during our moderated discussion.

 

Yonah Freemark:  Thank you so much, Emily. I'm excited about this conversation, and I'm really happy to be able to speak with this panel today. To start out with some initial thoughts, I wanted to note broad agreement with the land use reform elements in response to the COVID-19 crisis that Emily and her colleague, Kimberly Hermann, produced in the white paper that was shared.

 

What is interesting about many of the issues related to regulatory reform in housing markets and in land use markets is that there are many instances of agreements between people who are ideologically on the progressive end of things, who are focused on such issues as housing affordability, and social equity and people, who are ideologically on the libertarian end of things who are focused on expanding access to markets and increasing entrepreneurship.

 

Some examples of how this cross-ideological concurrence might play out include broad agreement about the ability of people to use spaces freely. Emily and Kimberly point to the fact that there have been numerous instances of healthcare and other essential workers being deprived of the right to live in certain places because of the fear that they might've been exposed to the virus. This is an unacceptable overreach that it is hurting people who need access to housing the most right now.

 

I would add that we can think about this issue of access to housing more broadly, such as in terms of people reentering society from jail or prison. They, too, have the right to live in our communities, and restrictions on formerly incarcerated people are inappropriately depriving people of the ability to reenter the workforce.

 

A correlate to this is the fact that landlords are currently allowed to use what is called "source of income discrimination" in much of the country, which means that they can deny people using subsidized housing vouchers the ability to move in, which makes little sense if our goal is to encourage equality of access.

 

I think there is also broad agreement between ideological progressives and libertarians on the concept of allowing small business owners to use their spaces freely. We can think about this in several different ways. Emily and Kimberly note that commercial zoning in many cities is quite restrictive. Just to give you an example of this from Arlington, Virginia, which is just across the state line from D.C., convenience grocery stores are permitted in what are referred to as C-1, C-2, and C-3 districts but require site plan approval from the city in C-0, RA, and R-C districts and aren't even allowed at all in RA-H and C-1-0 districts.

 

This kind of minute differentiation is not helpful and actually increases the burden on both commercial users and the public sector that has to oversee permitting. I would add that we need to think even more broadly about what being open to more commercial space should look like. For example, we should be more comfortable with allowing what are referred to as informal commercial uses, like street vendors, food trucks, and the like. These are often lower-income entrepreneurs who need a leg up. We shouldn't be banning them from our streets.

 

In terms of ways in which a progressive and libertarian approach to reform might diverge, I can think specifically of two major areas of interest. First, I think we continue to need strong urban design standards. The walkability and livability of our communities requires significant public intervention in terms of ensuring that buildings are designed to be approachable to pedestrians, in terms of requiring adequate public space, and the like.

 

Second, freeing up apartments for short-term rentals, as Emily just noted, may open up more space for people who are visiting or for people who have trouble qualifying for traditional leases on apartments. At the same time, the growth of companies like Airbnb has unquestionably been associated with several troubling trends, including the replacement of previously available affordable housing rental stock with units that are now devoted permanently to Airbnb units.

 

This, in turn, has increased the cost of units in popular neighborhoods, which cannot be understood as a positive given the interest to encourage access to affordable housing in these exact same communities.

 

Those are some of my initial thoughts. I'm looking forward to further conversation.

 

Luke Wake:  Thank you, both of you. Emily, would you like to respond briefly to what Yonah just said there?

 

Emily Hamilton:  Sure. As Yonah said, we certainly have a lot of agreement about the importance of access to urban space for people of all backgrounds and recognize many of the same solutions to current barriers to that access.

 

Yonah brought up the issue of the need for discretionary review in Arlington, Virginia as one example of the permitting process that can stand in the way of new businesses opening or new construction getting started. This is a very important point.

 

Another issue that local policymakers should remain focused on as they seek to facilitate pandemic recovery: when someone wants to propose a new business, it shouldn't require a big discretionary review process in order to facilitate that. As long as that business is going to not have major externalities for its neighborhood, as most typical retail uses do not, these barriers serve to make it more difficult for commercial space to be repurposed and for new businesses to enter their neighborhoods without a lot of public benefit.

 

Yonah mentioned the issue of street vendors who are currently heavily policed in many communities. This is another area where we have complete agreement. I just want to flag one example of hot dog vendors in Los Angeles where there's a thriving market for what they're selling. But over the years, as these vendors have become more and more policed, the capital that hot dog vendors are using has become extremely minimal.

