October 16, 2023
Wealthy benefit when land rezoned for more dwellings: paper
By David Pendered
Feb. 12 – Allowing more homes to be built on land once zoned for single-family detached houses benefits the wealthy and educated, while homes of existing residents lose value, according to a paper released by scholars with Wharton business school and Princeton University.
The paper could provide guidance in Decatur. The City Commission approved Feb. 6 a rezoning plan that allows quadruplexes to be built on land now reserved for single-family houses. The Planning Commission in October 2022 had recommended denial after hearing from residents who opposed the proposal, who said they fear investors will exploit the situation. Residents who favored the plan said it will increase diversity.
Three take-away findings in the paper, “Estimating the Economic Value of Zoning Reform,” are that developers raced to build more dwellings in areas rezoned for greater density, and existing residents lost home value while the wealthy newcomers benefitted. From the conclusion of the paper:
- “[W]e find that developers responded swiftly to obtain approximately 65 percent more permits in blocks that relaxed zoning rules. …
- “Our welfare analysis suggests that higher income and education groups benefit the most from the reform, due to their greater price sensitivity and the ability to move from the suburbs to areas in the city that are closer to workplaces. …
- “Finally, we show that such reforms negatively impact the housing wealth of existing homeowners and landlords, which may generate political backlash in the form of NIMBYism – even though those same homeowners should not fear dramatic changes in the socio-economic composition of neighbors.”
The paper, released in 2021, evaluated a 2016 rezoning reform in Sãn Paulo, Brazil. The city served as a case study because it had rezoned at the city-block level to allow for greater density, according to the authors from Wharton, Santosh Anagol and Fernando Ferreira, and Jona Rexer of Princeton.
Some Decatur residents cited concerns similar to those raised in the paper during the city’s recent debate over allowing quadiplexes to be built in neighborhoods zoned for single-family houses.
The Decatur City Commission on Feb. 6 voted unanimously for the rezoning proposal. The Planning Commission had voted Oct. 11, 2022 to issue a non-binding recommendation the commission deny the proposal and revise it to reflect residents’ concerns.
One common issue in the Decatur debate and the academic paper involves the notion of the affluent making money from the denser development, while existing residents are left to manage woes related to density, such as traffic congestion.
More than 40 residents spoke, many of them in opposition, according to minutes of the Planning Commission’s meeting in October 2022. Comments included supporters who said density would lead to greater diversity, and opponents who questioned design standards for structures built by investors who are likely to be absentee landlords. Here are four representative remarks:
- Jacob Buchanan, 1229 Church Street, Unit H, endorsed the proposal and said it will lead to increased diversity of residents. He also suggested the elimination of requirements for a minimum number of parking spaces per dwelling “because cities are for people not vehicles.”
- Sherry Siclair, 416 3rd Ave., endorsed the proposal and said it would “increase diversity.” The Planning Commission “has the privilege of being in a position of leadership and sometimes that means doing the very unpopular thing because it is the right thing to do.”
- Mark Arnold, 15 Glenn Court, opposed the rezoning proposal and cited concerns about investor-led groups taking advantage of the proposed policy. The policy as proposed does not include “a guarantee that it will create affordable housing as suggested in the presentation.”
- Kathie Gannon, 335 West Ponce de Leon Ave., opposed the proposal saying it lacks a definition of “what affordable means” and “does not equal diversity or affordability.”
Towns and cities across the country, and the world, are grappling with the question of how to house the planet’s growing population.
One approach is the one Decatur’s City Commission adopted: changing zoning codes to allow more than one house to be built on land currently zoned for one single-family house.