Friday, June 18, 2010

NJ's "Affordable Housing Crisis" - It's the Zoning, Stupid!

The New Jersey State senate recently voted to abolish the Council on Affordable Housing, known as COAH, and shift its functions to the Department of Community Affairs. COAH has wreaked havoc on NJ municipalities since its inception in the 1980s. Created by the Fair Housing Act of 1985, its intention was to force each town to provide for its “fair share” of affordable housing, as determined by COAH bureaucrats. The consequence has been 25 chaotic years in the state, with a flood of lawsuits to go along with the affordable housing quotas.

The COAH story doesn’t begin in 1985, however. It begins with a state Supreme Court decision back in 1970. Frank X. Askin, an opponent of Senate Bill S1, wrote:

“On a Sunday in October 1970, Jacob’s Chapel, an African Methodist Episcopalian congregation in Mount Laurel, had invited Mayor Bill Haines to discuss a nonprofit organization’s plan to build 36 garden apartments.

“As in many other suburban municipalities, Mount Laurel’s zoning ordinance prohibited garden apartments and any other form of multifamily housing. Haines delivered the town’s response to the housing proposal to the congregation: ‘If you people can’t afford to live in our town, then you’ll just have to leave.’

“That incident led to the landmark New Jersey Supreme Court decision known as Southern Burlington County NAACP v. Township of Mount Laurel, which established the doctrine that all municipalities must provide 'reasonable opportunity' for the creation of affordable housing.”

Mayor Haines’ arrogance exemplifies the practice engaged in by many municipalities, and which the high court was asked to deal with – the exclusionary housing policies of powerful local central planners called zoning boards. The court’s answer was to force zoning changes on the towns, which really meant that the state was given override powers over local officials. The process was complex in practice, with the legislature creating the state central planning bureaucracy known as COAH and builders suing towns to overturn zoning regulations that allegedly didn’t provide “reasonable opportunity” for low cost housing.

COAH itself became a source of housing chaos, with quotas being imposed on towns where there was no market for “affordable” housing, and so forth. Scott T. Rumana, a proponent of S1, had this to say:

“The practical application of the court’s decision has far exceeded the original purpose to require inclusionary zoning. Instead, it has driven up property taxes, destroyed open space and natural resources and worsened flooding and traffic problems.

“The Mount Laurel decisions and ensuing laws and regulations have been a nightmare, resulting in impossible quotas on towns, unfair fees on new development and an expensive, endless cycle of lawsuits.

“As a former mayor, I have been on the front lines grappling with the unintended consequences of the Mount Laurel decision — especially 'bonus density' and 'builder’s remedy.'

“Bonus density allows developers to build four market-rate units for every low- or moderate-income unit they build. In practice, builders have built up to seven units for each affordable one.

“Builder’s remedy allows developers to sue municipalities to force excessive housing developments into places that don’t make sense from any logical planning perspective. Communities have essentially been held hostage to developers empowered to dictate how much development would occur regardless of zoning laws or the impacts on nearby property.”

Sound crazy? Such is the nature of political interference in the market. Proponents and opponents of the bill have diametrically opposing views:

“The bill ‘restores sanity in New Jersey housing policy,’ said Sen. Raymond Lesniak (D-Union). [He] said the bill will eliminate the state’s ‘byzantine maze’ of rules and ‘produce more affordable housing.’

“Housing advocates say the moves would return the state to practices that occurred before the state Supreme Court’s Mount Laurel decisions, so named for the township that was sued for its zoning policies.”

Despite differences, all sides hold to the belief in central planning, whether by the courts, a state bureaucracy, or local zoning boards. But, they’re all missing the obvious.

In 1970, Mount Laurel zoning ordinances forbade the African Methodist Episcopalian church from building a 36 unit apartment complex in the town. The state Supreme Court saw exclusionary zoning (which it was), and issued the decision that led to COAH. In doing so, it correctly identified the problem – local zoning regulations – but then proceeded to compound rather than solve the problem. The question that should have been asked and answered was: Why should any central planning authority have the power to stop the African Methodist Episcopalian congregation, or any developer, from building what they please on their own land? The issue is not “exclusionary” vs. “inclusionary” zoning, but the legitimacy of zoning powers as such.

The court granted override powers to the state to correct what it considered local zoning abuses. This simply shifted central planning abuses to the state level. Instead, it should have overturned those powers at the local level, thus liberating the housing market.

