Rezoning The Rust Belt

As Congress debates a housing law, zoning reform should be an important goal—even in some of the nation’s shrunken cities

Photo by Doug Zuba on Unsplash

Ongoing housing affordability challenges in the United States have scholars and policymakers focused on land-use regulation. Deregulatory reforms—like allowing multi-family housing in single-family neighborhoods—are proposed to allow more housing in supply-constrained places like California, or to keep building it in fast-growing places like Texas. But a focus on affordability and housing supply has left cities like Detroit or Cleveland, victims of long-term depopulation and deindustrialization, mostly ignored in the national conversation about zoning reforms. In new research, focusing specifically on Midwestern Rust Belt cities, we find that these places, too, badly need land-use reforms. Here, the consequence of outdated, overly restrictive land-use rules is not a housing shortage driving up prices, but unnecessary barriers to economic revitalization. Zoning reform is not only a task for the superstar cities, but for struggling cities as well.

A Focus on Housing Shortages and Affordability Has Left the Midwest Missing in Land-Use Policy

When studying urban land-use policy, academic lawyers, planners, and economists mostly focus on wealthy, coastal cities like the Bay Area or Greater Boston, which feature high housing costs and low new-housing production. They also focus nearly exclusively on housing. And reasonably so! In these places, housing shortages drive an affordability crisis, excluding working-class people from moving to opportunity and impeding innovation. In light of the urgency of their housing affordability challenges and in response to a mounting body of scholarly research, many of these cities—and their respective states—have undertaken important deregulatory reforms.

Some other analyses consider more elastic markets like Atlanta or Phoenix, which have, until recently, produced enough housing to satisfy demand, enabling growth while moderating housing costs. These cities stand in contrast to the first group. There, overly restrictive regulation isn’t (yet) so problematic. Depending on one’s perspective, these Sunbelt cities demonstrate how coastal areas could better regulate land use, show what housing problems remain even when supply constraints are minimized, or need reforms to prevent them from becoming like California as they hit the limits of sprawl. In this discourse, land-use law presents a choice for successful places: to be San Francisco or Austin.

Then, regions like the Rust Belt are largely ignored, and even where they undertake reforms, they receive relatively little attention. Conversely, in these shrinking cities, policy discussions often cover practically everything but zoning. Overlooking these places is, perhaps, understandable. Land-use regulation mostly controls new development. Even if zoning limits Rust Belt cities’ few developments, their surplus of available housing—as well as office, retail, and industrial space and vacant land—means that land-use rules rarely cap supply. Critiques of land-use regulation oriented around housing shortages and affordability have little to offer places where buildings are so oversupplied that many sit vacant and crumbling.

Nevertheless, central elements of these critiques—that land-use regulation is too inflexible, too wedded to low-density, too empowering of unrepresentative opponents of development—hold in depopulated places as well. We set out to study whether such rules still matter in places without a housing shortage.

Land-Use Rules In Slow and No-Growth Cities Block Badly Needed Redevelopment

We use a deep-dive quantitative and qualitative study of development in Detroit, along with detailed analyses in other Midwestern cities from St. Louis to Syracuse, to identify the effects of poorly tailored regulations in these places. We find a system that impedes redevelopment at the parcel level and citywide.

Even in a world where demand is low and land plentiful, land-use regulations prove binding and costly. Thousands of vacant lots in cities like Akron and St. Louis—though once occupied—are too small to rebuild under contemporary law. Zoning laws frequently force developers in these places to shrink projects, shoulder additional costs, or seek uncertain, discretionary relief, usually through variances or rezoning. For example, 52.5 percent of townhouse units permitted in Detroit required a variance, as did 64.4 percent of homes in the city’s downtown-adjacent R3 districts, where much of Detroit’s revitalization efforts are focused. In contrast, in other cities, variances tend to be used to grant relief in unique circumstances, such as where a small or irregularly shaped parcel cannot comply with generally applicable standards. Historic preservation laws or rules concerning subsidies, the latter of which are necessary to most projects’ viability, impose additional reviews. These processes empower the public to impose unpredictable and onerous requirements on builders. Dysfunctional building permitting systems—resulting from understaffing, antiquated technology, and other fiscal strain-driven capacity challenges—create even more burdens.

These rules and administrative structures increase developers’ costs. As a result, projects shrink or are scrapped, leaving vacant lots. Other developers are dissuaded from even trying. These effects are evident in downtowns and neighborhoods, for buildings large and small, for market-rate and affordable housing, and for some commercial and industrial projects. In addition to impeding projects by the public, private, and philanthropic sectors, such rules also inhibit organic, incremental rebuilding by individual homeowners and entrepreneurs. Although poor cities face many obstacles to redevelopment, market weakness in stagnant cities means that even small frictions have outsized impacts.

The effect of these frictions is not to create a regional housing shortage. Zoning reform, in these settings, should not be primarily focused on increasing overall zoned capacity or reducing average home prices. Rather, the goal is to reduce development costs.

In cities that experienced substantial population declines, an overhang of housing supply and continued low demand mean that housing is priced below the minimum cost of producing new units. Accordingly, little unsubsidized new construction occurs. Additionally, increased production costs cannot be passed on to consumers, rendering marginal projects unviable.

