In November 1993 voters in Houston narrowly rejected a referendum to establish zoning in that city.[1] This was the third time in a half-century that Houston voters had rejected zoning. Thus Houston remains the only major city in the United States without zoning. To zoning's supporters, Houston represents an unenlightened backwater that has stubbornly resisted the tide of twentieth century land use regulation. To zoning's critics, Houston stands as a lonely beacon of economic rationality, or at least a living laboratory in which alternatives to zoning can be fairly tested.[2]

Extensive academic literature critical of zoning has accumulated in the last twenty years, beginning with Bernard Siegan's landmark 1970 study lauding Houston's non-zoning approach,[3] and followed shortly thereafter by Robert Ellickson's broader theoretical critique of zoning.[4] Subsequent academic literature has been almost as uniformly critical of zoning[5] as public policy has been uniformly in favor of it. Although few academic defenders of zoning have stepped forward, governmental decision-makers have proceeded with zoning apace, apparently untroubled by the academic on slaught. By some estimates, 9,000 municipalities, large and small, in every region of the country and representing at least 90% of the nation's population, have zoning schemes in place.[6] The closeness of last November's vote, and Houston's status as the only major holdout against zoning, can give little cheer to zoning's critics. No trend toward abolishing zoning appears on the horizon, and indeed, non-zoning in Houston hangs by a thread.

Why is this? How do we account for the fact that this nearly universal feature of local government enjoys such disrepute in academia? Are local governments simply in the grip of irrationality? Have local officials hoodwinked the public on a massive scale? Or have the academic critics somehow missed the mark?

This article argues that the academic critiques of zoning, though based on insights that have some validity, are often overstated. They simply prove less than their authors think they prove. In particular, this article argues that in some circumstances, such as in mature neighborhoods in large urban centers, zoning can be a rational and justifiable public policy response to very real problems and can be made to work at least as well as any of the alternatives the critics propose.[7] The analysis of this article is descriptive in part, illustrating zoning at its best, in rather limited circumstances.[8] Yet principally this article is normative, discussing zoning as it might be made to work, in a way that is justifiable and that meets many of the objections offered by its critics. Therefore, the purpose of this article is not to offer a general defense of zoning. Its task is the more modest one of showing that many of the critiques, despite the broad claims of their authors, should not be taken as general indictments of zoning, but rather as indicators of particular dysfunctions that must be addressed if zoning is to work effectively.

Initially, the question of why we even have zoning must be addressed. Zoning's proponents traditionally have offered two rationales, neither of which stands up to close scrutiny. First, zoning advocates suggest that zoning is necessary to protect or enhance property values,[9] particularly the values of residential properties (and especially single-family homes).[10] On this analysis, zoning serves principally to protect property owners from the negative externalities of new developments. Without zoning (or some compa rable system of land use regulation), residential property owners would face plummeting property values if a development with significant negative externalities—a junkyard or brick factory, for example—moved in next door. Moreover, the mere prospect that such a development could move in would tend to depress the value of residential property. The solution is to divide the municipality into zones so that industries are sited near other industries, commercial enterprises near other commercial enterprises, and residential properties with other residential properties.[11] This rationale has some intuitive appeal, based on the real or imagined horrors of entirely unregulated development.

A significant problem with the property values rationale for zoning, however, is that such a rationale is difficult to support with empirical evidence. It has not been clearly established that zoning results in higher market values for residential property.[12] Another problem with this rationale is that zoning's advocates have not clearly established that zoning is the only means, or even the most effective or efficient means, of controlling externalities.[13]

Second, zoning is defended as a tool of a broader scheme of comprehensive urban planning.[14] However, in many smaller communities that cannot afford their own planning agencies, zoning is often not accompanied by comprehensive planning.[15] Furthermore, critics suggest that in bigger cities that do have planning departments, planners often find zoning a bothersome, time-consuming, and highly technical distraction from what they regard as their more important planning functions, i.e., charting the future of that area. Therefore, it is not clear that zoning has ever been well-integrated with the other tools at a planner's disposal.[16] In particular, with regard to mega-developments that often preoccupy big-city planning departments, traditional zoning appears to play a relatively minor role among the array of available planning tools.[17] Finally, Houston, which has never had a zoning ordinance, does have an active and apparently effective planning department. This suggests that zoning is not a necessary component of successful urban planning.[18]

More recently, some zoning advocates have suggested the prevention of "fiscal freeloading" as a third rationale.[19] According to this view, some new developments place a greater burden on public services than they contribute in new taxes. Zoning is a means by which such developments can be screened out in favor of developments that pay their fair share.[20] This may indeed be one of the ways zoning is used in some exclusive, and exclusionary, suburban com munities,[21] but it does not appear to be a major factor in big-city zoning schemes.[22] Moreover, where the fiscal freeloading rationale is employed, it has troublesome normative implications. Typically, it is lower-income, multi-family rental housing developments that are thought not to "pay their own way."[23] Such developments often increase the demand for public services by the sheer increase in num bers of new residents they bring to the community. This effect may be compounded if low-income residents require more public services per capita than higher-income residents. Yet, low-income housing is generally less costly (and therefore has a lower taxable value) per household and per capita than the housing of more affluent resi dents; consequently, ad valorem property tax revenues will be lower per new resident.[24] If allowed to proceed, such lower-income housing developments might permit lower-income persons to share in a higher quality of public services than otherwise would be available to them, including public schools with better funding and higher quality academics. Such developments might allow low-income persons to reside in closer proximity to what are often the fastest-growing job markets.[25] Thus, the fiscal freeloading argument may become a rationale for excluding lower-income (and often minority) persons from suburban residency and opportunities for economic advancement.[26]

Most of the critiques of zoning fall into four broad categories. Two concern fairness or equity and the other two are based on con siderations of economic efficiency. Zoning is said to be: (A) unfair because it benefits some landowners at the expense of others; (B) exclusionary, and therefore unfair to those excluded from a particular community; (C) inefficient insofar as it adds large transaction costs to development decisions, outweighing the benefits (if any) of zoning; and (D) inefficient in that it "distorts" land use allocation decisions, resulting in inefficient patterns of land use. Let us briefly consider each of these arguments.

Some critics contend that zoning is fundamentally unfair because it grants special privileges to some property owners (typically, current owner/occupants of single-family homes) at the expense of others, including principally those (usually non-resident) owners who wish to develop their property for non-residential purposes.[27] Stated this way, the argument concedes that zoning confers a real benefit to some property owners, e.g., single-family homeowners.[28] In this common non-utilitarian or deontological version of the argument, it is enough to assert that a fundamental norm of fairness is violated when property-owners are treated differently. This argument rests on the normative judgment that the benefit to homeowners does not justify the harm to would-be developers. A variant of this argument is the utilitarian version, which argues that the wrong is the fact that the harm to would-be developers outweighs the benefit to homeowners.[29] Yet the basic unfairness argument need not go this far. Therefore, under this critique, even if the benefit to homeowners outweighs the harm to would-be developers, zoning is wrong.

At one time, this argument was of constitutional dimensions,[3]0 but Village of Euclid v. Ambler Realty Co.[31] settled the dispute by holding that zoning is constitutionally permissible, at least on due process grounds.[32] Absent a constitutional or positive law norm prohibiting unequal treatment of different classes of property owners, advocates of this position must rely on some deeper moral principle. Yet our legal system recognizes many other kinds of unequal burdens by type of property, such as differential tax treatment. This suggests that under contemporary notions of property, the moral and legal norms implicated here are at best very weak. Ultimately, this type of critique must rest on a highly controversial (and ultimately insupportable) natural rights notion of property in which property rights are seen as having some nearly-inviolable, pre-political status.[33]

This argument, in its attenuated form, has already been alluded to in the prior discussion on fiscal freeloading.[34] In its more general form, the argument is that zoning, because it is prohibitory in nature, is fundamentally a device of exclusion. It is further argued that, in fact, zoning is widely used to exclude racial groups, economic classes, and economic activities that are deemed to be undesirable.[35] These arguments are more commonly directed at suburban zoning[36] because big cities, by their very nature, tend to be less exclusionary, taking all comers.[37] It does appear, however, that while big cities do not use zoning to exclude groups entirely, some neighborhoods within the cities do use zoning as an exclusionary device.[38] At first glance these arguments have some appeal, but they often are stated vaguely. Once we unpack them, it becomes clear that they should not stand as a general indictment of zoning.

The idea that some racially discriminatory applications of zoning should somehow taint all zoning is a peculiar one. If zoning is consciously used to achieve racial segregation, then a serious problem exists. But this problem should be addressed by constitutional and statutory equal protection claims, not by scrapping zoning.[39] Many powers and institutions of local government, including public schools, police functions, criminal sentencing, the taxing power, various licensing powers, and powers to hire public employees, grant government contracts, and award public services have been used in unlawfully discriminatory ways. Yet this does not lead to the conclusion that all those powers and institutions should be scrapped.[40] Whenever the zoning power is misused, strong action should be taken. But stripping local government of the zoning power is inappropriate unless it can be shown that the zoning power is incapable of being put to valid uses. Since it is not zoning on its face, but rather its application that results in discrimination, those particular applications, and not all zoning, should be eradicated.

More difficult is the claim that zoning is used to exclude persons by economic class, resulting in the side effect of racial exclusion, because racial minorities generally are not as affluent as the white majority.[41] Again, this charge is typically made against suburbs rather than big cities because big cities embrace a greater diversity of income classes.[42] The problem with this claim is that our legal and political culture is at best ambivalent about the principle of equal treatment on the basis of economic status.[43] Even if society were committed to that principle, the appropriate remedy would not be to reject zoning as an institution, but to challenge particular applications of the zoning power based on impermissible categories of economic status.[44] Alternatively, the states or perhaps Congress could enact statutes prohibiting the use of zoning to exclude on the basis of economic status.

More fundamentally, exclusion on the basis of economic status appears to be the entire raison d'être for the most exclusive suburbs. Although zoning is one tool used to achieve that goal, it is not the only tool, and abolishing zoning would not necessarily effect a cure.[45] Finally, even if all public regulation of land use were abolished, private devices like restrictive covenants might still be used to achieve the goal of exclusion.[46]

Another variant on the exclusion argument is not concerned with exclusion by economic status, but with exclusion of certain legal but locally undesirable (yet socially necessary) land uses. This is the NIMBY (Not-In-My-Back-Yard) syndrome. It is said that zoning benefits the best-organized and politically most powerful residents who are able to block the siting of locally undesirable economic activities in their own communities. Yet those same residents get some portion of the social benefits of those activities when they take place in other, less politically powerful communities. For example, a noxious factory is unlikely to be sited in an exclusive suburban community, even though the wealth that factory produces may directly benefit some residents of the affluent community and indirectly benefit all community residents insofar as they enjoy the economic benefits of the entire metropolitan region.

