How economic development is impacted by a city’s zoning and official plan

By Bruce Firestone | Architecture

May 05

(A version of this article first appeared in OBJ, Ottawa Business Journal, https://obj.ca/article/op-ed-zoning-better-ottawa. An online poll is available for you to make your views known until May 31, 2019 here, https://docs.google.com/forms/d/e/1FAIpQLSedsKa0yykFAqStVgMvZwBux1QTfknZ3TIn8tuspcHjPZ1dHA/viewform).

Introduction

Urban guru, the late Jane Jacobs had a theory—the closer government is to people, the more important it is to citizens and also the better its performance, productivity and delivery of services are likely to be. She called this the “subsidiarity principle” defined this way: Government works best—most responsibly and responsively—when it is closest to the people it serves and the needs it addresses.

Cities, towns and villages often provide many basic services like water supply, sewers, storm drainage, electricity, roadways, public transit, parks, pools, beaches, libraries, schools, garbage collection, waste disposal, recycling, policing, firefighting, heath inspections, ambulance, paramedic and emergency services, parking garages, plus some deliver other utilities such as cable, phone, internet, wi-fi, and natural gas.

Do any of these look like essential services to you? Do you think they might make a difference in terms of a ratepayer’s quality of life? I would answer, “Yes” to both.

But there is a more subtle influence that municipalities, counties, townships, provinces and states have over cities, towns, villages—the power their zoning codes and official plans/master plans sometimes controversially exert concerning the shape, density, intensity, and form that human settlements take.

Energy Probe executive director Lawrence Solomon states that Ms Jacobs saw “planners as rigid freezers of development; she mocked regulations and she did object to the useless green space that planners forced on high-rise builders, calling such ‘tower-in-a-park’ developments economically sterile[1].”

Businessweek View recently estimated that in some areas housing costs are 50% higher because of zoning rules, and that local economies are performing 10% below their potential for the same reason. More recent studies put this much higher—at 36%.

Let’s explore this further…

What’s holding back the economy?

In their ground-breaking study[2], University of Chicago Booth School of Business economist Chang-Tai Hsieh and University of California at Berkeley professor Enrico Morerri reported that restraints on new housing prevented people, especially young talent, from moving to or staying in clusters of innovation. They found that such constraints: “lowered aggregate US growth by 36 percent from 1964 to 2009.”

Hsieh was quoted saying this about their research:

“If you compare it to all the things our political system talks about, this is just huge relative to everything else.”

You can think about it this way—if zoning codes were as permeable and permissive in 2009 as they were in 1964, the US economy would be more than one third bigger.

That’s an enormous increase in economic wellbeing amounting to nearly $7 trillion per year[3]. To put that in perspective, that’s an additional $21,432 USD per year per person (based on US population estimate for 2017 of 325.7 million persons). For a family of four, it represents a nearly unimaginable $85,728 a year of extra income… forever.

According to Bloomberg Businessweek correspondent Peter Coy[4]:

“The good news is that cities don’t have to be prohibitively expensive. The trick is to form a broad coalition for what pro-housing activists call YIMBY (yes in my backyard) by ensuring that the benefits will be enjoyed by all, or almost all.”

Harvard economist Edward Glaeser adds[5]:

“Arguably, land use controls have a more widespread impact on the lives of ordinary Americans than any other regulation. These controls, typically imposed by localities, make housing more expensive and restrict the growth of America’s most successful metropolitan areas. These regulations have accreted over time with virtually no cost-benefit analysis. Restricting growth is often locally popular.  Promoting affordability is hardly a financially attractive aim for someone who owns a home.  Yet the maze of local land use controls imposes costs on outsiders, and on the American economy as a whole.”

James Howard Kunstler’s advice to local governments in Home from Nowhere[6] was to essentially burn all your zoning codes[7]. Short of this, local governments that adopt proactive zoning codes (sometimes referred to as performance zoning) where everything is permitted unless expressly forbidden instead of traditional zoning where everything is forbidden unless expressly permitted, will develop an experimental environment where people can allow their creativity to flourish. Public safety codes and public input on things like site plan control can take care of nuisances and correct mistakes as well as improving overall urban design which should be, like any creative pursuit, an iterative process anyway.

City of Ottawa Official Plan

The city of Ottawa’s 700-person Planning, Infrastructure and Economic Development department currently led by its general manager Steve Willis assisted by director John Smit, manager Alain Miguelez plus a team of executives is currently reviewing its official plan (OP) with the goal of creating the very first official plan of any city anywhere in North America that is truly a “21st century plan.”

