At Lincoln House

The Weblog of the Lincoln Institute of Land Policy

October 09, 2015

Pioneering legal expert Steve Small named Kingsbury Browne Fellow

    If you have protected farmland, forests or open space in your community, there’s a good chance you have Steve Small to thank. A legal pioneer who paved the way to make conservation easements tax-deductible in the U.S., Small wrote federal tax regulations credited with facilitating the conservation of millions of acres of private land.
    Small is the new Kingsbury Browne Fellow at the Lincoln Institute, and the winner of the Kingsbury Browne Conservation Leadership Award from the Land Trust Alliance.
    The fellowship and award, made in recognition of outstanding leadership, innovation and passion in land conservation, were announced Thursday at the Land Trust Alliance's Rally 2015: The National Land Conservation Conference, in Sacramento.
    “Steve is an indefatigable source of energy and creativity for the use of easements and land conservation in America,” said James Levitt, Manager of Land Conservation Programs for the Lincoln Institute.
    The Kingsbury Browne fellowship and award is named for the Boston tax lawyer who is considered the father of America's modern land trust movement, a network of land trusts that have conserved more than 37 million acres. Browne’s 1981 gathering of conservation leaders from across the country evolved into the Land Trust Alliance, today representing more than 1,100 member land trusts.
    A special short film celebrating Browne’s life and career can be viewed here.
    A former attorney-advisor in the Office of Chief Counsel of the IRS, Small wrote the federal Income Tax Regulations on Conservation Easements, a critical legal framework for private land conservation. He has been involved in the protection of more than 1.5 million acres of land, working with more than 500 property owners in more than 45 states on land conservation strategies.
    The fellowship is just one piece of the Lincoln Institute’s active engagement in land conservation, which includes the publication of the Working Paper Cowboys and Conservation, the Policy Focus Report Conserving State Trust Lands and the book Conservation Catalysts, and the establishment of The Practitioners Network for Large Landscape Conservation, a group of leaders and innovators on the forefront of today's conservation strategies.
    In the fellowship, Small will engage in research, writing and mentoring, under the Lincoln Institute's Department of Planning and Urban Form.
    The Kingsbury Browne fellowship and award is in its tenth year. Previous winners were Jean Hocker, a former president of the Land Trust Alliance and longtime board member at the Lincoln Institute; Larry Kueter, a Denver attorney specializing in agricultural and ranchland easements in the West; Peter Stein, managing director of Lyme Timber Co; Audrey C. Rust, president emeritus of the Peninsula Open Space Trust based in Palo Alto, Calif.; Jay Espy, executive director of the Elmina B. Sewall Foundation; Jamie Williams, president of The Wilderness Society; Laurie A. Wayburn, co-founder of the Pacific Forest Trust; Mark Ackelson, president of the Iowa Natural Heritage Foundation; and Darby Bradley, president of the Vermont Land Trust.

September 24, 2015

Making inclusionary housing work

Inclusionary_Housing_web_heroFrom Seattle to San Francisco to Chicago to Portland, Maine, debates are raging over inclusionary housing – the requirement that developers reserve a percentage of new residential development as affordable. Some say the policy discourages development, or, in an argument that could reach the Supreme Court, threatens property rights. Meanwhile, New York City Mayor Bill de Blasio faces dual criticisms that his inclusionary housing proposal goes too far, or not far enough.
     Today the Lincoln Institute released a new report, Inclusionary Housing: Creating and Maintaining Equitable Communities, that separates myth from fact, charting a path forward for policymakers and showing how inclusionary housing can be used effectively to reduce economic segregation.
     “In hot-market cities, skyrocketing housing prices push middle class and low income residents far away from well-paying jobs, reliable transportation, good schools and safe neighborhoods,” said Lincoln Institute President George W. “Mac” McCarthy. “Inclusionary housing alone will not solve our housing crisis, but it is one of the few bulwarks we have against the effects of gentrification—and, only if we preserve the units that we work so hard to create.”
     Through a review of literature and case studies, author Rick Jacobus of Cornerstone Partnership offers solutions for overcoming the major political, technical, legal and practical barriers to successful inclusionary housing programs.
     “More than 500 communities have used inclusionary housing policies to help maintain the vibrancy and diversity of neighborhoods in transition, and we’ve learned much along the way,” Jacobus says. “Research shows that if programs are thoughtfully designed and implemented, they can be a valuable tool at a time when affordable housing is desperately needed.”
     In particular, the report addresses the concern that inclusionary housing can impede new construction by making development less profitable. According to the report, many cities have avoided such impacts by allowing flexibility in how developers comply and offering incentives, such as the ability to build at greater densities.
     Other key findings and recommendations in the report include:

