Are We Approaching Peak Land Use Control?

A lot of things are analogized to a jack-in-the-box—wound it up tight until it bursts out of the box. It’s a useful metaphor because it’s such an accurate reflection of both the human and societal condition: everyone and everything has its breaking point. The same is true in land use, where an ever increasing number of regulations and requirements are added, each topped right on top of the other, in an attempt to advance societal goals. The question now becomes, where is our breaking point?

Berkeley’s Downtown Initiative

The city of Berkeley in California has yet another land use ballot initiative approaching for November 2014. Berkeley’s Measure R, or more locally known as the “Downtown Initiative”, is a broad stroke aimed at real estate development in Berkeley’s downtown. The measure itself is very complex—it essentially rewrites a good part of the Berkeley Zoning Code through the ballot box. The blog Berkeleyside has had excellent coverage and analysis of Measure R. As they note, some key effects of Measure R would include:

• The height allowed in the “corridor” sections of downtown would drop from 75 to 60 feet.
• The height in the downtown “buffer zones” would drop from 60 to 50 feet.
• The height in the proposed Civic Center Historic District would drop to 50 feet; it currently has a range of 35 to 120 feet.
• Buildings 75 feet or taller must offer two or three bedrooms in 20 percent of their units to accommodate families.
• Buildings over 75 feet must have public bathrooms, for lease to the city for $1.
• Current provisions that allow developers to get an expedited ruling by the Landmarks Preservation Commission on whether a structure is considered historic will be struck.
• The city Zoning Adjustments Board could no longer grant a use permit to allow heights or setbacks that deviate from city zoning laws. Deviations from code will require a variance.
• Developers who want to build higher than 60 feet could no longer apply for a state density bonus, which often translates into an extra floor in exchange for more affordable housing units.
• Buildings under 75 feet would no longer be eligible for “by right” approval—with no notice or hearings—under the “Green Pathway,” (a streamlining process) which currently exists.
• The Planning Department could process just one building over 75 feet tall per year.

There are many issues brought up with the Downtown Initiative, but a key issue in the debate is whether or not it reduces height limits that were approved in 2012 as part of the Downtown Area Plan and adds requirement to construct buildings that previously did not exist. While it may seem a cut and dried of a question, the answers have been far from simple.

Berkeley City Councilman Jesse Arreguin, a leading backer of the initiative, insists that the changes don’t reduce height limits, but simply offer a choice for developers—to either meet the new requirements or not. For example, Arreguin insists that height limits remain 75 feet in the “corridor” section, but to get to that 75 feet max, a developer must fulfill extra requirements. Developers are, of course, not required to undergo these requirements if they do not wish, but if they don’t they may only construct a development that maxes out at 60 feet.

Eric Panzer, chair of Liveable Berkeley, the main opponent of the initiative, points out that Arreguin’s argument is misleading. As previously referenced, the recently passed Downtown Area Plan allowed several large developments in the Downtown area. Under the initiative, those same developments, as well as others seeking height above 60 feet, would now be obligated to fulfill the requirements that weren’t there before, partly because the projects have not been fully entitled yet (meaning, they have not secured their right to build, or “vested”). Therefore, the result is a de-facto reduction in maximum height.

(Full disclosure: Eric Panzer is a friend of mine from college.)

There are many other effects the initiative would have on development in Downtown Berkeley, for which I would direct you to Berkeleyside’s coverage. However, this post isn’t about Berkeley. While the debate over the pros and cons of Berkeley’s Measure R is beyond the scope of this post, the initiative brings to the forefront an increasing wedge between city land use requirements and the rights of property owners to make reasonable economic use of their land.

Police Powers

You could begin by thinking that this is not new, that regulation in of itself is a wedge between property rights and government, but this is not where we begin. The United States Supreme Court, since its seminal case on land use regulations in Village of Euclid V. Ambler Realty Co. has granted great deference to the legality/constitutionality of a city’s zoning laws, stating that a city has the right to regulate the use of land through zoning, as long as the city can justify a connection of the regulation to protecting the health, safety, and public welfare. However, courts are increasingly scrutinizing the validity of some zoning laws in terms of legitimate government interest. The extreme is when a government essentially removes all right to develop without conditional approval. An example is when a government allows development in an area only through a conditional use permit, or “CUP.” The Wisconsin Supreme Court took up such a case in 2008.

