Politics: J'accuse!

[Greedy,Greedy,Greedy]

Originally posted by Atticus Grinch
If I run a dry cleaning business out of my home, I'll wager my neighbors' collective loss of property value will exceed the increase in my property's value, even if you can show me it's the highest and best use of my particular parcel.

ETA: Lemme 'splain. I think Ty's point is that you're thinking of zoning too much like a negative covenant between individual parcels, and then assuming that the burden on the parcel owned by the guy who wants to run the dry cleaning business must translate into unique benefit (added value) for everybody else --- hence, wealth transfer. But it's not like that. If the benefit applies equally to every house in the neighborhood, it doesn't uniquely raise the property value of non-burdened parcels; it sets an all-property-improving condition, like giving every house in the neighborhood the same view. A use restriction that applies equally throughout a neighborhood can thus be a gain, net net. Believe you me, McMansion neighborhoods wouldn't have such recockulous CC&Rs if they didn't maximize individual parcel sales value.

Excuse me, everyone, but I thought zoning wasn't supposed to be for the purpose of maximizing values for private persons, but to regulate land use for everyone's health, welfare, and safety. Are you all suggesting that zoning in a way that keeps the neighborhood appropriately hoity-toity (i.e., "exclusionary zoning") is really the end all and be-all of zoning everywhere?

I'm not a real estate lawyer, but somehow I really thought that the theory of zoning, and all those court cases, was that one could restrict (and thus devalue) someone's land without a taking occuring because it was being done for health, welfare and safety? Please disabuse me if this is wrong. But this theory also really does sound just like rent control.

[Mmmm, Burger (C.J.)]

Originally posted by bilmore
I think these are contrary statements. A restriction on a valuable use of my property "doesn't transfer that value to another", but it "makes everyone's (else's, I assume) property more valuable?

We seem to be having a fundamental dispute as to whether zoning raises or lowers property values, which makes it a bit hard to understand arguments beyound that basic point.

But, first, to respond to Bilmore's query--the two are not inconsistent statements because it's a mutual benefit agreement--by having everyone agree not to do something (sell to the dry cleaner, or atticus), the value of the property is raised for everyone. The cost of that is giving up unrestricted alienability. Sure, do some people give up a bit more and gain a little less? probably, but not in the way rent control operates, which is a gross transfer from landlord to tenant.

So, back to the effect of zoning. It does both: It lowers values of property by restricting their use to less valuable endeavors (a factory is going to be a more valuable use of nearly any property than residential). This basic fact is the one fringey can't explain away in her "wealth preservation" argument. Zoning does not preserve wealth, it destroys it (or limits it). Zoning does, however, get some of the lost wealth back by preventing others from appropriating that value as well--it preserves a particular character for a neighborhood/town/area by preventing the renegade from selling out. As Ty explained, it solves a collective action problem, and thereby enhances, to some degree, wealth.

But if you think that the second effect outweighs the first, such that restrictive residential zoning truly generates wealth, then you have to explain why we need it at all--as 1/2 acre mcmansions must surely be the most valuable use of the land--and why residents fight tooth and nail to retain the zoning restrictions they have, rather than let them be eliminated to allow each owner to sell to the highest bidder.

[Hank Chinaski]

Originally posted by Mmmm, Burger (C.J.)
Zoning does not preserve wealth, it destroys it (or limits it). Zoning does, however, get some of the lost wealth back by preventing others from appropriating that value as well

Zoning is a tool to achieve various aims of a local government. Like a power hammer can build a home, or drive nails into your head, zoning's effect depends on how it is directed.

Within a stone throw (ok a half mile really) of my office in rich suburbia there is:
an area where home must include 3/4 acre plots to limit overbuilding;
an area where home can only cover X% of the property to limit "bigfoot" rebuilding;
a high rise apartment (the only one near here) built to provide low-income housing since some government entity deemed it was required for the city; and
a Historic district where the city recently decided no one can change their homes anymore.

At the least these do all sorts of increase/decrease in value. The low-income housing sure as shit doesn't provide wealth, and actually is a nuisance from all the sirens (its old folk housing- this wasn't racism Ty). So anyway, keep up your detailed analysis of zoning and Atticus' dry cleaner, but this has nothing to do with rent control.

Rent control would be closer to the city telling Atticus that anyone who got their shirts for .70$ back in 1985 still needs to have that price break, and have the right to expect the same volume. And even if Atticus needs 1.25$ to break even, and he doesn't have the capactiy to do the .70$ work plus the 2.50$ he can get from all the rich guys that moved into the neighborhood, it is just too f'ing bad.