Under these conditions, zoning reforms might serve two purposes. First, reforms could enable cities to seize whatever opportunities exist where profitable development can proceed, hopefully seeding neighborhood changes that then increase overall demand. Second, they can reduce the gap between production costs—for housing and all other uses—and the price that future users will pay, helping more projects pencil and stretching limited subsidies further. In post-industrial Midwestern cities, we find problems on both fronts.

But, importantly, we also find nascent reforms. Not all zoning liberalization is successful in these cities: sometimes, the demand simply is not there. But zoning reforms have unlocked mixed-use development in Buffalo, townhouse construction in Cleveland, and affordable housing development in South Bend—among many others. Even where a rezoning facilitates a single new project, it may be in a neighborhood where residents and officials alike work tirelessly to attract each individual development.

The stakes are high. Population and job losses create a vicious cycle. Population decline means that the remaining residents must shoulder ever-larger shares of service and infrastructure costs. Vacancies sap cities of social and economic vitality. Basic services, from utilities to policing and education, are imperiled. These problems make attracting and retaining businesses and people harder still, compounding the cycle. In most Rust Belt cities, depopulation has hit Black residents—who have been more likely to remain in the city—hardest. Land-use regulatory reform alone cannot fix all of these problems, but better regulation is worth pursuing if it can promote some revitalization.

Deregulation Is Not a Cure-All

While we find serious costs to depopulated cities’ continued use of restrictive zoning and discretionary review procedures, simply deregulating land-use is only a partial solution. Some of these cities’ greatest redevelopment challenges involve their limited administrative capacity, especially around permitting. Promoting growth requires optimizing—and investing in—those systems.

Moreover, even concerning zoning, post-industrial cities face a distinct challenge—generating demand, not just accommodating it—which deregulation alone cannot solve. With higher taxes and worse services than their suburbs, these cities’ urbanism is often their best competitive advantage. They must therefore build desirable urban spaces while pursuing the sometimes-countervailing goal of reducing development costs. Some reforms, like those removing barriers to improving vacant lots, achieve both. But mandating high-quality urban design—by, say, prohibiting strip malls or drive-throughs—may both increase costs and produce positive neighborhood spillovers. Similarly, historic preservation requirements leverage a unique attribute of older cities while adding potential frictions.

Some Rust Belt cities have navigated these tensions by permitting denser, mixed-use development while simultaneously imposing new design requirements. Although this combination is a sensible approach, it requires striking a delicate balance, and cities’ individual efforts are unproven. Further research is necessary to understand how prescriptive approaches to urban design can best function in these settings, without becoming undue barriers to redevelopment. Regardless, we note that liberalized land-use regulation is a precondition for these additional efforts.

State and Federal Pro-Housing Reforms Can Help Rust Belt Cities—and Can Build Needed Administrative Capacity

In high-demand areas, state intervention has been necessary to break through local land use politics, guiding hesitant localities and overruling recalcitrant ones through incentives and zoning preemption. Currently, the federal government appears interested in these efforts, with the bipartisan 21^st Century ROAD to Housing Act having passed the Senate. Though Rust Belt cities are substantially more pro-growth, they, too, could benefit from state and federal interventions: they have their own political challenges to overcome. Moreover, insofar as states and the federal government provide significant subsidies for Rust Belt redevelopment, they have reason to promote land use reforms. Even as state and federal policy efforts continue to center high-demand places, they should include—and be adaptable to—depopulated places.

In large part, those reforms should be the same: encouraging cities to allow more multi-family development, allow more by-right development, require less parking and speed up permitting. But we also note some differences in emphasis. For example, in slow- or no-growth cities, it may be advisable—or at least acceptable—to focus on policy inputs rather than outcomes. Essentially every rezoning effort we observed in the Rust Belt relied on external financial support, particularly from the federal government’s recent PRO Housing grant program. This external funding provides the necessary administrative capacity for developing significant reforms and the impetus to put zoning onto a crowded political agenda. In contrast, high-demand cities don’t need nudges around planning; they need to show results. Likewise, some reforms that have proven effective elsewhere may rely on either high housing costs or robust administrative capacity and be poor fits for low-demand settings.

The 21^st Century ROAD to Housing Act includes some elements well-suited for Rust Belt settings. For instance, it proposes funding communities to develop their own pattern books of pre-approved building designs, which can expedite permitting processes for builders of low-cost housing types. Some other provisions that might especially aid Rust Belt cities, like those requiring federal agencies to develop zoning best practices and guidelines for single-stair apartment building development, were previously approved but dropped from the latest version of the bill. As negotiations over the package continue, Congress should proceed with the understanding that its reforms can—and should—help improve land-use rules and permitting in both depopulated and supply-constrained cities.

Conclusion

Many long-struggling cities are now revitalizing. Land-use law can support or smother these trends. Some cities are already adopting and adapting reforms pioneered elsewhere, without a media spotlight. Such efforts offer preliminary evidence of what land-use reforms can do for depopulated or stagnant places, even as they reveal a need to identify policies better suited for these cities’ unique needs. In an era of political and economic divides, it is worth understanding and improving places that have faced decline.

As Congress considers a greater federal focus on land-use, it should do more to support zoning reform and help rebuild administrative capacity in depopulated cities. Doing so could go a long way toward keeping some of the United States’s most affordable cities affordable, while vastly improving revitalization outcomes along the way.