In the case of Town of Rhine v. Brock O. Bizzelli, et al., the court determined that such a restrictive zoning law, where one could only develop the land via a CUP, was unconstitutional on its face because it was “arbitrary and unreasonable in that it precludes any use of right in the [district] and such limitation bears no substantial relation to the public health, safety, morals, or general welfare.” (Please click the link at the beginning of this paragraph to learn more about the specifics of the case.)

Berkeley’s Downtown Initiative doesn’t go as far as to prohibit any development in the Downtown district, as the Town of Rhine did in the Wisconsin case. However, developers and scholars alike have argued that too many government regulations can and have increased the cost of housing because they make it more difficult to build and increase the cost of development. If we accept that regulation does make it more difficult to build, regardless of your judgment of that conclusion, at what point does such numerous regulatory constraints go beyond typical police powers?

It first becomes a question of law: Is the land use regulation, on its face or as applied, constitutional? An on its face constitutional challenge is when a law is said to be unconstitutional by simply being—that no circumstances exists in which the law could be applied. On the other hand, an as-applied challenge is when a law is said to be unconstitutional because, in practice, the law effectively creates the conditions that themselves are unconstitutional to the person or party. (More info on facial and as-applied challenges here.)

While it is obviously a question of law, it is a question for the planning profession as well. Can city officials and planners work to achieve policy and societal goals without adding layer after layer of restrictions and requirements that necessitate discretionary approval? The answer becomes more difficult in modern times.

Arbitrary and Capricious

As cities suffer from budget shortfalls and the housing affordability crisis intensifies, many cities are turning to additional requirements on development projects, such as new fees or requiring even greater percentages of affordable units in all projects, in an effort to rein in the cost of housing and increase available funds. As communities’ concerns for building heights and density continue to manifest, additional restrictions on height and density are also added. Such measures often take the place of a more comprehensive approach to tax, zoning, and housing policies.

Taken individually, each development requirement and restriction may be a legitimate exercise of a city’s police power. With increasing reliance on developers and their projects to satisfy societal goals through a multitude of land use controls, the potential cumulative effect of all regulations risks turning all proposals into discretionary or conditional approvals. When the increased number of regulatory constraints causes development to be so economically infeasible that the only way for a property owner to gain the right to develop is to request discretionary approvals, have we not effectively removed the right to make reasonable economic use of the land?

It’s important to point out that the issue here is not the declining value of land as a result of regulatory action (see “regulatory takings”). The courts have held that a property owner is not entitled to a specific use of the land, thus the market value of the land is not a right and must yield to government’s police powers (see Euclid v. Ambler, Penn Central Transportation Co. v. New York City, and HFH, Ltd. v. Superior Court). However, land owners are granted the right of a use that is economically viable. In other words, just because you can’t develop the specific project you want does not mean you cannot develop something that provides a reasonable economic return. The distinction between the two is minute and vague, but there nonetheless. 

The police powers granted to local government are not absolute. As stated, regulatory constraints on development must demonstrate a legitimate government interest—relation to ensuring the health, safety, and public welfare. Thus, the more land use controls push a district to rely on discretionary or conditional approvals, the more those controls risk being challenged as arbitrary and capricious—lacking a legitimate government interest—and open the door to favoritism and discrimination that undermine the entire planning process.

Jack in the Box

This is a very difficult topic and not one I can resolve in a single or even multiple posts. Certainly, cities everywhere can and should regulate where development may be and under what circumstances, and as the Supreme Court said in Lucas v. South Carolina, “In 70-odd years of succeeding 'regulatory takings' jurisprudence, [the Supreme Court] ha[s] generally eschewed any 'set formula' for determining how far is too far, preferring to 'engag[e] in . . . essentially ad hoc, factual inquiries.'" Nevertheless, regulations, or collection of regulations, that restrict the use of land so onerously should face a higher threshold, let alone be barred from a vote of the general population like Berkeley’s Downtown Initiative. Continuing to add development requirements while simply stating that uses are still allowed on its face is not enough if the only economically valuable use(s) still requires numerous discretionary approvals to be realized, lest we continue to wind the box more and more, risking the next turn will be the final before it bursts.