Andrew T. Hayashi, Dynamic Property Taxes and Racial Gentrification
(Dec. 23, 2020), available at SSRN
In his article, Dynamic Property Taxes and Racial Gentrification, Professor Andrew Hayashi makes the compelling case that dynamic real property tax regimes, under which gentrifying neighborhoods are taxed at a lower rate than non-gentrifying neighborhoods, encourage racial gentrification and raise challenging, previously ignored, distributional questions. (P. 20.) To put it more plainly, dynamic property taxes are real property taxes that depend upon a property’s history of values so that two properties worth exactly the same amount today, could be taxed at different rates if the properties’ values evolved in different ways over time.
As an initial matter, Hayashi’s work makes a valuable contribution to understanding just what “gentrification” is and how it affects individuals and communities. Many years ago, I attended a meeting with a mixed group of law professors and planning professors. It was there, for the first time, that I became aware that in some corners of the academy, “gentrification” is a bad word and always a bad word.
It is code for displacement of poor Black residents from their troubled inner city neighborhoods when these neighborhoods become safe again for middle-income White residents to return, bringing with them investment, renewal, safety and increased property values. The Black residents who had “always been there” when the neighborhoods were not places of investment or of safety would be slowly displaced by all the wonderful benefits that attended the return of middle-class White residents because they could not afford to pay the property taxes on their newly appreciated homes.
Before learning about gentrification from my urban planning colleagues’ perspectives, I used the term gentrification more innocuously to describe poor, sometimes dangerous neighborhoods, becoming middle and higher income neighborhoods. I recall asking my urban planner colleagues, “so for your discipline, is gentrification always bad?” Their answer was, yes. And in that moment, so much changed for me.
Today, I think it is common to understand gentrification pejoratively, with discriminatory undertones and overtones. The lines between gentrification’s victims and assailants can be more than a bit blurry.
More and more scholars, across disciplines, are writing and thinking about these intersections. For example, are gay and lesbian couples hoping for urban refuge from suburban discrimination both drivers and beneficiaries of gentrification?
It is at this difficult intersection of beneficiary and victim, that Professor Hayashi’s scholarship makes a quite interesting contribution to the complicated discussion around gentrification. Hayashi argues that by establishing the real property tax rate using a combination of the recent history of market values and current market values, our taxing system creates a “dynamic aspect in property taxes” whose racially disparate impacts result in Black homeowners paying higher property taxes than White homeowners.
Hayashi’s tax and economic expertise is on full display as he explains two of the principle features of dynamic property taxes. First, why does the distinction between using assessment caps as opposed to phase-ins matter when taxing property?
Hayashi illustrates that the assessment cap does not benefit property owners whose properties appreciate at below the set cap rate while, in contrast, all appreciating properties benefit from phase-ins because all market value increases that occur between assessment years gets added incrementally to the assessed value. (P. 5.)
Thus, “caps tend to benefit the fastest appreciating neighborhoods for a relatively long time. In contrast, phase-ins benefit all appreciating neighborhoods, but the benefits are shorter-lived.” (P. 5.)
Second, Professor Hayashi illustrates how the treatment of property upon transfer is an important aspect of the design of dynamic property taxes. Are assessed values reset to their fair market value upon transfer?
This approach discourages property transfers, as Professor Hayashi explains, because the current owner has a more favorable effective tax rate than the buyer, a phenomenon Hayashi describes as “lock-in.” Or do assessed values remain unaffected by real estate transfers so that the buyer acquires the property at the seller’s assessed value? Under this approach, the buyer benefits from owing the property with the seller’s lower assessment ratio.
As neighborhoods’ racial demographics change, so too do home values and the trajectory of these values over time. Gentrifying neighborhoods under a dynamic property tax system benefit from lower taxes as caps and phase-ins reduce the effective tax rate for these properties. The consequence is that the effective tax ratio for gentrifying neighborhoods experiencing rapid property appreciation is lower than the effective tax ratio compared to properties with stable values, modest growth rates, or declining values.
Professor Hayashi drives home the impact of dynamic property taxes for his reader when he notes that dynamic property taxes can impact racial preferences on how wealth is distributed as “homes in neighborhoods that are rapidly becoming white may pay less in property taxes.”
As we grapple with difficult problems of racial disparities, gentrification, and demographic change going forward, it will be critically important to understand as many of the alternative explanations for these challenges as possible if we hope to craft a solution. Professor Hayashi makes a compelling case that dynamic property taxes are part of an alternative explanation. His article exposes the reader to a different view of a perennial problem with the hope that with a new perspective, perhaps new solutions can be imagined.
Professor Gregory H. Shill’s recent article, Should Law Subsidize Driving?, reminds us of the hidden costs of driving that are borne, largely unrecognized, by the public.
When most people consider the costs of owning a car, they factor in typical expenses such as monthly loan or lease payments, insurance, maintenance, and gas. They probably do not consider other costs that are less directly related to their automobile ownership, including the construction and maintenance expense for public roadways, the negative effects their vehicles have on pedestrians and cyclists, and the health impacts of their tailpipe emissions.
By subsidizing driving in these concealed ways, the law partially externalizes the cost of driving, thereby transferring these disguised expenses to others and encouraging people to drive more than they otherwise would. And for the past century, laws and regulations have actively encouraged driving, quite possibly to the detriment of everyone.
Professor Shill begins his article by listing and describing the many negative effects of private automobiles, including death, personal injury, and property damage and the production of greenhouse gases. These downsides on their own do not necessarily argue against the widespread use of private cars, since the costs of driving must be weighed against its benefits. But he goes on to demonstrate, in extraordinary detail, that the growth of the private auto did not just happen on its own.
There are many ways in which our system of laws and regulations promotes and bankrolls the private use of the automobile. Professor Shill observes, “These subsidies lower the price of driving by comprehensively reassigning its costs to non-drivers and society at large.” (P. 498.)
