11

MANAGING URBAN LANDRESOURCES: LAND-USE CONTROLS AND LANDPOLICY
AN INTRODUCTORY INVENTORY ISSUES OF AND APPROACHES
'fhere are th_reegenerally accepted reasons for intervening into the f unctioning free markets.
l. elimination of irnperfections as t() enable the markets to work more effiso ciently and thus allocate scarce resources bett.er than previously. Accounting for externalitiasso that private and social costs and benefits can be brought into closer correspondence. Redistribuling lhe .scarce resources of'society so that the disadvantaged are provided with a greater opportunity to share in society'soutput. 'l-he

explicit goall tional effectl We will ! marketsand contain the 1 will then turl most notablj control of url not of direct of the work i externalities We will r particularly I ind t0 deal literature tol our theoreti served effer strategies. Finally, into the raP managemer minimize ol have accom vanous regl

1

EXTE

2. 3.

The first two objectives of intervention seek to effect allocationalfficiency, while the third objective seeks to create distributional equity. Traditionally, economists have been reasonably effective on the allocation front, but have fared rather poorly on distributional issues. When transposing these rather general objectivesof government involvement in the marketplace into the realm of urban land markets, one of these objectivescomes to the fore: the control of externalities.A secondary objective has been the removal of imperfections, particularly in urban housing markets, a subject to be treated in the next chapter. Redistribution of income or resources, however. is not seen as an

Land-use c( earliest forrl clusivezond jacent usesI the first lan( significantl/ trols have t zoning. Th( externalitiei ter 8, limitC property al agarnstenv The ea sideredto ! of the first l

. . . (it is) ur{ nessof a pq liq ciV which

I

302

ManagingUrban Land Resources

303

-

IG URBAN iOURCES: -AND-USE iOLSAND D POLICY

UESAND
rvening into the
to work more effi_ iously. rnd benefits can be rtaged are provided

explicit goal of urban land policy, though rhere are significant distribu" tional effects of urban land managem-ent policies. will.begin our analysiswith the exteinality issuesin urban land ,we markets and focus on the urban land policies designed to minimize or contain the off-site effects of various urban land-"usingactivities. we will then turn our attention to imperfections in urban"land markets, most notably with respect to issuei of monopolistic and oligopolistic control of urban land resourcesand the role oi land speculato"rr. whit. not of direct concern, distributional issueswill arise as we review some of the work on zoning and other land-use controls intended to control externalities, but shown to have significant redistributional impacts. we will draw on the tools of analysisset out in part 2 of this text, particularly.those.microeconomic toois discussecl chapters 4, 5, 9, in and l0 dealing with markets. we will make frequent reference to the literature to draw some empirically based conclusions to complement our theoretical and concept;al conclusions as to the predicted'and observed eff-ects of various urban land -unog"rlrl,-,t policies and strategies. Finally, we c<-rnclu.de chapter with an extension of the analysis this . into the rapidly.growing area.of environmental controls und g.,ri"th management policies, which have sought during the past deJade to mlnlmlze or even reverse some of the negative external effects that have accompanied urbanization, industrialiiation, and rapid growth i; various regions of North America.

EXTERNALITIES URBANLANDPOLICIES AND TO CONTAIN THEM
Land-use controls date back to the end of the lgth century. The earliestforms of control were zoning ordinances which establishedexclusivezones for specific types of larid-use activities.rrhe fear that adJacent uses and users rvould devalue properties led to the passageof the first land-use restrictions. The roni.,g.o.rcept has been ilaboiated significantly over the course of the p.ere-ntcentury, and land-use controls have burgeoned well beyond- the relatively'narrow confines of zoning.The desire to protect property values from erosion by negative externalitieslies at the heart of land-use controls. As we .rot.d in 6hap_ ter 8, limitations on property rights have evolved from protection of property against undesirable individuals all the way to protection against environmental hazard and ecological disruptions. The earliest land-use conrrol of geneial interesiis most often considered to be that of the city of Modeito, california, which is prorection of the first kind observed'above. . . . (it is) unlawfulfor any personto establish, maintain, carryon the busior ness of a public laundry. . . within the city of Modesto,except that part of the city which lies west of the railroadtract and south of G street. . . ,

allocationaleffiributional ,qiity. veon rhe allocional issues. of government n land markets, externalities.A 'ctions,particur the next chapi not seen as an

304

Economics Land lssues Contemporary of Urban

Here the issue was users more than usesof urban land. The ordinance was a blatant attempt to exclude Chinese from living and carrying out their businessesin certain portions of the city. As such, the Modesto ordinance was a precursor of similar land-use controls that have served as thinly veiled efforts to exclude the poor, blacks, and other minority groups and which have proliferated since World War II. Modesto therefore provides one source of tradition, that of socalled exclusionary zoning aimed at excluding certain groups in the belief that the presence of these groups will have detrimental effects on property values. However, the more prevalent theme in zoning, that of excluding uses rather than users, is the second step in the hierarchy of limiting property rights as set out in Chapter 8 and can be traced to the New York City landmark zoning bylaw of 1916, an effort spearheaded by merchants and owners of fashionable properties along Fifth Avenue to prevent the spread of the garment industry up that thoroughfare. Nothingso blastingto the best class of businessand propertyinterestshas ever been seen or known in any great retaildistrictin any large city as this vast flood of workerswhich sweeps down the pavementsat noontimeevery day and literand the shoppingpublic.3 ally overwhelms and engulfsshops,shopkeepers Such concerns by property owners and rnerchants led the city of New York to f<rrm,in 1913,the New York City AclvisoryCommissionon the Height of'Buildings, which cuhninated in the l9l6 bylaw that regu'fhis law became the l:rted height, area, and use of'land and builclings. rnodel f or other legislationand for the U.S. Department of Commerce State Standard Zoning Enabling Act, which was issued in 1924 and 'fhe era of modern land-use controls was :rcloptedby 1929 by 1930. under way; the stated objective was to control negative externalities ancl maintain neighborhood stability and property values. The Growth and Diversity of Land-UseControls The history and substance of land-use controls in Canada and the United States parallel each other quite closely. However, the legal and basesfor controls are sufficiently different that we must constituti<-rnal look beyond superficial similarities to understand the nature and status of controls in each country. We discussedthis point at some length earlier, in Chapter 8, to which the reader is directed for background. Canada followed closely the New York model when Ontario adopted similar legislation in l92l . The municipality of Point Grey, British Columbia, followed suit in 1922, and this traditional form of zoning control was extended to the entire city of Vancouver when it merged with Point Grey in 1927. Other provinces and municipalities picked up on the lead of these areas,so that by the onset of World War II zoning was well established.

One immedir Canada and ther tracted litigation I cal government's marked contrast t regulate land us chillenges.n To h Alberta Town an Town and Counl separated the no and stated that dt that the right to with the land or I Rural Planning y opment controls t6e United State property rights.

The previouslYc the maior dePa rooted in the 19 dian innovations developmentrig or occupation. c late use and del expropriation. Land-rce cot ish Columbia M right to enter ir developers wert previouslY zone return tor certa amended in 19 zoning bYlaws change in Proc municipalities c obligated to ma the market, ser cilities such as s and develoPers develoPment o municipalities. requlrements lI tional equitY b' public) accessI

They also served to promote distributional equity by giving the municipality (and therefore its taxpaying public) access to profits that derived from local public action. to regulate use ancl development. of protractedlitigation by private interesrschallenging the provincial and local government's regulation of the uses of urban-land.in the former. or occupation. d )l- h n 15 . and statedthat clevelopment riehts were the purview of'the Crown and that the right to develop or redevekrp land or buildings does nor go 'fhe with the lan<lor buildines as a rnatter of right. we have only ro look at the lg50 AlbertaTown and Rural Planning Act.where almost every attempt to regulate land use ancl urban development has been met with court challenges. a phase that would have been difficult in the Unitecl States.'Tohighlight this poinr.o Municipalities and developers were thus splitting rhe profits that accrued from the development of land within the municipality. 'Ihat municipalitiescould sell zoning. Thii . in (lanada.to minimize exrernal effects by writing fairly stringent requirementsinto the contracts. Recent Canain dian innovationsbuilcl on the underlying idea in the act. Under these land-use contracts.r'In 1968 the British Columbia Municipal Act gave municipalities in the province rhe right to enter into contractual relationships with developers. in return for certain obligations that the developer had to assume. servicecompletely their sites. These acts separated the notion of devekrprnent rights f rom ownership and use. namely that developmentrights are separzrble f}onr other rights of ownership. This is in markedcontrast with the Unitecl States.ver )od lerew :he iuhe 'ce nd ras ies le rd . wherein developerswere granted the right to develop lands that were either previouslyzoned for another use or lower density or were unzoned. Alberta Town and RuralPlanning Act thus openecla new phasein land and urban developmentcontrols in Canada. use. Governnrents have the legal right. and parks. community centers. a change in process not in substance. developers were frequently obligatedto make cash payments for each lot or housing unit put on the market.Managing Land Urban Resources 305 lnce 'out esto ved rrity sobeion tof Yof the led .given strinsent constitutional protection of private property rights.vehat One immediate manifestation of the legal differences between Canadaand the United States is the absence. without such regulation being deemedln expropriation. Land-use contracts are an excellent casein point.st a- rh d. which were rootecl the l9l6 New York City clistrictingordinance. closely modeled on the 1947 Town and Country Planning Act of'the United Kingdom. is. It was amended in l97l so that land-use conrracts had to be treated like zoning bylaws and were subject to the same procedural details.and often provide off-site facilitiessuch as schools. Recent Canadian Innovations 'fown The previously cited Alberta and Rural Planning Act provided the major departure fnrrn previous lancl-use controls. Such a system allowed municipalities.

Time zo 8 . intended ro curb documentedabuses som-e deas.. density.r'bun arEas).. Water. deu-el. Subdivi A brief look zoningcon beyond its i Un Planned flexibi duce PUD allow over an en ...f protecting the public . 2. .u.We I from extern sought to ir1 pricing of cq zones.. il in.i.rt) permit system Land-use contracts have their roots in the deuelopment ment pelTlt in 1956' The develop. central have sprung up ln most Canadian cities and in many U'S' development districts are functionally areas.tnJUhited States.are much more flexible and more subject to bureaucratlc lnterpretatlon. .. controlling mechanisms at more work in Canadian"rrrbin areas. Exclusior Performi Incentivt Floating 6. 4. foregoing rep"resent the major."u?tr. local Other conrrols a. Issuance pendent .rrl.. of lessthan Health Act forbids the use of septic tanks in developments acres in 5-acre lots in and around urban areas. farmlt .rl of the"system"has of the Ontario Planning Act. t.itrups the most elaborate'sy^stem controls in North America is A hierarchy oT controls is provided for by local muar work in bntario. Building 10..ir.' sincethe [il. 5." t'" nif..guidelines is und other restrictions..opment which of com. distrirts.2 is provided for.zoni Zoning cont and local pol tive external dustrializati Beginni vision ordin: versions..members. land-usecontractswere replaced in British columbia with a more complicatedsystemof development municipalities by Juin.-Control in such cases place use.under demands'u veloperswith excessive tt.These comprehensive reu.etc l..r..ot tut " place intil a developmeni permif is issued. that external efiects of urban land sovernments in Canadu'to are kept to a minimum. all nicipalities.. with ihe objectivb o.h ne$dtiations rarher than arbitrary bureaucratic rules and . Planned Fiscal zol 3.u"l"p-.. since more direct controls can be applied readilv in Canada. n'hich.Development is de..f.. All lots of less than 5 these areas must be serviced by sanitary sewers' -...r.*i interest and regulating urban land use and develoPment: ^A major just been completed with the 1983 passage ouerhu. the -t i-porlti"ri of externilities'oncommunity. 3.. fiscal and"exclusionary zoning' and environmental more impact statements.rt.. s 9.. Official r I l.rive November 1979.of e...uJl' rrrovinciaTcabinier. prlcrng arrse Iatter includi the Standar Commerceit details).[.i.prehcnsiue A veritable e mental contn decade." uy the development .r -.. In British Columbia the .il?. -cLurio' -. rhe principle remains unchanged:To minimize the il... While the form haschanged.. trilt . right to recaprure action. Largely absent are many of the as water and controis existing in."."blackmailing" comnmun^ity r.it.r.. Thly are areas where broad planning. and finally .p..td poliJies have been usedbyprovincial and . A iomplex process of fullic hearings..a through the development permit process..regional governments (for most of the urban areasand the the Ontario IUunicipalBoard.suctr .'' -itr.upp.306 LandEconomics of lssues Urban Contemporary was significantlymore efficient and equitable Drocess -than-previous n'ere basedon bilatCanadianschemes "p. oioneered by the city of Vancouver Ii.rrr.r. community some of the gains that result from public "I in.ing the criteria oi rhe guidelines.d sewer moratorla.d areas.o-pti.i procedures.rr. can!"".

