As a young land use lawyer, I can remember reading countless scholarly articles which, based on an implicit premise that increasing housing supply only generates new demand, insisted that residential development hardly ever paid for itself. I thought the premise had the line of causation reversed, and that the conclusion, if true, would mean property taxes would go up and never come down. I was right; the argument was faulty, and today’s housing shortages and soaring prices are the result.
The fact is that residential development, from the perspective of the entire community, is far more positive than negative; it keeps prices and rents down, increases the tax base, and provides large numbers of jobs in construction and elsewhere. The problem, however, is that it also imposes costs on the immediate neighbors: new traffic; construction noise; reduced privacy; and unwelcome aesthetic changes. The character of the neighborhood can change completely. These are very real problems for the neighbors; just dismissing them and calling them NIMBYs is not a solution.
Local governments typically try to bridge the gap between the community good and the neighborhood harm by creating a transparent process and a meaningful opportunity for the surrounding property owners to be heard. In my experience, the results have been mixed, because the ultimate decisions are usually political, and the stronger side wins. In some communities, this means the developers; in others, it is the neighbors. Either way, the outcome is unsatisfactory to someone.
We need a better way to bridge the gap. I will throw out two proposals tomorrow.