In short, everyone in America, including the 100 million non-drivers, is indirectly paying part of the cost of driving, largely without even realizing it. Rather than weighing costs against benefits, we have consistently encouraged people to drive by underwriting driving.
The first two parts of Professor Shill’s article focus on the two most straightforward targets: laws relating directly to traffic and land use laws. Safety laws such as speed limits regularly go unenforced, allowing drivers greater freedom at the expense of those who are inconvenienced and harmed by this excess speed. This latter group most obviously includes accident victims other than vehicle occupants, particularly those on foot or on bicycles.
Moreover, the method of setting speed limits is arbitrary and obsolete, with pressure from traffic violators sometimes causing local officials to increase speed limits. Drivers rarely suffer for the failure to yield in a crosswalk, and jaywalking laws favor drivers over those on foot. Thus, the law not only encourages driving by forcing others to pay part of its cost, but “almost certainly produces a higher level of not just driving in general, but of negligent, reckless, and wasteful driving in particular.” (P. 504.)
Even though nonmotorists receive only limited benefits from the driving subsidies they are providing, “[a] person who does not own a car is still conscripted into underwriting driving in numerous ways, overpaying for everything from groceries to commuting.” (Id.) In short, “[n]onmotorists pay motorists to drive.” (Id.) Professor Shill demonstrates that the typical household may pay indirect costs such as these amounting to $1,012 to $1,488 per year. (P. 538.)
In the land use arena, zoning laws such as height limits and minimum lot sizes encourage sprawl, by restricting density and forcing would-be occupants to more far-flung locations. These artificial caps on population density increase the amount of driving that is necessary while reducing the likelihood that mass transit alternatives will flourish.
Free parking is not free, of course, which means that much of the cost of on-street parking is paid by someone other than the owner of the parked vehicle. Moreover, minimum parking requirements set forth in zoning codes mean that much valuable downtown land must be devoted to the storage of empty automobiles, driving up the cost of residences and exacerbating existing shortages of affordable housing in desirable locations. Professor Shill notes, somewhat ironically, that many of America’s most walkable cities could not legally be built today, since their layouts would violate subsequently enacted land use laws. (P. 553.)
Other forms of subsidy are even more hidden. For example, the growing popularity of taller vehicles, particularly SUVs, leads to more severe accidents and higher levels of dangerous pollutants, meaning that victims of SUV accidents are paying part of the costs of other people’s desire to operate these vehicles. The growing popularity of electric and hybrid vehicles reduces the per-mile cost of operation, thereby encouraging people to drive more.
The process of building and maintaining roads creates additional pollution. Tort law generally requires accident victims to prove driver negligence even though, Professor Shill argues, driving is an ultra-hazardous activity that should be held to a more pro-plaintiff strict liability standard. Vehicle safety standards consider automobile passengers but not those outside of the vehicle. Contract law often requires privity, making it difficult for accident victims other than a vehicle’s owner to recover from the product’s manufacturer.
Professor Shill does a thorough job of demonstrating, in clear prose and with much support, that vehicle owners are not paying all of the costs of driving. In other words, non-owners are suffering from the many externalities that driving creates and paying a portion of every vehicle’s overall cost.
He also shows the many ways in which this type of cost-shifting is intentional, with laws designed to encourage driving and discourage the use of mass transit. His final section is somewhat pessimistic, suggesting that reversing these trends will be unpopular and will take generations to accomplish, assuming that government officials even have the desire and stamina to begin this process. (Pp. 577-78.)
Once these laws begin to be modified, he concludes, their replacements “should be reoriented towards consensus social priorities, such as health, systematic safety, prosperity, sustainability, and equity.” (P. 578.)
Ultimately, Professor Shill recognizes that the automobile is sufficiently necessary that existing rules are unlikely to change much. But he also reminds us that “[a] different bargain is possible.” (P. 579.)
Our current system of driving laws and regulations does not merely reflect vehicle owners’ preference for driving but actually helped create that preference by partially paying for it. And that system “produces a higher level and risk of driving than would be socially optimal.” (P. 579.)
It is up to us whether we continue to live under such a regime or seek to modify it. Contributions such as Professor Shill’s excellent article do an effective job of highlighting these issues, so that when decisions of this nature are made, they can be made with a full knowledge and understanding of the underlying facts.
The Fair Housing Act is now 52 years old but housing segregation persists. Historically, the government itself supported and entrenched our reality of “two societies, one black, one white—separate and unequal.” Recognizing the vast and long-lasting harms caused by housing segregation and inequality, Congress passed The Fair Housing Act in 1968. The Act required government instrumentalities and partners act “in a manner affirmatively to further” fair housing (Section 8(d)). Government institutions and instrumentalities have not so acted, and inequitable and unfair housing continues, impacting all metrics of racial inequality.
Professor Kristen Barnes’s article, The Pieces of Housing Integration, addresses head on the government’s failures to fulfil the mission of the Fair Housing Act. She adds an important voice and perspective to existing Fair Housing scholarship.
Professor Barnes’s article specifically responds to some of the conclusions and solutions articulated in the important book on the subject, Moving Toward Integration, by Richard H. Sander, Yana Kucheva, and Jonathan Zazloff. The authors of Moving Toward Integration adopt a cautiously optimistic approach to the future of fair housing, concluding that “structural segregation” is “relatively low” and that recent Supreme Court jurisprudence clears the way for disparate impact litigation to “potentially address structural segregation.”
Barnes applauds Sander, et al. for their exhaustive study and multi-faceted proposal to improve housing equities, but gently removes the authors’ somewhat rose-colored glasses regarding, for example, the promise of disparate impact liability under the Fair Housing Act. Barnes notes that, historically, government actors have erected or even shored up barriers to fair housing more often than they have dismantled them.