Like economic and racial exclusion, the NIMBY syndrome is more symptomatic of suburban than big-city zoning.[47] Big cities are usually able to offer some site for almost any legal activity.[48] Indeed, early zoning advocates argued that in order to pass constitutional muster, zoning must provide a place for every otherwise-legal activity.[49] Although contemporary big-city zoning advocates are unlikely to accept this as a realistic goal, much less a legal requirement, big-city zoning probably comes much closer to achieving this ideal than suburban zoning.

The critics' recurring mistake is confusing the zoning power itself with the application of that power to achieve a goal they find objectionable. If suburban zoning is too restrictive and produces NIMBY-like results, then perhaps the problem is not with zoning generally, but with the particular goals and practices of suburban zoning, or even with the existence of suburbs themselves as exclusive enclaves within the larger metropolitan community. Some suburbs are intended to be communities that keep out certain kinds of economic activities; zoning is but one tool used to achieve that result.[50] If NIMBY is a problem, then perhaps the solution is a return to the requirement that zoning allow all otherwise-legal economic activities to take place somewhere within its bounds.

A final variant on the exclusion argument is that politically well-connected developers are often able to win the zoning changes they need, while political neophytes and outsiders are disadvantaged.[51] An even harsher version is that self-seeking, entrepreneurial local officials are able to use the zoning power to "shake down" developers for campaign contributions, bribes, patronage jobs, and other private benefits. Only those who "ante up" are awarded the zoning approvals they need. There is substantial evidence that these practices do take place.[52] This has led some to conclude that land use regulation should be more rule oriented.[53] Others argue that the solution is to make zoning more scientific and professional, and less political.[54] Still others argue that these practices are so widespread, and such an unavoidable part of the zoning power, that no solution short of abolition of zoning will suffice.[55] This article addresses these concerns in Part IV, arguing that zoning decisions must be policed both from the top-down and from the bottom-up, using processes that encourage neighborhood residents to participate actively in decision-making.

Most proponents of this argument concede that some form of local land use regulation is necessary to control the negative effects of certain types of land uses. Typically, they argue that some alternative form of regulation would be more efficient than zoning because of lower transaction costs.[56] The direct governmental administrative costs of zoning are generally conceded to be relatively low.[57] The higher costs are shifted to developers, especially when the development requires approval for a variance, special use permit, amendment, or planned unit development.[58] Yet these transaction costs are only part of the total cost equation.

Though critics of zoning contend that zoning advocates focus only on the costs of the externalities they seek to prevent (ignoring the transaction costs added by the zoning system itself), the critics themselves may focus only on the transaction costs.[59] In particular, some critics would rely, in whole or in part, on private covenants to perform some of the nuisance-avoidance functions of zoning.[60] As has been frequently noted, however, the transaction costs of getting all residents of an existing neighborhood to agree to restrictive covenants are prohibitively high.[61] Thus, private covenants are likely to be effective only in previously undeveloped areas where a private developer can impose them as part of the subdivision of a large parcel.

Moreover, that alternative schemes of land-use regulation would result in lower transaction costs is both a controversial and unproven assertion. Ellickson, for example, proposes establishing "Nuisance Boards" empowered to declare certain land uses presumptive nuisances and to adjudicate nuisance claims.[62] Other commentators have suggested that such a scheme might actually involve higher transaction costs.[63] To his credit, Ellickson himself acknowledges that the case supporting his proposal on the basis of transaction cost efficiency is a problematic one.[64]

In its purest form, an economic critique of zoning might argue that zoning (or any scheme of land use regulation) is inherently in efficient because it forces landowners to make land use allocation decisions other than those they would make in a free market. According to classical economic theory, free markets efficiently allocate economic resources, and neither legislative-type categorical regulations nor case-by-case decisions by bureaucratic regulators can make such decisions as efficiently as the market. Thus, land use decisions made under a regulatory scheme inevitably result in inefficient distortions of the market.[65]

The classic objection to such a pure laissez-faire approach is that it does not take into account externalities or spillovers from land uses. Internalizing the externalities requires some kind of regulatory scheme.[66] The laissez-faire response argues that land-use conflicts involve highly localized and concentrated externalities. Therefore, only a few neighboring properties are significantly affected.[67] No major obstacles exist to Coasean bargaining[68] to resolve that conflict efficiently. In addition, the existing common law of nuisance offers landowners remedies for negative "spillovers" from noxious uses of neighboring properties. This common law should produce efficient results where neighbors recover damages for such negative spillovers.[69]

Surprisingly, no major critic of zoning makes this laissez-faire argument in quite so pure a form. Perhaps Bernard Siegan comes the closest.[70] At some points Siegan seems to argue that the Houston market creates a "rational" pattern of land use allocation decisions that results in relatively few, highly localized, and concentrated negative externalities.[71] The implication is that no regulatory scheme is needed.[72] Similarly, Andrew Cappel suggests that prior to the adoption of New Haven's first zoning ordinance, the market produced a rational pattern of land use allocation that at least equaled, and possibly surpassed, the efficiency of land use allocation under zoning.[73] Elsewhere, both Siegan and Cappel seem to argue that zoning merely replicates the allocation of land uses that the market would make—but at a higher cost due to higher transaction costs.[74]

Most of zoning's critics recognize the need to control negative externalities through some regulatory scheme, but do not make the pure laissez-faire "market distortions" argument.[75] Since any regulatory scheme is arguably subject to the laissez-faire market distortions objection, their objections to zoning principally turn on equity and transactional efficiency arguments. Many critics suggest that zoning produces some distortions in land use decisions. For example, both Ellickson and William Fischel contend that restrictive suburban zoning and growth controls contribute to suburban sprawl (together with the related ills of transportation inefficiencies, air pollution, and loss of "agglomeration economies" for business) and inflated housing costs.[76]

Jane Jacobs' classic critique of zoning[77] might be considered a sociological variant on the distortions argument. Jacobs argues that healthy, lively, innovative, and economically dynamic cities are founded upon diversity within their neighborhoods.[78] Zoning renders cities sterile and uncreative, by stifling the diversity of land uses within neighborhoods and generally segregating land uses by type. Thus, to Jacobs, zoning distorts the natural allocation of land use within cities in a way that is detrimental not only to economic inno vation and growth but also to the flowering of culture and the natural pleasures of city life.

This article contends that both supporters and critics of zoning have misconceived the nature of zoning. Zoning is only partially about protecting individual property owners against the effects of "spillovers" or negative externalities that adversely affect the market values of their property.[79] Specifically, zoning protects a homeowner's consumer surplus in a home and in the surrounding neighborhood, that lies above the market value of that home. This consumer surplus has essentially been overlooked and is fundamental to an understanding of zoning.

Arguably, protecting against the effect of negative externalities on market values can be achieved more efficiently by providing property owners with what Guido Calabresi and A. Douglas Melamed call "liability rule" protection.[80] Armed with such protec tion, neighbors would either bargain with would-be developers to achieve efficient outcomes or bring suit to recover their losses.[81] On its face, however, zoning appears to function as what Calabresi and Melamed call an "inalienability rule," categorically prohibiting any development proscribed by the zoning ordinance.[82] As numerous commentators have suggested the reality is much different. In fact, zoning functions more like a "property rule," allowing neighborhood residents (or their governmental representatives) to enjoin a pro posed development that does not conform to current zoning, while leaving room for the would-be developer to "buy" the entitlement to build through design concessions, campaign contributions, and the like.[83] But property rule protection in this kind of situation theoretically allows property owners (or the municipality acting as their proxy) to hold out for more than the damages they would actually suffer (in the form of reduced market values for their property) from the proposed development.[84]

Yet the notion that property owners should merely be protected by a liability rule compensating them for the loss in market values suffered at the hands of a new development does not square with our intuitions about the entire package of values zoning seeks to protect. Consider this example, which is a true story from Houston. In a quiet residential neighborhood, a new neighbor moves in and promptly opens a loud marble-grinding business in his backyard. This forces neighbors to contemplate either expensive (and probably only partly effective) sound-proofing of their homes, or moving out. As a long-time neighborhood resident put it: "He's cutting and grinding and polishing all day. It's nuts."[85] Most people would feel the long-time resident has a legitimate grievance, and that merely compensating him for any decreased market value of his home is not an adequate remedy. Clearly one's home is more than a monetary investment.

Zoning in urban neighborhoods is not merely a system for protecting the market values of individual properties,[86] but rather is a device to protect neighborhood residents' interests in their entirety, including consumer surplus in their homes, as well as their interests in what this article calls the neighborhood commons.[87]

Although typically not addressed in the literature, which generally discusses only objectively measurable market values, the notion of consumer surplus in an individual parcel of property is quite straightforward.[88] The concepts of "home" in general, and "home ownership" in particular, are areas where consumer surplus are particularly important.[89] What distinguishes a mere "house" from a "home" is the consumer surplus we have in the latter. "Home" provides continuity, security, familiarity, and comfort for our most intimate and satisfying life experiences. The intimately bound ideas of home and family strike deep emotional chords in our culture. Since most people feel that these values cannot be reduced to dollars, people tend to be especially sensitive when the use and enjoyment of the home is threatened.[90] In part, this reflects the importance of a homeowner's financial stake, which typically represents a substantial part of that homeowner's net worth. If the only concern were to protect financial investments, however, monetary compensation for any loss of market value would be acceptable. Part of zoning's appeal lies in the fact that it allows homeowners to protect all the value we place in a home, including the consumer surplus that lies above and beyond the market price of the home.

The failure of zoning's critics to account for the importance of "home" to the homeowner suggests that their critiques are based on an incomplete cost-accounting. But the notion of individuals' consumer surplus in their homes, by itself, is not sufficient to explain or justify zoning. An adequate account of zoning must also deal with the collective values zoning seeks to protect. Zoning is a device that protects a neighborhood from encroachments by land uses inconsistent with its character, regardless of the positive or negative effects of a proposed development on the market values of individual properties.

Neighborhoods are not just made up of individual parcels, but include collective resources comprising a neighborhood commons,[91] and the property rights of an urban neighborhood dweller typically consist both in specified rights in an individual dwelling and inchoate rights in a neighborhood commons. This commons consists of open-access (but use-restricted) communally-owned property, such as streets, sidewalks, parks, playgrounds, and libraries. It also in cludes restricted-access but communally-owned property, such as public schools, public recreational facilities, and public transporta tion facilities.

