Legislative Responses to the Regulatory Takings Conundrum

As a housing shortage grips many American towns and cities, some local policymakers are exacerbating the lack of housing options by reducing property owners’ rights to provide housing. This paper proposes a renewal of state legislation that would enshrine protections against downzonings into law or into state constitutions without respect to the degree of diminution of value. This approach, which was successfully pursued by a handful of states in the 1990s and 2000s, is ripe for revival at a time when state zoning reforms have been gaining momentum and economists have been underlining the role of down-zonings on increasing housing scarcity. Legislative initiatives have the potential to fortify existing property rights against further encroachment while complementing courtroom efforts to strengthen the regulatory takings doctrine. 

This paper first examines the history of downzonings in the United States, showing how early zoning entitlements had a tendency to be whittled away over time, even as demand for real estate increased and land values rose. Some down-zonings, such as those of New York City in 1961 and San Francisco in 1978, are well known to students of urban history, but the process has been nationwide and remains ongoing. Secondly, the paper examines legislative responses to downzoning, including Florida’s Harris Act, Oregon’s Measure 37 and Arizona’s Proposition 207. All three laws provide some protections for property owners who lose development rights through land use regulations, and Proposition 207 in particular is, an effective alternative to regulatory takings litigation. The paper recommends that other states concerned with high housing costs consider a similar policymaking approach.

Find the paper here.