p. urban development.o'logical zones.often well beyond its initial intent. A major 1983 passage echanisms at ' of the more as water and nvironmental rpplied more Recent U. 10. regulations that seek to protect itt.S. with the issuince and rapid adoption of the Standard state zoning Enabling Act by the U.Managing Urban LandResources 307 : than previous basedon bilatltic rules and :re replaced in . lnnovations A verirable explosion in land use.'Department of commerce in rg24 and the Euclid v. and environmental controls ha.ndlocal policies a-ndlaws intended ro furrher limit"the effects of negative externalities deriving generally from continued urbanization. central :e functionally guidelines rein such casesis elopment canssuanceis dehich are much 'etation. l. sewage. from externalities. and site service moratoria Building permit and related growth restricrions Official maps Subdivision conrrols A brief look at each will serve to illustrate just how much the standard zoning. unique e. ihe latter including externalities. Tndustrialization.'. perversions.iuti. 6. and growth. 5. It is closely related ro the iverage-density . 3. ll. state. 4. Lngthe public ent. and historic buildings and sites.s taken place-in the United siates during the past decade. . elaboiations. a. etc. Planned Unit Developments (PUDs)is PUD's are an attempt to introdu-ccflexibility. which y U. Planned Unit Developments (pUDs) Fiscal zoning Exclusionary zoning Perlormance zoning Incentive zoning Floating zoning Time zoning Water. reserving for the next section those thai have sought to improve market efficiency and overcome the improper pricing of certain land resources such as shoreline. ncialand local of urban land Columbia the rtsof lessthan ran 5 acres in rth America is rr by local mur areasand all rnd finally the rngs. 8.r been developed during the past 60 years. Beginning with elaborarionsof the locally based zoning and subdi. 2.congep! !a.S. This impr6per pricing arises from differentials between private and social cost.S.creativity into the traditional zoning framework. we have the following extensions. farmland. A PUD allows a developer ro cluster buildings and averale out densities over an entire project.Ambler decision (seeciapter g for details). vision ordinance. we focus here on. 7.and. Zoning controls have been suppl-ementedb/a range of federal.zoning bylaws spread rapidly throughout the unitei srates. 9. appeals.f development : municipalities rckmailing"dechangedunder r minimize the he community rlt from public entpermtt system )pment permit drslrrrls.

Becauseof their subtleness and flexibility.For example.-" Figure l1Saskatchewan of zoning regul zoning rangestl high rises. actual experience with performance zoning is somewhat limited. land users.Performance zoning would seek to. or income groups living in proximity to each other. they are ofren difficult ro formulare adequately in an acceptable ordinance and. 2-.cl veloper has brou munity objectiv lished to permit closely alignedw ment zoning ide Time Zoningz T demand for con growing commu tional zoning th Such timing allo be consistentwit classicand muc York. performance ioning seeks to isolate characteristicsof various land-use activities that cause negative externalities and to regulate these characteristics. It has been frequently. Exclusionary Zoning" L. 'fhis Performance Zoning'e and floating zoning are the most subtle. Fiscal zoning seeksto bar land uses that place burdenr J. and densities as long as they comply with broad overall density and use concepts. courts. As exPec .lan to developerstor a most imaginativ concept and how Floating Zoning cial plan and a < various land-use zoning ordinanc but does not sP boundaries. and most often successfullychallenged in the U. Thus. which has through the im servlclng. water. and recreational services. Such large lot requirements.The classicform of such zoning is so-calledlarge lot zoning where l-.r. density in and of itself need not be a problem if there is adequate transportation. Rath mixed-income h< as well as sPecifY and shopping. objectives. Their residents are seen as lower-income families requiring social.308 Contemporary of Urban lssues Land Economics zoning.Ther uses.r loc"algovernmenl expenditures. high tax revenue producers with low demands on the public purse. or even 4. Rather than regulating land uses and intensities. Traditic and even building ugly buildings. flexible. Developers can mix uses.building types.xclusionary zoning returns ro the l88b Modesto ordinance by attempring to excluddcertain types of land use and.S. Fiscal Zoningl.cultures. This is an application of zoning to achieve fiscal. This type of zoning seeks to minimize the perceived negative externality that derives from having people of different races.impose limits in different zones on rhe traffic and iewagegenerating capacitiesof various uses. vigorously. typically. frequently coupled with large minimum-size house requirements for these lots.or 5-acre minima are established for single-family lots. a high-rise office building adjacent ro a subway srarion may prove to be no problem to traffic. cluster zoning. is effective at excluding lowerincome (and often nonwhite) households from the municipality. by extension. but with exclusionary rather than fiscal objectives. multifamily housing. educational. Incentive Zoningt seeks to eliminatt use characteristic overcome this by negative. and innovative elaborations of zoning. Fiscal zoning typically leads to the overzoning of land for light industry such as research and developmenr parks and for high-quality office space. c tempts to build c open spaces. rather than land-use and externality-minimizing. as does traditional zoning. yer rhe same building placed in the suburbs or on streets with no subway might cause significant traffic problems. and sewagecapacity. as a result.instead of on the usesthemselves. and comprehensivedevelopment zoning concepts. It is often closely related 1o fiscal zoning in appearance.

zoning-that is phased in over time on a plescribed schedule.or Such n-size owerThis nality corne . rbtle.g. Floating. New York.ding such positiu"'"Ie-eits. in performance zoning). bring people and jobs.d boundaries.ifi.'' Figure I l-l in-dicaresa zoning map in the city of Saskaroon. aftei a ieveloper has brought forward a suitable propoial.As expected. bltoo tightly regulating uses. At a later. and even. The concepr here is closelyaligned with the PUI). densities.r-n". Time zoning can be as straightforward as tiaditional .teiil".?l FloatingZoning 'rraditional zonin_gis implemented through an official. rbtle:ly in perland ning rause (amuate ould ageIves. mixed-use. iicenti"ve rorirg triesto as overcome this. or people and shopping.b. unspecified d"ate.plan and a corresponding official roning map that dElimits the various land-use zones permissible under thle official plan and the zoning ordinance.s.. 'rne classicand much heralded example of time zoning is Ramapo. agriculturally zoned areas of the city are on the I 885 rd use oning .. Such timing allows_a com-munity ro regulate its paie of developmenr to be consistent with its ability to service" new land and housenotds. ^ . legend rates thelarge number of alternative types "a 'the of zoning regulations rhat can arise in city.permit.ro move ahead. the precise boundaiies of the zone can be established to.by acknowledging that exteinalities can be po"sitiveor negative..a negative exrernality. and comprehensive development zoning ideas rnentioned above. IncentivE zoning attempts to build on positive aspecrsof built-form such as plazas"and ope_n spaces. which has been successfulin controlling its pa"ce deveiopment of through the implemenrarion of a timed siquince of zoning and servlclng. clearly.Traditional zoning. consistent with community objectives. Rather. There are also some restricted and lessrestricted industrial uses. landscaping. and ugly building.:glgper.zoning builds directly on thi official plan but does nu specify disiricts of land use witir precisely rp.a. Fiscal 'nment "e seen tecrearf land nd for rw de- Incentive loningm whereas traditional zoning is purely negative and seeksto eliminate negative externalities throirgh'reguiatin"g uses (or usecharacteristics.uilding materials. and artwork by giving bonuses oiincentives to developels fo1 incl.In rerms of quality. l8 t. 'rhe saskatchewan. The 2-. New york city has a most imaginative scheme that has served as a successfulmodel of the concept and how it can be implemented. closer together).Managing Urban LandResources 309 ng conlong as fiscal. often leadl to. ranges the whole gamur from agricuitural to different rypes of 39nj"q high rises. unimaginative. TimeZoning" This is an innovation that has arisen in response to the demand for conrrrlling_urban development in many smali but rapidly growing communities. may Lthe affic . it sets out a functional land-use category'such as mixed-income housing or mixed residential-commercial d"evelopment aswell as specifying rhe purpose (e.igor.

site servicing controls work more indirectly. by controlling the placement. zoning Figure 11-1. and road development.310 LandEconomics lssues Urban of Contemporary {p { I '-*&* i . sewage. Cityof Saskatoon fringes. sewage. . Land'u CitY (Source. Alberta. Figure I l-2 depicts the land-use zones in downtown Calgary. Water. 1913-75. Sewage and Site Service Moratoria24 Time zoning opens up the whole subject of growth controls. . Where all of the previously discussed controls were placed directly on land. 1953-1975. timing.and other infrastructure moratoria attempt to reduce negative effects of growth by directly limiting the urban development ffi ffi Retail Off ice Fiqure 11-2. 1 r I r*'*'*' map. Open-space areas are noted on the fringe of the city. and quantity of basic urban infrastructure such as water. The pattern is similar to that exhibited by Saskatoon'szoning map. which begs the question about the efficacy of zoning to create such patterns. and zoning that allows higher density is nearer to the central businessdistrict (CBD). The source is the Planning Department of the City of Calgary. Water. and permitted density increasesup to high-rise offices in the central portion.

City of Calgary PlanningDepartment. downtownCalgary. to reduce velopment I ffi Figure 11-2.) Government Openspace .ManagingUrban Land Resources 311 the central rn Calgary. nent of the of the city. the central on's zoning g to create )ensup the y discussed work more ity of basic relopment. Land-usezones. 1953-75.(Source. .

t ... powersun_ der the U.rrity as it wilr lo.o--.J r""a uuuiluur.J|..tiy h-it-til.rtrui.i-ii uifr""ur processes.ru"m... the rocar governments.ir...g.r!. in rand use controls..regaring ir. spearhead for .g Ti"T._. """a Thiscountry in th is land.r.." The c<-rst .. and the lack of expeditioustreatment ot permit apprications.k.1J-.curbs. 3l state Other statewi following.""... .Such measureshave been something lessthat popurar with the development industry.tpowersto limit the negative ex_ arising f'r. an revolution newl are monthemF-thene in the major decisi l a n d.. L'cal governmenrs can piescribeservicingstanJ. i-porition of lengthyand complicated subdivisircn p..t'yut: brares because rhey. a?.ary sensi_ tive lands such as marshes. nuri"g G pastdecade.i".rtrgi..unstable . s.":. than d. rhey p... california..ture prop_ erry and urban developmenrflows t.. ard the list of .o*th contrors ries of in ultimately higher"land and imp..srorm ruresfor )uyr. .ire these powers. of-build_ ing that can tak6 place within a commu"itl.y. toorsprovide localgovernments with very rig.'f the .that compremenrofficiar .. ..ir. alhwing lor drain:rge..rvide a very useful means for guiding growth and can'becombiirehwith one ".'fhat the statesrruu" . stares havebeenac_ tivein exercising s<-rme of." the subiect is Iengthy and growing.o.. building permit resrrictions arr.. utilities.. irui.r. we s direct state involv also saw that in Ca tutional property provincial control cal decisions.r"i.iir'r. Building permit and ReratedGrowth Restrictions.which are vestecr with sri-cailJ p"ii..ul g." powers -rarher .. tl. l-orrr.". ot'the rand_use serour ab've.2T orher ..... Local governm effective action ( boundaries-inclur downstream water ent. erc.rin.p8ri.ui.:: plans and the zoning mzrp.ir.m urban"crevelopmenr. it.[^r".6 while moratoria on infrastructure limit the amount Lr ..uttycontrol ::r":r:*^r.ruiiSJ.1 In Chapter 8..312 Contemporary of Urban lssues Land Economics process.:'.'rapidry.nce fulry developed. oni and fbr buildingon s'rpes. warer. The ancienreg entirepattern lan of ual localgovernm socialproblems._.rn thisapproach.-p. plrriJro"reg.ing of rand. are rhe most widery known una'pr. tlr..in the United P..r?t .are seenas providing.. and ec here are stateatten urban and regiona excellent casein po Similarlv.)as welr-as our rors."r tt i. States have a shorelands.'Theydesig.3s Air Pollution I Act of 1970.T... .. dr'nes.lt is a peace revolution.[or.r..:hniques use.p.t g.r* removar.. and public infrasrrucrurdand pro_viieu frup....Th..ri.Throu . 3 2 officiat Maps'e are pranning devices..rher..OT. .iryT. of petaruma. parrern of developmenrand iapital plu. parks. qrri. itsS and organized revolut nonetheless.directly has been rermed "trr. The mapsdo nor.rate future striets.. floocring .rage.i'il.r.. stategovernments.ver urbanranddeverop_ menr directry. poiiii.r.o.r"seismicary"active rr"dr. corrsriturion.from ac lmpact states man( (NEPA) (seeTabl land-useand land The stateshav response to the rel so.Lrt". sincethey can control iuira .me. ..l*". These rimitationsof the 1111aJities properryright are deemed consriturio"rily "ir-ui..i. o.Lr. Table I l-l se management prog vorvementls slgn area shown earlier involved acrossa capacities. -ross rocalgovernment boundaries.... for urban growth.s.ri.r' for the generalwelfareof the enrirecommunityl rn.rt by public Subdivision contrors3osubdivision contrors provide with the wherewithar regurate subdiuision'ur"J communities to tt.nr prices. stateshave all of the land-usecontroring powersof locargovernment and then s.n.r.