No zoning does not mean no government role, but recognizing government’s proper, limited role – the protection of individual rights, including property rights. The principle of individual rights is the basic premise governing what one may or may not do with his property and when government must intervene. The builder cannot, for example, design his project so as to allow storm water runoff to flood adjacent properties. In these or similar instances, if the parties can not work things out among themselves, the government can properly step in to require corrections and/or the payment of restitution to the affected property owners, as determined in a court of law. But as long as the builder causes no physical harm to the property or lives of others, he has violated no one's rights and thus should be free to build according to his best market judgement. Also, since government owns the roads, it has a legitimate interest in seeing that road improvements appropriate to the project are built. (Whether the government should own the roads, is another complex issue encompassing philosophy and law.)

Applying the principle of individual rights is a complex legal issue. But rights, properly understood (as our Founders did), belong to individuals and not to groups. The “community” or municipality, as such, has no rights, and so it has no legitimate power to impose land-use restrictions...whether for reasons of race, income level, preserving the "quality of life" of existing residents, esthetics, or to impose their own utopian vision of what the "character" of "their" town should look like, etc. When it does, it is merely acting at the behest of some local special interest group, usually a majority of the township residents, at the expense of the rights of individuals. Protecting individual rights includes protection from any majority voting block, which is only a collection of other individuals.

Is there a real life model for what no zoning would look like? Yes – Houston , Texas has never had zoning. Joel Kotkin, writing in Forbes, had this to say about Houston:

“So what does Houston have that these other cities lack? Opportunity. Between 2000 and 2009 Houston's employment grew by 260,000. Greater New York City--with nearly three times the population of Houston--has added only 96,000 jobs. The Chicago area has lost 258,000 jobs, San Francisco 217,000, Los Angeles 168,000 and Boston 100,004.

“Politicians in big cities talk about jobs, but by keeping taxes, fees and regulatory barriers high they discourage the creation of jobs, at least in the private sector. A business in San Francisco or Los Angeles never knows what bizarre new cost will be imposed by city hall. In New York or Boston you can thrive as a nonprofit executive, high-end consultant or financier, but if you are the owner of a business that wants to grow you're out of luck.

“But Houston's biggest advantage cannot be reduced to numbers. Ultimately it is ambition, not style, that sets Houston apart. Texas urbanites are busy constructing new suburban town centers, reviving inner-city neighborhoods and expanding museums, recreational areas and other amenities. In contrast with recession-battered places like Phoenix, Houston remains remarkably open to migrants from the rest of America and abroad.”
(Emphasis added.)

And, Houston isn’t burdened by one of the biggest regulatory barriers any city can throw at its ambitious residents – zoning restrictions, whereby some elite’s vision of “style” can trample the rights of people pursuing their life’s goals.

While Mr. Kotkin doesn’t mention Houston’s no-zoning governance, some correspondents do. And it’s clear that this thriving city in the middle of a recession owes its “uncontrolled” growth in large measure to its lack of central planning, which is exactly what zoning is.

Reading the comments section to “Model City”, it seems that people either love Houston or hate it. Those who hate it are by and large arrogant, elitist snobs who, when you get right down to it, simply hate the choices others make. But, the freedom to make those choices is exactly what Houstonians have that residents of those other cities Mr. Kofkin discusses don’t have. And, the legal sanction of the snobs to impose their version of acceptable development through the legalized physical force of zoning powers is what only Houston does not have.

Not all of the differences between Houston and other cities is due to zoning, of course. But, the point is, Houston is thriving without zoning. Compare that to the chaotic mess that is the NJ housing market.

There is a strong demand here in New Jersey for affordable housing. The answer to the housing affordability problem is to eliminate the source of the problem...the many government impediments. Zoning power is a major one. The answer is not better state central planning, such as shifting COAH authority to the Department of Community Affairs as Senate bill S1 does. The answer is not to choose between local or state central planning. The answer is no central land use planning at any level of government. The property and housing markets should be liberated from the tyranny of local (and state) central planners. So long as no one else's rights are violated, the location, price range, and quantity of residential development should be determined by the voluntary, uncoerced judgements of landowners, homebuilders and homebuyers freely contracting with each other to mutual advantage ... i.e., by the free market ... and nothing else.

Mr. Rumana objects when, under state affordable housing rules, “developers … sue municipalities to force excessive housing developments into places that don’t make sense from any logical planning perspective. Communities have essentially been held hostage to developers empowered to dictate how much development would occur regardless of zoning laws or the impacts on nearby property”. Excessive, by what standard? Don’t make sense, to whom? To those directly involved by voluntary choice - property owners, the builders, or his customers? Or to the central planning elite’s “logical planning perspective”? There’s a hostage situation going on, all right. But, Mr. Rumana has it exactly backwards. The original Mount Laurel case proves just the opposite. Developers have been held hostage to zoning boards.

Let no one suppose that a free market is not the answer to the housing affordability problem in New Jersey. That institutions as diverse as large profit-seeking developers and small non-profit church congregations stand ready and willing to meet the demand for such housing, with only government standing in the way, is my proof that it is.

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