Furthermore, Barnes shows how government relationships with two other key types of actors in the housing sector—namely financial institutions and real estate developers—have more often encouraged rather than discouraged residential segregation.
Right now, the country is poised to reverse course on the Trump Administration’s four-year mission to dismantle HUD’s 2015 directive to local governments that they fulfil the mandate of the Fair Housing Act (that they act affirmatively to furthering fair housing). As we attempt to move forward toward integration, it is imperative that we attend to Barnes’ cautions regarding both the tragic flaws of current disparate impact jurisprudence, and the unholy alliance of local governments, developers, and banks in the realm of housing.
The authors of Moving to Integration, along with many other legal scholars, have cast the 2015 Supreme Court opinion of Tx Dep’t of Hous. & Cmty. Affairs v. Inclusive Communities Project, 135 S. Ct. 2507 in a hopeful light. In the Inclusive Communities opinion, the Court upheld the use of disparate impact theory under the Fair Housing Act, but it established a framework for disparate impact litigation that, according to Barnes, undercut the goals of the Act and made it highly unlikely that disparate impact liability under the Fair Housing Act would serve as a robust tool to combat housing discrimination.
Although Sander, et al. suggest that disparate impact liability and the threat of disparate impact litigation can “pressure individual suburbs to cooperate” in achieving the long-deferred Fair Housing dream of integration, Barnes explains that the Inclusive Communities decision caused disparate-impact liability to be “stripped of its power and effectively neutralized so that the Fair Housing Act is prevented from performing the integrative work it was intended to do.”
In other words, although Inclusive Communities did not literally destroy disparate impact liability, it rendered this tool vastly less effective than it otherwise could have been. For example, Barnes concludes that the Court established an “unduly onerous” high bar for a plaintiff’s prima facie case of a racially discriminatory impact, requiring them to show a clear relationship between a specific governmental policy and an adverse impact.
Second, the government can fairly easily escape liability even if such a robust causal connection is shown, simply by articulating a valid state interest served by the policy in question. Barnes carefully deconstructs the reasoning of Inclusive Communities to show that its analogy to employer-employee relationships is faulty. Then, she explains that the framework articulated makes it extremely likely that disparate impact claims will fail.
Furthermore, even though Sander, et al. predict that frequently municipalities will not be able to articulate an important goal served by a policy creating a discriminatory impact, Barnes makes a compelling case for her conclusion that the business-necessity defense approach simply involves stating “a valid interest” served by the suspect policy—which municipalities should be easily able to do. In fact, a sufficient public purpose that could justify an otherwise-discriminatory policy may include “a community’s quality of life,” which is not only an amorphous concept but may itself be quasi-racist trope.
Barnes makes the important point that watered-down protection of disparate impact liability under the Inclusive Communities framework offers merely a pretense of protection from housing discrimination and is insufficient to achieve the residential housing integration that is so desperately needed. Even more importantly, she explains how disparate impact liability could and should be better framed in order to be effective for its purposes. Barnes cuts through politicized rhetoric about the rights of local governments to housing self-determination and states a conveniently ignored truth about the Fair Housing Act: “Contrary to the Supreme Court’s assertion that the ‘FHA is not an instrument to force housing authorities to reorder their priorities,’ the FHA is intended to accomplish exactly that in the name of racial equality.”
Barnes also approaches, with a healthy degree of skepticism, the suggestion by Sander et al. that creative new policies (such as mobility grants) could improve residential segregation. Any such policies must be framed against the uncomfortable truth that for decades and decades, all levels of the government—from local to federal, from legislatures to courts—have prioritized profit over integration both in their housing laws and policies and in their relationship with banks and developers.
Barnes suggests that governments need to be more proactive in their relationships with both financial institutions and real estate developers—a point that is not often emphasized in legal literature, but which is of paramount importance. Barnes asserts that “cities often do not ask for enough on behalf of their constituents.” As a former counsel to a national real estate developer, I agree. Developers will find a way to better achieve public purposes of integration and affordability if they are affirmatively required to do so, particularly in places where housing demands are strong.
As for financial institutions, Barnes points out that fair lending is still absent in Black neighborhoods, and predatory lending and its associated harms continue to plague households, neighborhoods, and society as a whole. Barnes explains that settlements from litigation relating to the Foreclosure Crisis recognized—and monetized—some public harms caused by predatory lending (the “racial surtax”), but points out that cities have not necessarily applied the compensation resulting from predatory lending harms to ameliorate the harms perpetuated.
The Pieces of Housing Integration is a concise, powerful article. Barnes adds a critically important voice to the hundreds of pages of empirical scholarship examining Fair Housing. She also explains how to fix a few of the most essential legal tools that could—if tweaked—make moving toward integration possible.
Residential housing must be integrated in order for our society, our economy, and our government to become healthy and sustainable. For fifty years, government agencies and instrumentalities have taken one step forward and one or two steps back in their journey toward integration. In order for us to actually move toward integration, explains Barnes, we must do more than come up with new programs and hope that future disparate impact litigation will be successful.
Our nation’s housing situation gets worse by the day. Even before the pandemic, subprime lending, exclusionary zoning, and modern-day redlining forced millions of households into unstable, unsafe, or unaffordable living situations. Now, with the pandemic wiping away jobs, we appear to be on the verge of an unprecedented national housing crisis that will start when the evictions and mortgage relief end. We need creative solutions now more than ever.
That’s why Lisa Alexander’s most recent law review article, Community in Property: Lessons from Tiny Homes Villages, is such a timely, significant contribution. Her work focuses on “tiny homes,” which she defines as being units of 400 square feet or less.
Given their small size, these homes will not be a year-round solution for everyone, but Alexander focuses on their utility for the unhoused. She notes that a tiny house can be quickly created. It can be affordably built. It offers privacy not offered by other housing types, such as homeless shelters. I’ll add to Alexander’s list that a tiny home uses fewer material resources both during construction and over the course of its life, through more compact development that uses less land, and a smaller physical footprint that uses less water and energy than a traditional home.