and rs it will rans for and-use lrol use. as of April 1975.9. We alsosawthat in Canada. States have acted to protect endangered wetlands. in the This is of country in themidst a revolution thewaywe regulate useof our within law.lt is a quiet land.Through their power to regulate land use and transporta- : official rks. Control of power plant siting is an excellentcasein point. Hawaii and Vermont). impact statesmandated by the National Environmental Protection Act (NEPA) (see Table 8-l for details) to the development of statewide land-use and land management programs (e. Table I l-l setsout. some that it generates.32 .as of 1975.Notice that state involvementis significantly broader than the environmental protection 'f 'Iable 8. Similarly. he table illustrates that the statesare areashown earlier in involved across a number of'lancl-use activities and in a number of from acting as a coordinating agency fcrr the environmental capacities. as 28 states.. itssupporters and and revolution. seeking maximize tax baseandminimize its its each to uallocal problems. it is a revolution with but organized nonetheless.the various types of land-use managementprograms in effect in the 50 states.and ecologically sensitive areas. there was a parellel trend toward direct provincialcontrol over land-use decisions and provincial review of local decisions. is whichthe Theancien regimebeingoverthrown thefeudalsystem under pattern landdevelopment beencontrolled thousands individhas by of entire of governments. water.I . is a dislt revolution. 3l states control surface mining. In Chapter 8. . exercised such controls." Air Pollution States have an important role under the Clean Air Act of 1970. frequently. is a peaceful lt revolution. to Thetoolsof the and social of a revolution newlawstakinga widevariety formsbuteachsharing comare provide participation regional mon them*the needto somedegree stateor of limited inthemajor that the supply of decisions affect useof our increasingly land . rut lots.ManagingUrban Land Resources 313 'with the ubject is trols lies Itoria on lr urban of buildetaluma. such as downstreamwater pollution from untreated or partially treated effluent. Other statewide attempts to control such externalities include the following. The stateshave stepped directly into the land management area in response the repeated failure or inability of local government to do to so. we spent a good deal of time looking at this trend toward direct state involvement in land-use and environmental planning. no centralcadresof leaders. shorelands. . farmlands. conducted entirely the include bothconservatives liberals. Of more direct concern here are state attempts to minimize negative externalities arising from urban and regional development.Local government is either too small or too narrowly based to take effective action on negative externalities that fall outside its boundaries-including. ' public runities rf land. caring lesswhathappens all others. ling on y sensirrovide tive exof the United for the 3 propy from grs uneen ac:velop: local overnhl govr these rd use . head for sition of :ocesses. despite a very dif ferent set of legal and constitutional property institutions.

lcxitrr Ncw York North (larolina North I)akota ()hio ()klahonra ()rcgon I'crrnsylvarria Rhodc lslan<l South (iarolina South I)akota -l-ennesscc l-cxas Utah Vcrnront Virginia Washington West Virginia Wisrrlnsin Wyoming Yes Ycs Yes Yes Yes Ycs Ycs Ycs Ycs Yes No Yes Ycs Ycs Yes Ycs Yt's Ycs Ycs Ycs Ycs Ycs Yes Ycs Yes Yt-s Yes Ycs Yes Ycs Ycs Yes Ycs Yes Yes Yt--s Ycs Ycs Ycs Ycs Yes Ycs Ye.I Sourrz. S t u d y ( e x e c u t i v e o r l e g i s l a t i v e )o r s t a t e l e H i s l a t i v cc o n s i d e t a t i o n i n p r o g r e s s . U. Statc land (rrsc progranr lcgislation enacted.s Yes Ycs Yt-s Ycs Yes Yes Yes Counties Yes Ycs Yes Yes Yes Yes NA No Ycs Ycs Yes Yes Yes Yes Ycs Ycs Ycs Ycs Yes Yes Yes Yes Yes Ycs Ycs Ycs Ycs Ycs Yes No Ycs Yes Yes Ycs Ycs No Ycs Ycs NA Yes Ycs Ycs N-<l Ycs NA Yes Ycs No No Ycs Surface Mining Yes Yes No Yes Yes Yes No No No Yes No Yes Yes Yes No Yes Yes Ntr Yes Ycs No Yes No No Ntr Yes No No No No Yes Ycs Yes Yes Yes Yes Yes Yes No Yes Yes Yes No No No Yes Yes Yes Yes Yes h"g.Management. April 1975 Table 11-1 Statusof StateActivityRelatedto Land-Use Enabling Legislation Regional Agency Advisory Only Yes NA Ycs Ycs Yes No Yes Yes No Yes NA Yes Yes Ycs Yes Yes Yes Yes Ycs Ycs Ycs' Ycs Yes'l Yes Yes Ycs Yes Ycs Ycs Yes Ycs Yes Ycs Yes Ycs Ycs Ycs Ycs No Ycs Yes Yes Yes Yes Ycs Yes Yes Yes Yes N-o Regional Agincy R?vieiry Authority No NA No No Yes Yes No No Ycs No NA No No No No N<r N<r No N<r No No No No N<r Nrr No No No No N<r N<r Ycs No No No No No N<r No No No No N<r No No No No No No Ycs Procedures for Crcrdination of Functional Prognms No Yes Yes No Yes No Yes Yes Yes Yes Ycs No No Ycs No N<r Nrr N-o Ycs Ycs Nrr No No No No No No Ycs N<r No Ycs Yes No No No No No No Ycs No No Yes Ycs Ycs Ycs No No Yes Yes Yes Func. tion Floot oltit No No Yes Yes Yes Yes Yes No No No Yes No No Yes Yet No No No Ye Ye Nc Ye Nt N( Nt Y( Y N N Yr N N Y N N V t\ I "(bastal Zont' Man:rgcntent No statc has an appr'oved (irastal Zone Managentent I'rogram at present. data and infbrmation collection (b) policy study or pronrulgation by agency or conttnission (c) identification ol land arcas or uses of more than kral concern (d) regulation or management ol land areas and uses identified (d) direct state implementation or state review of local government itnplententation 'Massachusctts Areawidc (louncil lirr Nlartha's Vineyarcl has authority to administer c()ntrols /Minnesota uo Twin (lities MetroPolttan 'Nevada Must be ratified in a reteren /Rhodc lsland de' Within the coastal zone a fl-ennessec Power Plant siting is conduc of. No activity at statc levcl 2 . bStateLand Use Program Codc: l.ional Programs Iand UseValue Tax Assessmena Iaw No Yes No Ycs Yes Yes Yes Yes Yes No Ycs No Yes Yes Yes No Yes Yes Yes Ycs Ycs Ycs Yes No No Yes Yes Yes' Yes Yes Yes Ycs Nrr Ycs Ycs No Ycs No Yes No Yes No Yes Yes Yes Yes Yes No Ycs Yes Municipalities Alabanra Alaska Arlz()I)a Arkansas (lalilbrnia Colorado (lonncctictrt Delaware Floricla (icorgia Hawaii Idaho Illinois Indiana rlowa Kansas Kcnt uckv [-ouisiann Maine Maryland M:lssirchusct ts Michigan Minncsota Mississippi Missou ri Montana Ncbraska Neva<la New Hanrpslrire Ncw Jcrscy Ncw N.S DePartmenr In ( CitizeneNew York' NY: 314 . 3. Authoriz:rtion Iirr: (a) invcntorying cxisting land res()urces.

Citizeri (Ncw l.rtrlv Poncrpl. I and LlseControk in th( LlnitedStaes: Handbook Sourcr: (louncil. Elainc Hess. Dcp:rrtnrcnt ef lnterior.rliciPation' Ycs Yes NA NA Ycs NA Ycs Ycs Yes Ycs Ycs NA Ycs Ntr NA NA NA Ycs Ycs Ycs Ycs Ycs Ycs Yes NA NA NA NA Ycs Ycs NA Ycs Ycs NA Ycs NA Ycs Ycs Ycs Ycs NA NA Ycs NA NA Yes Ycs NA Ycs NA Staae Land Use Program (see Code)o I Critical Areas No No No No No Ycs No No Ycs No No No No No No No No No Ycs Ycs No No Yt's No No No No Ycs No No No No Ycs No No No Ycs No No No No No No Yes No No No Ycs No No z 2 2 2 3a-c 2 2 3a-e 2 3a-e 2 2 2 z 2 2 2 z .ork. ed. NY: l-he Dial Prcss firr the n*ational Resoutce Defcnse 315 .f?l-(' 2 2 2 2 2 2 3a-c: 2 2 2 2 3a-c 2 z 3a-c 2 z 2 2 2 2 3a-c 2 2 2 z 3a<l dMinnesota Twin (jitics Metropolitan (lount:il lras regulatory autlrority 'Nevada Must bc ratified in a refcrcndum to take cflect /Rhodc Island (loastal (iouncil Within the coastirl zone a clevelopntent perrrtit is rcquired lrorrt lhe {Tennessec 'l VA . Program P. Inc.rnt riting is r onrlut tcd br oJtheI'egal Rightsol A U. 1977.Functional Programs land UseValue Tax Assessmen! law No Yes No Ycs Yes Yes Yes Yes Yes No Yes N-o Yes Yes Yes No Yes Yes Yes Ycs Ycs Yes Ycs No No Yes Ycs Ycs" Yes Yes Ycs Ycs N<r Yes Ycs No Yes No Yes No Yes No Yes Ycs Yes Yes Ycs No Yes Yes Floodolain Surface Mining Yes Yes No Ycs Ycs Ycs No No N<t Ycs No Yes Ycs Ycs N<r Ycs Ycs No Ycs Ycs N<r Ycs No N<r No Ycs N<r No No No Ycs Ycs Ycs Ycs Yes Ycs Ycs Ycs No Ycs Ycs Ycs N<r No No Ycs Ycs Ycs Ycs Yes \eguIa'lons No No Yes Ycs Ycs Yes Ycs No No No Ycs No N<r Ycs Ycs No Ntr No Ycs Ycs No Yes No N<r N<r Yes Ycs No Nrr Ycs No No Ycs N<r N<r Ycs N<l Nrr Ntr N<r No No No No Ycs No Yes Yes Ycs No Power PIant Siting Yes Yes Ycs Ycs Yes Ycs Yes No Ycs No No No N<r N-o No No Ycs N<r Ycs Yes Ycs N<r Ycs No Ycs Yes Ycs Ycs Yes No Ycs Ycs N<r Nrr Ycs No Ycs No Ycs/ No No Ycsa N<r Nrr Yes Ntr Ycs No Ycs Ycs Wetlands Managemena No No No N<r N<r No Ycs Ycs No Ycs No No No Ntr No No N<r Ycs Ycs Ycs Yes N<r Ycs N<r Ycs No N<r No Yes Ycs No Ycs Yes N<r No N<r No No Ycs Ntr No Nrr Yes No Yes Ycs Yes No Ntr No Coastal Zone MEmt.S.