 

Whereas they used to have portable grills or even trucks that they would use to cook and sell their hot dogs out of, often today they just use cookie sheets on top of little candles to cook their food, reducing their potential to serve customers, their profits; all in service of not really benefitting the communities where these roles are enforced.

 

One area where we may have some disagreement in on the issue of urban design standards. I'll certainly agree with Yonah that much of the development that we see today doesn't match what often provides the liveliest, most walkable neighborhoods that provide thriving commercial areas in our cities. But I'd argue that it's, in fact, land use regulations that are often standing in the way of this livelier design rather than a need for new urban design standards.

 

For example, the discretionary review process that drives up costs and makes it difficult for small developers to compete in the current real estate environment means that often only very large projects are feasible to get built in our urban environments. As a result, we lose out on the fine-grained urbanism that happens as a result of incremental development that we can see in lower Manhattan, for example.

 

That type of development just isn't feasible under the very strict rules and design processes that many localities enforce today.

 

Luke Wake:  Well, thank you, Emily. Yonah, would you like to respond to Emily there?

 

Yonah Freemark:  Yeah, just very quickly. I think what's interesting is that regulatory reform can be done in a variety of ways. We can either be talking about just getting rid of regulations or, more realistically, changing the sorts of regulations we're using to regulate the construction of new buildings, the regulation of businesses, and things of that sort.

 

I think that we're in broad agreement that there don't need to be so many steps and processes for individual small businesses to open, for street vendors to provide the sorts of foods that they provide. Those seem like unnecessary burdens on people who are honestly just trying to make a living and who are trying to use the public right of way in a way that other businesses are able to do.

 

I think where we might diverge is -- I agree with Emily that we certainly do have zoning codes right now that actually encourage very poor use of the public space. I completely agree that there are many zoning regulations that are quite hostile to pedestrians. My sense is that we don't need to get rid of those, though; we need to reform them so that they're directly correlated. They're designed to enforce what are known as key elements of creating walkable, livable cities.

 

Luke Wake:  Well, very good. It is interesting to note what seems to be, at least between the progressive and the libertarian side of things, some degree of substantial consensus at least as to some of these problems. Maybe a little bit more difficulty in terms of the devil in the details as to where do we go from here in solving those problems, but it's a good first step.

 

Let me ask, and this can be to either of you. To what extent do you think that we should view this current pandemic as a real amenable opportunity for regulatory reform? Or, conversely, what do you say to those who would respond to calls for liberalization at this moment as, essentially, reactionary? That everything that Emily said in the white paper, those are things that you would've said even before the pandemic began?

 

Yonah Freemark:  I can try to respond to that quickly. I think one thing that's been surprising about the response to the pandemic in a lot of our communities is that we've seen a lot of experimentation, a lot of cities saying, "You know, our existing rules on things like allowing people to eat on the sidewalk or allowing restaurants to open little places to sit on what used to be former parking spaces were too restrictive. We were having rules out there that were making it impossible to live in the pandemic because we weren't even letting people eat inside."

 

So, I think what we've seen over the last few months has been a genuine interest in changing the way we interact with our cities and the rules that we use to determine uses in our cities, and I'm hopeful that the positive elements that came out of that, the things that I think we enjoy in the small moments of enjoyment we've had over the last year should be used as the start of real thinking about changes we want to see in the way our communities work.

 

Luke Wake:  Great. Emily, anything on this question?

 

Emily Hamilton:  Yeah. Certainly, all of the recommendations that Kim and I made in the white paper are probably things that I would've said prior to the pandemic, but I do think the pandemic has revealed some longstanding issues in local land use planning that may be easier to address now that the extent of these problems has been revealed.

 

For example, many localities have commercial vacancy rates that are much higher than their residential vacancy rates. They might have vacant strip malls or larger malls as well as office buildings that just don't have users available to put that space to use.

 

The longer-term trends that have been accelerated by the pandemic, like remote work or online shopping, might make it more politically feasible to get rid of some of those use restrictions and allow those spaces to be put to new productive uses, whether as residences or distribution centers or other uses that remain viable where the uses that those spaces are currently zoned for may not be.

 

Luke Wake:  Very good. Emily, you talk a lot about restaurants and bars particularly. We all know that they've been hard hit with this pandemic, but so have a lot other businesses. I'm in California where there's a lot of businesses that may be more regulated than other parts of the country. We're seeing a lot of business closures throughout the country right now.

