Deed restrictions/opt-out provisions viable alternatives to local zoning laws?

L.A. housing researcher–author and city planner M. Nolan Gray breaks down the successes of Houston ditching zoning codes and minimum lot sizes in favor of opt-in deed restrictions. On the UCLA Housing Voice podcast, Gray explains how private deed restrictions (and opt-out provisions to no-zoning)—appropriately reliant on the free market—empower residents with an informed choice about land use laws. To receive daily updates of new Opp Now stories, click here.

(14:11–14:16)

But an interesting thing about Houston and the way they make [no zoning code] work is that they have a lot of private land use regulation, right? So homeowners who have a preference for stronger land use regulations can voluntarily opt into what people recognize as maybe a deed restriction or an HOA. So you and all your neighbors can come together and sign an agreement regulating how you are and are not going to use your property. Generally, this is set up by the developers when they build a new community because it’s just so hard to get unanimity in an existing community. But in Houston, in some contexts, people have done this on their own…

I would argue this is key for why Houston didn’t adopt zoning in 1993 [when it was put to the voters]. Because most of the people who had a strong preference for stricter land use regulation already had it, but they had it through a private means that didn’t set up a citywide system where everybody gets a say over everything and it becomes harder to build, right? (11:43–13:16)

… [Deed restrictions] have to be opted into. They can’t be imposed onto a community.

(14:31–14:46)

And that’s another key thing, too. Deed restrictions are subject to market pressures in a way that zoning is not. So for example, if a home is subject to deed restrictions that are far more restrictive than the average person’s land use preferences, then the value of that home’s going to be lower, right?

(35:43–36:31)

Because oftentimes, when a regulation isn’t a binding constraint, the reason we don’t consider it binding, in addition to maybe some other regulation being it, is because there is a prevailing sense in the market that is a certain amount of amenity that, just, people want.

And so that, the example would be, well, if you’re over in this neighborhood, people want 5,000 square feet. Or to go back to our earlier discussion about parking requirements in a single-family neighborhood, there’s a sense of, you just don’t put up with a detached single-family home that doesn’t have a driveway, so it doesn’t really matter that the city requires parking. And I think in many instances, that’s true.

But the point about what happens in these middle-income neighborhoods also illustrates another benefit of deregulation, which is that it puts some of those prevailing sentiments to the test.

(1:00:30–1:02:11)

So I think there was a compromise here that made this [Houston zoning law] reform work. If a group of neighbors wanted to come together and voluntarily petition for a minimum lot size that reflects existing conditions, they could do that, and then they will hold a vote of all the property owners who would be subject to these rules; and if they approve them, then they can have their own local minimum lot size. So this is crucial, right? This is essentially following the same playbook as Houston did with deed restrictions.

So in 1963, Houston said, “Alright, the city voters have voted down zoning, but for people who have strong preferences for certain types of land use regulation, to get these people to stop advocating for something far more extensive and restrictive, we’re going to let you opt out of non-zoning. You can have something like zoning in your little bubbles.”… that opt-out provision basically gives the principal constituency for zoning what they want without all the other harms that come with a citywide zoning ordinance.

And Adam and I [in a paper entitled “Subdividing the Unzoned City: An Analysis of the Causes and Effects of Houston’s 1998 Subdivision Reform”] argue that something similar happened with minimum lot sizes, right? So there’s a certain type of person who’s opposed to the 1998 reforms because they don’t want subdivisions happening on their street. Well, okay. If your preference for a larger minimum lot size is so high that you will petition the city and then campaign and have all of your neighbors vote on it, fine; you can have your own local minimum lot sizes.

This article originally appeared in the UCLA Housing Voice. Listen to the whole thing here.

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