Cities must end the economic apartheid of ‘growth management’

Fewer than 1.6 percent of the residents of Boulder, Colorado have African-American ancestry, and it is becoming whiter than ever thanks to restrictive land-use policies that have made housing unaffordable. Census data show that, between 2010 and 2016, Boulder’s population grew by more than 10,000 people, but the number of blacks declined by 30 percent. 

Boulder residents would bristle at claims they are racist, but the nation’s most progressive cities tend to be the ones that have adopted policies that make housing unaffordable and push low-income people out. Since black per capita incomes remain about 60 percent of whites, they are some of the first to leave such cities.

City housing crises have garnered headlines nationwide, but few have noted that there is almost a one-to-one correspondence between high housing prices and land-use policies that are collectively known as growth management. Growth management seeks to control where and, in some places, how fast growth takes place.

{mosads}Boulder, for example, limits the number of building permits that can be issued each year and the city and county of Boulder have together purchased land or development rights on an area equal to nine times the land area of the city itself. These supply restrictions have made Boulder the most expensive housing market in any state not on a coast.

Other cities, such as San Jose and Portland, use urban-growth boundaries, outside of which development is heavily restricted. Oregon, for example, forbids owners of most rural land to build a single house on their own land unless they own at least 80 acres, actually farm it, and actually earned (depending on soil productivity) $40,000 to $80,000 a year farming in two of the last three years.

Fifty years ago, housing was affordable throughout the United States, with median home prices in most areas being between two and three times median family incomes. The one exception was Hawaii, which passed the nation’s first growth-management law in 1961, and where housing prices were slightly more than three times incomes.

Since then, California, Florida, Oregon, Washington, and most northeastern states have passed some form of growth-management law. Colorado has not, but Boulder adopted its own pioneering growth-management plan in the 1970s and the Denver Regional Council of Governments (DRCOG) established a metro Denver urban-growth boundary in 2000 through its Mile High Compact. 

The public comment draft of DRCOG’s “Metro Vision” has a stated goal of seeing that any new urban development occurs within the urban-growth boundary.

The result is that housing in these places has become severely unaffordable. In San Jose, median home values are more than seven times median family incomes. In Boulder, it is six times. While it can take just fifteen years to pay off a mortgage on a home that is three times your income, it can be nearly impossible to ever pay off a mortgage on a home that is six or seven times your income.

Cities such as Boulder and Denver have responded by stepping up subsidies to affordable housing. But such subsidies aim to provide housing for a few low-income people, and do not make housing more affordable for anyone else.

Indeed, some affordable housing policies actually make most housing less affordable. Boulder, for example, requires homebuilders to sell or rent 20 percent of the homes they build to low-income people at below-market prices. Builders respond by constructing fewer homes and by selling the market-rate homes they build for higher prices in order to cover the losses on the low-income homes.

Land-use policies that make housing more expensive effectively discriminate against low-income blacks and other minorities. In 2015 the Supreme Court ruled that such policies violate the Fair Housing Act just as much as if Boulder put out a sign saying, “No blacks allowed.” The ruling said that these policies can be excused only if they have a legitimate goal and there is no other way of accomplishing that goal without making housing less affordable.

For example, requiring sewer hookups makes housing more expensive, but has a legitimate goal of protecting public health. The goals of growth management, however, are either not legitimate or can be achieved without creating a housing crisis.

Boulder, for example, sits on the boundary of the 1.5-million-acre Arapaho-Roosevelt National Forest. Why does it need 145,000 acres of additional open space except to make housing more expensive? 

Growth-management advocates also claim that more compact cities will lead people to drive less, saving energy and reducing greenhouse gas emissions. However, the effects of density on driving are tiny, especially when compared with the huge costs, and there are much more effective ways of saving energy and reducing emissions that don’t make housing unaffordable.

To end discrimination against blacks and other low-income minorities, states and cities must repeal their growth-management laws, growth boundaries, and other land-use rules that make housing unaffordable.

Randal O’Toole is director of the Transportation Policy Center at the Independence Institute (@i2idotorg), a free market think tank in Denver. He is the author of Using Disparate Impact to Restore Housing Affordability and Property Rights in Colorado.