While Alexander recognizes the benefits of individual tiny homes, she believes the real power lies in many such homes arranged in communal villages. She draws from theories about progressive property, personhood, and the urban commons to assert that tiny homes villages can help model a new type of relationship with real property: stewardship.
Currently, property law prioritizes relationships with land that are rooted in title and in exclusive ownership and control. Alexander’s conceptual claim is that property law must recognize short-term, informal relationships that privilege sharing and co-management.
To support her push for law to evolve, Alexander shows that these villages have already sprung up in 39 different states. Residents do not simply contribute one-time “sweat equity” (typical for programs like Habitat for Humanity), and they do not get an interest in the form of fee simple ownership.
Rather, residents are required to contribute to ongoing community management, renovation, and decision-making, in exchange for a stable tenure in, and a right to exclude from, their housing unit. Particularly for the homeless, this structure allows meaningfully participation in a communal setting—which, according to Alexander, restores their dignity and sense of community. As stewards, they have limited transfer rights: they cannot sublease or rent their interest, or give it to anyone outside the community without the permission of the community.
Although villages are emerging, the concept of stewardship is not yet fixed in property law. For that, we have the formalistic tendency of property law—and the obsession with the numerus clausus, the set of fixed forms of ownership—to blame.
Alexander persuasively explains why the tenures of the residents of tiny homes villages created for the unhoused do not fit neatly into traditional categories, including tenancy, condominiums, cooperatives, and other similar arrangements. (For example, the participation requirement goes beyond what would be expected of an ordinary tenant.) She pushes theorists and policymakers alike to go beyond an essentialist view of property, drawing from an important article by Kirsten A. Carpenter, Sonia K. Katyal, and Angela R. Reilly, which discusses among other things stewardship on indigenous land.
Introducing flexibility into state law definitions of property and modifying zoning laws to allow tiny homes villages may be easier said than done. The Not-In-My-Backyard mentality, undertaken by owners of detached, single-family homes, has largely resisted making this kind of housing legal. The “invasion of your suburbs” dog whistle used repeatedly during the presidential campaign attempted to rally the NIMBY crowd to vote. Alexander is optimistic about the emerging Yes-In-My-Backyard (YIMBY) movement.
I hope she’s right. The YIMBYs have been gaining steam, although many groups are focused on perhaps the lower-hanging fruit of trying to legalize accessory dwelling units and transit-oriented development. I personally believe that zoning reform is a common-sense, nonpartisan issue. But if, given his campaign rhetoric, a vote for President Trump was a vote against inclusionary housing, then we as a nation have a long way to go. Let’s hope Lisa Alexander—whose terrific article explains why thinking small is thinking big—can help us get there.
Zoning has long-been regarded as quintessentially a local matter. And, states usually defer to local governments believing that they have better information about local conditions, preferences, and practices. In his article, Professor Elmendorf shows how those preferences and powers often operate to undermine state interests, particularly in ensuring housing opportunities for all its needy residents.
In July 2020, President Donald Trump thrust the issue of zoning for housing on the national scene when he proudly announced: “I am happy to inform all of the people living their Suburban Lifestyle Dream that you will no longer be bothered or financially hurt by having low income housing built in your neighborhood.” The announcement came after the Department of Housing and Urban Development repealed the “Affirmatively Furthering Fair Housing” (“AFFH”) mandate, adopted by former President Obama, in fulfillment of the aims of the Fair Housing Act of 1968.
That “Suburban Lifestyle Dream” (and its exclusive character) was first enabled by ordinances prohibiting blacks from living in certain neighborhoods. After those ordinances were struck down by the Supreme Court in Buchanan v. Warley, 265 U.S. 60 (1917), as a violation of the privileges and immunities clause of the United States Constitution, homeowners retooled with deed covenants that prohibited the sale of property to persons who were non-white.
When the Supreme Court ruled in Shelley v. Kraemer, 334 U.S. 1 (1948), that judicial enforcement of those covenants violated the equal protection clause, local governments stepped in with facially neutral zoning ordinances to keep out affordable housing. As President Trump hints, these measures had a disproportionate impact on the poor and people of color.
We have come to see that zoning affects not only neighborhoods, but the lives of people; barriers to housing development exacerbate inequality, excluding many from the economic, social and cultural benefits of communities. As Professor Elmendorf shows, the problem of housing is a cat and mouse game, with states imposing requirements and local governments coming up with stratagems to evade them.
The game seems to have begun in the 1960’s with the “Quiet Revolution,” when states intervened in local land-use decisions, at first out of concern about uncontrolled growth and the environmental impacts from development. In some cases, states stripped local governments of the power to ban outright certain land uses, but leaving them the power to regulate discrete perceived harms associated with those uses.
Development opponents who had lost a local battle could now use state law to go over the head of the local planners. This created what has been described as the “Double Veto.” This second chance was used by anti-development interests to block important development such as housing.
Professor Elmendorf shows that some states’ assumptions were wrong, such as their underlying assumptions about the connections between projected populations and housing targets. In other ways, states displayed naiveté, for example by presuming that local governments would act in good faith, when they could “legitimately” kill a housing project on the pretext of design, scale, and public benefits issues.
He wades through the various models of intervention. In the East, the Mt. Laurel doctrine, fashioned by the New Jersey supreme court, requires local governments to meet their “fair share” of the low-income housing needs or suffer the “builder’s remedy,” a judicial or administrative proceeding giving developers certain exemptions.
States in the West typically set quantitative targets for affordable housing units and some require local governments to enact and periodically update a comprehensive plan or “housing element,” that explains how they will meet their share of the housing needs based upon projected population growth. Localities without a compliant plan might lose state funds, but traditionally, they would not face the builder’s remedy.
