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Are Municipal Politics to Blame for the Rise in Rents?

Mark Bergen, with the help of David Schleicher, argues that zoning policies are to blame for slowing development and escalating rental costs in cities across the country.
March 6, 2012, 10am PST | Jonathan Nettler | @nettsj
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In his piece for Forbes, Bergen interviews Schleicher, a law professor at George Mason University, who has recently published a paper arguing that, "[b]y default, city governments make land use decisions that snub small developers, stymie growth, and send housing costs up."

Schleicher cites the lack of competitive local parties in urban legislatures as the root cause of the breakdown in the historical pattern in which an unencumbered housing market responded to rising housing prices with housing development, thus reducing costs.

According to Schleicher what results from the lack of political competition is that, "City Councils end up featuring what one journalist called the 'ironclad principle of aldermanic privilege' or a norm that Members of the City Council have an absolute power to veto zoning changes in their district."

"This makes a big city like a bunch of exclusive suburbs, at least for zoning purposes. Projects that would help the whole city, benefiting economic growth and reducing housing costs for newcomers or renters, lose out because the neighborhood in which they are located doesn't want them and because each project is presented to the Council seriatim."

A problematic result of this situation is that large developers have the resources to push their projects through the political logjam, but small and incremental developers do not. "Cities end up with a bunch of towers but strong limits on incremental housing growth-small new buildings, granny flats, and the like. This too pushes up housing costs," argues Schleicher.

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Published on Monday, March 5, 2012 in Forbes
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