Why do we regulate our cities?

Grounding the discourse in first principles

Much of urbanist discourse today centers on how and where we should regulate the built environment.

“How” is the old question. Is our Euclidean zoning insufficient, do we need layers on top to require better placemaking? Or does it go too far, and need to be stripped back. Can we relax the rules without rethinking the core model? Or should we start over with a model we admire from abroad, like Japan or the Netherlands.

“Where” is the new question. Today we have local control, in theory so our places can be responsive to local knowledge and local needs. But has localism failed? Is the answer is to shift responsibility up the scale to the county or state? Should we think more ambitiously, and redefine “local” for the 21st century, amalgamating our fractured government into modern city-states?

I think both of these conversations skip past a more fundamental question: why do we regulate the built environment? What are we actually trying to accomplish?

Today is the first in a series of essays on regulation, the built environment, and the role of the city. To start, I’ll offer the following thesis:

The beneficial purpose of regulation is to minimize negative externalities and maximize positive externalities.

As we approach city government, that should be our goal, and that should be the mindset behind asking “why.” Why have we taken the approach we’ve taken, is it working, and what alternatives should we be considering instead? Could an alternative approach deliver more benefit at less cost?

Parking as an example

To give a concrete example, let’s consider a widespread conventional policy that’s on the way out: parking requirements.

Parking requirements exist, at least in part, to solve a straightforward negative externality problem. In the 1920s and 30s, when larger and larger percentages of the population began owning and using cars, city streets became clogged with traffic. And a lot that traffic was caused by people circling around looking for a place to leave their car, or blocking traffic by double parking while they made deliveries, etc.

Each of these drivers was creating a negative externality — imposing a cost on the rest of the population. Leaving their car parked in the street took away public space, and if everyone tried to cram their car into not enough space the streets would stop functioning entirely.

Public officials eventually decided to deal with this cost by transferring it to property owners, mandating that each property provide off-street parking. That meant taking away property rights — requiring that a significant portion of the land the property owner previously could have used for other things could now only have one use.

We could imagine other ways cities might have solved this problem. Perhaps by building public parking lots or garages, by banning cars from parking on streets, charging for parking on the street, or by limiting the number of cars entering the city, etc. Perhaps some mix of all the above. But instead, the predominant approach was to transfer the cost from drivers to property owners.

This approach did result in lots and lots of parking places, but it created more problems than it solved. Thanks to the work of Donald Shoup, who dedicated his career to studying parking, we now have an entire discipline worth of knowledge on just how expensive this approach was, and a better alternative.

Shoup’s recommendation is to not regulate off-street parking at all, to regulate congestion via pricing, and to reinvest the parking revenue into the community. This approach recognizes that property owners have plenty of incentive to provide parking without it being mandatory, and that most streets are not congested and don’t need to be regulated.

More important, in the places where parking is scarce, charging for parking places the cost of the externality on the person who created it by driving. Pricing then becomes a signal, encouraging people to shift behavior by carpooling, time-shifting, or using a different mode to reach their destination. This means more people can get to popular places at peak times, visitors generate revenue for public improvements where they’re needed, and property owners there can respond by utilizing more of their lot to serve the crowds. It’s a positive-sum outcome that meets the purpose of beneficial regulation.

In the rest of this series I’ll extend this paradigm of beneficial regulation to the major elements of our conventional city planning system. We’ll look at land use, zoning, and transportation, and consider an alternative approach cities could take. The common theme will be to think in terms of complex systems, externalities, and signals, and to look for positive sum solutions to the genuine problems facing citizens and city governments.

My goal is inspire a new way of thinking about cities and how we govern them — a post-suburban mindset, if you will. I’d love for you all to join me in the process, so if you have questions on your mind or ideas you’d like to know my thoughts on, please let me know in the comments.

One meta note to close: I’m intentionally breaking this series into small pieces, and aspiring (🤞) to post more frequently than usual over the rest of May. I’d like to write one main idea per post for ease of linking, and I intend to use much of what I’m writing this month in my upcoming presentation at the Strong Towns National Gathering (June 11), so I need to get several more things on paper. Hopefully it won’t feel like I’m flooding your inbox this month, but if it does please know that it’s temporary and I’ll be back to about two posts a month after the Gathering. Thanks!