Professor Elmendorf’s exhaustive analysis of the administrative and practical problems with both models, reveals that it is not enough to just tinker with the local regulatory baselines for housing development. Instead, states must strong-arm local governments to block retrogressive stratagems, including bad-faith exercises of permitting discretion.
He proposes a framework modeled after the enforcement scheme under the Voting Rights Act of 1965. Under this model, changes to voting rules had to be pre-cleared by the Department of Justice.
Requiring local governments to pre-clear permitting rules would function like a preemptive statewide zoning and development code; negotiated with the state, out of public view, in an administrative setting and codified as a component of the locality’s own general plan. The housing element then acquires de jure status as local law that controls permitting by local governments in reaching their housing quotas. The plan resembles a preemptive and self-executing intergovernmental compact.
Applying pressure from above, the state would use the threat of fiscal penalties to compel local governments to periodically revisit and liberalize their entire framework for housing development, including zoning maps, development standards and fees, and permitting procedures. This top-down pressure would encourage bottom up measures, by subtly shifting the balance of local policymaking authority toward more housing-tolerant factions, while giving these factions some cover from challenges by housing opponents.
What the article so cogently reveals is the seeming intractability of the housing problem, one that needs aggressive and sustained efforts to resolve. Yet, in his model, Professor Elmendorf stops short of giving states the power to rewrite the housing element, relegating them to the threat of withholding funds in case of withdrawals from the pact. But, why so? Surely, state legislatures can curtail local powers if they would frustrate larger state interests.
Professor Elmendorf’s analysis and model could and should be extended to the critical sphere of housing. All citizens are entitled to have their governments exercise police powers to serve the public safety, health, and general welfare. Ensuring access to housing comports with this power, but barriers to access do not. Local governments that have and continue to resist affordable housing may have to forfeit some zoning powers. Housing, one of the most urgent of human needs, is still being withheld from those who need it and by those in the position to ensure it.
In what has been described as an “emerging consensus” and pejoratively labeled an “elite liberaltarian consensus,” there is growing scholarly recognition that land use overregulation is hurting the country by limiting the supply and increasing the price of housing. By highlighting state-level interventions that succeeded in checking local zoning authority, Professor Anika Lemar’s article makes a valuable contribution to the fight against excessive zoning limitations.
Professor Lemar’s article weaves together seemingly disparate examples—family day care homes, manufactured housing, small-scale residential alternative energy, and group homes—and explains what made those state-level assertions of authority succeed. Given how entrenched is the presumption that zoning is necessarily local and the related resignation among academics that state and regional approaches to zoning are doomed to fail, Lemar’s work is cause for celebration.
The article begins by differentiating between two types of state interventions in local land use regulation: those that limit local autonomy, what Lemar and others call “displacing interventions,” and those that do not. This useful taxonomy highlights to readers that not all state interventions are created equal when it comes to checking zoning barriers.
State procedural interventions—such as unenforced planning requirements and duplicative environmental reviews—impose procedural requirements but not in a way that allows states to check local governments. Similarly, requirements that projects be approved first at the local level and then at a regional level, a “double veto” intervention, serves to create additional barriers to construction or use of land.
The sort of interventions starting to get scholarly attention recently are those that limit local autonomy. Unfortunately, as Lemar highlights, most forms of clawback interventions—when the state take back land use regulatory authority from local governments as contrary to larger state interests—“are much touted by quite rare in practice” (P. 302.)
The final type identified in the article, deregulatory interventions (which in some cases might be categorized as federally preempted areas of land use regulation), carve out certain matters as inappropriate for local and state regulation.
Society is in a rare moment in which exclusionary zoning is getting attention. Some of that attention might be the result of scholarship about property and race, particularly Richard Rothstein’s The Color of Law: A Forgotten History of How Our Government Segregated America (2017). But the rising cost of housing in economically vibrant cities and coasts probably is the largest driver.
Lemar’s article contributes to our understanding of the dynamics of local land use regulation at just the right moment by showing how, with the right conditions and with special interest or bureaucratic support, states can assert their authority to permit some forms of land use that localities might otherwise block. There is a long history of courts and scholars looking at local antagonism to manufactured housing and group homes. But by combining examples of state intervention in those areas with similar interventions targeting local limits on family day care homes and small-scale alternative energy examples, Lemar is able to develop a larger theory about what sort of state interventions work.
The story The Role of States in Liberalizing Land Use Regulations tells is not of blanket state-level displacement of local authority, instead it is of tailoring. Partial displacement combined with a continued role for local government regulation at the margins.
Lemar contends this approach works because it provides a way to balance state interests (backed by special interests, including the interests of state regulators) with local competency. One could of course explain it in other ways—perhaps as a face saving device or even a way for local governments to permit locally undesirable land uses while also providing them political cover—but the most important point is that this combination of displacing intervention and limited local tailoring works. It somehow has permitted states to reclaim some land use regulatory authority despite scholarly pessimism that such a shift could ever occur.
This article sits comfortably alongside the writing of other scholars working on innovative theoretical models for balancing state and local zoning interests, but it is more of a ground up rather than top down contribution. And that is its strength. Lemar’s expansive research into the state laws surrounding her four examples provide both a strong base of support for her claims and a model for the sort of detail-oriented work that moves between the macro and the micro that is a hallmark of the best scholarship.
Deborah N. Archer, “White Men’s Roads Through Black Men’s Homes”: Advancing Racial Equity Through Highway Reconstruction,
__ Vanderbilt L. Rev.
__ (forthcoming, 2020), available at SSRN
In recent months, citizens and elected officials around the country have been tearing down or ordering the removal of monuments that symbolize white supremacy and subjugation. While many of the targeted monuments are statues of people who supported or espoused racist ideologies, another set of more innocuous monuments to racial segregation still stand: America’s Highways.