It further includes privately-owned "quasi-commons" to which the public generally is granted access, but with privately-imposed restrictions as to use, cost, and duration. These generally include restaurants, nightspots, theaters, groceries, and retail establishments.[92] It will include (risking the appearance of an oxymoron) "private commons," like churches, temples, private schools, political organizations, clubs, and fraternal and civic organizations. These are essentially private associations, but are characterized by some substantial degree of open access to members of the community.[93] Finally, the neighborhood commons will include other intangible qualities such as neighborhood ambiance, aesthetics, the physical environment (including air quality and noise), and relative degrees of anonymity or neighborliness.

These features together make up the "character" of a neighborhood. They are what give the neighborhood its distinctive flavor. A purchaser[94] of residential property in an urban neighborhood buys not only a particular parcel of real estate, but also a share in the neighborhood commons. Typically, differences in the neighborhood commons may be as crucial to a decision to purchase as differences in individual parcels.[95]

To some extent, differences in the neighborhood commons will be reflected in the market values of individual parcels.[96] If, for example, other things being equal, neighborhood A has better public schools and more desirable parks than neighborhood B, property in neighborhood A will have a higher market value than similar property in neighborhood B. But because different people value different features in a neighborhood, not all such neighborhood differences will be reflected in property values.

For many people, a high level of consumer surplus may attach to particular features of a neighborhood commons.[97] I may be particularly attached to my church, for example, or to a particular local club or political organization, or to a particular spot in a local park where I am accustomed to walk at sunset. These values are highly subjective and may not be widely shared by people who have never lived in the neighborhood, so they may add little or nothing to the market value of the property. Moreover, these resources are for the most part non-fungible and therefore irreplaceable. To me, enjoying the use of these resources is precisely what it means to live in my neigh borhood. In addition to protecting the market value of my home and my consumer surplus in that particular piece of real estate, I will naturally want to protect those collective resources of my neighborhood that I care about most, whether they are reflected in the market value of my property or are part of my consumer surplus.[98] These values can be almost priceless, especially for long-term neighborhood residents. Like one's home, one's neighborhood may be centrally bound up in one's definition of self and sense of his or her place in the world.

Apart from consumer surplus, even those neighborhood features that are capitalized in market value come in different mixes from neighborhood to neighborhood. I may be more concerned about parks and less concerned about public transportation, and you vice-versa. While better parks and better public transportation may both make positive contributions to market values, I may prefer a neighborhood with good parks and mediocre public transportation, while you prefer a neighborhood with good public transportation and mediocre parks. Properties in the two neighborhoods may be similarly priced, but you and I will place entirely different values on the characteristics unique to each neighborhood.

Some neighborhood differences are simply inconsistent. For example, I might prefer a quiet, neighborly, low-density neighborhood of single-family homes, with access to parks and good neighborhood schools; you might prefer the faster pace, excitement and anonymity of a high-rise condominium in a high-density neighborhood featuring interesting restaurants, bistros, music venues, and trendy boutiques. Yet my house and your condo may have identical market values because some people are willing to pay the same price for my house as others are willing to pay for your condominium. In this example, the individual properties are themselves not interchangeable, but additional subjective value attaches to the features of the neighborhood that we each find desirable.

However, some of the same neighborhood features that add value to your property in your neighborhood might detract value from my property in my neighborhood. A hot new jazz club, for example, might be a welcome addition in your lively, trendy neighborhood, but would be a nuisance in my quiet neighborhood. To some extent, the spillover effects on your individual property are different; noise, traffic congestion, and heavy pedestrian traffic are presumably of less concern to you.

This example illustrates that some land uses are incompatible with the neighborhood commons that current property owners have come to rely on. It further illustrates that negative externalities are contextual. A land use that would have severe negative externalities in my neighborhood may be an amenity in your neighborhood.[99]

It is not always the case, however, that inconsistent uses will lower market values. Suppose my quiet single-family neighborhood is located within a few blocks of some successful high-rise developments. Absent some system of land-use control, a developer might acquire the previously single-family parcels adjacent to mine, and proceed to put up more high-rises. The value of my house may go down because of spillover effects from the new high-rise, but the value of my land may increase, as my property becomes attractive as a potential site for additional high-rise developments.[100] Under a market value based system, I would be entitled to no relief since my property is worth exactly what it was before. Yet under these circumstances many homeowners would feel aggrieved by this devel opment. In part this is because the direct spillovers (e.g., noise and aesthetics) would interfere with the use and enjoyment of my home. To recoup that loss by selling my home would subject me to the additional cost and inconvenience of moving.[101] More importantly, however, my loss of consumer surplus in this particular home would go uncompensated.[102]

Additionally, my neighbors and I may be equally concerned about the effect of the new high-rise development on the neighborhood. The coming of the first high-rise means, at least initially, more intensive uses of the neighborhood commons (e.g., streets, side walks, on-street parking, public transportation facilities, etc.) which means that more people are competing for diminishing shares of fixed resources (e.g., on-street parking). Again, since land prices may rise, the result may be that I suffer no net financial loss.[103] But what I suffer now (in addition to my uncompensated loss of consumer surplus in my own home) is a loss of consumer surplus in my interest in the neighborhood commons. In short, the neighborhood is taking the first step toward becoming something other than the neighborhood where I chose to live. Although difficult to place in quantitative terms, the loss is great.

What's wrong with this? Well, nothing, I suppose, unless you were that homeowner who had been quite happy with your home and neighborhood but now find them to be no longer what they were. Of course you can move, but it may not be easy (and in some crucial respects is impossible) to replicate those features of your old home and neighborhood that made your life what it was.

Zoning is aimed at preventing, or at least limiting, precisely these kinds of changes in the use of property that are disruptive of a neighborhood's character because they are inconsistent with current uses of the neighborhood commons.[104] These include changes in density, as well as shifts from residential to commercial or industrial uses.[105]

Furthermore, inconsistent uses of neighborhood commons are not limited to residential neighborhoods. Seymour Toll argues that although advocates of New York's first zoning ordinance tried to justify it in terms of protecting property values and instituting comprehensive planning, the impetus to enact the ordinance came largely from the desire of Fifth Avenue retailers to protect themselves against incursions by garment manufacturers.[106] To be successful the retailers needed a particular kind of neighborhood commons, one with many high-quality retail establishments in close proximity to one another, with a sufficient critical mass to attract shoppers. This area also needed to be free from competing uses that would detract from the ambiance their affluent customers preferred.[107] Now it may well be that the encroaching garment manufacturers reduced the market value of retail properties along Fifth Avenue, but equally plausible is that the demand for loft manufacturing space drove up the price of properties along Fifth Avenue. In either case the market value of property along Fifth Avenue was not really the central concern. Instead, the impetus for New York's original zoning ordinance came from a desire to maintain Fifth Avenue as a particular kind of neighborhood commons—one in which it was possible for carriage-trade retailers to conduct their business.[108]

This insight is implicit in the writing of Eric Steele, who concludes that zoning is only partially concerned with "aggregate welfare economics."[109] In a mature urban setting, Steele argues, zoning instead serves principally to "conserve viable [residential] communities."[110] While Steele is correct that zoning does function to preserve viable residential communities, this may actually contribute to aggregate welfare by allowing neighborhood residents to preserve their consumer surplus in their neighborhoods and in their individual homes.[111]

If zoning serves to protect not just market values but the consumer surplus of neighborhood residents in their homes and neighborhoods, then why isn't a liability rule a more efficient substitute? The answer is obvious: consumer surplus is notoriously difficult to measure.[112] Faced with that problem, homeowners' consumer surplus might simply be ignored, and they would only be compensated for losses of market value.

In that case, homeowners are forced to bear the full costs of lost consumer surplus, whatever that cost may be.[113] If consumer surpluses in our homes and neighborhoods are small, this may make little difference; but the converse is also true. First, where the surpluses are high, current neighborhood residents would be made to bear a substantial part of the cost of new developments. Second, many unzoned neighborhoods would become less stable. Home owners, fearing potential risks, would have reduced incentives to invest in their homes and neighborhoods and greater incentives to move to areas where they perceive the risks of unwelcome development to be lower.[114]

Another possibility would be to rely upon a liability rule, while also adding some fixed amount or percentage to the damages award to account for lost consumer surplus.[115] Fixed damage schedules are likely to be highly inaccurate, however. Some homeowners would then be severely undercompensated for their loss of consumer surplus, and others dramatically overcompensated.[116]

Calabresi suggests that in such circumstances where it is simply too costly (or impossible) to calculate the subjective value of a loss, "specific deterrence" (either a property rule or an inalienability rule) may be justified.[117] Since the true costs are unascertainable there is no way to decide how to allocate them fairly or efficiently. In effect, we must decide whether to err on the side of developers (by adopting a rule that ignores or discounts homeowners' consumer surplus) or on the side of homeowners (by adopting a rule that protects their consumer surplus). If, as I have argued, consumer surplus in one's home and neighborhood is likely to be quite substantial, a "specific deterrence" rule may be the preferable approach, on grounds both of fairness and efficiency.[118]

But what kind of "specific deterrence" approach should be adopted? In addressing this question we are once again confronted with zoning's ambiguity: while zoning appears facially similar to what Calabresi and Melamed call an inalienability rule it appears to function in practice like something more akin to a property rule. The municipality (theoretically acting on behalf of neighborhood residents) may stop a proposed development inconsistent with the zoning scheme, and the developer may "buy" the development rights through various kinds of concessions.[119]

Some critics have suggested that zoning ought to be refashioned into something more explicitly resembling a property rule in the Calabresian sense.[120] These critics propose that zoning ought to be "freely alienable," that is, that neighborhood residents should be allowed to sell zoning rights for cash, in-kind compensation, or what ever equitable trade-off is deemed appropriate.[121] In addition to the high administrative costs of such a system,[122] it is unsound on other grounds. Compensating individuals in cash for their willingness to sacrifice community resources may be utility-maximizing in the short run. In the long run it reinforces norms of individual gain at the expense of shared community resources, which ultimately may be destructive of the sense of community that zoning aims to protect. More fundamentally, such a system is deeply contrary to our most cherished democratic and legal traditions.[123] For these reasons, such a system seems to be inadvisable.

This article has argued that, although ultimately we can never be certain, zoning may be welfare-maximizing.[124] Since we must decide amidst uncertainty, we should choose the course that appears most likely to simultaneously protect the welfare of current neighborhood residents and reinforce community values, resources and institutions (which themselves contribute to the welfare of current and future neighborhood residents). We should also recognize that the limits of our knowledge mean that our initial choice of zoning regulations may sometimes be wrong. Sometimes a neighborhood may be willing to accept a proposed development not permitted by the regulations in exchange for other benefits. By limiting the terms of that bargain to community benefits, however, we retain community-reinforcing norms.[125] Zoning thus can be seen as a peculiar kind of property rule—one in which developers can in limited ways "buy" the rights to develop contrary to the zoning entitlement, but only by compensating the community for its loss.

