The Importance of Zoning in Sustainable City Development

By Sachin Desai

Who remembers Sim City?  Most of my lessons about city development started there.  What were the first few things the user did when they started their city ( usually with very limited funds)?  First, build the power plant.  Then, the water lines.  But then….  was it rail?  No.  Was it an airport?  No.  Was it a port?  No.  It was zoning.  Yet in our initial discussion on best practices for sustainable city development, zoning was not put on the board and was generally not discussed (although, as Prof. Macomber mentioned, the board was encrypted).  There are two key reasons proper zoning, and innovative methods of zoning, should be a focus point for new sustainable cities.

First, proper zoning is a very cheap way to incentivize private capital to build sustainably, and all sustainable cities need private capital to grow.  Most legal scholars that focus on promoting economic development focus on developing clear, hard, and fast “default rules” or ground rules that the private market can rely on.  Stability allows markets to grow.  Good zoning lays out these rules, and since zoning is hard to change it provides stability for the private sector to act upon.

Applying this to the KAEC case, zoning was one of the things to do with $5B that wasn’t listed.  There is no reason to invest ourselves (as the city government) in areas where the private sector can act.  Instead of investing directly in residential development to make sure the houses turned out a certain way (more western), we could have just zoned the city to restrict housing development to that type.  This would have allowed us to spend our valuable funds on other projects that would create the demand for people in the first place.  Zoning allows for the specification of new development in all sorts of ways – building height, style, and what codes have to be met.  Zoning isn’t free – there are some planning and infrastructure costs associated with it – but it’s very cheap to do for new cities.

Second, proper, forward-thinking zoning also enables a city to grow sustainably in the future.  Think to the BRT Avenida case, where a barrier to expanding the BRT was that the road was too narrow in certain places.  This was fundamentally a zoning problem – a zoning mistake allowed other real estate to impinge future traffic development.  It’s the lack of long-term zoning planning (or enforcement of zoning) that has led to many of our biggest city challenges – from slum development to urban sprawl.

On the flip side, bad zoning hinders future sustainable growth, because although zoning is free to do initially, it is EXPENSIVE to CHANGE.  Entrenched interests will challenge any change.  City planners do not want to spend their time in town council meetings or in the King’s court arguing over these matters, and lawyers (or connections to the King) cost a lot of money.  Additionally, many changes that restrict future development will have to be compensated for (remember the 5th Amendment – the government cannot take without providing for compensation).

Frankly, there hasn’t been too much innovation in zoning as far as I can tell, but it is critical to sustainable city development.  I hope some blog comments can talk about innovations in zoning to promote discussion for our last class.  I also hope students can talk about innovative ways to enforce zoning, because that is a key problem in cities in developing countries with inefficient or corrupt local governments.  For example, can a community come together to help set and then self-enforce its own zoning within a neighborhood?  Can digital property records or even smart electricity meters help track who violates a zoning ordinance or create new enforcement mechanisms?  I look forward to any thoughts in this area.

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One thought on “The Importance of Zoning in Sustainable City Development

  1. While I agree that zoning is critical in the development of a city and carries a low investment hurdle with partners and private investors creating most of the developed assets, I slightly differ on where it ranks on the list of importance relative to other aspects of the city.

    I believe zoning is an activity that endures throughout the life of a city and is a type of “kaizen”, as Henry and Ted have mentioned, that is necessary for any city to flourish. However, zoning should not replace any of the other items on the list of a city planner or developers agenda because zoning is a way to manage the supply of real estate available but does very little by itself to stimulate demand.

    Some may argue that by creating commercial zones, one can stimulate demand for residential zones, because office workers have to have homes. It can also be equally effectively argued that by creating residential zones, one can stimulate demand for commercial zones because people living in an area have to work. Thus, its easy to see how this can be a circular argument. I agree with both sides of this argument in a city which already exists but in a brand new development, zoning in isolation will not stimulate either commercial or residential demand.

    In order to populate a city, one needs to create substantial economic activity in the city. Thus, ports, electric utilities or factories can jump start the growth of a city after which zoning plays an essential role in regulating the supply of real estate vis a vis demand and creates incentives for private players to enter.

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