In her forthcoming article, “White Men’s Roads Through Black Men’s Homes”: Advancing Racial Equity Through Highway Reconstruction, Professor Deborah N. Archer examines the way that the U.S. highway system served as a tool of segregation, both destroying and isolating Black communities.
Archer begins by describing the way that the creation of interstate highways provided a vehicle for the enactment of a pre-existing racist agenda. The roads were often intentionally positioned in order to isolate and segregate or destroy thriving Black neighborhoods in the name of urban renewal, slum clearance, and improved traffic conditions.
Archer looks at the examples of Miami (where Overtown, the “Harlem of the South,” was destroyed and replaced by the highway), Birmingham, and Atlanta (where freeways were constructed along historic racial zoning boundaries, thus serving as physical barriers between pre-existing segregated Black communities and white ones).
Although many decisions about where to place highways were made in the past, this is not a mere legacy issue. Archer undertakes a discussion of some of the ongoing impacts of past highway construction, including “cement[ing] hyper racial segregation in housing and schools; concentrating poverty and excluding low-income inner-city residents from communities of opportunity; and the physical, psychological and economic division of communities.” (P. 29.) Thus, although many of the structures themselves were designed and built in the past, they continue to regulate behavior and enforce harm on communities of color in the present.
Archer recognizes that we are now at a moment in history where we might have a chance to alter some of these physical structures. Much of our highway infrastructure was built in the 1950s and 60s, and is therefore nearing or beyond the end of its useful life. Thus, there is the potential for additional harm to Black communities and other communities of color that were harmed by the initial highway construction as these roads are torn down or rebuilt.
However, there is also opportunity for redress. But merely removing existing highways will not be enough to affirmatively further racial equity in communities that were destroyed by highway development.
The existence of the highways has led to years of neglect in affected areas. Something more must be done in order to ensure that highway redevelopment has positive, instead of negative, impacts on communities of color.
Unfortunately, as Archer points out, our existing laws are not sufficient to ensure that racial equity will be centered in new highway development decisions. These laws often focus on intent, but “[o]ne or two bad apples, making a few discrete racially-motivated decisions, did not lead to the interstate highway system’s devastation of Black communities.” (Pp. 53-54.) Rather, structural racism and systemic inequality were behind these actions, and our existing civil rights laws have been interpreted in such a way that they are unable to dismantle these systemic problems.
Archer’s article goes on to consider other laws that might be helpful. Here, Archer makes an important contribution by addressing the way that advocates have attempted to use the National Environmental Policy Act (NEPA)—the focus of which is environmental protection—to force consideration of the racial impacts of proposed projects, couching race-related harms as either social or economic impacts.
While many highway projects must comply with NEPA, that statute is merely procedural and lacks teeth. So while decision-makers might consider the racial impacts of highway projects under NEPA, that statute doesn’t force any specific action or mitigation of harm.
Because our existing laws are insufficient, Archer joins the call for expanded use of racial equity impact studies (REIS), suggesting that they be completed prior to any highway redevelopment projects. As Archer notes, REIS are primarily designed to ferret out unintended consequences of governmental programs, but impact statements can also illuminate historic influences and structural racial inequities. As the article has made clear, the racial impacts of highway development have historically been largely intentional and systemic.
Under Archer’s proposal, REIS should: collect demographic data to determine how communities of color will be affected by proposed highway projects, further transportation justice goals, require a process that gives local stakeholders voice and an opportunity for participation, take a regional focus, and require both monitoring systems and mitigation requirements.
While tearing down Confederate monuments carries symbolic weight, it doesn’t change the systems of racism at work in the United States. In contrast, tearing down the freeways that physically divide and control movement between and within places can have a real impact toward eliminating both physical and psychological barriers to movement.
Thus, Archer’s framing and proposal provide a real means of dismantling one aspect of systemic racism. And, while our existing legal tools are likely not sufficient to achieve these goals, Archer’s suggested REIS process might get us there.
Cite as: Sarah Schindler, Tear It All Down: Highways as Racist Monuments
(September 24, 2020) (reviewing Deborah N. Archer, “White Men’s Roads Through Black Men’s Homes”: Advancing Racial Equity Through Highway Reconstruction,
__ Vanderbilt L. Rev.
__ (forthcoming, 2020), available at SSRN), https://property.jotwell.com/tear-it-all-down-highways-as-racist-monuments/
The lack of affordable housing in our nation’s most generative cities is an ongoing tragedy. The cause is hardly mysterious: incumbent residents—homeowners, sometimes joined by renters—artificially suppress housing supply by blocking development. The result reflects neither the verdict of free markets nor the outcome of democratic processes, but rather political and regulatory dynamics that are powerfully and systematically skewed against change.
In their new article, Professors Roderick Hills and David Schleicher dust off what might seem like just another wonky policy tool, the transferable development right (TDR), and repurpose it as a coalition-building device that can help unstack the political deck to facilitate development.
The backstory is familiar to those who have been following the land use literature. Incumbent homeowners are a dominant political force, as William Fischel’s work has emphasized. The home looms large in their personal portfolios, and risk aversion drives them to oppose anything that might be perceived as a potential threat to home values—including virtually any and all residential development.
This appears to be true not only in suburbs, the original focus of Fischel’s work, but also in cities, where land use politics typically operate at a fragmented, sub-city scale. Incumbent renters may also strongly oppose development, fearing gentrification, neighborhood changes, and displacement.
The collective power of incumbents to block change arises from the “hyperlocal” politics that surround zoning. Against a backdrop of restrictions, new developments are proposed seriatim and typically require a localized map amendment to the zoning ordinance.
Incumbents who are near a proposed new development are physically proximate to each other and have little difficulty coordinating. Zoning, as Hills and Schleicher explain, does not just reflect but also produces and perpetuates political clout through “constituency effects” that bind together the beneficiaries of the status quo and enable them to entrench it.