[sgtclub]

I never thought I'd say this, but I miss that green, galloping T-Rex.

[sgtclub]

Originally posted by Mmmm, Burger (C.J.)
We seem to be having a fundamental dispute as to whether zoning raises or lowers property values, which makes it a bit hard to understand arguments beyound that basic point.

Doesn't the answer to this question depend on the nature of the zoning and the intended alternative use for the property?

[Mmmm, Burger (C.J.)]

Originally posted by sgtclub
Doesn't the answer to this question depend on the nature of the zoning and the intended alternative use for the property?

Commercial uses are almost invariably more valuable that residential uses, which is why you need zoning for residential use only. Few (if any) zoning laws prohibit residential uses in commercially zoned areas.

The only type of area I can imagine being more valuable for residential use is perhaps those with unique natural attributes, such as shoreline/coastline, where people are willing to pay sufficiently much to have a house there that commercial uses would find it uneconomical. of course, someone still might put up a hotel.

[sgtclub]

Originally posted by Mmmm, Burger (C.J.)
Commercial uses are almost invariably more valuable that residential uses, which is why you need zoning for residential use only. Few (if any) zoning laws prohibit residential uses in commercially zoned areas.

The only type of area I can imagine being more valuable for residential use is perhaps those with unique natural attributes, such as shoreline/coastline, where people are willing to pay sufficiently much to have a house there that commercial uses would find it uneconomical. of course, someone still might put up a hotel.

But aren't there other types of zoning restrictions? This is not my area, but in SF there are all sorts of restrictions on how high you can build (which, incidentally, contributes to the housing shortage, which spikes rents, etc.). So if I have a bay view which would disappear if the height restriction was removed, doesn't this increase the value of my property?

[bilmore]

Originally posted by Atticus Grinch
ETA: Lemme 'splain. . . .

I think we're speaking at cross-purposes, but, if I could articulate exactly how, we'd probably be in agreement.

One more example to show what it is I'm saying:

Imagine a Neighborhood with six lots, with NO zoning whatsoever. Guys 1 through 5 build single family homes on theirs. Mine sits empty. The value of their lots is a function of what a willing buyer will pay. Everyone knows that I remain free to build whatever I want on my lot. Their value will be affected by this knowledge - as long as my lot sits empty, and I could start a VOC landfill there if I wanted, their values will reflect this. I could also build a single family home, and their values would then rise because of the end of uncertainty and the presence of a compatible use. But, since I can live at my landfill AND make a $10 per year profit, I decide to go with the VOC's.

Introduce zoning before I get my first VOC shipment. Now, I lose that $10 per year profit. The other five people, however, no longer face uncertainty as to what I will do - I can only build that single family home. Their values rise as a consequence - the uncertainty is no longer a factor in their valuation. So, that lost (to me) $10 per year of profit has gone into their pockets.

That's how I get to the wealth transfer. I think that maybe we're looking at different scenarios, in that I posit the individual transaction, while you are looking to the abstract mass effect. In your view, I don't face that uncertainty either, so it's a wash, but, in my view, each transaction must be valued. I am held to "the average" use, by governmental coercion, and must forgo profit that I could derive from my ownership. For me, in that situation, money has gone from my pocket to other people.

[Mmmm, Burger (C.J.)]

Originally posted by sgtclub
But aren't there other types of zoning restrictions? This is not my area, but in SF there are all sorts of restrictions on how high you can build (which, incidentally, contributes to the housing shortage, which spikes rents, etc.). So if I have a bay view which would disappear if the height restriction was removed, doesn't this increase the value of my property?

Yeah, we can start getting into types of zoning restrictions, but the debate was initially around single family/multifamily and minimum lot size restrictions, or at least that's what I assume fringey was hacked off about.

Of course, if the height restriction is removed for the guy in front of you, it will also be removed for you, so you then built another level after he does. It's mutually beneficial. Everyone would like to have the highest deck and best view of the bay, but you end up with a height war in the process, so by restricting everyone you save money and end up in the same place. It's like going to a football game and wondering why everyone stands up to watch, when everyone could sit down and get the same view.

So, I think you can generalize the principles here: Zoning laws that restrict ways in which you use your property, either for function or in form (height, density--max sq. feet, set backs, etc.) all are a solution to a collective action problem that prevents people from expropriating to themselves the value of a given area.

[Mmmm, Burger (C.J.)]