In this idealized model zoning gives current neighborhood residents a kind of "right of prior appropriation" over the neighborhood commons. This right trumps the right of other property owners to use their land in ways that interfere with, or are inconsistent with, current uses of the neighborhood commons. Developments may proceed as long as they are either consistent with current uses of the neighborhood commons, or in ways the neighborhood has agreed in advance (through the political process) to allow. This protects the expectations of neighborhood residents. Moreover, neighborhood residents have the right to change course and to agree to modify the rules to permit developments facially inconsistent with the presumptive prohibitions. But the only compensation that may be offered or accepted for such exceptions is compensation that benefits the community as a whole, i.e., that preserves a healthy and vibrant commons.

This analysis has several further normative implications. First, zoning should not be understood solely as a means of protecting property market values. Instead, it protects values that may be only partially captured in market values. Second, it suggests that zoning should not be understood principally as a tool of rational/scientific urban planning. Indeed, the visions of planning bureaucrats may sometimes stand in sharp contrast to the values of neighborhood residents, who seek to protect the neighborhood in which they have chosen to live. This analysis further suggests that rather than seeking to impose a rigid uniformity over all residential neighborhoods, zoning should seek to accommodate diversity among neighborhoods.

Not all neighborhoods are alike, nor should they be. The whole point of urban land use zoning is to allow people to live in the kind of neighborhood they want. Imposed uniformity defeats that goal. Some residential neighborhoods, for example, may be more tolerant of certain kinds of, or higher concentrations of, commercial activities than others.[126] Thus a zoning scheme should be designed with a sensitivity toward the neighborhood context, taking into account the particular needs, interests, and desires of the residents of particular neighborhoods.[127]

A zoning scheme also should not attempt to freeze a neighborhood in time. Despite the apparent conservatism inherent in the notion of "protecting" a neighborhood against inconsistent changes in land uses, this does not imply that all changes are unwelcome.[128] For instance, a new restaurant may be entirely consistent with neighborhood residents' vision of the kind of neighborhood in which they have chosen to live, while a new liquor store may be inconsistent with that vision.[129] A properly designed zoning scheme should attempt to predict, from consultation with current neighborhood residents, what kinds of changes would be welcome in a particular neighborhood and accommodate those changes while presumptively (though not conclusively) ruling out other changes.

Such a prediction is bound to be at best only an estimation for several reasons. First, there are obvious epistemic limitations. No clear, objective measures of the preferences of neighborhood residents exist, and in the absence of detailed information about particular, concrete choices, residents themselves are likely to be unable to articulate their preferences. Perhaps the best evidence of these preferences is what currently exists in the neighborhood, which is why it seems eminently sensible that zoning should have started by simply incorporating the status quo of land uses into regulations.[130]

Second, neighborhood values can change over time. This can be the result of such factors as the change of individual interests and points of view, the fluctuation in attractiveness of particular kinds of residences and businesses due to market conditions, and the influx of new residents, as well as the departure of old residents. Third, at some point a proposed development of an unanticipated kind may come along that is seen by neighborhood residents as consistent with the vision they had of their neighborhood all along, although the use falls outside what is permitted under the current zoning scheme.[131] Fourth, it is possible that a proposed development prohibited under the existing zoning scheme could be so beneficial to the neighborhood that it would cause neighborhood residents to change their vision of what their neighborhood should be. Current neighborhood residents should not be rigidly bound by the preferences of past gen erations.[132]

This underscores the need for flexibility in zoning.[133] Zoning should accommodate changes over time, through mechanisms that encourage individual variances and amendments when supported by neighborhood residents, as well as periodic comprehensive updates of the zoning scheme to reflect larger-scale shifts in neighborhood values.

A zoning scheme, because it is inherently rule-like, may appear fundamentally incompatible with this kind of fine-grained contextual sensitivity to neighborhood preferences and flexible accommodation of changes over time. Rather than conceiving of zoning as consisting of legislative-type rules, we should understand zoning as establishing mere presumptions or baseline rules that precipitate and provide a convenient substantive starting point for negotiations between developers and representatives of neighborhood inter ests.[134]

In a Coasean world, free of transaction costs, such bargaining would take place even in the absence of a zoning scheme.[135] But in our world such bargaining is unlikely because the transaction costs, and more particularly the problems of coordination among dozens or hundreds of neighborhood residents and property owners who would be affected by a proposed development, are simply too great. Zoning, however, can actually facilitate such bargaining and reduce information costs (an important part of transaction costs) in several ways.

Foremost, zoning establishes brightline rules under which some categories of land uses are automatically permitted. As a practical matter, bargaining is therefore unlikely to be necessary in these cases. The Coase theorem, of course, tells us that in the absence of transaction costs, bargaining to efficient outcomes will take place whatever the initial assignment of property entitlements. The transaction costs involved in organizing neighbors to oppose a proposed development that meets current zoning requirements, however, are sufficiently high that in most cases the developer can proceed with reasonable confidence. In these cases, zoning acts as a positive short-hand signal of the community's likely acceptance of the proposed development.

Secondly, zoning establishes categories of proposed land uses which are presumptively prohibited, signaling to the developer that the proposed development must win approval of the municipality, acting as the neighborhood's representative, in order to proceed.[136] The developer will then bargain for such approval (so long as the developer expects the costs of such bargaining, including both transaction costs and the costs of any additional concessions likely to be required to win approval, will be less than the benefits to the developer of the proposed development).[137]

Third, by empowering an identifiable party to grant variances, amendments, and/or wholesale revisions of the zoning scheme, the zoning ordinance identifies a single party with whom the developer can initiate bargaining without the need to identify and bargain individually with all potentially affected homeowners. This promotes efficiency of both time and money.

Fourth, by placing bargaining power directly in the hands of elected officials (or, alternatively, in the hands of persons account able to elected officials) zoning creates political incentives for the neighborhood's representative to bargain on the neighborhood's behalf.[138]

Finally, by initiating such bargaining, zoning opens channels for the transfer of information between the developer and the neighborhood. The neighborhood acquires the necessary information about the proposed development needed to gauge whether the proposed development is consistent with neighborhood interests, while the developer learns more about the needs and interests of the neighborhood and can gauge whether, given the costs and benefits, it is sensible to proceed.[139] Thus, zoning can actually reduce transaction costs, by supplying and channeling information useful to both com munity residents and potential developers.[140]

The core functions of zoning can best be served if zoning is decentralized[141] and participatory.[142] A decentralized and participatory neighborhood zoning process, which gives neighborhood residents a direct voice in zoning decisions affecting their neighborhood, is critical for several reasons. First, neighborhood residents, not planners or elected officials, are in the best position to evaluate their own consumer surplus in their homes and in their neighborhoods. To the extent zoning is designed to protect these values, the most effective way to elicit that information is through residents' participation in neighborhood zoning decisions.[143] Second, decentralized and participatory zoning is essential to shift zoning decision-making out of the "interest group" paradigm—in which neighborhood residents are just one of a number of competing interest groups, and a weak and disorganized one at that—into something more akin to the "median voter" model in which decision-making more clearly reflects neighborhood preferences.[144] Third, as I shall argue below, citizen participation is essential to combat bribery and the corrupting influence of political contributions by developer interests.

It must be mentioned that there is also a cost associated with increased citizen participation. As Fischel points out, citizen participation involves large numbers of people in some level of the negotiation process, making bargaining cumbersome and difficult.[145] This is partly a function of sheer numbers; but it also reflects the fact that idiosyncratic and self-seeking voices ("cranks") will have an opportunity to disrupt the bargaining.[146] Thus, we may expect that, other things being equal, the transaction costs of bargaining will be higher with more citizen participation.

Perhaps the best that can be said in response is that if, as I have suggested, citizen participation is the only way to elicit the true preferences of neighborhood residents, there can be no such thing as truly "efficient" decision-making in local land-use decisions. From the point of view of a developer, a well-placed bribe or campaign contribution may appear to be a more efficient transaction than a lengthy and messy process of neighborhood hearings and complex public negotiations. Yet as Fischel points out, from a utility-maximizing standpoint such a solution is not likely to be efficient at all (and certainly not equitable) because it ignores the relevant preferences of neighborhood residents who will be affected by the development.[147] Thus, the high transaction costs of community participation appear to be the price to be paid to ensure that the interests of neighborhood residents are adequately taken into account.

Just how this decentralization and participation should be accomplished is a more difficult question. Elections are too costly and cumbersome a process.[148] While Nelson proposes turning the zoning power over to formally constituted neighborhood associations, this is probably too extreme a solution, in part because it too is costly and difficult to administer.[149] In addition, because it is difficult to sustain high levels of community participation in such formal structures, they are subject to capture by cranks.

To some extent this is an inherent feature of participatory politics.[150] But in my view a more appropriate balance can be achieved by leaving ultimate decision-making power in the hands of an official elected to represent the neighborhood.[151] This official must then sort out the cranks from the truly representative voices. The existence of this type of official can create more opportunities for democratic participation through required public notice and neighborhood hearings,[152] and through ongoing structures of community representation in neighborhood zoning negotiations and decision-making, albeit in an advisory capacity.[153]

The problems of corruption and favoritism, which were identified in Part III, must be addressed in any normative account of zoning. To some extent, these are problems associated with government generally,[154] and especially local government.[155] If local government does tend toward corruption, it may appear sensible at first glance to strip local government of the zoning power (and any other powers it can do without), especially if an alternative regulatory scheme can accomplish the same ends with a lower risk of corruption.[156] When corruption and favoritism crop up periodically in other areas of local government, the problem usually brings about a call for prosecution of the individual offenders, institutional reforms, and more effective policing, not abolition of the police department, the judiciary, the building code, or whatever institution may have committed the offense. Is zoning somehow different? The critics might suggest that corruption is so prevalent in zoning that the institution simply cannot be salvaged. Further, they contend that such large financial interests are at stake in zoning decisions that corruption is particularly tempting.[157]

I submit that zoning, while a particularly important power of local government, is not so different from other powers and institutions of local government. We should be concerned about corruption and work to eradicate it. Our response to corruption in other areas, in the form of swift and tough prosecution of offenders, more effective policing, institutional safeguards, and requirements of openness in transactions, should apply here as well.[158] Zoning may also require special policing, for example, through a special state agency with broad investigatory powers, established solely to monitor and investigate zoning corruption cases.

