In continuation of the previous post, this article will examine how the restrictions on accessory dwelling units, various housing typologies, and maximum building heights impact housing affordability. I will also offer a solution that should please both NIMBYs and YIMBYs. We will analyze not only how housing affordability is impacted, but also how society would be better off overall in terms of happiness, in the absence of these policies.
Accessory Dwelling Units
First, accessory dwelling units (ADUs) are additional individual dwelling units that exist on an existing improved parcel. Oftentimes, owners of the primary improved structure will rent out an ADU. Still, other times, investors will own the entire property and rent out the main residence and the accessory dwelling unit. Many people wince at the idea of any ADUs entering their neighborhood. They would likely complain about the potential increase in traffic or crime associated with more people living in the neighborhood. They may also be reluctant to have new neighbors as they are unsure of what they will be like.
What nearby residents may or may not complain out loud about is who they think might move into these accessory dwelling units. ADUs are generally smaller in size, which helps make housing more affordable for lower-income tenants as they won’t need to pay for as many square feet. Holding all else equal, a smaller home will rent for less than a larger home. ADUs also tend to house family members of the primary occupants. This can be a tremendous benefit to some families, but unfortunately, many communities restrict this type of housing.
You or I may or may not want ADUs in the neighborhood that we live in, but some people would. I don’t think that you or I individually should have the right to influence the property rights of a neighbor down the street simply because we want things to go our way. By influencing the property rights of others, people attempt to increase their own utility, or happiness as economists define it, by decreasing the utility of others. This is wrong. No person, group, or government should be able to choose the winners and losers of society. Who should be making the decision-making for society, though, is the free market. The free market allows every person to make decisions according to their own best interest, allowing them to maximize their own utility. Individuals are able to make trade-offs between varying choices in an attempt to maximize their own utility.
Sometimes in the free market, there are negative externalities that arise, a type of market failure. Many people worry that increased density may lead to an increase in traffic or crime. For example, if I built an ADU, I would be increasing my own utility but decreasing the utility of others because I benefit from the ADU that I built, but others might suffer the increase in traffic, crime, road deterioration, and all other negative externalities that arise from the construction of my newly built ADU. If that were the end of the story, then this would be bad as well. I would get to benefit, but it would be at the expense of others.
So then, what do we do? Well, impact fees, or fees levied on developers to compensate society for the externalities that arise from varying developments, are designed to solve this problem. Impact fees are already in place throughout virtually every municipality across the county. I am actually unaware of any municipality that doesn’t charge impact fees. As long as the impact fees being levied adequately compensate society for the externalities that arise, the playing field becomes fair. Empirical research within each municipality ought to be conducted to determine the accurate amount of impact fees for each development.
If impact fees are overlevied, then developers are overpaying for the externalities that they create, which drives up development costs more than necessary. A portion of this added cost will likely be passed on to consumers, or people like you and me who use housing. If the impact fees are being underlevied, then the rest of society is getting the raw end of the bargain, as they are not being compensated for the externalities that arise. For example, a new development could arise nearby, and without the sufficient amount of impact fees being charged, the roads may not be maintained as well or as often, or the police may not have the budget to patrol frequently enough. A mere guess or rough estimate is not sufficient to determine the amount of impact fees that ought to be levied. Again, more research is needed to determine if, within each municipality, these impact fees are sufficiently covering the burden placed on nearby residents while also not overcompensating them, leading to an overburden on developers.
Deed-restricted communities provide another avenue for land use controls for those who want it, while still allowing for the utility maximization and housing affordability of others. ADUs help lower housing costs by increasing the supply of total dwelling units, lowering housing costs for everyone. If someone wanted to live in a community where ADUs were not allowed, they could move into a community with such rules, and they don’t need to affect the property rights of others, like current zoning regulations currently do. If someone wanted to build an ADU, then they should be allowed to outside the jurisdiction of any deed-restricted community that doesn’t allow them.