Originally posted by bilmore
That's how I get to the wealth transfer

Your wealth transfer is creatd by the imposition of the zoning scheme. Most of the time, you know what restrictions are on the property (or should, or could) when you buy. This justification is the converse of fringey's "too bad--the landlord knew when he bought it was subject to rent control." That's a decent argument re investment-backed expectations: you knew what you were getting into. And that's true of zoning as well. (please don't get me started on takings law and how it's a taking if you bought knowing of the restrictions--see the RI case [the SC case from years ago is another matter, since they imposed the restrictions after the purchase])

But that (fringey's justification) doesn't make rent control a good policy for the reasons Ty and I and others discussed yesterday. At most, it undermines a part of the "unfairness" argument. Zoning, on the other hand, doesn't seem to create similar bad incentives that make it an undesirable policy for reasons beyond the "unfairness" to the owners. Oh, except that it stifles economic diversity. Oh no.

[bilmore]

Originally posted by Mmmm, Burger (C.J.)
Your wealth transfer is creatd by the imposition of the zoning scheme.

See - we are all saying the same thing.

But the foreknowledge that I am stuck doesn't, in my mind, change the character of that stuck-ness. A potential value of my property has been co-opted for the "public" (i.e., usually, someone else's) good.

Don't think this means I am arguing against zoning. Not at all. I'm just arguing that it is a form of wealth transfer that we use to coerce a more liveable environment.

[Mmmm, Burger (C.J.)]

Originally posted by bilmore
I'm just arguing that it is a form of wealth transfer that we use to coerce a more liveable environment.

Okay, it is a form of wealth transfer, but one in which you get something back as well, because someone's transfering wealth to you as well. (i.e., an exchange of agreements not to fuck your neighbors by opening a VOC dump). Rent control doesn't provide the quid back to the landlord in exchange for his quo in discount rents.

And let me clarify, I meant the wealth transfer is created by the initial imposition of the zoning scheme. That is, the value you posit as being transfered from you to your neighbors is a one-time transfer created when the zoning regs are put into effect. After that, no such trnasfer occurs.

[Greedy,Greedy,Greedy]

Originally posted by Mmmm, Burger (C.J.)
Okay, it is a form of wealth transfer, but one in which you get something back as well, because someone's transfering wealth to you as well. (i.e., an exchange of agreements not to fuck your neighbors by opening a VOC dump). Rent control doesn't provide the quid back to the landlord in exchange for his quo in discount rents.

And let me clarify, I meant the wealth transfer is created by the initial imposition of the zoning scheme. That is, the value you posit as being transfered from you to your neighbors is a one-time transfer created when the zoning regs are put into effect. After that, no such trnasfer occurs.

Slowly everyone starts to admit that, yes, the fundamental justification for rent control and zoning are the same. But I really like the idea that there is a transfer back of value to the guy who want to build a dump -- umm, Burger, wouldn't the presence of compatible uses (e.g., maybe a McDonalds or something) enhance the value of his dump? To him, aren't all the folks in the single family home who don't want the street widened a nuisance? I don't think dump guy will see the value you're positing, just as landlord wouldn't see the value if I told him that as part of rent control there will be a regulated system of annual rent adjustments intended to preserve his original profit margin, and that will add stability and thus value to his property. It's telling someone you're going to take away X - Y rather than X, and they should thank you for the Y part.

[bilmore]

Originally posted by Mmmm, Burger (C.J.)
Okay, it is a form of wealth transfer, but one in which you get something back as well, because someone's transfering wealth to you as well. (i.e., an exchange of agreements not to fuck your neighbors by opening a VOC dump).

But I didn't agree. It was imposed on me. And, if I can maximize my own value with a VOC dump, it matters not a whit to me if you build one, too. I gain nothing.

And let me clarify, I meant the wealth transfer is created by the initial imposition of the zoning scheme. That is, the value you posit as being transfered from you to your neighbors is a one-time transfer created when the zoning regs are put into effect. After that, no such trnasfer occurs.

You assume that the coercion becomes a natural force, never to be questioned again. To me, every time the government says "no", a value has been taken. I can use the land to make a huge profit, with some new use tomorrow, but am told "no". Wealth has been transferred at that point.

Oh, and seven angels can dance on the head of a pin. (My way of saying, yes, I am arguing completely abstract and useless concepts.)

[Mmmm, Burger (C.J.)]

Originally posted by Greedy,Greedy,Greedy

But I really like the idea that there is a transfer back of value to the guy who want to build a dump -- umm, Burger, wouldn't the presence of compatible uses (e.g., maybe a McDonalds or something) enhance the value of his dump?

you're mischaracterizing the value of which I speak. The value is the agreement of others not to build something nasty next to my mcmansion. I agree not to build a dump; you agree not to build a dump. we've both given up our own rights to get more value in exchange for insurance from another guy that he's done the same.