Ultimately, as with other avenues of municipal corruption, what matters most is effective policing from the bottom up through effective participatory democracy. As Steele has documented, the Chicago suburb of Evanston, with its tradition of citizen participation, has not experienced graft and influence-peddling in the zoning process.[159] It would be a mistake to assume that this is purely a function of the size of the municipality or the result of suburban homogeneity. Other municipalities in the Chicago metropolitan area of the same size or even smaller are notoriously corrupt,[160] and Evanston is one of the most diverse communities in the metropolitan area.[161] But on the whole, graft becomes impossible (or at least ineffective, and therefore not worthwhile for the developer) under the watchful eyes of the citizenry and its active involvement in the zoning process.[162]

Ironically, just around the turn of the last century a great wave of Progressive Era reform swept over municipal politics offering cen tralization and professionalization of big-city government as the solution to parochialism and petty graft. But centralization came at the cost of removing citizens in the big cities from active involve ment in the day-to-day workings of their municipal government, and removing public officials from the watchful eyes of the citizenry, thus increasingly subject to the influence of organized interests.[163] Today a new wave of reform is needed, at least in the processes of zoning but perhaps in other aspects of municipal government as well. This time, I suggest, the reform should aim at increasing citizen participation.

This article has argued that, by limiting their analyses of zoning costs and benefits to monetizable values, both defenders and critics of zoning have substantially missed the mark. While zoning does have significant effects on the market values of individual parcels, and larger-scale economic consequences as well, a complete cost accounting must also consider zoning's role in protecting crucial, non-monetizable values. These include each homeowner's surplus in his or her home, as well as neighborhood residents' interest in preserving the unique set of common neighborhood resources—the neighborhood commons—upon which they rely. Far from being trivial, or mere ancillary values, "home" and "neighborhood" are central components of our identities. Precisely because these values are notoriously insusceptible to objective valuation, we afford them property rule protection in the form of zoning laws.

Thus conceived as a means of protecting the legitimate interests of current neighborhood residents, zoning regulations should be flexible to change over time, sensitive to unique neighborhood concerns and contexts, and based upon a participatory process. Citizen participation both gives voice to the interests of current neighborhood residents and provides the most effective safeguard against corruption of the zoning process.

_______________________________

[*] J.D. 1994, Yale Law School. Law Clerk, Hon. Patricia M. Wald, U.S. Court of Appeals, D.C. Circuit. The author thanks Robert Ellickson for helpful comments on earlier drafts. The author also thanks Ann Mongoven and Emma Karkkainen Mongoven for their support and patience, without which this article would not have been possible. Return to text.

[1] The margin was 52% to 48%. R. A. Dyer, Zoning Defeated by Narrow Margin, HOUSTON CHRON., Nov. 3, 1993, at A1; Peter Cooney, Houston Voters Reject Zoning for Third Time, REUTERS NEWS SERVICE, Nov. 3, 1993, available in LEXIS, Nexis Library. Pre-election polls predicted the referendum, backed by the mayor, a city council majority, and many civic organizations, was headed for passage. Sam Howe Verhovek, "Anything Goes" Houston May Go the Limit: Zoning, N.Y. TIMES, Oct. 27, 1993, at A14. Several factors explain this pre-election discrepancy. With an incumbent mayor facing token opposition, voter turnout was low, and expectations that the referendum would pass may have lulled supporters into staying home. Second, zoning opponents spent about four times the amount of supporters in promoting their position, see Cooney, supra, suggesting that opponents had more intense (though perhaps narrower) support, superior resources, and superior organizing tactics, see Dyer, supra. Third, pro-zoning forces aroused populist opposition by trying to adopt zoning through city council action rather than by referendum in a city where voters had twice previously rejected zoning. Finally, despite charges that they were engaging in unprincipled racial scare tactics, opponents apparently convinced lower-income minority communities that zoning would mean costlier housing and racial segregation: 72% of Black voters and 58% of Mexican-Americans opposed the referendum. Id; cf. RICHARD F. BABCOCK, THE ZONING GAME 25-28 (1966) (stating that in the 1948 and 1962 referenda, which were lost by wider margins, opponents outspent proponents and the strongest "no" vote came from low-income minority communities). Return to text.

[2] For the moment at least. Zoning proponents in Houston, confident that public opinion and sound public policy are on their side, have vowed to continue their efforts to enact a zoning ordinance. See Dyer, supra note 1. Return to text.

[3] Bernard H. Siegan, Non-Zoning in Houston, 13 J.L. & ECON. 71 (1970) (arguing that land use patterns in Houston are similar to those in other cities, but the patterns are achieved more efficiently because of the absence of zoning). Return to text.

[4] Robert C. Ellickson, Alternatives to Zoning: Covenants, Nuisance Rules, and Fines as Land Use Controls, 40 U. CHI. L. REV. 681, 779-80 (1973) [hereinafter Ellickson, Alternatives] (recognizing the need for land use regulation to control negative externalities, but arguing that restrictive covenants, modified nuisance law, and administrative fines would operate more efficiently and fairly than zoning). Return to text.

[5] See, e.g., WILLIAM A. FISCHEL, THE ECONOMICS OF ZONING LAWS: A PROPERTY RIGHTS APPROACH TO AMERICAN LAND USE CONTROLS (1985); ROBERT H. NELSON, ZONING AND PROPERTY RIGHTS: AN ANALYSIS OF THE AMERICAN SYSTEM OF LAND USE REGULATION (1977); Douglas W. Kmiec, Deregulating Land Use: An Alternative Free Enterprise Development System, 130 U. Pa. L. Rev. 28 (1981); Jan Z. Krasnowiecki, Abolish Zoning, 31 Syracuse L. Rev. 719 (1980); Andrew J. Cappel, Note, A Walk Along Willow: Patterns of Land Use Coordination in Pre-Zoning New Haven (1870-1926), 101 Yale L.J. 617 (1991). Return to text.

[6] Ellickson, Alternatives, supra note 4, at 692; FISCHEL, supra note 5, at 22-23 (stating that for all practical purposes, we may assume zoning is a universal feature of local government in the United States). Return to text.

[7] Cf. Eric H. Steele, Participation and Rules—The Functions of Zoning, 1986 AM. B. FOUND. RES. J. 709, 713 (1987)(finding that despite academic criticism, "[r]esistance to changing the basic nature of zoning springs from a widespread, if unarticulated, perception that the institution is serving some vital social function."). Return to text.

[8] Cf. id. at 722-23 (describing zoning in Evanston, Illinois, as a participatory process designed to preserve existing well-established mature urban neighborhoods). My analysis is also descriptive in the sense that it tries to capture the core unarticulated purposes of zoning—the "vital social function" it is thought to perform, even though in many instances actual performance falls short of the perceived ideal. Return to text.

[9] BABCOCK, supra note 1, at 116-17. Advocates of the nation's first comprehensive zoning ordinance, enacted by New York City in 1916, argued that zoning was necessary to protect property values. See City of New York, Board of Estimate and Apportionment, Committee on the City Plan, Final Report of the Commission on Building Districts and Restrictions, June 12, 1916, at 12-14, reprinted in ROY LUBOVE, THE URBAN COMMUNITY: HOUSING AND PLANNING IN THE PROGRESSIVE ERA 95-98 (1967)(arguing for enactment of zoning ordinance principally as a means to protect existing property values). See also Daniel P. McMillen & John F. McDonald, Could Zoning Have Increased Land Values in Chicago?, 33 J. URB. ECON. 167, 168 (1993) (proponents of Chicago's first zoning ordinance claimed it would raise property values by one billion dollars over 25 years by eliminating negative externalities and objectionable land uses). For instance, much of the impetus for the early New York ordinances came from carriage-trade Fifth Avenue retailers who saw their business threatened by the encroachment of the garment industry's loft-type manufacturing buildings northward from lower Manhattan. SEYMOUR I. TOLL, ZONED AMERICAN 110-16, 158-61 (1969). See infra pp. . Other early supporters of zoning, however, argued that mere enhancement of some property owners' financial interests at the expense of other owners' property rights would not be constitutionally permissible insofar as it would not provide a valid "police power" justification for zoning. See EDWARD M. BASSETT, ZONING 52-53 (1936). Return to text.

[10] BABCOCK, supra note 1, at 1, 115; Marc A. Weiss, Skyscraper Zoning: New York's Pioneering Role, 58 J. AM. PLAN. ASS'N 201 (1992) (stating that although from the beginning zoning in New York was principally concerned with large commercial developments, in other cities the central focus has been on protecting residential neighborhoods). Return to text.

[11] This approach seems to presuppose that the external effects of a particular type of land use (e.g., industrial) are not negative externalities with respect to neighboring land uses of the same type. A factory, for example, will produce equivalent amounts of air pollution, odor, noise, vibration, and heavy truck traffic regardless of where it is sited; but these effects, which are negative externalities if its neighbors are residential properties, are not negative externalities if its neighbors are other factories. A full explanation of the externalities theory would need to account for not only zoning by type of land use, but also zoning by density, minimum lot size, and building height and bulk, which are other typical features of a comprehensive zoning scheme. These arguments, while perhaps not impossible, are more tenuous; it is arguably less clear, for example, why a two-flat building in a neighborhood otherwise com posed of single-family homes would produce significant negative externalities. Return to text.

[12] See, e.g., McMillen & McDonald, supra note 9, at 168-69 (study of historical data shows no increase in residential property values over a period of years after Chicago adopted its first zoning ordinance). The empirical literature on this and related questions is reviewed in William A. Fischel, Do Growth Controls Matter? A Review of Empirical Evidence on the Effectiveness and Efficiency of Local Government Land Use Regulation, LINCOLN INSTITUTE OF LAND POL'Y 1990. Fischel finds the empirical evidence inconclusive. While it has not been definitively established that zoning results in higher residential property values over time, Fischel argues that this result is nonetheless consistent with the hypothesis that zoning is working well to steer developments with substantial negative externalities to sites where they do the least harm. Id. at 12; cf. Steele, supra note 7, at 714 (suggesting that density and congestion, while regarded as undesirable and regulated under most zoning schemes, are not correlated with reduced prop erty values). Furthermore, while zoning may not increase the value of a particular property, it may prevent the decrease of that property's value by limiting land uses that can have a negative impact on that particular property. Return to text.

[13] See infra notes 59-77 and accompanying text. Return to text.

[14] BABCOCK, supra note 1, at 120-25; NELSON, supra note 5, at 59; Charles M. Haar, In Accordance With a Comprehensive Plan, 68 HARV. L. REV. 1154, 1154 (1955) (stating that unless zoning conforms with a comprehensive plan broader in scope than the zoning scheme itself, zoning "lacks coherence and discipline in the pursuit of goals of public welfare which the whole municipal regulatory process is supposed to serve" and is therefore constitutionally infirm). Progressive, reform-minded advocates of New York's 1916 zoning ordinance also cited zoning's role as a tool of comprehensive, scientific urban planning similar to that then practiced in Bismarck's Germany, which they admired. See TOLL, supra note 9, at 128-31, 140; LUBOVE, supra note 9, at 13-14 (stating that Progressive Era social reformers supported zoning as a tool of comprehensive urban planning aimed at improving social conditions and beautifying cities). In New York, as in many cities, however, once zoning was in place, the push for broader forms of urban planning was largely abandoned. TOLL, supra note 9, at 178-80, 279. Return to text.