r. il. recen y use :i:.". agencies allowsrares focustheir. and enviionmenhl externarities are found.g."i governments and by devero[ers in uninctrpo.. sratesare envisi.nsiypicaty exemprexistingrand use..r".. u. uiu". io acr#.." g/ i". land andto Iigl::.r.e Inrersrare areas: srarewide rald-yie^planning-ana rtut..ir. f reglonallzatlonls functional geogr states. water. regard."i locar concern via nuisance ordinances.. sratetransportition departnients.ldTdr lmpact statements.l.ni.improvemenrsExamprJsare-llegai .. This has traditio""ily u"...rur. to provide I tive effects of ur already taken su toric buildings. may not be"mini-.sRace . states have arsobegun tr involve themserves directly in two critical yet enablethem t graphical 1nd . which enc or are of sufficie (such as a unique eral intervention ing a state conce government hast make grants..Hi.urJ.*rd.C boundaries requi hetped coordinate ."f"... rl protection and rhe conr. .d.:rr] ir.rits ronnlents.ies regions States have created ... broadenedint.i i".. h a d s t a t b w i d ea n d _ u s e r p l a n n i n ga l l s e & i n g t . ffi..il... . m i n i m i z e h ec o s t s ' t o r .so nant land-use el where and utiliz enormous impac most notably thl granting of capit intercitv railroad Finallv..r._".rtiJ.. and to channel*growth.iJ _or...if the excess demandfor urban. ..ion Fr Federal involvem tivities.r"" ..res given a rarher are cenrrar..ned as playing a key rore in the'imprem.r"ri"rru.. states do this nof onry through diiect t"::]:T""t in supplyi"s..'. 'fhe.t. During rhe lg70s virtuaityotf .la . f". i.. Again. such as Minnesota.. solid'waste pollution under the terms of the federal solid waste Disposal Acr.[.d i.u..lt Lct nsportari.rrrmenrar f.c o n t i n u eu r b a ne x p a n d sio.and protect endangerea rurrir..u.J.i tr ". some states.rronmenrat of New york-New.Yoise porlution while f'ederal activities here are restricted to frrr airporrs and rhr'ugh general imp*t. uJh.g . fede and on the dedu land have affect and positive exte the federal gove sistency with othr tion.urton r. rhe A-95 budgerreviewprocess the "ros: of y""..i i. s i x s r a r e s r.runJil.316 Contemporary of Urban lssues Land Economics tion.g"ir"i Xj::rJ..rui.n plan I ra s wit h land_ plans. u.estion i. water pollution under the Federar water poilution control Act Amendmenrs.. . lev) Suchd directly. provided with f..regi'nal agencies such as the Metroporitan Transporrarion commission"in rhe s?.ii.a-[u.its 'fh.e and over_ crolding' regurari.J-.up. states can exercise significant contror over both stationary and mobile sourcesof air pollu"tion.'.'....rrurrugemenr programs and in overseeing that such ptu"..."uti. rhe sra. have moved to corrrol this exrernarity...i...poricy i..r.." or rhe two_ state Port Authority where air.r. ensuring that the water qualitv within the"stateis prorected. prann i r r ga n d m a n a g e m e n A s o f I g i b .ll. sraresare. I for new depreci preservation pol ures enactedby IMP MARKET regional localized In government lmproper prlcln between Canada trols and in the I will differ for ea .and resources.ri r.e-nt'ana Budgets (9YB) and rhe provisions the igso ?{ 'f xrrionri-o. rrancisco B. as in the I Washington. . of the various states. uy sharing in the funding of sewage rrearmenifuiititi'.. however.trt" frid. warer_ quality statutes. in ex_ isting. D. thui becomingcon_ cerned with modesorher tian roadsand uehicre.A for developing statewide solid waste disposar prans..uri.hu.

Federal Involvement in Land-Use lssues Federal involvement derives from the negative effects of land-use activities. to provide protection against. The issuesto be discussed will differ for each country.namely. most notably'through highway conslruction. Similar measures to reducb the incentive to use land for new depieciable structures would provide a complement to this preservationpolicy and to the other environmental protection meas.S.rf tn" costsof holding potentially developable land have affected the urban development process and the negative and positive externalities that have flowed from that process. as the perceived problems differ. tion. Such spillovers beyond state boundaiies require federal intervention.nd land use.r. the federal go"u. Constitution. government since the late 1960s'u' POLICIES AND IMPERFECTIONS GOVERNMENT MARKET THEM TO CORRECT In government intervention to overcome market imperfections and lmproper prtclng of land resources. However.. Clearly.transpoltation investments. federal tax policies on artificial depreciation allowances and on the deductibility . there are two areas of difference between Canada"and the United States. g..rbtidies. land use beeral interventiron. levy taxes.3" Finally.rl-.C.nwitfr other measures such as environmental protection legislasistency of.to Direct federal intervention is difficult. in the nature of controls and in the perception of the problem. often dominant land-use element. ing a state concern under the U. The federal government has enormous impacts on land use through its.i. and in interstate issuescontrol directli. Nei York metropolitan region and the Washington. For ex- .d by the U. even though highly localized require fed(suchas a unique environment iike the Grand Cany^on).S.Resources Urban Managing Land 317 vet enable them to deal with these external effects at a broader geolraphical and political level than can local governments. as in" th"e cise of th..tt t. and discoura-g_ement the negative effetts of uiban growrh.of valued historic duildings.r-rt has exercised great control indirectly through its ability to irake grants. Such iesionaliration is bound to create its own externalities if and when the fuictional geographical region spills over into another state or other states. metropolitan region. country or are of sufficient n"ationil importance.which enclanger populations acrosswide regiont 9{ t-h.S.?indirect measures have alarge. D. The U..t. "nu.rnSuch iirect nr-. and more recently the granting of capital aid op"eratingsubsidiesto urban masstransit and to intercity railroads. since polluting activities must Iocate somewhere and utilize land in the process. the fbderal government must rationalize its tax policies to provide co. government has already taken such measures vis-)-vls the preservation.

and canadian casesstems from the relative popi tation sizes of the two countries and from the patterns of land'owner'fable. blv farmland and histo Year Federald Stated County and Municipal 1959 1969 1974 1978 Percentdistribution 2271 2264 2264 2264 100.. : U .' Turning now to substantiveissues. ship.. 'Managed in trust by Bureau of Indian affairs.9 8 1 ( w a s h i n g t o n D .7 103 l14 l16 I JJ 6.S. the end ations since following' l. T a b l e N o .This tat p'ti. The markets are more rapidlY in gene aDPreciation. with-the exception of farmland in British Columbia and ontario. s .i. legislation is aimed at protecting coastlines.8 million hecrares(3.3 886 897 897 897 39.ssible_explanation fo.. of exceptpercent) PUBLIC LAND Private Iand' Indian Iands" J3 5(. there is much talk in the United Statesabout the need for government ownership to protect prime farmlands.b39 million square miles) in of the united States. sPeculation. ImProved Plannin Reduced cost o[ se PublicParticiPatio .unique environments such as wild and scenic rivers. " A p. whereas rhe United states has 230 million residents.ent the 916. wherea-s-. I l--2 and I l-3 set our dara on the renure parrerns of land in canada and the United States. s t a t i s t i c a l A b s t r a cit. and corporations. fgrr.7 million hecrares$.private ownership accounts fbr only g percent of canada's 916. Muc'h r. 3.t during the l9i ior house Pricestoo)' immediatelY directed icized oligoPolistic stt us examine thesecntl ures taken in Canad competition and Pri< ProbablY the mt control monoPoly at land banking and Pu local and Provincial1 Sask and Saskatoon. dChanges in f'ederal and state land holdings mainly represent federal land grants to the State of Alaska. In canada.r land-use conflicrs in the United States than in Canada.we shall be looking at canadian approaches to the following land policy issues that cairadians have Table11-2 Landrenure in United states-ownership Land.6 /05 763 761 742 32.rt u. rare and beauliful natural environments.0 t332 t 3t 7 l 3l 6 l3l5 58. deemed imPortant: m< a markets.0 Iu 20 20 20 . It should be recalled that canada has 24 million people. and to the construction of artificial reservoirs. 2. Table I l-4 Pres the National Housing have been further bro try. s o u r c e :u . 'Land owned by individuals. MonoPolY/Olig Concern about this i Canadians in view of tt would logicallYaskhotr huge sufPlies. c .. we will not see such concerns mirrored in Canada. B u r e a u o f t h e c e n s u s ) .Private ownership uccorttts for over 5. S . l 5l 52 2.first becausegovernments own much more of canada than they do of the United states and second becausegovernmenrs can exercise much greater control over land in canada wilhout having to resort to direct ownership. and farmland. ownership is much lessan issue.9 "Changes in total land area are due to variable methods and materials used in periodic remeasure_ ments.224.of land particularlYurban lan hustrv' and retail trad when considering con da's 24 major urban I control therefore bec easy to imagine large urban land' Concern for artifi prices of urban and ut lscalated during the P findings for the next s concein on the Part oi tives. and historic structures.r many of the differences in defining issues between u. p.8p_erc.318 Contemporary of Urban lssues Land Economrcs ample.1959-'197g of (in million acres. There is a great deal of public policy ii the United states directed toward environmental issuei. It is clear from these aggregare that with much grearer densities rhere are likely to 6E to"o. partnerships.b40 million square -ite$. 3 g l .by class. Part of the change indicated after lg74 may have occurred prior to 1g74..S.

The markets are highly regional. and Saskatoon. with western markets growing more rapidly in general and experiencing higher house and lot price appreciation. These havebeen further broken down within the table by region of the country.38 Let us examine these criticisms at face value and explore some of the measures taken in Canada to halt the manipulative practices and restore competition and price stability to urban land markets. but we will illustrate here the high level of concernon the part of the Canadian public and its elected representatives. Alberta. The totality of land in Canada is irrelevant when'considering control over urban land resources in each of Canada's24 major urban regions.3' Stated objectives include the following.have had municipal land banking operations since the end of World War II. most notably farmland and historic or architecturally unique buildings.One would logically ask how anyone can exercise market control given such huge supplies of land? However. Improved planning and orderly community growth Reduced cost of serviced land Public participation in land price appreciation .speculation. 3. and protection of unique resources. land markets are highly localized. industry.Managing Land Resources Urban 319 deemed important: monopoly and oligopoly control of urban land markets. particularly urban land submarkets for such land uses as housing.Table I l-4 presents data on lot prices for houses financed under the National Housing Act (NHA) in Canada from 1966 to 1975. Concern for such monopoly/oligopoly control therefbre becomes an empirical issue. Both Red Deer.This table revealsan enormous increase in residential lot prices during the 1972-1975 period (similar increaseswere recorded for house prices too). Some culprit had to be found. l.Saskatchewan. 2. Concern for artificial shortages and oligopolistic manipulation of pricesof urban and urban fringe land escalateddramatically as prices escalated during the period 1972 to 1975. and attention was immediately directed toward the urban land market and its widely criticized oligopolistic structure and alleged manipulative practices. We will leave the empirical findings for the next section. Probably the most widely heralded and publicized programs to control monopoly and oligopoly price manipulations are the public land banking and public lot servicing activities undertaken by several local and provincial governments in Canada. and retail trade. it being conceptually easyto imagine large landowners virtually cornering the market in urban land. MonopolyiOligopoly Control of Urban Markets in Canada Concern about this issue might seem somewhat ironic to nonCanadiansin view of the size of the country and its land reserves.