 

As I read your recommendations, you were kind of forward looking about how to allow -- I kind of think of the fire destroying all these all old growth trees and new trees are going to emerge, hopefully, in the future to replace those. But we want to enable that growth to happen, and that's kind of what you're talking about.

 

You specifically focus on restaurants and bars when you're talking about the need for flexibility and allowing people to change. Is your point more specifically that we ought not to micromanage everything these businesses do and we ought to be allowing them to pivot from one thing to the next or to make changes without having to go back before a review board? Or should there be any review when a business intends to change the way it's operating from zoning authorities?

 

Emily Hamilton:  I wouldn't go so far as to say there should be no review, but in general, the types of uses that commercial land use restrictions permit should be much more broad than they are today. To provide one example, there's a new trend of axe throwing bars, at least prior to the pandemic, in U.S. and Canadian cities. This isn't really a use that anyone had thought about prior to an entrepreneur suggesting that this might be something that customers want to come and do.

 

In many cases, these businesses had to go through incredibly expensive and long review processes to get permission to open in the location of their choice. But they're not presenting any externalities to their neighborhoods that a typical bar or a restaurant would not.

 

So simply broadening use restrictions to greatly expand the type of retail businesses that can operate under commercial use zoning could go a long way toward reducing the cost of opening new businesses and speeding up economic recovery.

 

Yonah Freemark:  Yeah. I completely agree with that assessment. I would add more generally that I think that one of the problems with the review process we've set up right now, especially for commercial establishments, is that we have created a system where everything requires such extensive public sector review that we're wasting a lot of public resources on reviewing rather than producing better outcomes for people in communities.

 

It's not clear to me that -- I'm not sure that axe bars are necessarily what everyone's thinking of, but I love it, Emily. I don't think that an axe bar in one community versus another makes more or less sense, and the idea that the zoning code is saying that an axe bar can only be allowed in one part of the community versus another is pretty illogical and unfair to both the public sector and the business itself.

 

Luke Wake:  Yonah, I want to follow up a little bit on something you mentioned a moment ago. You were talking about the need for allowing street vendors, and I take it like food trucks and whatnot, to operate more freely. I know that a lot of the opposition there has typically come from more brick-and-mortar establishments.

 

Let me ask you. One of the temporary measures that we've seen a lot of communities have embraced during this pandemic is to enable outdoor dining in light of these restrictions. For example, allowing people to dine on the sidewalks or even on the streets, as I think Emily noted. Is that fair, if that's going to continue?

 

As I believe Emily suggested, maybe we should consider allowing businesses to do this on an ongoing basis. Is that fair to non-brick-and-mortar businesses? Or are there other issues presented that you think are maybe concerning with that kind of idea of making that more of a permanent operation?

 

Yonah Freemark:  Well, I think certainly from a purely equity perspective, it's pretty unreasonable that it has become acceptable over the past year for brick-and-mortar restaurants and the sort to open businesses on the street, to serve people on what used to be parking spaces, while at the same time we're having police go and stop people from having taco trucks line up on the corner or street vendors on the sidewalk. That seems to me that it's an unequal enforcement of the use of the public right of way, and it's, frankly, unfair for the lower-income, generally, entrepreneurs who are wanting to do things like street side retail.

 

My general response to this that we need are more public right of way, larger sidewalks in a lot our communities, and allow for brick-and-mortar establishments to have outdoor spaces, but also that encourage street vendors and people who have mobile trucks to be able to provide food and things of that sort.

 

I think we can be open to both, and I think that kind of variety will end up creating more vibrant communities that more people will want to enjoy.

 

Luke Wake:  Emily, I'd like you to respond, but I want to ask an additional question to layer on, and specifically, those who object to more freely enabling food trucks, for example, and street vendors to operate—again, I know that that tends to come from more brick-and-mortar establishments.

 

In addition to anything you want to say in response to Yonah, to what extent do you think that there is actually a principled basis for objecting to that sort of liberalization? Or do you think that the only ground for which someone can actually object to the sort of reforms Yonah is talking about is having a pecuniary competitive edge over possible new interests into the market?

 

Emily Hamilton:  Well, I think one principled objection is that many U.S. cities have quite narrow sidewalks on some of these restaurant rows. Perhaps, during the pandemic, it makes sense to allow some of that scarce sidewalk space to be used as outdoor dining space, but in the longer term, taking away some street parking space might be a less conflict-prone approach relative to taking away some of the smaller amount of pedestrian space in some of these locations.