[15] FISCHEL, supra note 5, at 31; Robert F. Benitendi, Comment, The Role of the Comprehensive Plan in Ohio: Moving Away from the Traditional View, 17 DAYTON L. REV. 207 (1991)(arguing that a "comprehensive plan" requirement in a state zoning enabling act is deemed to be met by a comprehensive zoning ordinance; in fact, many small zoned municipalities do little or no "planning"). Return to text.

[16] BABCOCK, supra note 1, at 62-65. It is sometimes said that zoning, which by its very nature consists of a series of "negative" local prohibitions on particular kinds of land uses, cannot serve as an effective planning tool because it can neither compel nor encourage any particular kind of development. See, e.g., LUBOVE, supra note 9, at 13-14. This broad generalization probably overstates the case, however. If there is sufficient market demand for gas stations, for example, then prohibiting them in residential zones but permitting them in commercial zones will almost certainly result in gas stations being sited in commercial zones, even though public officials cannot literally compel such a result. What is not likely to work is what some courts and commentators have insisted upon: a zoning scheme that embodies a comprehensive, inflexible, expert-designed community master plan. See BABCOCK, supra, at 123-24 (arguing that although planning may be desirable, planning may be just as arbitrary and irrational as zoning); cf. Carol M. Rose, New Models for Local Land Use Decisions, 79 NW. U. L. REV. 1155, 1160-64 (1985) (criticizing this "adjudicatory" model of zoning as "problematic"). See also FISCHEL, supra note 5, at 33 (arguing that in most communities, zoning is driven by political interests, not professional planning); NELSON, supra note 5, at 77-83 (arguing that the notion that a community can conform its development trajectory to an expert-designed master plan is just misguided wishful thinking); contra Haar, supra note 14 (arguing for this kind of professional planning); Fasano v. Board of County Comm'rs, 507 P.2d 23 (Or. 1973) (requiring all zoning decisions to conform to comprehensive land use plan). Return to text.

[17] See Robin Paul Malloy, The Political Economy of Co-Financing America's Urban Renaissance, 40 VAND. L. REV. 67, 73-82 (1987) (describing zoning as one tool, along with "co-financing," grants and tax incentive programs, by which municipalities try to influence large developments); Weiss, supra note 10 (describing role of innovative zoning techniques such as transferable development rights and planned unit developments, along with special districts, negotiated development, and "linkage" exactions, as tools municipalities use to steer large-scale developments). Return to text.

[18] Siegan, supra note 3, at 73. Return to text.

[19] This view is most prominently associated in academic literature with Bruce Hamilton. See, e.g., Bruce W. Hamilton, Zoning and Property Taxation in a System of Local Governments, URB. STUD., June 1975 (arguing that, in a metropolitan area with a large number of competing municipal jurisdictions, the use of zoning as a neutral fiscal device can make residential property taxes function as an efficient price for public services). Return to text.

[20] See Michelle J. White, Fiscal Zoning in Fragmented Metropolitan Areas, in FISCAL ZONING AND LAND USE CONTROLS 31-33 (Edwin S. Mills & Wallace E. Oates eds., 1975) (arguing that most zoning is done for fiscal purposes, either on a neutral basis in which newcomers pay exactly the marginal cost of the services they consume, or on a "fiscal-squeeze" basis in which newcomers are required to pay more than the marginal cost of services in order to benefit long-term residents). White argues, however, that even where zoning is fiscally motivated, the legal rationale is typically cast in terms of controlling externalities. Id. at 33. Return to text.

[21] Techniques typically employed in exclusive suburbs include large minimum lot sizes, minimum house sizes, and exclusion of multi-family housing developments. Legal challenges to exclusionary zoning, based on state rather than federal constitutional requirements, were briefly successful in New Jersey in both Southern Burlington County NAACP v. Township of Mount Laurel, 336 A.2d 713, 724-25 (N.J. 1975), cert. denied, 423 U.S. 808 (1975)(Mt. Laurel I) (holding exclusionary zoning violates New Jersey constitution), and Southern Burlington County NAACP v. Township of Mount Laurel, 456 A.2d 390, 452, 467 (N.J. 1983) (Mt. Laurel II) (establishing numerical quotas for low-income housing and authorizing courts to grant "builder's remedies," i.e., court orders allowing proposed low-income housing developments to be built in order to achieve compliance with numerical goals). Communities have continued to find creative ways to resist compliance with the Mount Laurel decisions, however. See RICHARD F. BABCOCK & CHARLES L. SIEMON, THE ZONING GAME REVISITED 214-33 (1985). Return to text.

[22] I do not mean to suggest that planners in big cities are insensitive to the fiscal impact of proposed developments, and especially of large-scale developments. But as I previously suggested, big cities typically address such concerns through planning tools other than, or in addition to, zoning. See supra note 17. Moreover, the notion of excluding the poor is a concept largely alien to big cities, where large numbers of the poor already reside. Thus, a low-income multi-family rental housing development that would be disfavored for fiscal reasons in some suburbs may be welcomed in the central city, where such a development is likely to be seen not as attracting new low-income residents, but rather as benefiting current low-income residents. Although big-city zoning has been used to exclude the poor from particular neighborhoods, see infra notes 36-37 and accompanying text, such decisions usually result in relocation of the proposed developments to poorer city neighborhoods, so the fiscal impact on the municipality is negligible.

Some public policy analysts have suggested that the central cities' generosity in providing welfare benefits to the poor is at best pointless and perhaps self-defeating. Rather than ending poverty, they suggest, these programs merely encourage the poor to remain in the central cities, where jobs and economic opportunities are scarce; thus, the poor stay poor and in the central cities—to the detriment of both the poor and the cities. See Michael H. Schill, Deconcentrating the Inner City Poor, 67 CHI.- KENT L. REV. 795 (1991). To my knowledge, no one has advanced a similar argument concerning the central cities' "generosity" with respect to zoning, but conceivably it could be argued that the cities' willingness to accommodate low-income housing through their zoning standards has a similar self-defeating effect, keeping the poor in the cities where they are likely to stay poor. Liberals are unlikely to make such an argument because it implies a harsher approach toward the poor.

Free-market conservatives, who typically favor less government regulation, are unlikely to make this argument because it implies more regulation, in the form of stricter big-city zoning. Instead, they would argue for leveling the playing field at a lower level of regulation by lowering zoning barriers to low-income housing in the suburbs. See id. at 831-52; infra notes 35-46 and accompanying text. Return to text.

[23] Schill, supra note 22, at 812-14; Siegan, supra note 3, at 120. But cf. Robert C. Ellickson, Suburban Growth Controls: An Economic and Legal Analysis, 86 YALE L.J. 385, 406 n.55 (1977) [hereinafter Ellickson, Growth Controls] (stating that because tenant families usually have fewer school-age children and apartment buildings are often subject to higher effective property tax rates, apartments are more likely to "pay their own way" in property taxes than are modest single-family homes). Return to text.

[24] Ad valorem property taxes are still the principal local revenue source in most municipalities. See JEROME R. HELLERSTEIN & WALTER HELLERSTEIN, STATE AND LOCAL TAXATION 8-12 (5th ed. 1988). Other local tax revenues, based on income or consumption, would also tend to be lower per capita on low-income residents. Return to text.

[25] Schill, supra note 22, at 796-97. Return to text.

[26] Cf. Ellickson, Alternatives, supra note 4, at 704 (finding that exclusionary zoning "may cause substantial inefficiencies by widely separating housing for working-class families from industrial job opportunities."). In addition, it has been suggested that suburban fiscal zoning may result in an undersupply of low-cost housing throughout the metropolitan area, including in the central city. See White, supra note 20, at 98. Return to text.

[27] See RICHARD A. EPSTEIN, TAKINGS: PRIVATE PROPERTY AND THE POWER OF EMINENT DOMAIN 263-66 (1985) (zoning frequently results in uncompensated taking of private property in violation of constitutional principles and fundamental norms of fairness). Epstein recognizes, however, that zoning sometimes has beneficial outcomes such as controlling nuisances or benefiting the regulated party along with her neighbors, "so it is out of the question to invalidate all zoning per se." Id. at 265; Ellickson, Alternatives, supra note 4, at 699 (arguing that zoning reduces some property values while raising others; the losers are typically not compensated, and the winners reap a windfall); Ellickson, Growth Controls, supra note 23, at 438-40 (arguing that some forms of land use controls effectively allow current homeowners to skim off developers' profits, violating principles of horizontal equity); Robert C. Ellickson, Three Systems of Land-Use Control, 13 HARV. J.L. & PUB. POL'Y 67, 72-73 (1990) [hereinafter Ellickson, Three Systems] (stating that political processes of zoning are biased in favor of local residents). Return to text.

[28] Some more radical economic critiques, however, suggest that zoning provides no benefit to homeowners, or at least that such benefits are isolated, fortuitous, and incidental results of a fundamentally misconceived regulatory scheme. See, e.g., McMillen & McDonald, supra note 9, at 187 (concluding that Chicago's first zoning ordinance had no overall beneficial effect on property values and may have created as many externality problems as it solved). Return to text.

[29] Since the "harms" and "benefits" in this utilitarian calculus are thought to be economic harms and benefits, the utilitarian version of the fairness argument thus appears to collapse into economic arguments about efficiency. See discussion infra notes 56-77 and accompanying text. Return to text.

[30] See supra note 9 (showing that some early advocates of zoning feared that protection of property values from negative externalities, thus benefiting some property owners at the expense of others' property rights, provided inadequate "police power" justification to pass constitutional muster). Return to text.

[31] 272 U.S. 365, 389-90 (1926) (upholding local zoning ordinance against claims that it unconstitutionally deprived landowners of property without due process of law). Return to text.

[32] In cases where zoning imposes extreme burdens on some property owners to benefit others, especially if the burdens are unrelated to the purposes of the regulation, the jurisprudence of regulatory takings may still have some bite. See, e.g., Nollan v. California Coastal Comm'n, 483 U.S. 825, 837 (1987) (establishing requirement of a "nexus" between regulatory purpose and burden imposed on property owner). But these cases involve claims by property owners against the government for compensation for a "taking" of private property; unequal treatment may be a relevant consideration, but in itself is neither necessary nor sufficient to establish a takings claim. Moreover, the remedy for a taking is typically compensation, not invalidation of the zoning scheme. Nor is the equal protection doctrine likely to help those seeking to overturn zoning; since would-be developers are not likely to be a "suspect class," all the government needs to show is that the classification passes a "rational basis" scrutiny, i.e., that under some imaginable set of facts it would be rational to impose these classifications. Thus, it is enough to show, for example, that the legislature could have thought that the benefit to homeowners outweighs the harm to would-be developers. Return to text.