The interests on the other side enjoy no comparable constituency effects, Hills and Schleicher argue. The most obvious beneficiaries of development are would-be residents who have no ability to coordinate with each other or influence local political outcomes. There are, however, some better-organized proxies for their interests: employers who lose out on talent and developers who lose out on purchasers.
But employers and developers may not be able to overcome hyperlocal resistance either, because their own interests are often diffuse and fragmented. Projects considered one by one face tremendous headwinds, as local opponents rally against a lone developer who has no way to tie her interests to those of other developers who came before or will come after. Employers too would benefit collectively from more housing development, but they have only a fragmented interest in each particular development.
If there is no natural coalition capable of countering the incumbents, Hills and Schleicher suggest, then we ought to use policy to create one. They thus suggest using TDRs as a bundling mechanism—one that can connect development tightly enough to popular causes (like environmentalism and historic preservation) to pass political and legal muster.
TDRs are a special-purpose currency that enables the owner of a “sending” property to shift some of its development potential (height, say, or density) to a “receiving” property. The fact that owners on both the “sending” and the “receiving” ends of the TDR have an interest in the transaction occurring makes TDRs a potential coalition-building tool—although it may not be easy to keep those interests aligned.
For example, Hills and Schleicher discuss policy tweaks that would keep those with TDRs to sell from pushing for downzoning in receiving areas in order to increase the value of their entitlements. Other efforts may be necessary to keep those who support restrictions on the sending sites but oppose development on the receiving sites from finding ways to effectively unbundle the two parts of the deal.
Hills and Schleicher cite the High Line in New York as a compelling example of the coalition-building potential of TDRs. The owners under the High Line were restricted from developing into the airspace occupied by the park but were given TDRs that they could sell to those in the surrounding area. The park itself provided a nexus between competing interests, as well as a highly attractive focal point. Notably, the very reason for restricting development—to build an elevated park in airspace over the owners’ properties—also made the adjacent areas much more attractive for development than they otherwise would have been.
One might wonder about the generalizability of this sort of example, given the complex and localized political economy of zoning, the highly contextual way in which land use battles play out on the ground, and the many moving parts in TDR design—which is itself a political product.
Ultimately, what I find most valuable about Hills and Schleicher’s project lies not in any particular approach to TDRs, but rather in its insight that constructing durable bundles of interests offers a way to directly counter the political malfunctions that afflict zoning.
We might think about a variety of ways to carry out this bundling. For example, the recent success of some jurisdictions in loosening the grip of single-family-home zoning likely stemmed in part from the flexibility that the new zoning designations granted single-family homeowners to reconfigure their own properties—perhaps adding an accessory dwelling unit or converting their home to a duplex or three-flat.
Could this trend be further expanded (and its impact heightened) by making the added density permitted under new zoning rules transferable to other properties instead? Or perhaps a modified TDR format might be used to deliver benefits to neighbors who are impacted by nearby development, as other recent work has suggested.
Many other approaches might be imagined as well. Whatever the best policies turn out to be, Hills and Schleicher’s work seems sure to catalyze creative engagement with the ways in which land use law produces constituency effects, and with fresh efforts to reshape regulatory policy in ways that will benefit our cities and their residents—present and future.
Cite as: Lee Anne Fennell, Bundle and Conquer
(August 12, 2020) (reviewing Roderick M. Hills, Jr. & David Schleicher, Building Coalitions Out of Thin Air: Transferable Development Rights and “Constituency Effects” in Land Use Law
, 12 J. Legal Analysis
79 (2020)), https://property.jotwell.com/bundle-and-conquer/
The Fifth Amendment’s Takings Clause provides “nor shall private property be taken for public use without just compensation.” The Takings Clause therefore raises three distinct legal questions: First, when has property been “taken,” triggering the just compensation requirement? This is the question raised in “regulatory takings” cases. Second, to what extent does the clause prohibit takings except for “public uses”? This is the question raised in “public use cases,” when the government takes property by eminent domain with the intention of transferring it to a private party. These first two questions receive the most scholarly attention.
In the recent article What is Just Compensation?, Wanling Su provides a deep historical analysis and unique process-based focus on the third question triggered in Takings Clause analysis—what amount of compensation for property that is taken is “just”? This is the question raised whenever the government takes property, by eminent domain or otherwise, and property owners are entitled to be compensated for their loss.
Su’s work examines the question that has—perhaps not surprisingly—received the least attention in the scholarly literature on takings. But that is not to say that it has received no attention.
Scholars addressing the question typically assume that property owners are systematically undercompensated when their property is taken, although this assumption has been challenged, including by me. Concerns about under-compensation flow from the substantive legal standard used to determine what compensation is due when property is taken by the government (by eminent domain or regulation).
In United States v. Miller, the Supreme Court held that “just compensation” is the equivalent of “fair market value”—that is, the price that a willing buyer and willing seller would agree upon in a voluntary market transaction. There are many problems with applying this standard in the takings context—including the facts that the seller is typically unwilling and the market is nonexistent, leading to a high risk of error. Scholarly commentators primarily focus on the fact that the “fair market value” standard fails to take into account factors such as the owner’s subjective attachment to her property.
Su approaches the question from a different angle by focusing on process rather than substance. Su argues, convincingly in my view, that the Fifth Amendment’s “just compensation” requirement requires a jury determination of the compensation due when property is taken by the government.
Historically, the article is a tour de force. It links the right to a jury determination of value to the ancient English common law writ of Ad Quod Damnum (“to what damage”). (P. 1492.) Su traces the jury requirement in the takings context as far back as 1086, when William the Conqueror surveyed all the value of lands in England, relying entirely on jury assessments, for the Domesday Book. (P. 1498.) She demonstrates that the right of a jury assessment of value when property is taken was required by the Magna Carta (Pp. 1501-03), was endorsed by the Framers of the Constitution (Pp. 1506-09), and was assumed to be required by courts throughout the colonial and early republican eras. (Pp. 1505-13.)