>i.E .:.m € $O$ -o) Xi. .g! E ^ H i" E .H . . O _ r O (..+ . aC .. i^d { . ' E :-E Eui F 6' !E! + d ^ z : 6s H i = d - E + : U : 1 J O X 6 c O . : < 9 E -i 7 . F : .. 6 _ .? u E = . Y G : L h x X : ! = G * r 2 . uT x e :. .I : a O a d 6 o E Y t L = x . . o) F (d J .o . - m 5. x N = 3 li E: i . & . . x..6 : c ' o N . : = . T : p . =. + .: 9 6 : I' i E ! . -o .E b : J ! X H . . - l N n t N r O n $ @ € i. g n r : e 2i.'o 6 i + @ o s + qr d th 'O Y fa t\N &6 m(o- r c ) 6 rl o | 6 O) . o 'O r O & o) cO ro . : . 66.: a a ! t r Y = g 9 1E ES ? b G E a ' d ' O 7.tii2z 9 . F F t s # s .S tr 9 < . rt ' ' .: U c/ f \ 3 . l.E.i n F tr *fr b r6.F F an 7. G \ 5 p .. E o ::-o v j x X - F trr a s € i " o t .E $ + f I . q i A - y i a.g 9E 9 4 l . !3.'4. r v L i : i a . 3 - j d = d ^ c i o m @ c ro :9E o & f8i l -pu 3o . = :! y q i : S r y : v ! A : ' : a f ' i l i .o t 7 6 = : 3u 4 q 6 o o * ! t 9 .Nj .l l | | N s E: = z 7 .l Ic c v V t o :'".9.K q b y ! i .I H 5 a d : : - d.E . = . = (g (d g N q) 9 . : F C < t v.) o 6 5ii 6.! ! z P a . . . -9 tr : .E . s: Y N € + .o ' ? r t- t C : ' o S J c a l r (Ot l a v . .N : .t eE -rE u : 5 ! O .c l r i 1.! A .9 . Y 3S .g EA . : a i ! 6 6 a a q a = Y € c E h d d F i?iiEii"-i > ! .-. .* E = ..S N c .edcY C( O N (o sc{ 4 o 6 r c.J y o: m m r S o:) t m i O @ -r.fi I \ @ o - \-) F N '=i q I\ m e.o -A 6.: u u " ' E :-=.a .v - 7 y . 6 . : ir o !vo t \.r O O 6. r^ o m rfOc) cl)cocr) +' U 4 + r o +r o ' d 3= :. .r (o or. x m : o - i . = T FEFs E € i?iF.i > trq = ! * ! E€ . t .. ' o l I r c + . U .Y N ! v .I F .O $* l\ o m .>. E d = T . i ! .. 0 n t> 6 .- i ET 'E 8 : EE l o Q d a ^ ' .@ { . o " . : i j - x E J -y U.G E Q ! * ! a : : .. . u uF: . E S q : t ! : o a q F : : .2 c : :. j* E r v 1 x > t 9 s E ' i =EE:. = | 9 J . -i Cr 3t-3 =.! 6 d ! ! E S a a r ! 9 t ..: E< e = . X d-fr a 5 I ' B :: f. g o .i _ : i .di l :.T. . o r \ I r m .* .o i ' . : i f \ d 5 E ! 6F ! Y f. ts. .9. 6 Y s o C . = : .a E 9 E h i 5 :i 9 z 1 = 6 .'4.)X. . : : (c 't N oC I lr l N Y c) il - + r N lS . : i . I qa N J 6! o) r Lo . Y * = ! F ! 9 : : . r. o : ' a r j - Rgi .l n_ VC( O ++r Nqq *c) l I m l @ (O 7 = a o ! ? F x L . O @ 1 ( Q o ' - .f oC d 2 € . b t z : F 320 . i .. n ! . :? a ! -F 3 E . F a O a (U : o . . ii7 ig g o : a -6' *u r :.ql o F - .3 ez.i 9 = . : .6 O : l \ * O 3 \ ( O N . ! . X 2 : c '- . Q^ = .@ = i u . 9 c ! O : : L o )a h . + 6\I(0 N $ €( . ! _ = : .6 . d @ & # 5 + t _ + m . : ! . OsC c q . U i:^ . - : E o e 0 . x.o qJ #.9 L h 6 - ..! !.. Il-.q G e . E . Y d z = . : 6 > .+ m'OO). bU : " H ! ! . l j i n .l J t= . J ' = a ' L. ! > . o O) 'tr co N : E ' O N N -cl)fi 6!r+ 6tcq l \ F .. s . E E i 1-c P fr b K (! : ho t . s : 6 9 v : 9 : 9 : .r + : € @ . 4 Y o (t I o lt o s I i E e . i : : > Y . 3 3 F : . q z a 3.

6 95. These piogromsare not without their. Also.:) ().has-provided'the"impet".2..3 ll.4 t4."rJ i"Ih.blic'lot .5 102.banking acriviries be Jxpanded in canada.The rorsare .ooSuch legisla but also at reil es manipulate and dr problem of specu .5 rJ5.fi shortage.vacationho public ownershipo for conrrolling iper accruing frorn-such and not by narrow protectior When it comesto pr see different patten approaches need t< property rights. clntinued demands that such land. i.2 lt.1 .to T with a boosr... p ._Tbly servrclngprograms was and clearly'intended pro'ide H o I\'I and.0 . The succesi of these publicly o_perated land developmenr programs has artracted attention outside canadaar and .jpol.1p.lols rr'ed trom their land development revenues.3 47. Per tion was the Ontan 1974J This tax w: ti<lns.l 4..4 25.2 13.o.I land supplies on tl ket.u 3U.0 gtr.urive costs.9 2 1 .'y.8 26.:11.8 3 9 .i.s programsin other provinces .3 53.ast (loast Atlantic Provinces Quebec ()ntari<r Manitoba & Saskatchewarr Albert & Ilrirish Columbia All 25 [.7 7.h."d. Thi's *u. Raw land is purchased and then.i. profits de_ :19^-.anarogou. and the lotsat subsidized ratesto first-time homepurchas_ ers. but Xt prices which besiowed ail the wrndtall benehrs of'the subsidized land bwnershipon the first b.0.as. "reasonable" at prices.7 1 6l.8 21.lrban Areas Real Percent Change 1969_1972 Nominal 9q4 Percent Change r972-1975 Nominal ReaI ReaI 42.5 26. 7 .10.ii..I 22.n2 ! Monopoly and olil speculation in pog much of the puUlii this view. the property righf wa"s resrricted.I 27.12.2 .For instancL.s ti put"large numbers of lots o"n the marker . ponl()ns 0t the deveroped-lotmarket in their area.. during the l9J2-1975 period and pi"uia.ou Both laid bank_ operare without subsidies and exisl o" in.rpe.Fully of serviced Lotsfor NewHousing Financed-Under NHA:selec-t'dJ the Au"rag"sof Urban Areas Percent Change 19681969 Nominal ()ttawa t() West (loast Montreal to f. ln subdrvrsions under the HoME program where the public sec_ tor retained lot title."' This combination or"redeiat. wh under such constra values and change.6 49..2 ..5 Another poli cused on changes carrylng costsof r implemented by could not deduct land inventories.The provinceof ontario energ.ye. underrakendurirrq!llr:*?tl. land spe intention of impro land values thai wr The above-mentio pensesfor holding speculation as weii on the market. Closelyrelated pu.:.ur.5 56._.ations represent significant |.9 I 3. 9.proviie siteseruof l^TgtiT market rces..improved through servicing. llli.# k" prices.9 31.*i. ()ntario: Fetleral/Provincial Task Force Supply and I ' r i c e o f S e r v i c e c lR e s i d e n r i a l L a n d ) . over a five-yearpJriod u"gi""i"g in 1g73.there are uai"ln?rt. l g Z i t .land.with a numb dences.2 J J. One exampie ir preserve agricultura Ontario Land Spec the tax for farmland was exempt from tl forded faimland in .ilcial financine of subdivisionand lor servicingwas intended to treak th. u 5t. serviced lrpply rots on tne market. / 47. problems.4 .3 t7. pui_ tially-solvedby conveyingtitie. Each land bank operates via the market. f". Its Home ownErship Made Easy (HOME) was desipnedro acquire rarge rracrs rand..u 42..3S. -u."J p.. the 1972-l97l"boori in land p.322 Contemporary of Urban lssues Land Economics Table11-4 Percent changesin Average cost per-Foot Frontage Fullypaid. The allocatirn of some$500 million by the canaaa uortiage and Housing c. op.r. to provincesfor land..7 32..ri t t.) 26.banking.ing programs .r... its lot slivicing prolas.p1rtig*rarry gram during this period..1n^.5 Source: Doun tu Earth' Volume II (Toronto.)t)..l t5.2 129..t7.rporation.2 2t .

'7Land banking and dences. The above-mentioned removal of interest charges as deductible exfor penses holding raw land was a federal and provincial effort to stem speculationas well as to coax large-scaledevelopers to put more land on the market. public ownership of land were also frequently put forward as means for controlling speculation. farmed was exempt from the speculation tax. and resource properties.S. The intent was to force developers to put additional land supplies on the market and discourage holding land off the market. much of the public saw them as essentiallythe same issue. which made certain exemptions from the tax for farmland. with a number of important excePtions such as principal resivacation homes. Thus. Protection of Unique Land and Building Resources When it comes to protection of unique land and building resources. who.*'This tax was to be levied on all gains realized from transactions. to take advantage of the rapid increasesin land values that were being recorded in most urban areas in Canada. . as discussedin Chapter 8.Besources Managing Land Urban Fully lrban 323 Another policy directed toward restricting oligopoly control focusedon changes in federal and provincial tax regulations relating to carrying costsof raw land. Land that had been. approaches need to be consistent with constitutional protection of property rights.18 Ontario Land Speculation Tax. while Canadian policy interventions do not oPerate undtr such constraints.a5 Such legislation was not only aimed at large-scale landowners but also at real estate speculators. other tax exemptions are afforded farmland in every province-it is taxed for property tax pur- I and and narlant rnkdelese tion de{: ams rrge Ihe )ro\{E) ervhasand '' tO in]ces :ing run iced not )sts. Begun by the province of Ontario and later implemented by Revenue Canada. from 1974 to 1979 developers could not deduct from taxable income interest charges for holding land inventories. In fact. it was alleged.According to this view. and continued to be. also helped to manipulate and drive up land prices. secParthe ers. One example is the British Columbia Land Commission Act to Another is the preserveagricultural land. land speculators bought and hoarded land with little or no intention of improving it. the general notion being that any gains accruingfrom such speculativeactions would be realized by the public and not by narrow private interests. Perhaps the most dramatic effort to influence speculation was the Ontario Land Speculation Tax imposed in the spring of 1974.we seedifferent patterns emerge in Canada and the United States. only under the pressuresof politics and social valuesand change. we next turn to look at the problem of speculation. Speculation in Urban Land Markets Monopoly and oligopoly control was perhaps only overshadowed by speculation in popularity as a source of rising land prices.U.

Direct action in the United States has been as limited as it has been in Canada. The tax schedule appears as Iable I l-5 below. vice.sr ReS4ionwicle planning of development and open spaceto protect open and recreational spaces lor Iuture public land. but le 2.t' despite less need to put aside unique resources in Canada because ol'the relatively greater abundance of such resources vis-i-vis the United States. as part of a comprehensive state land-use bill (passedas Act 250 of the Vermont state legislature). s()urces.5'Other come forward. since once they are removed from farm use back taxes on the difference between farm use value and market value are due. options that provincial. Florida and Arizona land speculatnrshave achieved some prominence.them over time against future development. generally smaller parcels and principal residences.ae Other. -I-he Table11-5 V - Years l-and HeIt Less than one ye One year. r 3.t" Designating historic buildings for protection from demolition or reuse that destr()ystheir unique architectural qualities. we are concerned with urban land speculatorswho purchase land with little intent of improving it. ihe tax has been less successfulthan anticipated as a revenue-generating de- Protectior Desire to protect thl use control techniq protective legislatio and architecturally coastal zones.and r Prime AgriculturalL United Stateshas h pensation.governTelq. where the tax rate is a function of the number of years held and the size of the capital gain. but Four years. a capital gains tax on land was implemented. government by prosecuting land fraud perpetrated across state boundaries.it is interesting to observe the degree to which provincial and federal governnlents have acted t() protect such resourcesfor future (lanadian generations.have pursued in pro. but I Five years. Use of Eminent city. and the United States has a long history of land speculation. monopoly or oligopoly control of urban land markets does not appear to be of general concern.55 Paralleling the Ontario experience.f'? 'I-ight control ol waterfi'ont krts and shoreline and the common-law right of access to beaches all serve t() ensure public enjoyment of such unique land re'l'hus.More recently. or country can . placing ol large blocks of provincially owned land in provincial parks or in specially designatecl ecological reserves to protect. but k Three years. activitv speculation and olil dian experience.n.324 lssues Land Economrcs Contemporary of Urban posesat use value instead of current market value. (Baltimore: John 4. "Speculators" who deceive the public about land as an "investment" are not the focus here. In 1973. again ofien without compensation.wr and fall of house ar concern and politic Speculation in Urban Land Markets in ihe United States Perhaps becausethere are many more urban areas in the United States than in (lanada.a number of exemptions have been included in the tax structure. As with the Ontario legislation. or perhaps because Americans perceive their system to be highly competitive. Such use-value taxation provides a significant incentive to keep the lands in farm use in Canada. Robert G. tecting unique resources have included the following. Speculation is another matter. Much of'the blatant abuses have been controlled by the U. or fc which the agreeme purchasing the lan compensatlon. l. and its actuale opment remains an ln sum. a notable exception being the state of Vermont. Agricultural Eas establish agricultur preserving and invc (usually easements owner in favor of tl cash payment in ret in perpetuity.S. or perhaps becausethere are more developers. Such designation is often made without any c()mpensation to building owners. Sozrce. but ler Two years.