  • Rapid construction of market rate housing actually fuels the need for more affordable housing by changing the character of neighborhoods.
  • Inclusionary housing programs have been challenged in court, but programs can be thoughtfully designed to minimize legal risks.
  • Follow-up in the form of enforcement and stewardship is critical. Some communities have created thousands of affordable homes, only to see them disappear after subsequent sales.

     The Lincoln Institute has for many years developed strategies to establish permanently affordable housing, including the establishment of community land trusts and other shared-equity arrangements. The effort is in recognition of the ongoing housing affordability crisis in many cities. Stratospheric rents and home prices in hot real estate markets are displacing longtime residents and changing the character of cities and neighborhoods.

September 23, 2015

Value capture, catching on

    The concept of value capture, which recognizes increases in property value triggered by government action and public investments, has been in the news of late, not coincidentally right here in our backyard. The Massachusetts transportation secretary, Stephanie Pollack, floated the idea as a way of confronting cost overruns in the proposed Green Line light rail extension north of Boston. The state has established a Value Capture Commission to explore ways of engaging the private sector in the financing of critical transportation infrastructure. The City of Cambridge similarly suggested that private developers and landowners might contribute more directly to transit operations that are such a critical element in the success of such booming areas as Kendall Square.
     Our research on value capture in the context of land-based financing tools goes back many years, and the idea has a prominent place in the promotion of municipal fiscal health. Martim Smolka, director of the Program on Latin America and the Caribbean, and author of the report Implementing Value Capture in Latin America, has been conducting research, courses, lectures, and workshops, most recently in Sao Paulo, where additional floor-area ratio (FAR) is auctioned in a stock market. Those discussions have centered on several common concerns in the implementation of value capture, such as whether charges to property owners are passed along to consumers in the form of higher prices, or doubts about the ability of local officials to determine the precise land value increment linked to government action.
      Next month, Lincoln Institute president George W. "Mac" McCarthy will make a presentation at Meeting of the Minds in Richmond, California covering land-based financing tools to allow cities to make critical investments in infrastructure. Armando Carbonell, chairman of the Department of Planning and Urban Form, will also present on value capture at the 45th Anniversary of the Loeb Fellowship in Cambridge, Mass., and value capture will be the subject of an upcoming talk at TEDxBeaconStreet. In addition, the Latin America program is commissioning further research on value capture, and conducting more workshops and online courses.

September 01, 2015

Unintended consequences in Colorado tax limits

     Tax and expenditure limits enacted as part of a 1992 voter initiative have led to inconsistent and unequal property tax burdens in Colorado, with state taxpayers increasingly subsidizing a handful of often-wealthy school districts, according to new research published by the Lincoln Institute of Land Policy. Moreover, more than 80 percent of Coloradans pay more in school property taxes than they would if voters had never enacted the Taxpayer Bill of Rights (TABOR), the state’s signature tax and expenditure limit approved in 1992, according to the research.
     “Since the early 1990s, Colorado has enacted layers of reform in pursuit of two conflicting goals – lower property taxes and well-funded public schools,” said Phyllis Resnick, lead economist for the Colorado Futures Center at Colorado State University and lead author of the Lincoln Institute working paper, Measuring the Impact of Tax and Expenditure Limits on Public School Finance in Colorado. “The result is greater inequality and inconsistency, and surprisingly, a greater tax burden for most Coloradans.”
     Resnick and co-authors Charles Brown and Deborah Godshall analyzed the impact of reforms intended to reduce property tax burdens and control spending for public education. Using a mathematical simulation, they also modeled what tax burdens would be without two property tax related provisions of the Taxpayer Bill of Rights, a 1992 state constitutional amendment that limited taxes and spending for all units of government and barred tax rate increases without voter approval.
     Highlights of the research include:

  • Taxpayers in 74 school districts – representing 81% of the state’s population – now pay more in school property taxes than they would if the Taxpayer Bill of Rights were never enacted.
  • In most districts where property taxes have decreased, a greater share of school costs are now paid out of the state’s general fund.
  • Among the 21 school districts with the lowest school property taxes, residential taxpayers have enjoyed property tax reductions from 59 percent to 97 percent since 1993, and nine of these districts are in the top quartile for household income in the state.
  • Disparities in school funding among districts have increased with the more frequent use of override levies, particularly in school districts that have benefited from lower base property taxes subsidized by greater state aid.

     “As these results show, Colorado’s experience should serve as a cautionary tale for other states as they consider enacting tax and expenditure limitations,” Resnick said. “In many cases, Colorado’s property tax limits relied on simple formulas that failed to take into account the complex factors affecting school district financing, such as changing local economic conditions and volatile school enrollment. As a result, these limits have served mostly to redistribute – rather than reduce – Coloradans’ tax burden.”
     The paper can be downloaded at the Lincoln Institute website, along with a research summary that includes infographics.

August 24, 2015

The surprising success of manufactured homes as affordable housing

  GWM manufactured homes lecture imageWhile at the Ford Foundation working on affordable housing, Lincoln Institute President George W. “Mac” McCarthy became convinced about the huge potential of an unrecognized sector of the national housing stock – manufactured homes. Setting aside the scorn of trailer parks, “redneck Riverias,” and Kentucky double-wides, he discovered that homes built in factories represent the largest unsubsidized affordable housing stock in U.S. Almost 8 million families, with a median income of $29,000, reside in manufactured homes.
     In the final Lincoln Lecture of the spring season last month, From Social Stigma to Housing Solution: The Case of Manufactured Housing, McCarthy reported on the work of a group of plucky social entrepreneurs who embarked on a Quixotic effort to transform the manufactured housing sector -- and the unexpected results of their efforts to preserve and expand this essential component of the national affordable housing stock.
     While efficient manufacturing reduces production costs and high-density, low impact development promotes smart growth, newer homes often outperform site-built housing in both quality and design. And yet, with a few notable exceptions, affordable housing practitioners remain ignorant of, or are openly hostile toward, this housing stock—instead of embracing it as a potential solution to affordable housing challenges.
      In the 1990s, manufactured housing accounted for two-thirds of new affordable single family housing, and nearly half of homes under $150,000. Over two-thirds of these homeowners earn less than $50,000 (80 percent of median income for most regions). More than 80 percent never move. Contrary to popular belief, the homes aren’t assets that diminish in value over time, so long as families control the land under their homes. There are an estimated 50,000 manufactured home communities in 3,100 counties, with an estimated three million homeowners who lease the land beneath their homes.
     The case studies noted in the lecture included Noji Gardens in Washington State, Cranberry Village in Carver, Mass., and ROC USA in New Hampshire.
      A key effort is to get the manufactured home industry to produce better products – something that has been embraced by Warren Buffet in Clayton Homes. “People are doing it right and making money,” McCarthy said. The Federal Housing Administration has changed rules to improve financing, though as McCarthy noted, “People who own manufactured homes are still paying too much in the lending.”
     The July issue of Land Lines featured an article on manufactured homes, From Stigma to Housing Fix: The Evolution of Manufactured Homes. Earlier this year, another article published in Hawaii looked at greater openness to manufactured homes. George McCarthy’s full lecture can be viewed here.

