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Reason Foundation

Zoning Econ 101

Leonard Gilroy
March 20, 2006, 8:44am

Every once in awhile, I'm surprised when I gain a fresh perspective on a topic that I think I already know well after reading an introductory article on that subject. This article on zoning from the Mises Institute's blog is one such example. Specifically, it details the argument that zoning is theft and is well worth a read from anyone unfamiliar with the economics of zoning, a ubiquitous, but often inconspicuous, type of land use regulation that affects the vast majority of people in the U.S. Here's an excerpt:
Zoning restricts current landowners based on the local power brokers. In the zoning process, someone gets hurt. Had the farmers of a township wanted to keep the area as farmland, they could have signed restrictive covenants guaranteeing crops instead of homes. Property rights, and the laws that purport to protect those rights, allow individuals to act in their own best interest. Zoning, collective decision-making, use the coercive power of government to restrict usage based on the whims of those in power. The farmer who owns this land now has his potential property rights bounded within a specific range; future use is restricted to residential developments that have no more than one house per acre. The farmer may vote, and may have voted for some of those elected, but he never agreed to the change in proposed land usage. He was robbed, and there is no means for him to restore his rights and land value; they are gone with the stroke of a pen.
A few states have recently taken steps to address this "theft via zoning" (a subset of what is more commonly known as regulatory 'takings'). Most prominently, Oregon voters passed Measure 37 in 2004, which either: (1) offers compensation to landowners whose properties have been devalued by the three-decades-old statewide system of land use regulation that mandates strict local planning and zoning; or (2) waives the enforcement of those land use regulations. (see here, here, and here for more on Measure 37) South Carolina may be the next state to adopt regulatory takings reform. Last week, the state House passed two bills to restrict the use of eminent domain, one of which contains a regulatory takings provision along the lines of Measure 37:
By an overwhelming vote, the House approved eminent domain legislation - one of the legislative session's top priorities - with a controversial "takings" provision that local planning advocates and conservationists fear could hurt governments' ability to control growth. The provision requires local governments to reimburse landowners if a new regulation lessens property value. [. . .] [Rep. ] Hagood and Rep. Wallace Scarborough, R-Charleston, were successful in eliminating the takings clause from a companion constitutional amendment but couldn't muster the votes to strip it from the statutory bill.
Stay tuned for more on South Carolina's bills, and check out the South Carolina Landowners Association's website for more detailed info.

Leonard Gilroy is Director of Government Reform


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