What this means is that the city had undertaken work that is fundamental to creating a regional economy and future that is flexible, resilient, and sustainable—a platform that doesn’t pick industry or individual winners and losers, doesn’t tie-up proponents in internal and external processes that are clumsy, expensive and lengthy, but rather establishes a sleek platform for talented, creative persons to create both private and public value upon. It goes beyond a resident-serving model to include a much wider audience and clientele.

This is foundational to retaining and attracting talent because, after all, it’s people that produce income not assets, no matter how valuable those resources might appear.

Ottawa has already started down this path by, for example, changing the city’s official plan and zoning bylaws to permit coach house development in backyards in residential (including R1) zones. This may seem a small matter until one realizes that it opens the way to neighborhoods that are more interesting, more diverse, more inclusive, denser and more intense, not to mention that they can add additional income for homeowners as well as create decent affordable housing in places where it is needed most—in the inner city as well as its suburbs and associated rural areas.

This, the city being proactive and taking a leadership role in terms of rezoning and redesignating lands, is not easy politically or inexpensive to do, but it goes a long way to creating a base for citizens upon which to create an amazing array of useful, productive and sustainable activities.

Your participation

It’s not sufficient to produce an OP designed to “boldly go where no one has gone before (or at least not many cities have).” It must also have buy-in from a wide spectrum of folks made up of not only local councillors and the mayor but also urban as well as rural-based citizens, BIAs, community associations, developers, environmentalists, creatives, techies, educators, healthcare professionals, ratepayers, investors, tenants, not-for-profits, affordable housing and transit advocates, sharing economy providers, economists, planners, infrastructure designers, tourist organizations, chambers of commerce, boards of trade, agritainment and agricultural producers, exporters, importers, truckers, entrepreneurs… you name it, the city needs to hear from you.

The form this participation can take is as follows:

  1. take 12-minutes or so and complete this poll, https://docs.google.com/forms/d/e/1FAIpQLSedsKa0yykFAqStVgMvZwBux1QTfknZ3TIn8tuspcHjPZ1dHA/viewform
  2. participate in a 90-minute online townhall organized by yours truly on May 22nd, 2019 from noon til 1:30 pm ET; use this zoom link to participate (zoom is a free app—it’s like skype on steroids, https://zoom.us/j/388405600)
  3. join a live, in-person panel discussion (time and date to be determined)
  4. do a 1 on 1 online interview with moi.

Please note that the townhall meetup, live panel discussion and 1 on 1 interviews will be recorded and uploaded to YouTube so that members of the public who can’t participate can see what their fellow denizens are thinking…

If you would like to attend the panel discussion or do a 1 on 1 online zoom meetup to make your views known, please reach out to me at: bruce.firestone@century21.ca. When you do, please indicate what your top three issues are.

The city wants to hear not just from the usual suspects but from tenants, charities, NGOs, not-for-profits, foundations, homeless, social workers and others—make your voices heard!

Bruce M Firestone, PhD, Ottawa Senators founder, Century 21 Explorer Realty broker, Real Estate Investment and Business coach. Follow him on twitter @ProfBruce or email him bruce.firestone@century21.ca


[1] Source: http://business.financialpost.com/fp-comment/i-knew-jane-jacobs-and-everything-urban-lefties-say-about-her-is-wrong.

[2] Housing Constraints and Spatial Misallocation, Chang-Tai Hsieh and Enrico Moretti, University of Chicago Booth School of Business, last updated 2018, https://faculty.chicagobooth.edu/chang-tai.hsieh/research/growth.pdf.

[3] US GDP in 2017 is estimated at $19.39 trillion USD. Source: World Bank. 

[4] Big City Housing Doesn’t Have to Be So Expensive, Bringing down prices requires a combination of affordable homes and upzoning, Peter Cory, Bloomberg Businessweek, August 27, 2018,

https://www.bloomberg.com/news/features/2018-08-27/big-city-housing-doesn-t-have-to-be-so-expensive.

[5] Reforming land use regulations, Edward Glaeser, Brookings Institute, April 24, 2017, https://www.brookings.edu/research/reforming-land-use-regulations/.

[6] Home from Nowhere: Remaking Our Everyday World For the 21st Century, James Howard Kunstler, Simon & Schuster, March 1998.

[7] What he actually said is this: “The model of the human habitat dictated by zoning is a formless, soul-less, centerless, demoralizing mess. It bankrupts families and townships. It disables whole classes of decent, normal citizens. It ruins the air we breathe. It corrupts and deadens our spirit.”

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About the Author

Bruce is an entrepreneur/real estate broker/developer/coach/urban guru/keynote speaker/Sens founder/novelist/columnist/peerless husband/dad.

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