 

In general, on the issue of parking, across most U.S. localities there's this incredible amount of real estate dedicated to sometimes zero-priced or sometimes very low-priced street parking whereas there are businesses or other uses that might be able to put that real estate to a much higher-value use.

 

Food trucks, for example, or restaurants that could do outdoor dining in that space that's restricted only to parking, if we were to use a demand-based price for that space, would likely be willing to far outbid what drivers are willing to pay to store their cars there.

 

Luke Wake:  Yonah, I'm thinking I'm hearing between you and Emily—but please clarify if I'm incorrect—that there actually is, again, broad consensus between a lot of what you're saying. And, I think, particularly on this issue of parking, if I'm understanding you correctly, that maybe there's agreement here that parking requirements specifically to say, "Well, to open this kind of establishment, you need to have this much parking," that that really is unnecessary, and, I've heard from some quarters, maybe is incompatible with some of the public policies folks are trying shift to encourage more public transit and whatnot.

 

The question to you is is this really a subject where there is compelling cross-ideological agreement or that this is actually a problem and ought to be reformed? Or do you not see that kind of opportunity for meaningful reform at the local level?

 

Yonah Freemark:  You know, this is an interesting -- yet again, another example where I think people who are thinking about cities in a progressive and people who are thinking about cities in a libertarian actually have very similar views. The idea that we should get rid of parking mandates, parking requirements, for new businesses or for housing, I think, is shared among those two groups.

 

Unfortunately, I think a large share of public policymakers neither consider themselves progressive in that way nor libertarian and, in fact, have a different view about why we would need parking, and that may be that they are prioritizing people's ability to drive around places, and that adds a different perspective built into it.

 

I think that is a disappointing approach that, unfortunately, dominates in many of our cities, most of our cities, in fact. Most cities have parking requirements for new residential construction that increases the cost of housing construction that actually encourages people to drive rather than to walk, bike, or take public transit, and that actually increases costs for developers.

 

Those requirements are really punitive for the free market, but they're also punitive from the perspective of increasing equity. I think what we need is more demonstration of the fact that there is an agreement from multiple sides on the value of making changes on this front, but also recognition that there's a large share of public policymakers in the United States who are really focused on prioritizing automobile access, and that goes beyond their ideological views related to equity or free enterprise.

 

Luke Wake:  Emily, do you have any thoughts on that? In addition, I think there's also a trend, I would note, again, towards the smart growth idea of really encouraging less driving. But do you have any thoughts specifically on what I asked Yonah, but also to the extent or are we seeing municipalities actually going in the other direction and affirmatively preventing construction that might contemplate significant parking in the interest of what they think is good social policy?

 

Emily Hamilton:  I completely agree with Yonah that this is an area of agreement between us and across people who would like to see reform across the political spectrum.

 

We have seen a fair amount of local reform on the issue of parking requirements in recent years. I think, among some policymakers, there's a recognition that parking requirements go a long way toward driving up construction costs and are standing in the way of some local policymakers' transportation goals.

 

These requirements provide just a huge incentive to drive over other forms of transportation, number one, by lowering the cost of driving by providing, typically, zero-priced car storage anywhere people want to go. But, number two, by making walking or public transit or cycling much less appealing because huge parking lots that are mandated by local rules are separating different destinations and making an unpleasant urban environment.

 

Luke Wake:  Okay. You noted, Emily, earlier that we're likely to see -- we see higher vacancy rates right now, certainly in commercially zoned areas. I know especially a lot of office settings are downsizing right now. A lot of people are going to move, maybe even on a more permanent basis, to having a large portion of their labor working remotely on a cloud-based basis from home or whatnot.

 

That really does raise some interesting questions about the future of our cities, what that looks like. But you specifically seem to be proposing that we should be taking this as an opportunity to address some of our housing affordability issues by enabling those buildings to be renovated and used for residential purposes.

 

I'd like you to address this, but also talk about, maybe both of you, what are the challenges here, but also what are the opportunities? And again, what does all of this mean for the future of our cities?

 

Emily Hamilton:  Yeah. I am reticent to make big predictions about what the pandemic means for the future of our cities other than to say urbanization has been a human trend for millennia, so even in a world with a much more remote work, I see a consistent demand for people to live in locations with lots of other people that offer the types of diversity and access to amenities that just can't be replicated outside of urban environments.

