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Zoning, TDRs and the density of development

Profile image of Elizabeth KopitsElizabeth Kopits

2006, Journal of Urban Economics

Abstract

Many communities on the urban fringe are implementing a range of policies to preserve farmland and open space, cluster residential development, and guide development to areas with existing infrastructure. These efforts are an attempt to control overall growth and the concomitant loss in open space and also to counter a trend toward the so-called large lot development that often takes place in these areas. Planners have argued that policies to manage density are the most important local policy focus for urban areas in the coming years. It is possible that large lot development and sprawl are themselves the result of government policy. Most local governments use zoning to establish minimum acreage requirements for each residential dwelling unit; in ex-urban localities, these limits are often quite high. Developers might build a subdivision with average lot sizes greater than the minimum but they cannot by law go below it. Some researchers have argued, however, that the spatial patterns of development are simply the natural result of household preferences and market forces. In this paper, we address the question of whether zoning limits are the primary cause of lowdensity, sprawling development or whether market forces tend to dictate this outcome. If zoning limits account for low-density development in at least some cases, how would development patterns be different if there had been no such rules? We begin by constructing a simple model of the developer decision about the density of new development. The subdivision is the unit of observation, and developers must weigh both demand and cost considerations in choosing density, in addition to complying with zoning restrictions that vary across parcels. We apply the model using parcel-level data from a region where zoning rules vary but are exogenous to the period under study. Calvert County, Maryland, near Washington, DC, is an historically rural county that has experienced rapid growth in recent years. The county has a transferable development rights (TDRs) program that has led to a great deal of variability in the intensity of development across properties. We are able to not only examine the extent to which zoning has contributed to large lot development but also to determine the economic forces that underlie density decisions. Finally, we are able to forecast how density would have been different in the absence of zoning rules by estimating a Tobit equation that is censored for the observations constrained by zoning.

Figures (12)
Table 1. Maximum Density Allowed By Zoning Rules in Calvert County, Maryland
Table 1. Maximum Density Allowed By Zoning Rules in Calvert County, Maryland
3.2 Subdivisions in Calvert County Data on each new subdivision and every farm enrolled in either the county TDR program or a state preservation program was gathered from Calvert County Planning Department records and then digitized into GIS format using ArcInfo software. Overlaying this are data on the individual parcels from Maryland Property View, as well as topographical and soil quality information. For each subdivision we know total acreage, average individual lot size, the amount and configuration of open space within the subdivision, soil type and slope of both the lots and the open space areas, the location of the subdivision within the county, the baseline zoning designation, and the surrounding land uses at time of subdivision approval. These other land uses include the type of residential development, commercial and industrial uses, parks, wetlands, major bodies of water, and undeveloped farmland and forested lands—both those in protective status from the TDR program or other preservation programs and those that are unprotected. not zoning per se, land that is preserved through state, federal, or private conservation programs or that is county or state parkland is shown in brown.
3.2 Subdivisions in Calvert County Data on each new subdivision and every farm enrolled in either the county TDR program or a state preservation program was gathered from Calvert County Planning Department records and then digitized into GIS format using ArcInfo software. Overlaying this are data on the individual parcels from Maryland Property View, as well as topographical and soil quality information. For each subdivision we know total acreage, average individual lot size, the amount and configuration of open space within the subdivision, soil type and slope of both the lots and the open space areas, the location of the subdivision within the county, the baseline zoning designation, and the surrounding land uses at time of subdivision approval. These other land uses include the type of residential development, commercial and industrial uses, parks, wetlands, major bodies of water, and undeveloped farmland and forested lands—both those in protective status from the TDR program or other preservation programs and those that are unprotected. not zoning per se, land that is preserved through state, federal, or private conservation programs or that is county or state parkland is shown in brown.
Figure 4. New Subdivision Acreage in Calvert County, MD By Year and TDR Use
Figure 4. New Subdivision Acreage in Calvert County, MD By Year and TDR Use
Finally, the central focus of this paper is on choice over density. An important question discussed in the introduction is: to what extent are zoning regulations constraining the density of development? Is density primarily determined by the zoning regulations themselves, in which case most subdivisions would be at the limit of the number of houses that can be built? If density is constrained by zoning, TDRs offer an important opportunity to increase density in some areas and preserve farmed or undeveloped land in others. If density is relatively unconstrained by current zoning laws, other factors are determining density levels. In this case, there is likely to be little demand for TDRs and they will not play much of a role in land-use decisions.
Finally, the central focus of this paper is on choice over density. An important question discussed in the introduction is: to what extent are zoning regulations constraining the density of development? Is density primarily determined by the zoning regulations themselves, in which case most subdivisions would be at the limit of the number of houses that can be built? If density is constrained by zoning, TDRs offer an important opportunity to increase density in some areas and preserve farmed or undeveloped land in others. If density is relatively unconstrained by current zoning laws, other factors are determining density levels. In this case, there is likely to be little demand for TDRs and they will not play much of a role in land-use decisions.
Table 2. Number of Subdivisions in Calvert County at Maximum Density by Zoning Category 4. Empirical Model and Results
Table 2. Number of Subdivisions in Calvert County at Maximum Density by Zoning Category 4. Empirical Model and Results
Table 3. Summary Statistics of Total Subdivision Sample Resources for the Future
Table 3. Summary Statistics of Total Subdivision Sample Resources for the Future
The OLS regression results are shown in Table 5. Our central question is whether large average lot sizes in this ex-urban location are the result of restrictive zoning by the county government or whether market supply and demand factors dictate the pattern of development. The findings in Table 2 provided some evidence that zoning is not solely responsible for existing density levels: less than 10% of subdivisions built in the county are built at a density that is at the Table 4. Variables Capturing Zoning and TDR Program Changes, 1967-2001
The OLS regression results are shown in Table 5. Our central question is whether large average lot sizes in this ex-urban location are the result of restrictive zoning by the county government or whether market supply and demand factors dictate the pattern of development. The findings in Table 2 provided some evidence that zoning is not solely responsible for existing density levels: less than 10% of subdivisions built in the county are built at a density that is at the Table 4. Variables Capturing Zoning and TDR Program Changes, 1967-2001
***Tndicates statistically significant at the 99% level; ** at the 95% level; * at the 90% level (with robust standard errors)2?
***Tndicates statistically significant at the 99% level; ** at the 95% level; * at the 90% level (with robust standard errors)2?
With the introduction of TDRs, the maximum allowed density in the rural areas outside the DAAs increased and minimum lot sizes fell from five acres to two acres. Our predicted lot sizes from the censored model suggests that this new limit is approximately what the market demands. The predicted average lot size is 2.67 acres for these subdivisions compared to the actual average lot size of 2.02.39 This is consistent with evidence above that the constraints on density arising from zoning regulations, at least in Calvert County, are in the more rural, out- lying areas, and that residential areas seem to have zoning densities consistent with market outcomes.
With the introduction of TDRs, the maximum allowed density in the rural areas outside the DAAs increased and minimum lot sizes fell from five acres to two acres. Our predicted lot sizes from the censored model suggests that this new limit is approximately what the market demands. The predicted average lot size is 2.67 acres for these subdivisions compared to the actual average lot size of 2.02.39 This is consistent with evidence above that the constraints on density arising from zoning regulations, at least in Calvert County, are in the more rural, out- lying areas, and that residential areas seem to have zoning densities consistent with market outcomes.

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Related topics

  • Business
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  • Lot Sizing
  • Transferable Development Rights