r"i In sum.ManagingUrban Land Resources 325 "alue tax-m use in es on the {e Lle. Among the resources t6at have come under protective legislation and policies are prime agricuhural lands. (Baltimore: Johns Hopkins University press). Rosenberg. Table 11-5 Vermont Land Gains Tax Rate Inctease in Value (%) Years Land HeId by Transferor 0-99 100-199 200 or more d in proparks or in inst future se that denade withLess than one year One year. but less than four Four years. Land LIsearur States. lnence.5 30 60 50 40 22. op.but lessthan six Rate of tax on gain 30 25 Z0 l5 45 37.r.oT Protection of Unique Land and Building Resources Desire to protect these resourceshas led to u . we can envision this varying over time with the rise and fall of house and land price-sand with th"eebb and flow of public concern and political pressure.ung.3.5 30 20 l0 l0 5 soarca. 1979.. but less than twcr Two years.i: ight of'ac: land reanada behe United Ceral govnerations.and its actual effect on speculation and slowing the pace of development remains an open question. use of Eminent Domain to purchase prime Farmlands The state.' PrimeAgricultural Lands ..but lessthan five Five years.'Robert G.s' other approaches have to be sought.2nded. )nt" are rrs who in the rotable ssed as .The farmer reieives a cashpayment in return for keeping-the land in farm use or open space in perpetuity.t owner in favor of the community or the state). 70. coastalzones. or country can resort to direct acquisition either through negoti- d States or percmpetinot aplnd the -'cently.5 15 7. but less than three Three years. He aly and John s. historic and architecturally important buildings. and recretion.u'Thelost is significantly lower than purchasing the land directly. ifte. Four ideas have come fbrward. Agricultural Easementsor preservation Districts The basic idea is to establish agricultural districts where farmland is thought worth preserving and involves purchasing open-spaceor p.n land tber of ears as rxempDarcels :he tax ng de- . Iovernrdaries.r"ruuiion rights (usuallyeasements. Based on rhe canal dian experience. and wild scenic rivers.e and scenic vistas.i rpu. p. or for some mrrtually agreeable period of tim.Zoning land for agricultural purposes in the United states has been deemed to be uncdnstitutional without compensation. but also restriciivecovenantslevied by the pr. while simultanedusly farmers receive compensation. which the agreement is renewed. activity in the united states has been limited in controlling speculationand oligopoly in urban land markets. city. vice. of innovative landuse control techniques.

biliiy.. society::. Jer#y una carifornl*ii u-""ttr6...which usuailyinirudes u . Preser'arionhaslrso beensignifi. Tax and Assessment Relief Virtuaily every stateprovides fbr farmla. The Newark landownerwourdprirchase'theie exira-density rights from the farmer.. uut...ri to'aJu... it il. ....as in. i..*r.In light rhe or tn.-in-i"i.rty o*nL.. .p...l-ilarities to the farmland preseriationproblem.".^*t.on..mp. N. pr..f"". ...ruy...i{ Historicand Landmarkpreservation The problem here is anarogous to that of farmland: The market underpri.. A tie_ quentlycired exampre wourd ailow"as..nenr...y farmer to transferde'etopment rights from the tr.. it is argued.lolpm... to orher lq!:: It-rcations."*a at lasrto be a cure f<rrthe probremof proticting...&. .r.r."..derar income tax changesrhar give.r. iiJilurio.r ro rransfertheir deveropmenr f. notion gersexrremerycompricated'u.."ruiive and urban use c.uthern N..ption lic does provide grearerconrror.L.1r1..p.rrifi..n'r a schemeallowssocletyto such protect both the resource and the propert)' deveropment rights of the current owner.Tr"trmenr-procedures.t9 in p1e..unru....d2 Essentially.ar Reg_ ister of Historic B uildin'gs.g its fJod-gr". necessary t over and above the purchaseof open-space o.'. who would -qn.i. 6"..rtt aidei bi . ro take direct..purui.6'Th the absence of con Some notable exce Adirondack Park statewide land-use I Coastal Zones In < solutions. . resource to society.'k1.ir".. about government i land markets. ou andincrudes-rheof raxrevenu.The TDR .which . First.utrlr...fi"g it in farm use and protecii'.'pr.n. tr. trr..ue the land and iluilding with_ out compensating current owner.d r"u"r?r""-.e]gnment and buildingsand to ail.h. the TDR lherebi .. TDR idea is to . or tax l:_d.. jlrr.rope.i.gperries it'ui tnJ community.reviousrv..id"# ..- Open Space and Sc easements have be parks and open sp tion.y..r.rrl of rand $e1. and rtierebypreserue.N^ew taxesare owed if the land is later sord ro..w p.. promored demorition and new consrrucrion ana outwa.il* from tri_ ditional federal tax poriry which.lr. " Transferable Development Righ* eDRg The foregoing ap_ proaches are all basedon tradirioriarrear pr"i.rd..r.roperswho rede'el.y'i.r.. poricies discussed that re*ard...326 Contemporary of Urban lssues Land Economics ated purchaseor through compursoryacquisiti.y.i.nmenrs rh. underpriced in the The CoastalZone IV (30 of them) with fe of April 1975...:to yet p.unique resources and buirdings in the absence pubric funhs to. limited to the for such purchase Recently.-premenrarion and realization. a sta to protect the shrinl by fill and develop Scenic and Wild Rive front with the pass States have followed rivers within statebr have such legislatio Summing up.^..*d.uu.."pror.g..farmrandat agricurti-riui-"r!'*rre tax relief insteadof current marker ".i.h"Jop.. . g.... where thr eral involvement in river preservationir ship in both areas In Chapter 8 i redefining propert) the federal governr Coastal Zone Man increasing and com c o a s t a lz o n e . nutrient-ri l o g i c a ls y s t e m s .rJr".rrEhure'them of on .ri. The cost is high for this. is a signifi_ canrdeparrurefrom pasrpracrice and hasreclivJ .. .ilEil...i^. d...d buildings.llinN.rhip una ..29 st coastal Zon€ f€sour State programr California CoastalZ Conservation and Francisco Bav.. buirdings."^TJ..r the 'rights or potentiar from owne.'"" rig?ifi . r .i.. arrention be_ causeof irs innovativenature or perhapr b..Jr.k.u. a nu space directly....p"p.n market. o...i.^.""..fy::f...ui compensating current owners.havebeenapplea.tu sometimes.. or th? ..u.p..p.rn.exrremEty ruoorJbt. The TDR concepris necessirated'by i". h a wildlife. by raxing......pr'tective action with.. rosi o*n.

73 Stateshave followed iuit with their own designation of wild and scenic riverswithin state boundaries. permanent and adverse changes to eco'fhese socially valuable resources were being krgical systems uiclerpriced in the marketplace and government action was required. a number of communities have sought to zone open directiy. unlike interventions that seek to minimize negative . The Coastal Zone Management Act provided statesin the coastalzone (30of them) with federal funding. wildlife.67 easements parksand open space is also an extremely common form-of preservaiion. however. have been recorded. and some of the statewideland-use measures in Vermont and Maine. First. The "The Coastal Zone Management Act of 1972 came about because increasingand competing demands upon the lands and waters of our coastalz<ine. of the Wild and Scenic Rivers Act.in 1968. we find federal action at the forefront with the passage. have resulted in the loss of living marine resources. as more than half of the statescurrently have such legislation in force. Table I l-l (p. a state-charteredagency that began life in the late 1960s to protect the shrinking San Francisco Bay from future encroachment by fill and development. such as the Adirondack Park Agency in New York State. nutrient-rich areas.where the federal government has taken a limited role. again. Scenicand Wild Rivers Here. federalinvolvement in both coastalzone management and wild and scenic river preservation is paramount. Recently.29 stateshad taken such action to plan for and protect coastalzone resources. State programs vary from the highly innovative and protective California Coastal Zone Conservation Act of 1972 to the regional Bay Conservation and Development Commission (BCDC) for San FranciscoBay. . limited-to thb availability of taxpayer willingness to allocate funds for such purchases. 314) showed that as of April 1975. Summing up."* The courts have been loath to allow such measures in space the absenceof compensation for the loss of development potential. we can make some rather general observations about governmettt intervention to overcome market imperfections in hnd mlrkets.7" CoastalZones In contrast to the previous preservation problems and solutions. .T' In Ohapter 8 it was noted that one of the most signficant forces redefining property rights in the United Stateswas the growing roleof the federal governrnent in its environmental protection activities. and has provided the essentialleadership in both areas.LandResources Managing Urban 327 OpenSpaceand Scenic Vistas Conservation (or open-spaceor scenic) Direct purchase for have been particularly highly touted.6e Some notable exceptions.

THE EMPIRICAL EVIDENCE: LANDMARKET INTERVENTIONS In the preceding sections we looked at a variety of land-use control measures. six Year and methods.T'' work has largely been motivated by a desire to measure the cost of negative externiliiies to adjacenr properties and to societv.that were iniended to overcome a number of problems inherent in markets: the failure to accounr properly for negative externalities. including Alaska-cannot be overlooked. has attracted a 'fhe great deal of arrention. second. The reason is not hard to identify: These problems_are generally broader in geographic scope than a single municipality and require regional act'ion"at^theminimum but mo.uty ally.. conf More recentlY. we move on to examine"recEnt findings on the direct andlndirecr cosrsof land-use and urban development contr<tls. Having. or federal fiscal and tax actl()n. we witt look at evidence'on the existence or severity of the problems and on the effectivenessof the various land-use policies.and related tax measures. such as monopo. Controlling Negative Externalities:The Evidence to Date land-use control devices are predicated on the assumption (usuY. additional federal inrerv. apartments and co The earliest work r data for the City of ferent parts of the effects and sometin assert a significant e thors were the first the study. of Cre Stull himself wart Moreover. .an empirical fbundation for controlling nega. tive externalities (or failing to do so). while stateshave almost excrusiveauthority in regulating land use.ntion. Part of the eff Finallv..g. New York. and market imperfections.re usually state land-use control action. cast serious doubt on the exisi6nce of significant negative externalities from adjacent lower-status land . using d area from single-fa able negative effec This may depend o adjacent proPertie mlum on rezonlng ther away maY exp tion.e. the pr-ototypical s[ch control. the federal government has taken an enormous role i-nwork] ing to protect underpriced land and building resources. plus a much documenred nonzoning example (the 'fexas).328 Contemporary lssues of Urban Land Economics externalities. mc effect on prices in and Mark. actions to overcome weaknesses market operation have in :rlmost no local government base.7 nal effects and. Zoning. the outlyinl .vJitnim ability io buy land to create parks and land reserve-s and with its enormous land holdings-still roughly one third of the entire land mass of the United States.r 1"..ly uld oligopoly and discriminatory practices.Moreover. federal government acted to remove the deductibility of interest on holding costson land. In this final section of the chaptei. Ty-r studies. he con trol negative exter varlance ancl glve Figure I l-3 s which Stull found part of the urban t ible with the other central activities i maining usesare a ibility. is highly likely to-extend federal involvement into the areas of monopolistic"ani ^in oligopolistic control of urban land markets as occurred canada when the.as legitimate businessexpenses. there i city without traditil and the evidence much like any otht a and expressways of Houston lends the importance of There is onlY r the existence of n( 1974 work by Stull ative externalities Pittsburgh.rhrough taxes and subsidies. positive externalities.implicit) that there are significanr negarive externalitiei in urban land markets.hinally. as their significant negativ controlling them. the direct spending p()werof rhe federal governmenr.established. city of Houston.