 

In terms of housing affordability, we've seen some of the highest-cost housing markets in the country see very rapidly increasing vacancy rates and falling rents in their apartment markets, particularly in San Francisco and in Manhattan. There's been a lot of skepticism among the public and among policymakers that permitting more housing, particularly lower-cost types of housing, to be built through the private market is a viable solution to urban housing affordability problems.

 

But the pandemic response provides some reason to think that, in fact, supply and demand in housing markets work as we expect them to. As the pandemic has caused demand to decrease in some of these very expensive markets, prices have fallen in response. In turn, we have some strong evidence that allowing more multi-family supply to be built in these expensive locations would have a similar effect in the longer term and could go a very long way toward making the highest-demand locations more affordable.

 

Yonah Freemark:  Yeah. I agree with Emily that there's been some interesting trends over the last few months where we've seen somewhat of an exodus of higher-income people, especially from some of the largest cities in the country, especially in the San Francisco Bay Area and in the New York region. As Emily noted, the vacancy that resulted, especially in those higher-income units, has produced a decline in rental rates.

 

Now, my sense is that we're going to actually come back to some major problems with housing affordability relatively soon after the COVID crisis ends, hopefully. I am not under any assumption that we're going to have a maintenance of lower apartment costs or lower housing costs over the long run.

 

What I do think, though, is that we're going to continue to need to address the lower end of the spectrum in terms of people with lower incomes with additional housing subsidies of some sort. I don't think that the kinds of housing reforms that we've talked about so far—increasing allowed rights to build, increasing allowances in terms of short-term leases, and things of that sort—are genuinely going to address the housing needs of the lowest-income members of the population.

 

I am concerned. I continue to be concerned about those people, and I worry that we have yet to provide the sort of national programs to address housing affordability that are necessary in the coming years.

 

Luke Wake:  I want to ask more question, and then I'll ask Jack, who's on the line with Federalist Society, if we have questions from the audience.

 

But following up on this conversation about affordability issues. Of course, in the before times, there really was a lot of attention, I think, being focused on the issue of affordable housing that seems to, during the pandemic, have shifted a little bit to more policy debates about eviction moratoriums and so forth.

 

Again, the question, I think, is to what extent, if any, does this pandemic give us a reason to rethink land use regulation and how that's contributing to problems of affordability. As I heard you a moment ago, Yonah, it sounded like your sort of chief policy proposal here would be more focused on things like subsidies. And I assume, Emily, that would probably be a point of disagreement. I know, while it sounds like we have maybe broad ideological agreement between progressives and at least libertarians on the need for land use reform, certainly I don't think you have that with regard to those sort of policies, subsidies and so forth.

 

The question is how can we use what seems to be a growing cross-ideological consensus about land use problems specifically to actually see some meaningful change? Ultimately, does that mean that you have to find a way to overcome nimbyism and do things at the state level? What is a path forward?

 

Emily Hamilton:  Well, first off, I would actually agree with Yonah that there's certainly a role for housing subsidies for those at the lowest end of the market.

 

But it's crucial that new housing subsidies also be paired with the land use liberalization, Luke, that you mention and that we've been talking about because if not, expanding, for example, Section 8 vouchers to cover a larger share of low-income tenants is going to increase demand for housing and potentially exacerbate housing affordability problems for everyone who doesn't qualify for those vouchers based on their income. In some of the highest-cost parts of the country, it's not just the lowest-income households who are struggling with housing affordability.

 

So, I do think there's a role for states to step in to set limits on the extent to which localities can block housing construction, and certainly expanding housing subsidies only makes land use liberalization more urgent.

 

Yonah Freeman:  Yeah. This is an interesting place that we seem to have come to in much of the broader housing policy debate, which is that I think there's a recognition that, first of all, the housing voucher system—which is sometimes known as Section 8, sometimes Housing Choice Vouchers—in the United States is broken because it only covers a small share of people who would otherwise qualify for it, and that's because of congressional limitations on the funding.

 

The result is that, right now, housing vouchers are allocated pretty much as a lottery. You're lucky to get one if you're low income, but the majority of low-income people who need them don't have access to them. I think there is a growing affirmation—and this was actually part of Biden's campaign plan—that we need to expand the housing voucher system to make sure that if covers everybody who is within a certain low-income range. I agree that that's a very important part of this conversation.