Restricting Alternative Housing Typologies
The City of Bonita Springs, like almost all municipalities, specifically identifies residential zoning districts by the typology of the housing permitted. For example, single-family homes will be permitted in certain districts where duplexes, triplexes, and fourplexes are not permitted. These alternative housing typologies are allowed in only certain areas of the municipality. These alternative types of housing are generally more affordable; they increase density and decrease construction costs on a price per unit basis. These typologies are able to take advantage of economies of scale in the construction process and land acquisition process, which reduces overall costs, which will be in part passed on to homeowners and renters.
Additionally, shared features like a roof and walls help reduce the quantity of materials required to construct these typologies on a price per unit basis. You may be wondering why zoning boards don’t allow these alternative housing typologies to be built in certain districts. Should a zoning board separate these typologies? Why can’t single-family homes coexist with duplexes or triplexes?
People living in a single-family home may not want an alternative type of housing to exist near them because of a potential increase in traffic, aesthetic appeal, lack of housing uniformity, or perhaps even because of the potential demographics of the residents of these typologies. I’ve personally come across an array of people who have been against the idea of any renters moving into their neighborhood. Deed-restricted communities can allow for the express prohibition of leased properties within their jurisdiction. Municipalities will likely never be able to expressly get away with this in their zoning code, but they currently attempt to do it discretely. Ask yourself this: who lives in duplexes, triplexes, and fourplexes? There may be an owner occupying one unit, but generally, the other units, if not all the units, are being rented out. People seem to view renters negatively. They tend to not want homes near them to be rented out.
My solution again is this: if you are even going to have zoning at all, open up the zoning code to allow for all kinds of housing typologies in all residential districts. Let deed-restricted communities restrict land use controls within the jurisdiction of their own communities so they can prevent duplexes or triplexes from being built, but then allow everyone outside that jurisdiction to build what they want and where they want. People living in the deed-restricted communities can live carefree without having to worry that someone will build a duplex next to them, and people outside that community can build whatever they want, wherever they want. Housing supply will increase, and more people can get what they want.
Maximum Building Heights
Looking back at the T4 district in Downtown Bonita Springs, there is a maximum building height of principal, or main, structures of 3 stories. Consequently, they restrict the ground floor height to between 10-16 feet and the upper floors to between 9 and 12 feet. This could potentially reduce the density of any given project and restrict the amount of housing supply that can be offered to an area.
The T5 district in Downtown Bonita Springs allows a maximum of 4 stories. The Bella Apartments, a recently built apartment building in Downtown Bonita Springs, located at the corner of Felts Ave and Crockett St, within the T5 district, is four stories high. We can’t know for sure, but it is possible that without this maximum building height, the developer would’ve built the apartment taller if there were not a building height restriction. The other possibility is that the developer would have built the project to this exact height regardless of a change in the height restriction or not. The absence of the height restriction would have allowed for more units to be built and more housing to be supplied. Furthermore, assuming that the building would be more than four stories tall, the increase in allowable building height would have been able to provide value to more people. In other words, more people would have had the ability to live there, and if they voluntarily choose to live there, they are indicating that it was the best option that they had going for them. Nobody is ever forced to live anywhere; people make choices of where to live, weighing various factors and making tradeoffs according to what will maximize their utility according to their own indifference curves.
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Building height restrictions serve as another form of land use controls where the government decides the winners and losers of society. If more people want to live in a certain spot, why not let them? Let me mention again that as long as the developers are paying impact fees that are just, then nobody is being unfairly burdened.
Together, the restriction of accessory dwelling units, the restriction of different types of housing typologies, and maximum build heights serve as a barrier to providing affordable housing. These restrictions give local zoning boards the power to choose the winners and losers of society. Aggregate utility is held back so residents who benefit from the zoning regulations can continue to enjoy their standard of living, at the expense of those who can’t afford housing and those who want to live in nearby areas.