Using Land Value Ratio to guide zoning

The most obvious way to make use of the land value ratio concept is simply to incorporate it regularly into a city’s rezoning process . For example, a city planning staff could map the city’s LVR and use that to guide which areas should be upzoned. If rezonings were largely based on LVR, they would be more predictable, reducing the expensive and potentially corrupting political battles over rezonings, while giving a rational basis for cities to zone in a way to allow developers to meet demand affordably.

When we first proposed this concept, some people thought of this as a rather toothless version of zoning: you are not allowed to build something until it’s economically viable to do so. But we see a number of benefits, practical and political, to using LVR as a guide to zoning, rather than eliminating zoning altogether:

  • In addition to regulating density, zoning also regulates uses. Use zoning is one of the more popular aspects of zoning; many people want to know that their home or their child’s school won’t be immediately downwind of a polluting factory, for example.
  • In addition to regulating both density and use, zoning also regulates form or design. Some communities may prefer (relatively) large-lot fourplexes with shared front yards, while others prefer narrow townhomes close to the sidewalk, with private yards in the back. Some communities may prefer to allow either, but want the entire street to conform to one or the other guideline. Either of these options may have similar density, but give a very different feeling to both public and private space.
  • The alternative to zoning is not necessarily “no land use regulations” but “private land use regulations.” Restrictive covenants are far more rigid than zoning, often requiring unanimous agreement to modify.
  • It avoids idiosyncratic developers building economically risky but personally desirable structures. For example, if a block of low-rise buildings now has land values that support mid-rise buildings, the city could rezone them all at once. But if a single homeowner decided to build a mid-rise mansion for their personal enjoyment, this could still be coded against.

The major downside to this as a plan is that, while we would be very happy to see city planners use this as a tool to help assess rezonings, by-and-large the problems facing urban residents today are not cities willing to upzone, but lacking the tools to identify which areas should be upzoned. Instead, the problem many urban residents face is that cities are unable to come to political agreements about whether upzoning is needed at all.