 

In terms of liberalization of housing codes, I agree with Emily that we absolutely need more housing construction. The question is how that housing construction occurs. I think there's a lot of evidence out there that housing markets with more available new housing is likelier to produce lower costs overall.

 

But I remain concerned that the new construction is primarily oriented towards a higher end of the market. I think it's very important that we maintain significant support for project-based subsidies for new affordable housing, which means things like the low-income housing tax credit or expanded public housing or social housing programs which allow for direct government investment in new housing construction designed specifically for low or moderate-income people.

 

I think that that's an essential complement to an increase in the market rate supply of new housing stock.

 

Luke Wake:  Well, thank you, both of you. Again, this is an opportunity for the folks on the line, if they have questions, to raise those questions. Okay, while we're waiting for a moment to see if folks have questions, I assume that there probably will be some, but I wanted to follow up on some comments, Yonah, that you raised at some point here that while we have, apparently, some broad consensus on the need for reforms, one thing that you think is important is to maintain good urban design standards.

 

I guess my question there is exactly what do you mean by that? I would specifically note that, again, it did seem like there was some concern from both of you about the discretion that land use authorities tend to have here. We seem to see this a lot with vague terms. The zoning authority is supposed to consider things that seem rather subjective. How do you address urban design standards in a way that avoids those concerns?

 

Yonah Freemark:  I think one of the major questions raised by people who are concerned about overuse of land use regulations by communities throughout the country is that there's a lot of discretion involved in looking through new housing and new building construction in general. There are committees, commissions at the local level, sometimes the city council, but often unelected, appointed zoning commissions that will simply go through and announce that they like or don't like a certain building type and building design. That is problematic from the perspective of fairness and the perspective of aesthetics not necessarily being something that everyone agrees on at all times.

 

I would say, also, there is a concern that our current zoning code produces urban design outcomes that are really problematic for pedestrians. This can come in a variety of different forms. One is we have streets that are extremely wide with very tight sidewalks, which is a result of decisions by public work departments and transportation departments in communities throughout the country. That's something that we need to address if we're going to create communities that are more walkable.

 

We also have requirements for things like building designs that go straight up from the ground floor to the tenth or 20th floor. The result is an alienation of pedestrians from the street [inaudible 00:49:34].

 

My proposal is that we use what are called form-based codes, which basically means that we come to agreement at the local level about what kinds of what's called building massing—the general outlines of buildings—we're okay with, and then regulate new construction from that perspective.

 

We expect the buildings in a certain neighborhood respond to pedestrians in a way that's generally agreed on from the beginning and does not require variances for every new construction. I think that that approach is more equitable is that it treats more new developers fairly, but also can produce building designs that are more comfortable for people at the street level.

 

This is something that cities like Miami are already starting to pioneer, and it's something that other communities are considering throughout the country.

 

Luke Wake:  Emily, do you have a response to that or alternative ideas that you think cities should really be thinking about? Like, maybe, for example, "zoning as a right" concept? Or how different is "zoning as a right" from what he's talking about?

 

Emily Hamilton:  Well, typically, "as a right" means that a proposal that's in line with the rules on the books can just go through a quick permitting process that confirms it's in line with the rules on the books rather than requiring community input or a local policymaker to make a decision on whether or not that use is going to be approved.

 

In terms of form-based zoning, I agree that, in some cases, it's better than standard U.S. zoning approaches. Downtown Nashville is another example of where a form-based code seems to be working pretty well.

 

But in many cases, localities have layered form-based codes on top of traditional zoning restrictions. They add new limits on the shape that buildings can take on top of all the use restrictions that were already in place. They just provide one more barrier to development and one more factor that can drive up development costs rather than providing a more flexible regulatory model.

 

Luke Wake:  Well, very good. It looks like we have a question here in the chat box. I'm not entirely sure I appreciate the question 100 percent, but they're asking how do you inform local planning commissions and board of zoning appeals of the need to balance and protect neighborhood interests?

 

I think they're responding to some of the specific things you've said and asking to what extent or how do we ensure that the community's interests are balanced in the process? Or to what extent should we?

 

Yonah Freemark:  You know, I think this is a question that is eliciting really vivid debates in much of the planning sphere right now. The question is is there a rule for local communities in the participation process? And what does the participation process need to look like in order to both get equitable or effective outcomes versus outcomes that reflect what the community wants?

