Tying Infrastructure Reimbursements to Zoning Reform

Many authors and cities have proposed or made use of fiscal incentives to encourage growth of higher-density neighborhoods. For example, Transit-Oriented Development (TOD) zones are areas in which high-density development goes hand-in-hand with spending on the development of new or improved transit networks.  Many TODs exist on the ground in jurisdictions around Texas, the United States, and the world.

This solution makes a lot of sense through the lens of zoning cartels. A zoning cartel can function as a protector of scarce resources, but the promise of additional resources predicated on lifting the cartel could break that cartel as enough homeowners see greater benefits in access to the additional resources than in restricting access to existing resources.

There are still a number of limitations to this approach, though:

  • Amenities can be expensive and complicated to provide. While the costs of providing amenities can be spread across many people in a new zoning district, it is simply not feasible to provide new train service to every district that needs denser zoning. There are many competing interests in establishing where amenities are best-placed, including but not limited to logistical constraints of the amenities themselves and efforts to right historic wrongs by providing greater amenities to people in historically amenity-deficient areas.
  • Many TODs are created not where it makes most sense to build but where there is the least political resistance: e.g. greenfield or brownfield development on sites which have not developed out of historic accident. In many cities, new transit-connected housing anywhere is better than no new transit-connected housing. But this is also in some ways a complete abdication of any notion of addressing the cartelized limitations on the existing high-amenity districts.
  • TODs are usually large undertakings involving large-scale political coordination between multiple levels of government. As such, it is difficult to apply this solution to small problems. Small cartels can suggest policy responses that are too small for a coordinated large-scale political response.