Her historical analysis leaves, in my mind at least, little question that the Seventh Amendment, as originally understood, guarantees a jury determination of what compensation is “just” when private property is taken. She calls the constitutionality of alternatives to jury determinations, such as the commissions permitted by the Federal Rules of Civil Procedure, into serious question. And, she urges the federal courts to restore the proper understanding of the just compensation required by guaranteeing a right to a jury determination of property values. (Pp. 1518-27.) I’m convinced that she’s right on this important point.
That said, I remain uncertain whether her argument satisfactorily answers the question of whether the compensation awarded when property is taken is “just” or not. My uncertainty flows from three concerns.
The first is that, although the Fifth Amendment’s takings clause has been incorporated against the states, the Seventh Amendment’s jury right has not been incorporated against the states. So it is not clear whether the jury-right identified by Su applies to the vast majority of takings, which are accomplished by state and local—not federal—actors.
The second is that, as I have previously argued, most compensation calculations result from bargains made in the shadow of eminent domain—not in eminent domain proceedings, judicial or otherwise. That is to say, most of the time, private property owners accept the compensation offered by government actors under the threat of eminent domain. (Pp. 126-30.) They have good reason to do so since eminent domain proceedings impose what Thomas Merrill has called high “due process costs” on both bargaining parties. Jury trials undoubtedly increase those costs, perhaps further deterring private property owners from challenging compensation offers. (Of course, jury trials impose high due process costs on both sides, so a jury guarantee might increase compensation offers.)
The third, and most important, of my concerns is the following: Su offers a procedural solution to a substantive problem. If the fair-market-value standard systematically results in under-compensation by disregarding important “values” (such as subjective attachment to property), then restoring the right to a jury determination of fair-market value does not solve the under-compensation problem. It might be that juries are more sensitive to such attachments and will increase compensation awards to compensate for them. But, Su’s own analysis suggests that this isn’t necessarily the case.
In the end, Su’s account of the jury process for just compensation determinations does not leave assurances that jury awards will be just. Nevertheless, she provides a convincing account of why justice requires jury awards in the case of takings, adding an important perspective and new historical insights into the takings discussion.
Paul Babie, Private Property Suffuses Life
, 39 Sydney L. Rev.
135 (2017), available at SSRN
There is ongoing disagreement among property scholars about the fundamental nature of property. Some view property ownership as a bundle of unfettered rights while others envision property as a complex web of rights and responsibilities. Paul Babie’s Private Property Suffuses Life, while technically a review of two recent books, manages to review those works while also offering additional insights into this larger skirmish.
At one level, “private property allows us to exert control over things and over people.” (P. 137.) Under this view, owners enjoy “liberal freedom of choice about the allocation, control and use of things.” (Id.) If an owner controls a particular asset, all others lack dominion over that same asset, which means that the owner “control[s] the lives of others.” (Id.) An owner can use their property as they choose, and no one else may interfere. This broad conception of property is widespread in modern life, having arisen in England, spread to the United States, and then infiltrated the rest of the world, most recently Asia.
But, as Babie notes, summarizing Morris Cohen, “every choice a person makes determines the course of others’ lives.” (P. 138.) Property ownership is not just individual dominion, but also a web of relationships. Because of this interdependence, the state can restrict an owner’s use of their property rights if that use harms others. Property ownership thus comes with responsibilities to neighbors. The same law that creates and protects property rights also can limit their power.
This is not to suggest that property rights and powers are in complete equilibrium, as Babie notes. There is always more individual choice than government regulation. Those who make use of their rights sometimes harm other people, and the law often allows that harm to continue.
Over time, as the authors of the two books Babie reviews note, people came to recognize that individual effort leads to control over land, then to control over personal property, and then to more widespread commerce. As land and later other forms of wealth became more and more privatized, this view of ownership had extensive effects on economic life.
This evolution coincided with the growth of international trade and consumer culture and with increasing urbanization. That trend continues presently, “[a]nd so today we continue to face the consequences of the suffusion and the spread of the power of private property to control all that we do in every part of the world.” (P. 142.)
Where does that leave us now? Modern property owners recognize the degree of control that their ownership gives them over others. This leads them to defend their property rights vigorously, since those rights confer power and autonomy. “People the world over understand that property is power, the power to make the rules, to set the agendas, to make the decisions about how things are used.” (P. 144.)
Babie uses climate change as a contemporary illustration of this type of externality. In this setting, individual choice and control can lead to collectively extreme effects on many others. Thus, property is both a force for extreme good and a force for extreme evil.
Property ownership guards personal freedom and is often protected by democratic institutions. At the same time, property ownership leads to extreme displacement and destruction. “It is paradoxical because it fulfilled a dream, while simultaneously portending a nightmare: that which seemed to produce equality, really did so only for some, while for many others it destroyed their understanding of relationship to land and to things.” (P. 145.)
Toward the end of his review, Babie makes a weak call for reducing these inequalities. He recognizes that those who benefit from property ownership could lessen these inequities while still enjoying net benefits from the property rules that have afforded them such advantages. Those who profit would continue to profit, if somewhat less, while still exerting control over others.
While Babie’s article is stronger on description than on recommendations, that is not his goal – he is, after all, reviewing the work of two other scholars. But in offering his review, Babie also provides a thorough and concise overview of the growth and development of modern property rights. He merges history with legal and economic thought, and he suggests that those who benefit should remember that they are thriving under a system that may be protecting them to the detriment of others.
Babie closes as he opened, quoting from Shakespeare’s Henry IV, Part II: “Uneasy lies the head that wears a crown.” Like Henry, property owners enjoy a form of power over others. “And so we have come to know the weight of that crown, and just how uneasily lies the head that wears it.” (P. 146.)