Promoting Municipal Fiscal Health

August ALH thumbnail
   The Lincoln Institute of Land Policy today launched a multi-year campaign to promote Municipal Fiscal Health in the U.S. and worldwide, to help cities confront an epidemic of insolvency and restore the capacity for local governments to provide basic services and plan for the future.
     “We need a fresh start that recognizes the structural elements of the fiscal stress we see in cities in the U.S. and all around the world, from Puerto Rico to China and throughout the burgeoning metropolitan areas in the developing world,” said George W. “Mac” McCarthy, president of the Lincoln Institute. 
     “Our roads, sewers and levees are crumbling under the weight of fiscal stress and underinvestment,” said former Transportation Secretary Ray LaHood, co-chair of Building America’s Future and a Lincoln Institute board member. “Putting cities on strong financial footing is critical for protecting the basic public goods and services many citizens take for granted.”
     As part of the Municipal Fiscal Health campaign, the Lincoln Institute will share public policy ideas, conduct research, provide education and training, foster regional and international dialogue and help equip policymakers with tools to address their communities’ unique fiscal challenges. These are just some of the activities in the mix:
     -- A kickoff congressional briefing September 10 in Washington D.C. featuring a keynote address by Kevyn D. Orr, former Emergency Manager for the City of Detroit, emphasizing the need to align policies at all levels of government—local, state, and national—and the importance of national policies, like unfunded mandates or competitive funding programs, in hampering or supporting local efforts to maintain fiscal health.
     -- Engagement in the UN-HABITAT global summit Habitat III in Quito, Ecuador in October 2016, to ensure that that financing is a critical pillar in creating a more balanced and equitable future for the world’s cities.
     -- Mobilization of new research, culminating in a major conference next year, on the fiscal impacts of historical planning decisions, alternative land-based fiscal instruments that support infrastructure investment, dynamic efforts to measure fiscal health, and the impacts of austerity measures and appropriate regional and national government interventions.
     -- The appointment of Lourdes Germán as a fellow at the Lincoln Institute to help build the intellectual enterprise around the municipal fiscal health initiative, and develop a scorecard that lends transparency to government fiscal discipline. She is director of the Civic Innovation Project, a government innovation and research platform, and has held past roles that included creating the municipal finance division at Fidelity Investments, developing and teaching a municipal finance curriculum at Northeastern University, counseling governments as a public finance attorney, and serving on various government civic boards.
     -- Expansion of the Fiscally Standardized Cities database from 112 to 150 of the largest U.S. cities, including two from each state in the U.S., and additional information on the status of public pensions in each city. The continually updated database makes it possible to compare local government finances across more than 120 categories of revenues, expenditures, debt, and assets.
     Whether measured in infrastructure gaps -- $3.6 trillion in the U.S. by some accounts -- or precarious financial instruments -- $3.3 trillion underfunded municipal debt in China -- the fiscal challenges facing the world’s municipalities are deeply troubling. In addition to the challenges of meeting existing infrastructure needs, growing urban populations and a changing climate require local governments to make additional, preemptive investments for the future of their communities, to plan and prepare for growth and sustainability.
     At the same time that cities face such historic needs, numerous municipal bankruptcies, most notably Detroit in 2013, have highlighted the problems of chronically meager or diminishing revenues, increasing costs of providing public goods and services, mounting historical obligations, and expanding responsibilities imposed both by higher-level governments and local citizens. While the housing crisis and Great Recession of 2008 exacerbated the problem, the roots of cities’ fiscal problems go back many decades.
     The foundation of the Municipal Fiscal Health campaign is to provide cities with the fiscal tools and strategies necessary to support their vital role in society, grounded in these six key areas:
     Intersection of Planning and Public Finance In many cities, planning for growth and major infrastructure projects is conducted separately from budgeting and finance. Coordinating these functions is critical for navigating the ups and downs of revenue cycles and preparing for the costs of maintaining projects over time.
     Land-Based Municipal Revenues Land-based revenue models, including the property tax and land-value increment tax, which captures the increase in property valuesresulting from public actions and investments, can play a significant role in municipal fiscal health. Communities lacking the basic tools or land ownership patterns to use these tools will require innovative ways to leverage land-based revenues.
     Multi-Level Governance Decisions by state, provincial, federal or central governments can have serious impacts on local government finances, and poor higher-level decisions helped catalyse the decline of Detroit and other cities in the United States.  Coordinating efforts to monitor local fiscal health and intervene in instances of local fiscal stress, as well as improving the allocation of state and federal funding, is critical to creating a legislative and political environment conducive to Municipal Fiscal Health.
     Monitoring Fiscal Health and Local Transparency Sound fiscal monitoring and transparency provide the opportunity for intervention before municipal fiscal stress degrades public services, endangers the integrity of infrastructure, or devolves into municipal bankruptcy.  The Lincoln Institute is developing a community scorecard to help communities and lawmakers track the fiscal health of their local governments.
     Capital Accounts and Infrastructure Investment Fiscal stress can have a serious impact on capital accounts, and is a factor in the chronic underinvestment in infrastructure -- $3.6 trillion in the U.S. and up to $40 trillion globally. Failure to maintain infrastructure has been responsible for catastrophes such as the collapse of an interstate highway into the Mississippi River, the explosion of buildings in Harlem due to leaks in century-old gas lines, and the failure of levees during Hurricane Katrina.
     Unfunded Obligations Unfunded obligations such as debt and public pensions, and forgone revenue such as tax abatements and concessions contribute to fiscal stress. For example, Chinese cities have amassed $3.3 trillion in debt in less than a decade without a clear path to repayment, Puerto Rico’s recent bond default threatens to cascade into the largest municipal credit default in history and unfunded retirement benefits hamper the post-recession recovery of many U.S. cities.
     Watch this space for more updates.