[33] See, e.g., EPSTEIN, supra note 27, at 36 (describing property rights as pre-political "natural rights" with which government may interfere only if it provides dollar-for-dollar compensation). As Epstein recognizes, however, claims based on this theory are ultimately takings claims, resting on the notion that the government's action diminishing the value of A's property is wrong, regardless of how the government treats B. Id. Return to text.

[34] Supra notes 19-26 and accompanying text. Return to text.

[35] See Joel Kosman, Toward an Inclusionary Jurisprudence: A Reconceptualization of Zoning, 43 CATH. U. L. REV. 59, 71-77 (1993) (arguing that zoning is inextricably tied to invidious forms of racial and class exclusion). Return to text.

[36] See, e.g., Leonard Rubinowitz, Exclusionary Zoning: A Wrong in Search of a Remedy, 6 J.L. REFORM 625 (1972); Lawrence G. Sager, Tight Little Islands: Exclusionary Zoning, Equal Protection, and the Indigent, 21 STAN. L. REV. 767, 791 (1969). Some critics suggest that zoning is most important in the suburbs, because that is where the largest numbers and greatest dollar value of new land use decisions are made and where zoning restrictions are often the strictest. See, e.g., FISCHEL, supra note 5, at 34. This may lead to the non-sequitur that, since zoning is of greatest importance in the suburbs, and suburban zoning is exclusionary, therefore zoning in general is exclusionary and ought to be abolished. It does not follow from the premise that since zoning may be exclusionary in some places, it must be exclusionary everywhere. Nor does it follow that where zoning is now practiced with exclusionary motives or results it must necessarily remain exclusionary. Return to text.

[37] NELSON, supra note 5, at 24 (stating that history of zoning in big cities is non-exclusionary; exclusionary uses of zoning are closely tied to suburban regulation of undeveloped land); but cf. Kosman, supra note 35, at 60-61 (arguing that even in big cities zoning is aimed at exclusion by social class). Return to text.

[38] Cf. Gautreaux v. Chicago Hous. Auth., 304 F. Supp. 736, 741 (N.D. Ill. 1969) (holding that Chicago's public housing authority had violated the 14th Amendment equal protection rights of black public housing residents by failing to build public housing developments in predominantly white neighborhoods). The Housing Authority claimed it was unable to build the developments without zoning approval from the city, and city council members from those neighborhoods had blocked the necessary zoning changes in response to racial animus in their communities. Return to text.

[39] Cf. Ellickson, Growth Controls, supra note 23, at 418 (suggesting that constitutional remedies should be available for racially-motivated growth restrictions). Certainly some early zoning schemes were explicitly aimed at excluding blacks or segregating housing patterns along racial lines. See BASSETT, supra note 9, at 50 n.1 and cases cited therein; Buchanan v. Warley, 245 U.S. 60, 82 (1917) (invalidating, on due process grounds, a Louisville ordinance establishing racially segregated residential zoning, because it infringed upon a white seller's property rights to select a buyer). Return to text.

[40] Cf. BABCOCK, supra note 1, at 124-25 (arguing that it is an error to confuse the zoning power with the goals or purposes to which the zoning power is applied). Return to text.

[41] Cf. Village of Arlington Heights v. Metropolitan Hous. Dev. Corp., 429 U.S. 252, 264-65 (1977) (holding that absent showing of racial animus, a suburban zoning scheme excluding a low-income housing development does not violate the Equal Protection Clause, even though it has racially disproportionate impact). Return to text.

[42] But again, it is entirely likely that big cities exclude the less affluent from particular neighborhoods through minimum lot sizes and other requirements that contribute to making housing unaffordable for lower-income households. Return to text.

[43] Compare Goldberg v. Kelly, 397 U.S. 254, 264-66 (1970)(recognizing welfare benefits as an interest worthy of due process protection) and Shapiro v. Thompson, 394 U.S. 618, 629-31 (1969)(holding that a state may not discriminate against newly-arrived residents in awarding welfare benefits, based on constitutionally-protected freedom of interstate travel) with Village of Arlington Heights v. Metropolitan Hous. Dev. Corp., 429 U.S. 252, 266 (1977)(holding that a zoning decision excluding low-income multi-family rental housing, based on fiscal considerations, does not violate equal protection principles, even though its ultimate effect is to exclude racial minorities). Goldberg and Shapiro represent the high-water mark of constitutional protection for the poor; since Arlington Heights was decided, it is clear that constitutional doctrine affords little protection against classifications based on economic status, even where economic status is strongly correlated with race. Return to text.

[44] Again, the critics seem to confuse the zoning power with the uses to which it is put. Suppose we retained zoning, but adopted as a matter of constitutional law the principle that zoning may not be used to exclude persons on the basis of economic status. Thus, intentional exclusion by economic status would be an impermissible goal, just as intentional racial exclusion is now. This would severely curtail some uses of the zoning power, especially in exclusive suburbs (and in exclusive big-city neighborhoods). It would not, however, curtail all uses of the zoning power. Most zoning decisions based on density, or on the mixing of commercial and industrial uses with residential uses, would still be permitted. Return to text.

[45] See Peter Marks, Home Rule's Exclusive, Costly Kingdoms, N.Y. TIMES, Feb. 1, 1994, at A1 (stating that numerous small suburban home-rule municipalities are administratively inefficient and intentionally exclusionary, fostering "separateness and racial and economic exclusion"); Fischel, supra note 12, at 34 (arguing that although exclusion of the poor motivates some suburban zoning, other evidence suggests segregation by income is primarily a matter of individual decisions and, clear patterns of income segregation pre-date zoning and persist in unzoned communities like Houston); id. at 54 (stating that judicial efforts to curb exclusionary zoning helped spawn broad, across-the-board growth controls, "seemingly beyond judicial reproach on exclusionary grounds because they democratically exclude everyone."). It seems unlikely that "mature" exclusionary suburbs like Scarsdale, Grosse Pointe or Winnetka would suddenly be open to a flood of lower-income immigrants from the Bronx, Detroit, or Chicago if zoning were abolished simply because the existing housing stock is prohibitively expensive. Moreover, if those communities were required (through stronger measures than abolition of zoning) to absorb a population of diverse socio-economic status, it seems likely that many of their current residents would flee to other exclusive enclaves through purchases of large private tracts of land, perhaps reincorporating into new, smaller municipalities. See Marks, supra (describing division of eastern Long Island into minuscule municipalities, which are easier to keep "exclusive" under the social norms of a handful of property owners). Return to text.

[46] Cf. Ellickson, Alternatives, supra note 4, at 714 ("[R]estrictive covenants are widely used as a device to exclude lower income groups."). A solution to this would be to recognize discrimination based on economic status as a violation of equal protection, in which case those provisions of private covenants that exclude by economic status might be unenforceable. Cf. Shelley v. Kraemer, 334 U.S. 1, 20 (1948) (holding that restrictive covenants discriminating by race are unenforceable because enforcement violates the 14th Amendment guarantee of equal protection). Even then, however, it would be difficult to prevent the affluent from practicing their own private forms of exclusion through purchases of large private tracts of land, or private developments of large homes on large lots, enforced by informal social norms. Return to text.

[47] Cf. Developments in the Law—Zoning, 91 HARV. L. REV. 1427, 1628-29 (1978) (dis tinguishing "separation" zoning, which "carries the message that the use is incompatible with others and must therefore be located elsewhere in the community to maximize overall welfare," from "selection" zoning which "operates by encouraging some uses while disfavoring or excluding other uses"). Big-city zoning typically "separates" uses, while suburban zoning schemes are often "selective," i.e., exclusionary. Return to text.

[48] But the NIMBY syndrome may operate in big cities to exclude certain activities from certain neighborhoods, with the neighborhoods having the most political clout often bumping undesirable activities to less politically powerful neighborhoods. This kind of political power is often (though not always) correlated with socio-economic status and race, so that poor and minority communities often shoulder a disproportionate burden of undesirable land uses. See Vicki Been, What's Fairness Got to Do With It? Environmental Justice and the Siting of Locally Undesirable Land Uses, 78 CORNELL L. REV. 1001, 1001-03 (1993) (stating that locally undesirable land uses ("LULUs"), such as waste disposal sites, homeless shelters, and drug and alcohol treatment centers, have diffuse benefits and locally concentrated costs; typically, these are resisted by affluent communities and concentrated in poor and minority communities which lack the political effectiveness to stop them). In addition, city planners have had increasing difficulty in siting some land uses, such as landfills and incinerators, at all.

In a sense, all zoning decisions are NIMBY decisions; that is, they exclude some pre sumptively undesirable activities from particular neighborhoods. But discussion of the NIMBY syndrome usually focuses on two harms: first, that some socially necessary activities will be unable to be sited at a reasonable cost, and second, that some undesirable but necessary activities will be "dumped" on the politically powerless. Although many of these political battles are determined through the zoning process, the political dynamic of NIMBY is by no means co-extensive with zoning; many zoning decisions are unrelated to these NIMBY-like results, and many NIMBY-like results are achieved through market forces and/or levers of political power other than zoning. Thus it is by no means clear that abolition of zoning would curtail the NIMBY phenomenon. Houston, for example, which has never had zoning, nonetheless has its share of NIMBY-like land use patterns. See Vicki Been, Locally Undesirable Land Uses in Minority Neighborhoods: Disproportionate Siting or Market Dynamics?, 103 YALE L.J. 1383, 1400-06 (1994) (citing studies showing environmentally undesirable land uses in Houston are concentrated in poor and minority communities and suggesting that market forces may play a greater role than siting decisions). Return to text.

[49] BASSETT, supra note 9, at 80-81 (stating that New York's ordinance did not seek to "exclude any use that was necessary or desirable for civilized life"); NELSON, supra note 5, at 24. Return to text.

[50] To state the point more strongly, some suburban communities arguably were established to have a parasitic relationship upon the larger metropolitan community—reaping the benefits of participation in the metropolitan economy while avoiding its negative consequences. In that sense, exclusion of persons by economic status and exclusion of locally undesirable economic activities are two aspects of the same phenomenon. There is at least prima facie evidence that zoning has been a crucial tool allowing suburbs to achieve these goals.