that.. a facror.. Davis.g.77 found that there were no significant "*"t.using^data f<rr vancouver. arid Jackson results. 'fhe 1974 work by. who. moreover. T"*ur. let us assume central activities include office and ietail activities. o_fCrecine. Davis. Goldbeig and Horwood. prices in any guelr.7. Immediately adjacent properties may rise in p^ricesbecause of a speculative prJmlum on rezoning. . adrbsidies. it wai impossible to asserta significant external effect from lower-order land uses.9 New York. .i'r. lis^"r-.r b/ crecine. the existence of negative external forces in urban lind martets. given its lrequent amendme"ntby boards of variance and given its exclusionary and income distribution effects. .?u rhey found tliat identical uses in difl ferent parts of the city sometimes appeared to have negative external effects and somerimes positive ones. Part of the effect may depend on rhe qirality of the multiple unirs. and the evidence leads one to conclude that it looks and functions mu. in 1977. The earliest work y3.usto farmland. highly is monopolisticand urred in Canada eductibilityof inexpenses. by Rueter. 8. the outlying land usessuffer the negative exrernal effects of the . and Rosdtt. whereas the remaining usesare all residential in character). Riker.T' This may depend.t Pittsburgh. There is only one recent study that provides empiricar support for . and Jackson and of Rueter. properties iurther away qray experience the costs of congestion and view deterioration. six years later. found that rezoning afi area from single-family to medium-density residential had no -.Tu recently. Becauseof this incompatibility. Y.u. confirmed the crecine.c. zoning appeared to ha"velittle.ManagingUrban Land Resources 329 ket operation have t hard to identify: rhic scope than a the minimum bur :ral fiscal and tax 'lrityin regulating nousrole in wclrk:es. and Goldbeig and Mark. analogo. stull himself warns against placing roo much weight on his study.nt shapers of urban form. "uses which Stull found some support. Moreover.Moreover. However. he concludes that zonin$ may be the wrJng device to control negative externalities. Davis. with its abitity [<r [s enormousland assof the Unitecl \RKET land-usecontrol :d to overcome a [o accountpr()pand market imrim. there is the much documented caseof Houston. apartments and commercial uses adjacent to single-family housing). Much has been written about Houston. on how large the area affecte"dmu"stbe.roHow"ever.using Rochester.inatory pracevldence the on )ctiveness the of ontrolling negaexamlnerecent nd urban devel- rto Date isumption(usuralities urban in has attracted a motivated by a dJacent properg example (the lenceof signifiland usesJe. usiig data for the city of Pittsburgh.study. with the automobile and expressyayl as importa.ch like any other American city of its vinrage. if any.. and Jacison in i967.may_ be. on balance. The example of Houston lends further circumsiantial evidence to the case agaiirst the importance of negative externalities. a city-without traditional zoning. Finally.The authors were the first to qualify their results and methods. I l-3 sets out the case on which zoning is based. and for .rnal effects and.. as their laboratory.rable negative effect on surrounding remaining single-family homes. which led to the. . eff9c1-on. using more elaborate data and methods. studied two questions: theixistence of significant negative externalities and the elfectiveness of zoning in 'fhey controlling them.stull for the Boston merropolitan area suggesrs that negative externalities . There are land in the central part of the urban region (between the cBD and D") that are incompatible with the other la-nduses in the region (for example. contrary to tEE findings i. Maser. Finally.

6..u. protect the acrverselyaffected land uses and it ih. Maser el point to the mixture ing land values an< On the secon greatest impact app Eation of land' Th price of land for hc ilies from certaln I value of housing (' curs from lower-in' The evidence is m' significant negativ is"directed to Be and Bosselman''u The emPirica sistent.."ii.'l.!ies!erg.n. .lT:inffi lg i:*i. i *o sorts of evidtnce are ava'a- i'11::#J.rirr.330 Cont€mporary lssues of Urban Land Economics o @ c l a J I)o I)c "'tu ""'"' Fisure 11-3. however.'the Next. rr.. airtur.r. Figure .guuve exter_ nalitiesdo lower land varue. ""lii'ii'.a line in Fig_ to believein"..."?fl 5::.ir negarive ef_ c). rrr. enough awayfrom the incbmpatibre . central land uses and.l terms when muntt land for lower-cos must inevitablY rir and develoPment single-familY hon Laiee lots for mol 'lh.ir ".guriue exter_ ure I l-3)' stuil savsthat there is reason ti. u'nr. zoning could."'fJli'. comPared tri-butional inequ Modesto in 1885 Zoning aPPe ( ciencY grounds' all too effective a exclusion is done pay more for lanr ize subsidies thro should be stated sources.th. The first examit and therefore addrr we will look at the di the distribution of v the population' Tht for inilvtical neatn First.-inanrs of land values and renrs. their prices or rents are depressed below what they would have bee?i" .along the*rong-runequilibrium path denot.i"i"ginpractice ble.""1T#J'1. on rhe figure denores what land .rr. In this case.pur.".h". Fi.iry.l... on rents. ..lrJ.. in terms c the evidence forces Ohls et al'. -ou. in the absenceof the exiernarity) rand values shouldremain Accordingly.r to or rents wourd have been if there were no external effects de_ pressing them.l..u.r. of it.*. tu.rJ.Tfi.y a.ir."a"Ir." "" l""g.accordingly..J.1. "..--ore or less smoorhly. Rueter urrJ *ii.-n"".arities .it equilib to overzonlng' ano (again.there is no n'eedfor zohing. Ihere is addi_ thereby raise varuer ih.u.-0. we move-on to examine the empirical findings on the effects of zoning on the urban land markets...rF. uo*. say thar this is nor rhe caseand thai iand valuesa.!..t.. zoning is predicated on the assumption that these negative externalities exiit and are imporr".op r" the rever P6 and do not regaintheir "normui. uses in.T:t[a?..y the dotted Irne.rri.u. AnalYticall do act to raise lat manner.il"f"".e..iui.or-ul.:l':t. in theory.:r_toint varues 3s :llt:yj land use changes' and normaily' (i.?JJ:'.""d"""'d l.t..."..andwhiL.The dottedii". the resu flects more close .

The two effects are related. while protec"ted uses in essencerealize subs-idies through excesssupplies of land for their use. First.pu.r4.for land than otherwise. the effects on the distribution of wealth and income among tfre various members of the population. Analytically. where we started our discussion.idity predictable fashion. or executive offrce parks ufra u. not dn tire efficient aliocation of land. thereby raising the value of housing (wealth) in those communities. rre or less he dotted e is addir pracdce r casting ronrng is te effects :e availa- ble..development industries.'piice mrrst. The first examines the efl'ectsof'zoning on land values and rents.t. work bf ohls et al. the evidence forces us to draw the opposite co"nclusio.l terms when municipalities exclude lower-cost housing.e can.Managing Land Urban Resources 331 e depressed iatlveexter_ re land use nality) land to the level far enough regatrveef_ . A redistributio"n occurs from lower-income groups to middle. becauseof"underzoning. one caveat should be stated: In the caseof environmental protection of scarcere_ sources.inevitably rise. the evidence. it appears to be ^whether all too effective and highly regress-ive. Maser et al.nonzoning). and with .and upper-income groups. second. distributional grounds.. on the second issue.negative distri6utional coni6quences. lowering rheir flrice.with. Figure l-4 shows what happens in supply-aid-demand ."but are worth . in terms of the effectivenessof zoning in raising land values.Ez Scott.-tot single-family homes) are us'ally ov€rzoned. and therefore addresses questions of allocitional efficiency.8oMills and Oates. compared.This result holds the exclusion is done on racial or environmental grounds. I usesand ine in Figtlve exter_ however. and Tunnicliife (for the city of Vancouver. Excluded uses pay 1o1e. afl point to the mixture of effects zoning can have.t5 The empirical evidence on the costs of zoning is strong and consrsrent. and_ land for lower-cost housing becoffes overpriced (again."ti"g for analytical neatness. however.8. The evidence is mounting that zoning has become sociaily. that is.The interesred reader ts drrected to Bergman.o. on. The distributional inequities in this siiuation are clear and return us to Modesto in 1885. the resulting higher price is economicilly efficient since it reflects more closely true social costs rather than narrowly defined eco- . in no r.orrrturit demand. ih. Zoning appears to be largely unwarranted and ineffective on efficrency grounds. what land effects dertiveexterand rents. both raising and lowering land values and renrs.seewhy the effects of Exclusioniry zoning do act to raise land (and housing) prices in such a straightfor*ur8 manner. and Babcock and Bosselman. .. Allowld uses (usually high-technology resiarch and..g. The supply oi land for lower-cost housing shrinks. we will look at the distributlonal effects of zoning.[ty *itn significant. Large lots for Tgrg expensive houses become underpricled lcompareJ to their equilibrium without exclusionary zoning) because of overzoning.is piling up that zoning's greatestimpacr appears ro be on distribution. The principal result of zoning has been to raise the price of land for houslng and to exclude effecti'vely lower-income families from certain communities and submarkets.

e. or the top 25 firms control 90 percent or more.7 13. where we saw are relatively inelastic land price determinat rising demand.5 l7. Only in Halifax.86 Table I l-G sets out ownership figures showing nominal ownership and then ownership combining separate firms if they had two or more directors in common.3 84. the top ten firms control three-quarters.. However. in thesecitieso in the top four landow There remain som tion ratio formula take Second.0 Annual demand for land 73.A major source of evidence is the Canadian Federal/Provincial Task Force on the Supply and Price of Serviced Residential Land. VoL 2 P' 73. Regulating Monopoly/Oligopolyin Urban Land Markets The possibility of monopoly and oligopoly control and of manipulation of urban land markets represents an important market imperfection.Contemporary lssues of Urban Land Economics A n n u a l s u p p l yo f land after imposition of zoning or other l a n d.u s e c o n t r o l s C Table11-6 OwnershiP Statistics Ownership Metrcpolitan Area Calgary Charlottetown Edmonton Halifax Hamilton London Montreal Ottawa Regina Saskatoon 'foronto Vancouver Winnipeg % Ownet Top4A Annualsupply of land prior to the imposition of zoning or other l a n d.0 30.6 63.2 58.0 48.4 I 1. This is not z Part II. Sourre: Federal/ProvincialTal Doun to Earth. if the higher prices reflect the "true" social value of the resource whose price rises as a result of environmental controls and protection. Its findings were clear and unequivocal: There does not appear to be any Canadian metropolitan area where land is held in sufficient quantity by a sufficiently small number of firms to allow these firms to manipulate the price of land.dev the flow into Product areas and previouslYd the total stock suPPlY becausehomeownersh of land under currentL one can speak about r We can see from t ship and land banking idly rising housingand public ownershiP exP identical to those for tl task force. the higher price shold reflect marginal private and social costs. nomic costs. and withandwithout landusecontrols. Demand supply. sincet The task force als the effectiveness of la . higher prices need be neither inefficient nor indications of inefficiency.such or nondevelopers. It is an empirical question basically.8 30.nrity of trndQo '1 Figure 1-4. 'fhus. the data are o structed on flows.9 21.u s ec o n t r o l s 30. That task force was constituted in the face of enormous price increasesin land and housing in Canada from 1972 t<>1975. It delved into the ownership characteristicsof vacant land ripe for development and surrounding the major cities in Canada.7 oJu.5 27.tT The rule of thumb for market power (i. the power to manipulate prices) is that the top four firms control two-thirds of a market. Ottaw ria met.