July 22, 2015

Managing State Trust Lands, Updated

2508_State_Trust_Lands_Updated_cover_webA comprehensive report on the management of state trust lands in the West has been updated to reflect the latest policy innovations and best practices.  State Trust Lands in the West: Fiduciary Duty in a Changing Landscape (Updated), co-authored by Peter Culp, Andy Laurenzi, Cynthia Tuell, and Alison Berry, is the product of Western Lands and Communities, a joint program of the Lincoln Institute of Land Policy and the Sonoran Institute.
     The report, an updated version of the original 2006 publication, State Trust Lands in the West: Fiduciary Duty in a Changing Landscape, was presented at the Western States Land Commissioners Association’s summer conference held July 19-23 in Moab, Utah. The updated edition including new graphics, charts, and appendices, reflectsthe current status of initiatives profiled in the case studies, to better help trust land managers identify successful land management actions.
     Available in print and by free download, State Trust Lands in the West (Updated) introduces readers to the concept of state trust lands, which Congress granted to each state upon inception for the purpose of supporting public institutions, primarily K-12 public schools. The report explores the history and current status of trust lands in the West, where 85 percent of the remaining 46 million acres of these lands are concentrated; and offers examples of initiatives to help land managers and other interested parties fulfill their multiple trust responsibilities while producing larger, more reliable revenues for trust beneficiaries, accommodating public interests and concerns, and enhancing the overall decision-making environment for trust management.
     State trust lands are an often misunderstood category of land ownership in the U.S. According to Stephanie Sklar, CEO of the Sonoran Institute, ”This popular report was updated and reprinted so it can continue to serve as an introductory primer on the issue; one that clearly illustrates the varying degrees of flexibility the states have in managing their trusts, all while meeting their fiduciary responsibility to the beneficiaries.”  The Sonoran Institute makes a practice of sending this report annually to all new trust land managers, she said. “The history and core content of the report have not changed significantly, but providing updated data makes the report more timely and useful.”
     State Trust Lands in the West and a companion website,, show how the states compare to one another: how much land each state holds in trust; the type of revenue generating activities conducted on trust lands; who the beneficiaries are; and the annual revenue generated and distributed to the beneficiaries. Across the West, communities are changing rapidly as a result of both population growth and an ongoing nationwide shift toward a more diversified, knowledge-based economy. This report presents strategies and approaches state trust land managers have taken in response to the changes:

  • Establish comprehensive asset management frameworks that balance short-term revenue generation with long-term value maintenance and enhancement
  • Incorporate collaborative planning approaches with external stakeholders to achieve better trust land management
  • Encourage real estate development activities that employ sustainable land disposition tools and large-scale planning processes, especially in fast-growing areas
  • Support conservation projects that enhance revenue potential, offer ecosystem services, and allow multiple uses of trust lands
  • Introduce comprehensive reforms to expand the flexibility and accountability of trust land management systems

     Earlier this year the Lincoln Institute published a related report, Conserving State Trust Lands, by Susan Culp and Joe Marlow, examining strategies to conserve state trust lands with ecological and environmental value, while maintaining the trust obligation to earn revenue for K–12 schools and other beneficiaries.

July 18, 2015

What would Henry George say?

IMG_2382Edward T. O’Donnell has a Google Alert in place for “Gilded Age,” and lately it’s been popping up with great regularity, as the term is invoked to describe the 21st century: whirlwind innovations in technology; a huge and growing gap between rich and poor; and deep unrest among the “99 percent” who toil far out of reach of top-tier wealth.
 The economist sounding the alarm about extreme inequality today is Thomas Piketty, whose 700-page Capital in the Twenty-First Century became a bestseller. The towering figure of the late 19th century in the original Gilded Age was Henry George, whose Progress and Poverty was equally if not more popular. In the penultimate Lincoln Lecture of the spring series last month, O’Donnell, Associate Professor of History at Holy Cross College in Worcester, Mass., and author of Henry George and the Crisis of Inequality: Progress and Poverty in the Gilded Age posed he question, what would Henry George say today?
   George occupies a special place in the history of the Lincoln Institute. John C. Lincoln was an inventor and industrialist based in Cleveland, and co-founded Lincoln Electric at the turn of the century with his brother, instituting progressive employee policies that are studied at Harvard Business School to this day. (The story is chronicled in the book Spark). He also became interested in land policy and the ideas of Henry George, establishing the Lincoln Foundation in 1946; in turn the Lincoln Institute of Land Policy was founded in 1974.
     George grew up in Philadelphia, and seemed to be a distracted young man, training as a printer, heading to California to pan for gold, and ultimately returning to journalism.  Struck by the contrast of lavish mansions on 5th Avenue and the poor Five Points neighborhood of New York City, and how landowners outside San Francisco were holding onto land in hopes of cashing in as the city expanded, George came up with the idea of a single tax on land.
     A select few landowners were benefitting handsomely from owning land, entirely because they owned parcels in good locations; they weren’t actually making anything – the comparison being perhaps the hedge fund managers of today. Attempting to translate his ideas into political power, George ran for mayor of New York City in 1886, and finished second behind Hewitt, though in front of a young Teddy Roosevelt. Ultimately he ended up fading from the spotlight and died in 1897.
     In addition to the broad point that extreme inequality threatens democracy, the most relevant part of the legacy of Henry George today may be the land value tax, O’Donnell said. Land-based financing tools that promote municipal fiscal health, such as the property tax and value capture – based in the notion that government action creates value for the private sector – are also prominent, especially in Latin America.  Leading figures such as Warren Buffett and Joseph Stiglitz have underscored the importance of George’s identification of wealth in land.
     “In the seventies, Henry George would have gotten half a sentence -- now he’s getting a paragraph!” O’Donnell said.
      In addition to Henry George and the Crisis of Inequality, O’Donnell is author of Ship Ablaze: The Tragedy of the Steamboat General Slocum (Random House, 2003), and co-author of the U.S. history college-level textbook, Visions of America: A History of the United States 2nd edition (Pearson/Prentice Hall, 2012). His scholarly articles have appeared in the Public Historian, Journal of Urban History, and the Journal of the Gilded Age and Progressive Era. O'Donnell has created video courses for the Great Courses Company titled, "Turning Points in American History" and "America in the Gilded Age and Progressive Era." He also writes a blog on American history,
     The lecture, “Are We Living in a Second Gilded Age?” can be viewed in its entirely in our video library here.

