The biggest problem with “Make developers give something back to the public” is that a city’s efforts to do so end up ramping up the cost and complexity of development until the game is even more stacked in favor of the biggest projects and the deepest pockets. And that, in turn, even more dramatically raises the incentive to shout “Make them give something back!”
Let the community be heard in the abstract about what its zoning and development vision ought to be—let them hash it out in the zoning code and the comprehensive plan. But let’s not let each individual project become an existential battle. When we do, Goliath tends to stomp all over David.
Pointer from Scott Sumner.
I noticed the same phenomenon in Montgomery County. The county nominally has a “master plan” that governs development. But in practice the County Council gets involved in approving every project. We have the rule of men (and women), not the rule of law.
The net result is that we get none of the “livability” that supposedly comes from planning. All we get is a de facto requirement that to do real estate development around here you have to be a big-time Democratic donor. In the bootleggers-and-baptists model, the baptists are all the anti-development Progressives, who end up not really getting what they want, and the bootleggers are the big crony developers, who do.
Approving development processes by having elected officials decide on a case-by-case basis is unfair and harmful.
But as Glenn Reynolds would say, it does create opportunities for corruption and graft.
And of course requiring developers to add “affordable housing” manages to subsidize demand and restrict supply at the same time.
Living in California the reality of planned communities and giving back etc. has been around for decades here. Google Irvine, CA sometime and see how planned that was over the decades. (Of course, most of past Irvine planning tended to be more private ownership planned than city council who is probably doing most of the work.)
The reality is most of Southern California most planned communities were heavy Republican a generation ago and now moved towards an Obama Republican territory. (A lot of this is coming from both the heavy Asian-American populations in the areas and Trump anti-trade policies are not good for the region.)
I have this theory that this is why a lot of sports stadiums insist on getting local funding from the cities (and threaten to leave if they don’t get it). Sure, free money is always nice. But once the city has put in a few million or so, they have a great incentive to see that the stadium actually gets completed. So there’s much less screwing around with the project, and permits and red tape gets expedited.
Maybe developers should sell cities a portion of the ownership, so the city has a 10% stake in the project (and gets 10% of the profits). That might encourage the city to be sensible.
The trouble is, there is no “city”, there are individuals with their own interests not well-aligned with the overall organization, and facing particular, personal incentives and who therefore are, shall we say, less than perfect agents for the collective entity they technically are supposed to represent with something akin to a fiduciary duty. For example, for elected officials, getting elected, and getting the money to campaign to get elected, are bigger priorities than whatever happens to the level of the city treasury bank account.
The red tape etc. are indeed “opportunities for corruption and graft”, but instead of crude tactics and actual bagmen, they are ways for officials to “juice” potential campaign donations, and sometimes allocate those below-market-rate subsidized units to themselves, friends, family, etc.
Better to give people with decision-making authority a direct stake in the outcome, and so just come out and issue them dividend stock certificates for any approvals. Boomtown overnight.
It’s a little bit like that around here (Ann Arbor) — except that the negotiations tend to occur only when the developer wants to do something that goes beyond what is allowed by zoning. Here’s a case where the city council has been stalling a subdivision plan, BUT the developer has the option of falling back and doing a ‘by right’ project that conforms to the existing zoning. The city has learned not to try to stop those (after losing lawsuits).
Wow great link. One bit:
Yeah. Good use of taxpayer dollars there.
The whole concept of “giving back” is misplaced. By developing real estate, developers are already “giving back”–with their own money, at their own risk. When you add this –essentially a tax–onto projects, the price goes up and there remains even less incentive to develop low-income housing. Zoning also is designed to keep nice areas nice by mandating set-backs from the street, minimum green spaces, minimum square feet per occupant, etc. All of this costs money. duh
In California it is the resulting legal costs, lawyers everywhere, crossing the eyes and dotting the tees.