Capping heights – and the market

To stay competitive, cities need to attract and retain top-quality companies and the workers to fill them. Strong cites make strong regions; the spillover effects of increasingly competitive core cities bring educational, cultural and economic opportunities to surrounding areas.

Loosening zoning restrictions achieves robust cities and regions in several ways. Talented, educated workers are drawn to dense, vibrant urban environments with top-notch amenities and a diverse range of housing options. At the same time, firms benefit from both the infrastructural and intellectual capital provided by urban economies – high-speed fiber optic cables and a competitive, ever-present workforce alike.

But, in their perennial near-sightedness, a few noisy citizens are constantly shooting their own economic futures in the proverbial foot.

“Not in my backyard” (NIMBY) concerns like congestion and obstructed views trump opportunities to enhance economic competitiveness with surrounding communities. Local governments fall victim to the same myopia, pandering to NIMBY voters by enacting policies that increase stagnation, stifle growth and reject innovation. Status-quo thinking controls.

Strict, antiquated zoning hurts the real estate market, too. Construction shortages bring on runaway pricing in the most in-demand areas and limit turnover as workers are unable to easily relocate for scarce, high-paying jobs. Steeply inflated rents in underbuilt urban centers eat away at what otherwise becomes savings for future down payments. Wealth cannot be widespread when rents exceed 33% of gross earnings.

A tale of two cities

Major metros around the world understand what California doesn’t seem to get: grow or die.

Former New York City Mayor Bloomberg’s (now-dormant) Midtown East Rezoning Plan was devised to pave the way for a crop of large new office buildings aimed at reviving one of Manhattan’s aging business districts, where the average office building is 73 years old.

Proponents warned that failure to act on the plan would create a hemorrhage of tenants fleeing its decaying building stock for more modern digs. Millions of square feet of cutting-edge office space are emerging elsewhere in the city and, more importantly, in competitor cities abroad. Century-old buildings just don’t cut it for today’s most desirable tenants.

Bloomberg’s plan was mothballed because the city council felt it failed to sufficiently address the additional burden placed on transport and infrastructure. However, the new De Blasio mayoral administration intends to address these issues in a new plan, giving the appropriate attention to the services necessary to support more workers and residents. Infrastructure is government investment; buildings are private investment, but infrastructure has to come first in order for the private sector to prevail.

That reasoned objection to a flawed program and subsequent effort to address those flaws stands in stark contrast to how things are done in California.

To take the example of another large, global city struggling to stay competitive, the City of Los Angeles developed an update to the Hollywood Community Plan, which has guided zoning and growth in that neighborhood for 30 years.

Hollywood has seen a remarkable transformation from a grimy, crime-ridden corner to a bustling shopping, entertainment and employment center. A subway came to the neighborhood in the 1990s, and the urban renaissance of the last decade has brought new housing, offices, hotels and shopping.

The neighborhood’s future is bright, but its growth has been haphazard. The Community Plan update relaxed zoning restrictions around Hollywood’s several subway stations and on major boulevards to encourage denser growth close to transit, all while tightening controls elsewhere to preserve existing residential character.

It was a reasonable, measured approach, which carefully considered both the future needs of the region and the wishes of residents. But a small but litigious group of NIMBY neighbors and lawyers fought the plan all the way through its adoption, and ultimately to court.

Capitalizing on California’s onerous and oft-abused environmental review laws, the group convinced a judge to repeal the plan in its entirety based on technical aspects of the data used to forecast population growth.

It wasn’t just back to the drawing board for the Community Plan. The zoning changes made in the updated plan were already law, and the city was already issuing building permits for projects based on the updated zoning. The court’s decision enjoins any further activity on those projects. The issuance of new permits is on hold until the plan is redrafted and reapproved — a process which can take years.

Expanding choice and gaining an edge

The Hollywood Community Plan Update saga is just one high-profile example of an NIMBY epidemic in California. Fear and misunderstanding prevent residents from following the Midtown East model – which is taking a rational and collaborative approach to improving plans to guide growth. Instead, it’s a knee-jerk anti-growth crusade, which is highjacked by extortionist CEQA lawyers.

Encouraging higher urban densities is not a secret plot to force you and your family into a cramped sky hovel. It’s not an attempt to limit choice or dictate lifestyles. And it’s not even necessary – or possible, in most cities – to aspire to New York’s astronomically intense economic activity and built scale.

The reality is quite the opposite: looser zoning (government) allows builders (private sector) to respond to demand for a greater variety of housing types. In many California cities, it’s unlawful to build anything other than suburban single-family tracts and two-story garden apartment complexes.

Low-density suburban living is here to stay, and will remain abundantly available for anyone who chooses it. Leaner, smarter zoning programs which accommodate density where the market wants it increase choice and enhance economic competitiveness.

Looser zoning offers a little something for everyone:

  • luxury high-rise lofts for established urban professionals;
  • stylish and affordable flats for the mobile, educated Millennial;
  • small, accessible starter homes for young families;
  • backyard second units in single-family neighborhoods for aging Boomer parents and more.

Growth is going to happen whether you want it to or not. Cities and their citizens have the choices cut out for them: proactively work to accommodate growth beneficial of everyone, or stick their heads in the California sand and hope that if they shut  the problem out of discussion it will somehow go away.

Of course, cities can continue to try to stop growth by further entrenching restrictive zoning policies. But the price of that choice is to be left behind.