July 09, 2015

The past and future of zoning

Zoning_Rules_cover thumbnailZoning has an honorable history but is being over-used by local communities to block new housing development in ways that exacerbate sprawl and social inequity, according to Zoning Rules! The Economics of Land Use Regulation, a new book published by the Lincoln Institute of Land Policy.
     In a definitive economic, political, and legal account of local land use regulation, author William A. Fischel, a professor at Dartmouth College, reveals how homeowners seeking to protect their investment have made development difficult and costly.
     “State, federal, and judicial interventions to control local zoning have done more harm than good. To help grow the economy, decrease inequality, and improve the environment, America needs to take the wind out of the sails of local land use regulation,” Fischel says.
     For a century, zoning has been a useful and popular institution, enabling cities to chart their own course and homeowners to protect their main investment and provide safe neighborhoods. But as residential real estate prices have soared in recent years, Fischel says, concern about home values has created barriers to growth -- contributing to suburban sprawl, entrenching income and racial segregation, and slowing the growth of the American economy.
     Once dismissed by economists as a paper tiger, municipal zoning is now regarded as a major influence on the development of American cities. Zoning Rules! explores the behavioral basis as well as the economic effects of local government land use regulation. This requires not just an economic model of how zoning works but a deeper understanding of the social, political, and technological factors that guided its history over the last century. Zoning’s popularity is due to its success in protecting the value of single family homes, and anti-sprawl reforms must take this into account.
      Among the key takeaways from Zoning Rules:
      -- Curtail federal tax subsidies to owner-occupied housing, beginning with the home mortgage interest deduction. For tax purposes, housing should be treated like any other investment in terms of both its annual stream of services and its capital gains. “Economists should understand that reforms in that direction are not just about getting more revenue and leveling the playing field among types of capital taxation,” he writes. “The housing subsidy is most likely the major political basis for excessive land use regulation. Bringing the inflated owner-occupied housing sector down to earth would moderate the NIMBY syndrome and make public demands for land use regulation more reasonable.”
     --Take it slow on urban growth boundaries. Portland, Oregon, seems to have found a means of achieving infill development despite NIMBY sentiment, but constraining growth boundaries undermine local governments outside the pale and may cartelize the housing market, making the region less attractive and productive than it might be if exurban growth were simply charged its marginal cost.
      -- Re-assess concern about exactions. Courts and legislatures should be aware that new development can have public impacts that are greater than previous developments; the sequential nature of most development inevitably means that latecomers will be more burdensome than those that came earlier.
     -- Abolish rent control, which can reduce the supply of rental housing, driving more people into the owner-occupied sector and fueling more NIMBYism. Acknowledging political initiatives to cut back on rent control, Fischel suggests that “this is an instance in which the regulatory takings doctrine might be profitably deployed at the state level.”
     -- Re-examine the use of conservation easements for their impact on urban structure as well as their environmental benefits. Where urban development is possible, “perpetual easements are the worst form of suburban exclusion, in that they push development to remote areas and increase inefficient sprawl,” he writes.
     -- Play down the threat of monetary damages as a remedy for exclusionary zoning. Pennsylvania’s substantive due-process approach, which relies on injunctive remedies rather than financial penalties, makes developers allies with affordable-housing advocates without threatening the solvency of local governments.
     Fischel also writes that “the federal government should stop abetting parochial growth control schemes with false alarms about running out of farmland and other sky-is-falling issues. It should also limit litigation about environmental issues to parties that have an ongoing stake in the issues. Mostly, though, the federal role should be to leave the states alone.”
     And he concludes with an inversion of Daniel Burnham’s famous dictum, by suggesting that communities should “make only little plans.” Large plans are often high-profile targets for people who oppose development, he says. Modesty in scale often gets things done, not least because many reviews have thresholds that intentionally allow small players more leeway. More particularly, the megaprojects of urban renewal, like that of New London, Connecticut, create holdout situations and adverse publicity that more modest and contingent development can more easily avoid.
     William Fischel has taught economics at Dartmouth College since 1973. He has written four books, including The Economics of Zoning Laws (1985) and The Homevoter Hypothesis (2001), and more than fifty articles with local government themes. He served on the Hanover, New Hampshire, zoning board for ten years and was a member of the board of the Lincoln Institute of Land Policy for four years.
     Zoning Rules! is also available as an ebook at Amazon.