 

I think there are a lot of people out there who suggest that the participation processes that are used at the local level are inherently broken because they have the tendency to encourage whiter, wealthier homeowners to participate more than lower-income minority renters. That has a tendency to basically reinforce the power and the needs of those higher-income people rather than lower-income people. That is absolutely the case in many communities throughout the country.

 

At the same time, the idea of getting rid of participation altogether implies that somehow people who run planning departments are fully aware of all the needs of their communities. So, I think there needs to be a recognition of the concerns related to participation, but not an elimination of participation entirely.

 

I think my last point related to this is that I think we need more people running for office at the local level who have clear platforms about how they want planning to work in their communities, and they can share that with their constituents as they're running for office. I think this should be an issue for debate in the electoral process in communities throughout our country. We should have candidates who disagree about what kind of land uses they want to see in the future.

 

Unfortunately, that's something that we rarely see in U.S. local elections, but I think it's really important for the future.

 

Emily Hamilton:  I just had a couple of potential technocratic ways to protect neighborhood interests while also liberalizing use zoning. One is called performance-based zoning, and this can involve setting things like noise limits, which are often one of the primary externality concerns in urban settings, and saying that night clubs, for example, have to keep the outdoor decibel level below a certain level if they want to keep operating in their location. They can use soundproofing or other means to stay within the limits of a performance zoning ordinance.

 

Also, just wanted to go back to the parking policy issue that we've talked about a lot today and point out that when businesses aren't required to provide tons of parking at their location, that can go a long way toward reducing the burden that a new business will have on its neighborhood because people will be driving into the neighborhood, perhaps, for more than one trip or combining trips rather than driving in and out of the neighborhood many times throughout a day if parking is priced according to demand rather than mandated to be provided.

 

Also, it can encourage people to travel into and out of a neighborhood on foot or by transit rather than by contributing to neighborhood traffic congestion concerns.

 

Luke Wake:  Thank you, both of you. This really has been a great dialogue. As always, I appreciate Federalist Society for hosting this and for you guys presenting, and I mean that in the Midwestern way—you guys. Thank you so much.

 

Can you both just take a moment to give some closing thoughts and maybe in the process of this just say, if you haven't already, what you think really the top priority in terms of what and use reform should be?

 

Yonah Freemark:  I'll start out. First of all, I just really appreciate the opportunity to talk with you all today, and I really enjoyed speaking with Emily about most of the elements of land use reforms that, actually, we share in terms of our goals for the future.

 

Honestly, that's the positive aspect of this that I think we should take into the next year. I think the coronavirus situation has been so devastating for our communities, both in terms of its effect on health but also just in terms of the livelihood of our cities in terms of small businesses and people's jobs.

 

I think that many of the changes we're talking about—allowing more commercial uses in different communities, allowing reduced parking requirements, increasing affordability of housing—those are key conclusions that apply both to the period we're living in right now and to a future where, hopefully, we're not worried about the virus.

 

I'm really optimistic about that, and it's really exciting that we have people from all over the political spectrum who are really enthusiastic about pursuing these projects and looking for these changes in cities everywhere.

 

Emily Hamilton:  Yeah, I really enjoyed our discussion today. Thank you, Yonah, Luke, and RTP.

 

I think that we've seen some very successful local responses in some cases where localities have increased flexibility to help their businesses weather this time. Hopefully, this has shone a light on how local land use restrictions are a barrier to both business and housing affordability and accessibility at all times, and potentially will open the way to permanent and further reforms to make it easier to put urban land to its most valuable uses.

 

Luke Wake:  Fantastic. Thank you, again, to everybody. As always, we've enjoyed this. I think there'll be many more to come.

 

Jack Derwin:  Absolutely. Thank you, Luke. And thank you, Yonah and Emily, so much for taking the time to join us today.

 

Once again, thank you to our audience for also tuning into today's live podcast. We welcome any listener feedback by email at rtp@regproject.org.

 

With that, we are adjourned.

 

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Conclusion:  On behalf of The Federalist Society's Regulatory Transparency Project, thanks for tuning in to the Fourth Branch podcast. To catch every new episode when it's released, you can subscribe on Apple Podcasts, Google Play, and Spreaker. For the latest from RTP, please visit our website at www.regproject.org.

 

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This has been a FedSoc audio production.