If the goals and the results are impermissible, there are several alternatives to abolishing zoning, which in my view would unnecessarily cripple non-exclusionary uses of zoning in the cities. One is to effectively abolish suburbs as we know them through metropolitan government or at least substantial consolidation of crucial local governmental functions like zoning. In the Baltimore metropolitan area, for example, the suburban zoning power rests at the county level rather than with individual suburban municipalities. By administering zoning over a such a large area, a zoning scheme could be designed to accommodate all otherwise legal uses. But cf. Ellickson, Growth Controls, supra note 23, at 430-35 (arguing that metropolitan zoning, large-scale suburban zoning, and statewide land use controls would create monopoly zoning power and increase "rent-seeking" behavior, thus exacerbating inequities and inefficiencies); Hamilton, supra note 19 (arguing that competition among municipalities tends toward efficiency in zoning).

Requiring each zoning ordinance to make sufficient provision for all otherwise-legal land uses is another possibility; thus, suburban communities themselves would decide, jointly or in combination, how to accommodate industrial and commercial uses, multi-family residential housing, and other uses that might be considered undesirable. A final possibility is to allow decentralized zoning, but to create a metropolitan-wide or statewide override mechanism to protect those uses that might otherwise have difficulty finding a home. Many states, for example, have already created override mechanisms for siting waste disposal facilities, and a few states have experimented with statewide authorities for siting low-income housing. NELSON, supra note 5, at 37 (citing Massachusetts and New York as examples). Return to text.

[51] Campaign contributions to key decision-makers, large fees to politically-connected attorneys, outright bribes, and personal relationships with planning professionals and politicians are said to be crucial elements in this equation. See Ellickson, Growth Controls, supra note 23, at 407-08 (arguing that large central cities are more vulnerable to "capture" by pro-development interests than are elite suburbs, where homeowners' exclusionary interests predominate); but cf. FISCHEL, supra note 5, at 212-14 (arguing that in addition to the influence of developers' money on politicians, large cities tend to be more pro-development because city residents tend to be concerned about the jobs that accompany development; in this respect, big-city attitudes toward development are similar to those of smaller cities isolated from metropolitan areas). Public officials might also reasonably regard a developer's reputation for fiscal probity, demonstrated ability to secure financing and bring proposed developments to a successful completion, and track record of having produced developments that make ongoing positive contributions to the community as relevant factors that would tend to weigh in favor of granting zoning approval to "insiders" while being more wary of proposals by neophytes and outsiders. See Krasnowiecki, supra note 5, at 731 ("There is no local government that is not interested in a developer's financial capacity, reputation for quality, and record of good management," and "local governments have a legitimate interest in a developer's capacity to complete and manage the project and they should have the right to reject a developer who does not demonstrate such a capacity."). Return to text.

[52] See Harlan Draeger, A Crime Waive for Aldermen, CHI. SUN- TIMES, Jan. 1, 1992, at 1 (stating that of 18 Chicago aldermen convicted of criminal offenses since 1970, seven were convicted for zoning-related bribery or extortion); Ellickson, Growth Controls, supra note 23, at 408 n.62 (citing incidents of zoning-related graft). See infra notes 154-55 and accompanying text. Return to text.

[53] Cf. Kmiec, supra note 5, at 43-46 (arguing that to counter procedural unfairness zoning decisions should be less "legislative" and more "adjudicatory" in nature). But cf. id. at 52-53 (simultaneously arguing that rule-like zoning regulations are often too inflexible). Return to text.

[54] See, e.g., Haar, supra note 14, at 1155 (arguing that zoning must conform to a master plan "[b]ased on comprehensive surveys and analyses of existing social, economic, and physical conditions in the community and of the factors which generate them . . . direct[ing] atten tion to the goals selected by the community from the various alternatives propounded and clarified by planning experts."). Return to text.

[55] See Kmiec, supra note 5, at 31 ("[Z]oning . . . as presently constituted should be eliminated and replaced by an alternative free enterprise development system . . ."). Even Kmiec would retain some measure of public land use controls, however. Id.

Cf. Krasnowiecki, supra note 5, at 752-53 (concluding that, while nominally operating as a set of categorical rules, "short zoning" in undeveloped areas in fact results in "an arbitrary permit granting system" in which political favoritism is inevitable; in the interest of candor and effective judicial review, zoning in such areas should be abolished in favor of explicit case-by-case permitting, accompanied by a requirement that the municipality give cogent reasons for denial of a permit). Note that despite the provocative title of his article, Krasnowiecki would not abolish zoning in already-developed areas, such as central cities. Id. at 750. His general view appears to be that zoning, designed to meet the needs of the big cities, works tolerably well there, so long as additional flexibility is built into the zoning process, id. at 723-27. But zoning is terribly mismatched when applied to undeveloped suburban areas "in the path of development." Id. at 726; cf. NELSON, supra note 5, at 189 (arguing on efficiency grounds that zoning was designed for, and with modifications may still make sense in, developed urban neighborhoods but should be abolished in undeveloped areas). Return to text.

[56] See, e.g., Ellickson, Alternatives, supra note 4, at 697-98 (finding that in addition to governmental costs of administering zoning, developers bear the costs of obtaining information, winning approval, developing strategies to cope with uncertainty and delays in allowing a development to go forward); Krasnowiecki, supra note 5, at 727-44 (contending that "short zoning" effectively allows local governments to regulate the timing and design of developments, adding to costs; furthermore, the relationship between nominal zoning regula tions and actual bases of decision results in frequent litigation, adding further delays and costs); Kmiec, supra note 5, at 46-49 (arguing that zoning's inflexibility prevents experimentation with more efficient designs; process delays add to development costs; campaign contributions and bribes further inflate transaction costs). Return to text.

[57] See Ellickson, Alternatives, supra note 4, at 697 (finding that the direct governmental administrative costs of zoning are relatively low); but cf. Ellickson, Three Systems, supra note 27, at 72-73 (arguing that governmental administrative costs of zoning are high and are growing as regulation becomes increasingly complex). Return to text.

[58] Krasnowiecki argues that, as a result of "short zoning," such approvals are required for almost every development. Krasnowiecki, supra note 5, at 734. Fischel notes that most of these transaction costs are attributable to legal restrictions on the terms of trade. Developers cannot "buy" zoning rights through outright cash payments, but instead must arrange complex and circuitous barter agreements to remain within legally permissible boundaries. In addition, cumbersome public decision processes, which involve many parties with their own private agendas, make bargaining difficult. FISCHEL, supra note 5, at 131-35. Return to text.

[59] But see Ellickson, Alternatives, supra note 4, at 694 ("The pertinent goal is minimization of the sum of nuisance, prevention, and administrative costs."). Like other critics, Ellickson argues that the "prevention" and "administrative costs" of zoning outweigh any reduction in "nuisance costs" (i.e., negative externalities prevented as a result of zoning). Id. at 693. Cf. Kmiec, supra note 5, at 46; Siegan, supra note 3, at 141. The evidence to support this assertion consists largely of anecdotes, hypotheticals, and arguments from theory, however. Return to text.

[60] See Siegan, supra note 3, at 142; Ellickson, Alternatives, supra note 4, at 711-19 (urging expanded use of covenants as substitute for zoning). Return to text.

[61] Ellickson, Alternatives, supra note 4, at 718; Fischel, supra note 12, at 14. The result of this argument is that, while the transaction costs associated with zoning are real and visible for all to see, the transaction costs associated with private covenants are effectively hidden—the costs are so high (in the context of already-established neighborhoods) that the transaction never takes place. Thus, simply referencing the transaction costs of zoning is highly mis leading. Return to text.

[62] Ellickson, Alternatives, supra note 4, at 762-66. Return to text.

[63] See, e.g., Krasnowiecki, supra note 5, at 721-22 (arguing that Ellickson's proposed system of land use regulation would "in practice be even more costly and chaotic than zoning" because developers would not be able to predict ex ante the nuisance damages to which they would be subject). In addition, of course, a system dependent on case-by-case adjudications of damage awards is likely to produce wildly uneven outcomes, and entail enormous litigation costs. See FISCHEL, supra note 5, at 27. Nor would Ellickson's proposal to give adjudicatory jurisdiction to administrative Nuisance Boards necessarily reduce litigation costs, since due process principles would almost certainly require that administrative adjudications be subject to appeal. Ellickson, Alternatives, supra note 4, at 762 ("The major drawback of the nuisance approach is potentially excessive administrative costs."). Return to text.

[64] Additionally, others such as Fischel find the empirical evidence inconclusive. Fischel, supra note 12, at 53 ("Abolition of zoning and related controls would create a demand for alternative controls, and it is not clear that the alternatives are less costly to administer or more efficient in their effects than zoning."). Return to text.

[65] See, e.g., Siegan, supra note 3, at 142-43 (contending that free market land use decisions tend to follow rational and efficient patterns, which are distorted by zoning). Return to text.

[66] Even renowned critics of zoning, such as Ellickson, recognize that land uses may pro duce powerful negative externalities impinging on neighboring property owners. See, e.g., Ellickson, Alternatives, supra note 4 (arguing for a variety of regulatory schemes to control negative externalities of noxious land uses). Return to text.

[67] See John P. Crecine et al., Urban Property Markets: Some Empirical Results and Their Implications for Municipal Zoning, 10 J.L. & ECON. 79, 95 (1967); but cf. Mingche M. Li & H. James Brown, Micro-Neighborhood Externalities and Hedonic Housing Prices, 56 LAND ECON. 125 (1980) (finding that neighborhood externalities are important factors in determining housing values). Return to text.

[68] See Ronald H. Coase, The Problem of Social Cost, 3 J.L. & ECON. 1 (1960)(positing that in a world free of transaction costs parties will bargain to efficient outcomes regardless of initial assignments of entitlements). Here, it is suggested that with few parties affected, transaction costs are low, and parties will be more likely to bargain to efficient outcomes. Return to text.

[69] Ellickson, Alternatives, supra note 4, at 722-48. Ellickson, however, regards traditional nuisance law as doubly inadequate to this task. First, traditional nuisance law does not give a remedy for all negative externalities. Second, the traditional nuisance remedy, an injunction against the noxious use, provides too much protection for the injured property owner. Ellickson would reformulate nuisance law to allow nuisance remedies in broader circumstances and, at the same time, to limit nuisance remedies to a) damages or b) a novel Calabresian remedy in which the party making the nuisance claim pays the tortfeasor to stop the noxious activity. Id. at 738-48; cf. Guido Calabresi & A. Douglas Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 HARV. L. REV. 1089, 1116 (1972) (traditional tort remedies are incomplete insofar as they omit an efficiency-maximizing remedy, that of having the tort victim compensate the tortfeasor to refrain from the tort-producing activit