June 22, 2015

C. Lowell Harriss and David C. Lincoln Fellowships Named

     The Lincoln Institute of Land Policy announced recipients of the C. Lowell Harriss and David C. Lincoln Fellowships, named as part of a continuing effort to support research on the cutting edge of tax and land policy.
     The C. Lowell Harriss Fellowships, named in honor of the Columbia University economist (1912-2009) who served for decades on the Lincoln Institute’s board of directors, support work on dissertations. Administered through the departments of Valuation and Taxation and Planning and Urban Form, the program provides a link between the Lincoln Institute's educational mission and its research objectives by supporting scholars early in their careers. The recipients and their topics are:

  • Kyoochul Kim, Pennsylvania State University: Analysis of the Effect of Land Value Taxation on Land Value and Land Intensity
  • Ross Milton, Cornell University: The Political Economy of Property Tax Structure
  • Alexander Bartik, Massachusetts Institute of Technology: The Efficiency and Incidence of Improvements in Local Amenities: evidence from Census Data and Local Property Values
  • Lyndsey Anne Rolheiser, Massachusetts Institute of Technology: The Local Tax Implications of Inefficient Land Use
  • Paul Edward Bidanset, City of Norfolk, Virginia: Using Locally Weighted Regression with Simultaneous Spatial, Temporal and Attribute Weighting Functions to Improve Accuracy of Mass Appraisal Models
  • Charles J. Gabbe, University of California: Why are regulations adopted and what do they do? The case of Los Angeles
  • Andrew McMillan, University of Illinois at Urbana-Champaign: After the Foreclosure Crisis: Measuring Neighborhood Recovery and Contributing Factors
  • Linda Shi, Massachusetts Institute of Technology: Resilient regions: U.S. Experiments in Metropolitan Climate Adaptation?

     The David C. Lincoln Fellowships in Land Value Taxation (LVT) were established in 1999 to develop academic and professional interest in this topic through support for major research projects. The fellowship program honors David C. Lincoln, former chairman of the Lincoln Foundation and founding chairman of the Lincoln Institute, and his long-standing interest in land value taxation (LVT). The program encourages scholars and practitioners to undertake new work in the basic theory of LVT and its applications. These research projects add to the knowledge and understanding of LVT as a component of contemporary fiscal systems in countries throughout the world. The 2014-2015 DCL fellowships announced here constitute the fifteenth group to be awarded:

  • Alex Anas, Professor of Economics, State University of New York at Buffalo: The Effects of Land Value Taxation in Los Angeles and Paris in a Computable General Equilibrium Model
  • Kevin C. Gillen, Economist and Senior Research Consultant, Fels Institute of Government, University of Pennsylvania; and Guy Thigpen, Director of Research, Philadelphia Redevelopment Authority: The Empirical Development and Application of Land Price Indices
  • Tina Beale, Program Director, Land Economy and Valuation Surveying Division, University of Technology at Jamaica; Rochelle Channer-Miller, Assistant Lecturer, Land Economy and Valuation Surveying Division, University of Technology at Jamaica; Cadien Murray-Stuart, Senior Lecturer, Land Economy and Valuation Surveying Division, University of Technology at Jamaica; and Amani Ishemo, Associate Professor, Urban and Regional Planning Division, University of Technology at Jamaica: Towards Property Tax Compliance: A Case Study of Attitudes Toward Paying Property Taxes in Jamaica
  • Robert W. Wassmer, Professor, Department of Public Policy and Administration, California State University at Sacramento: Property Taxation, Its Land Value Component, and the Generation of "Urban Sprawl": The Needed Empirical Evidence
  • Zhou Yang, Assistant Professor of Economics, Robert Morris University: Differential Effects of Two-Rate Property Taxation: New Evidence from Pennsylvania