Local Variation in Land Use Regulations

IN THE UNITED STATES, land use regulation is the responsibility of more than 18,000 local governments, mostly cities and towns. While the legal authority for such regulation lies with state governments in virtually all parts of the county, such power has been legislatively delegated to local government for almost half a century. This delegation of authority has its origins in the idea that such regulation is designed largely to manage situations where local property owners adversely affect one another through their development decisions or other actions. These externalities need some mechanism for dispute resolution—and such a role for land use regulation received early economic justification by Ronald Coase. ¹ He argued that with the imperfect assignment of property rights, public intervention might be needed in place of private bargaining. The powers that local governments have acquired over the years now are quite broad. In a nutshell towns can

• regulate the part of their open land that is developed for a range of uses (commercial, industrial, residential); and
• regulate the intensity of each use that occurs on that land (density or floor-area ratio, or FAR).

Recently it has been recognized that such broad land use controls might have impacts on the wider metropolitan economy. Clearly, if many towns choose to zone out industrial development, the economic growth of the metropolitan economy as a whole could be endangered. Likewise, if all towns set strict maximum density limits, the provision of housing for low- or moderate-income families will be difficult. Such limits also would make housing in general more expensive. Finally, if towns choose to provide extensive greenbelts or open spaces, the region as a whole becomes more spread out, with resulting increases in travel distances, times, and congestion.

The specter of such problems has led a few economists to develop simple positive (as opposed to normative) models of how and why towns decide on such regulations. Generally, they do so to increase the well-being of their own residents—without regard to broader consequences. Bruce Hamilton speculates about the objectives of towns in the setting aside of land into open space. ² Michelle J. White, Edwin S. Mills and Wallace E. Oates, and William Wheaton discuss how minimum-lot-size (MLS) zoning results from the desire of town residents to avoid the tax burden of providing services to residents with below-town-average income. ³ William Fischel and Rodney A. Erickson and Michael J. Wasylenko discuss the complicated trade-off that towns make when considering how much commercial development to permit within their boundaries. ⁴

Empirically, there has been little study of zoning regulations. In large measure this reflects the difficulty of obtaining consistent information across so many local jurisdictions. Generally, local jurisdictions are not required to report systematically their zoning categories, area so zoned, and buildouts or density. In terms of process, there also are usually no systematic data on how many zoning or variance applications each town receives, what the average process time is, or what proportion are disapproved and later appealed. With little data, the few theories that have been advanced have never been carefully tested.

This research paper has two objectives. First, we describe a unique database created in the State of Massachusetts in 1999. This database used satellite technology to document the exact nature of all open land in each of the state's 351 cities and towns. The database then geo-recorded the zoning ordinances for each jurisdiction to ascertain how this open land was zoned. The data can be used to document the proportion of open land that is zoned for residential or commercial use as well as the buildout that is allowed there.

With these data, our second objective is to establish a series of stylized factsabout how towns zone. Which towns zone for the largest lot sizes? What...