and saskatoonare any of'these criteria met. the concentration ratio fbrnrula takes no account of the distribution of ownership.ally identical to those for the average of the 25 urban-areas studied by the 'fhis task fbrce.6 32.5 99.9 NA NA 48.6 63. of we can see fr. The task force also presented data that would lead one to question the effectiveness of land servicing policies such as that discussed for .5 5t .into a.2 47.I 22.0 4ti. Second.4 47.3 .7 46.2 39.4 70.4 71.7 71. Those urban areas with significant public ownership^experienced rates of price appreciatiotr i.rl Ottawa Regina Saskatoon 'l'<rronto Vanslrver Winnipeg 30. where we saw that in the short run land and housing supplies are relatively inelastic (the so-called stock-flow model of hlusi'and land price determination). F l Doun to Earth.r1 62.reas and previously developed land.*' 'rhere renrain some problerns with the data.7 13.3 rig. such as auto production.'fhis is potentially a very signifrcant oversigh"t because homeownership is so prevalent.irt. or nondevelopers. hardly a case for piivate manipulation. First.i 76.u NA flO.3 i]4. only in Halifax.3 64.rp .2 I'rtl.0 NA 90.7 NA NA 40.1 79. Regina. Prices rise in the short run in the face of rising_demand.2 24.rilt-.0 73.top f<rur landowners.rising housing and land prices..7 24.u u6.0 3O. the data exc-iude uil b. If there are passive.u NA 73.19.2 72.0 NA u6.6 50.7 49.9 21.0 32.5 27.2 27.7 37..ll 30.1t NA 64.2 96.I ll.7 l)t)_ I / J.8 NA 96. thus considerably understating the total. 5 23.r1 37. ottawa. 73.5 17.i.9 21.rr"r-r". since supply responsesare relatively limited. .0 nu.elopersmay yet control a large component of the flow production.. I 66.ManagingUrban Land Resources 333 Table 11-6 Ownership Concentration: Nominal Ownership Statistics Metropolitan Area % Owned by Top 4 Owners Nominal Effective and Effective % Owned by Top 25 Owners Nominal Effective % Owned by Top 10 Owners Nominal Effective Calgary Charkrttctown Edmonton Halifax Hamilton London Nlontrc. in thesecitiesone or rnore government agencies were included in the..4 5f1. -dev.the data are on stocks..6 u3.conversely.2 p. Vol.1 43.2 50.3 99. c<lncentration ratios are usually constructed on flows.0 90. and thus the widespread stdck of land under currently owned housing needs to be considereclbefbre one can speak about monopoly <'orrtrrjl urban land markels.3 4(i.:) S o u r r e F e c l e r a l / P r o v i n c i a l ' l ' a s k o r c e o n t h e S u p p l y a n d P r i c e o [ ' s e r v i c e t l R c s i c l e n t i aL a n d .3 9U.m the data in 'fable I l-7 that government owner:Tp +la lancl banking are not necessarilyshort-rin solutions ro rapidly.8 32. is not at all incohsistent with our theoretical analvsisin Part II.7 30.4 ll. stock supply.

3 99.7% _ 1. on TaskForce theSuPP 1978' Land).5 7t .O L 1950 52 54 ! r Figure11-5. Vol' 2 (Toronto. 1 8 3 . there does not appear to be monopoly or oligopoly power at work in Canadian urban land markets.9 68. Two things are prices. second.that eve r 85.e2 Recent work on speculation in urban land markets has reached mixed conclusions about the efficiency of such activities. Ont.9 84. Land'Pric suburbs.. Doun to Earth. despite government efforts to service land in the urban region. 1 9 7 u .l'rThe general finding is that speculators can be beneficial to adjustment processes in these markets by correctly anticipating changes and therefore easing the transition through guessing correctly in advance of (or in expectation of) the actual change.Capozza notes that speculation can lead to higher prices.0 26. but that these higher prices might in fact be warranted due to the underpricing of scarce urban land resources. lS72-197 5 NHA Lot MLS Dwelling NHA Dwelling 80.7 59. Those ownership and servicing programs designed to increase the flow of lots and keep prices low are doomed to fail in the short run. p Ontario.e" Controlling Speculation in Urban Land Markets Two sources of evidence can be brought into the analysis: theoretical 'Ihe theoretical evidence on speculation in organized and empirical.8 56.77o 62. 5 52. 1 7t . Montreal [Sourc // Volume (Toro to Earth.'e The justification for government ownership and servicing programs is not strongly supported by available evidence.6 64.3 15. but given the greater degree of competition in urban land markets in the United States. and have not been successful.O 75 . Toronto consistentlyranked near the top of the 25 cities studies in terms of house and lot price appreciation.9 l15.8 1.334 lssues of Urban Land Economics Contemporary of of Table11-7 An lllustration the lrrelevance Public Price Housing for Versus Private Ownership Short-run Fluctuations Urban Areas with High Government Ownership Regina Saskatoon Winnipeg Ottawa Halifax SaintJohn Average Average of 25 areas Di{Terence Percentage Change. 7 81.nnSmith Points o markets will be substan therefore every reasonI lization rather than Pe Aside from the wot there is a relative Pauc sathered bY the Previo Supply and Price of St that'speculation is riskY for land Prices within riod.2% Sozrcc: Federal Provincial Task Force.2 154. 86.3 + ro.9 44. P Residential .the Canadian findings should be relevant in the United States.2 3l-q havior.). markets is enormous and largely focused on financial and commodity futures markets.= o .7 17.7 73.Equivalent United Statesdata could not be found.n'Markusen and Scheffman conclude that the actual impact depends on a number of assumptions about landholding be- o o c a't .l 10I.

gi. second.rela. and there is e.ed. B r o s s a r d . of li19:"Iy^:liT:_are even pnces. P o r t o b e ll o .1978. of Asidefrom the wori<in financialand commodityfutures markets.Down to Earth.u. Figure l l-5 presenrs is data from the taskforce ^zo "Montreal for. that in the sameurban land market pricesdo not R i v e B o i s d eS u b d i v i s i o n ..rrsr. rhe"incredible vodtility.p i e r r e f o n d s .landprice.Managing Urban LandResources 33S havior'" sTrjh pointsout rhar there is ritrre reasonro expectthat rand markers be substantially rvril different from other marketi....-p.very reasonto expectspeculators work asagents stabito of therefore rrzarlon rarher than perpetuators instability. . thereis a.rive paucityof work done for ru"a -ui. on rhe Land lead one ro conclude luppty and Price of ServicedResidentiar that..s6 Data gathered bI !h9 previouslycited Federar/provinciar rask For.1 .._ noteworrhy: firsr.p.Ontario:Federal_provincial Task Force on the Supply and price ot Serviced Residential Land).[. " y. Volume// (Toronto..[Source: David Greenspan. "".r.O u e b e c ----S a b r e v o i s u b d i v i s i o nB o u c h e r v i l l eO u e b e c S .O u e b e c * A n o " " c o50 g o d40 19s0 52 54 56 58 60 62 64 66 68 70 72 74 76 Figure 11-5.s within' the urban. Land-price movements 1950-1976in various Montrealsuburbs..speculationrisky. 53..

as is calk the distributional land prices. 'fhere has been. Controlson negatiu appear to be few controls that have have little or no sources. ab... speculative activity does .jtionabte " and requires additionut ...rr".rfrti. ancl pr<_rducrive coasiuie. Simila destabilization of findings."-.nrirrue? p.older srrucrures are conrinuailybeing J. leads us to concrude that specuritors do not necessarirydrive up l:1::r.'. therefbre.-Jirn. Rivers..rptiy-.rs gr.u.rrrg empirical basisfor irnposingmany of the ai.since prices can falr as well as rise.lntinuation of p'esent pra-ctices are difficult to estimate. but rath or oligopoly and 3..uncls.uui"g rn.....I)oes the stated prolrler' existirr fact?''rhe prEsent question restson urlr." rich coasral areas.u.f' the uniqueness the'.open space."..t...i'h*il. .circufistantial evidence ab.. and can in fact re.wth irr.:Jrlr. p'irrre [armland.rlrrfirr."ri""... ()rre aspe. as welr as . Ju__..ur the relativeabundance .e.i. and the .r."tr-.a orrtu.. state.na fertile valleysflo'ded.n legisrati..oryrtems.ii""....r. speculators can indeed rose. environ served to restrict sr environmental pres market prices are t< cial costs and also for environmental r be the caseif a pre and opportunity cc Having reviewed tl for and effectiven tions appear consi l.i scenicareas.p"q.J g.n questi.r.". studiei h a v e. in urban land 'fhe markets. .rr....ne11 buirdings. .a...t urd u f""g. Monopoly or oligop based on assump areas in Canada l markets.and _!ea11ifql older and architecturallyinterestingbuitdings-J. .scenicand recreati.J: of .ul.ri..: In sum.ity "f " gi.and historic and archirectur"tty rrri. the general public in t aware of declinesir ward environmen opment.. Go. Thus.""Prpulari'n increases sriil... -fhe econ<.n areas. ur.t.n and p%lit has been investi_ galcd vigorously: cosrs the associlted *irn g.r......a to make way [<rrparkingl.i.'. y d ea r e . rearp"ubric pressures befo're enactingregis_ lati.h...legislation and policy stemsfrom"heighr.".rref.rti.. q.ns.n... Protectionof high-q be based on soun since there is so t quality."-.re difficult ro subsranriare sincethe benefit.asignificat-tt am.rl stabilizing'ri..r' pr.""'No clearanswerhasemerg.rriun of costs of'growth and growth control wide open.I thc <'<r. the l'ss of high-quility naturar and buitienvir.l'*iut".h.d rar?nrand clntinuesto be pavcd and devel.i protectingUniqueLand and BuildingResources where our other^analyscs began with the r".-entar protection. and most frequently m( protectlon ralsesPr similar to that disp and directing it ar areas.... .rtirie.336 Contemporary of Urban tssues Land Economics move together.appear to be i .orr.recri.t.rource..r. and by enco development and t buildings.not ap^pear harmful as purporred.t'1 The empiricar evidence on specurationin urban rand markets .r.. control... :ffi:r..ri.r-missioning the studies.p.. .io.]i.endJne.i Th.. in urban areas.rr.pta.r'ic casefor farmlancl.. evil.""fi".r *rr.tt"ira'i. .ilurion of air on. is m.a. on the assumprionthat legisrirors are not capricious. .. or prwer-hungrv and ieact t..nred lbr in tn" of the r'arketplace. we can'furrher assume thit rhegi.ros There are prol federal.-rt work as welr 'n assessing . r" U. fo.f tlre <.sts. to th 2.rag-".a n d m e a s u r a _ ble c()srs "r acco..ui.-rii"".'fhere croes.i r r . effectiveness of the Vermont"a..-.i.r. i g " i n . This is consisrenr with many of the .r..rru. r r s i s r e n t ld e n r o n s t r i t e t h a rt h e r-""r-ii""ft*.-q".The resultsare as varieclas the studiesand thJ. Developrnenr and polruti'n stilr .lit i..

3 . but rat.and by encouraging development in less sensitiveareas and redev. be based on sound thinking. there appear to be f'ew negative external effects am()ng urban land uses.u. First. wherein zoning appears to have raised housing and land prices. controls on negatiueexternalities are poorly supported by the evidence.By raising prices.specukttiue disttrtions in urban land markets are similarly based . It essentially does this through a mechanism similar to that displayed in Figure 1l-4. is the distributional efrect.Attempts to contr<-rl rnonopoly or oligopoly and speculative practices have not been successfulto date. environmental protecrion and presbrvation' policies have servedto restrict supply. Monopo\ or oligopo\ and .n assumptions rather than empirical "f act. federal. largely zoning and its recent variants.elopmentand reuse of older but more expensively redeveloped buildings. Sinrilarly. as is called for by zoning proponents.We must pay for environmental quality. Empirical evidence is difficult to compile.her on value-basedassumptions. The most frequently mentioned effects are those on price: e]rvironmental protection raises prices. since the tacit assumption is that ma. and local protection and preservation legislation. since there is so much room for judgment in the definition of environmental quality.ManagingUrban Land Resources 337 general-pyblic in Canada and the United States is becoming more awareof declines in environmental quality and is shifting its values toward environmental protection and against continued develoPmenl.rketprices are too low. one indirect effect."'7 SUMMARY Having reviewed the conceptual and empirical literature on the need for and effectiveness of land-use controls.Io'-' There are problems in assessi. seem to have little or no effect at improving the alkrcation of scarce urban land resources. we more t-reariyreflect social costs zrnd also slow down use and development. state. which is what economic theory tells us must be the case if a previously underpriced resource is priced at its social and opportunity cost. the following generalizations appear consistent with current knowledge l. second. Both of these ef f-ectsare part and parcel of environmental preservati<ln policies. By restrictiig developmenr and directing it away from easily developed farmland and ioastal areas. Protection of high-quality andlor unique natural and built enuironmentsdoes appear ro . however. the purported eflecrs of price manipulation and destabilization of urban land markets by speculators is not based on empirical findings. . however.I. the contr()ls that have been imposed. to the detriment of'lower-income households.gthe impacts of the bevy of recent ^ ." Detailed studies of'25 urban areas in (lanada failed to provide evidence ol' oligopoly contr()l of those land markets.

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