Tuesday, November 15, 2011

Ever Since Euclid

Euclid v. Ambler is one of the best known cases in American land use law.  Entire books have been written on that pivotal 1926 decision, and enough law review articles to fill several more volumes.  The attention is deserved: in the simplest possible terms, the case marks the dividing point between dueling conceptions of property rights, one being my right to do what I want with my property and the other being my right to tell you what to do with your property.

Although their arguments have been largely forgotten, several state and federal judges of the 1920s wielded natural rights principles to strike down early zoning ordinances. One of  these was none other than the district court judge in the Euclid case, David Courtney Westenhaver:

"The argument supporting this [zoning] ordinance proceeds, it seems to me, both on a mistaken view of what is property and of what is police power. Property, generally speaking, defendant's counsel concede, is protected against a taking without compensation, by the guaranties of the Ohio and United States Constitutions. But their view seems to be that so long as the owner remains clothed with the legal title thereto and is not ousted from the physical possession thereof, his property is not taken, no matter to what extent his right to use it is invaded or destroyed or its present or prospective value is depreciated. This is an erroneous view. The right to property, as used in the Constitution, has no such limited meaning. As has often been said is substance by the Supreme Court: 'There can be no conception of property aside from its control and use, and upon its use depends its value.'" -Ambler Realty Co. v. Village of Euclid, Ohio, 297 F. 307 D.C.Ohio (1924).
The logic is straightforward and simple.  If, as Westenhaver stated, property "includes the right to acquire, use, and dispose of it," then the removal of one of these valuable rights for instance, the right to use land for industry was a taking requiring compensation.  To hold otherwise would be analogous to concluding that a thief does not commit robbery so long as he leaves a few dollars in his victim's wallet.  And after all, states had long ago abolished the archaic fee tail, which removed an an owner's right to sell his property, for public policy reasons.  Was the right to freely use property any less important than the right to sell it? 

Unlike Justice Sutherland, the author of the Euclid opinion, Westenhaver was thoroughly unconvinced by the arguments of the Progressive planners that the zoning law was an enlightened regulation justifiable in terms of health, safety and the public welfare:

"The plain truth is that the true object of the ordinance in question is to place all the property in an undeveloped area of 16 square miles in a strait-jacket. The purpose to be accomplished is really to regulate the mode of living of persons who may hereafter inhabit it. In the last analysis, the result to be accomplished is to classify the population and segregate them according to their income or situation in life."
Chief Justice Phillips of the Texas Supreme Court reached the same conclusion in 1921, with regard to a zoning ordinance which prohibited commercial uses in a district except with the approval of a three quarters majority vote of area residents:
"This feature [majority approval] of the ordinance, in our opinion, reveals its true purpose. It reveals with reasonable clearness that its object is not to protect the public health, safety or welfare from any threatening injury from a store, but to satisfy a sentiment against the mere presence of a store in a residence part of the City. ... But it is not the law of this land that a man may be deprived of the lawful use of his property because his tastes are not in accord with those of his neighbors. The law is that he may use it as he chooses, regardless of their tastes, if in its use he does not harm them." -Spann v. City of Dallas, 111 Tex. 350, 235 S.W. 513 (1921).
Baseless prejudice against commercial activity, Phillips held, or against those of lesser means, was not a sufficient justification for a taking of property rights without compensation, any more than baseless racial prejudice was sufficient justification for the race-based zoning laws struck down in 1917 by the Supreme Court in Buchanan v. Warley.

This entire line of reasoning was invalidated by Euclid, which held that, in essence, the right to use one's property for lawful purposes was not a property interest within the meaning of the Fifth Amendment at all, and which permitted the regulatory regime we take for granted today.  The Supreme Court's takings jurisprudence since that time, constrained by this holding, has come to reflect an outlook on property rights that one legal scholar has called "schizophrenic" (p. 1650).  A few libertarian-minded scholars, notably Richard Epstein, have been attempting to revive a version of this older jurisprudence, but there's no substitute for examining the original arguments that were pitted against each other in the early 1920s, and for making one's own judgments.  


  1. Interesting! The "slippery slope" argument is used way too often in politics, but I think the institutionalization of zoning is a pretty good example of "slippery slope" bureaucracy.

    When zoning was first implemented, it was in many cases rather simple: "Do not put heavy industry near residences." That was it. Few other rules applied. You could still have mixed use, retail mixed into residential, light industrial among residential and retail, multi-unit buildings among single-family houses, attached alongside detached, and so on. But over the decades the initially-very-simple zoning ordinances have been elaborated and expanded to AN EXTREME.

    Many municipalities now have *scores and scores* of zoning categories which impose extremely rigid restrictions on property owners. These go way beyond the old "separate industry from people" notion: Want to set up a home office? Make sure it's allowed in your zone! Want to build a duplex bungalow in a neighborhood with single family homes? Make sure it's allowed! Want to build a 3000 sq. ft. house in an area with 4000 sq ft. houses? Make sure you meet the minimum square footage!

    Zoning categories have become so prescriptive and exclusionary that you no longer get a "menu" of choices for what you can do with your land. There is ONE option only, and you need to conform to that option! In many cases we're literally handing property owners dictates outlining exactly what they must do with their land. I don't think we have to go all the way back to laissez-faire land use, but the pendulum has swung too far in one direction and needs to be pulled back. But when has gov't ever willingly dismantled bureaucracy? :-(

  2. Oh, I forgot: If I was to stake a position in this debate, I suppose I mostly agree with this link (from the previous 'Did Zoning Ever Conserve Property Values?' post):

    Remove most, if not all, of the planning bureaucracy and replace it with what we had before WWII: urban *design* and civic *design.*

  3. "To hold otherwise would be analogous to concluding that a thief does not commit robbery so long as he leaves a few dollars in his victim's wallet." The flaw here, is that the thief does not provide any tangible or intangible good for the victim. In reality, a place where there is more grey than black and white, zoning restricts certain rights in order to allow others; such as, the right to enjoy your backyard without the nuisance of factory noise, smells, or pollution; or the right to sell your property at a comparable market value because there is not a gas station next door. I could certainly go on, but you get the point.

    This idea that property exists within a bubble and that all activities within that bubble are protected is false. Real property is intrinsically attached to all others around it. The title an owner holds is, simply-put, an indefinite lease-hold upon that land and its improvements. The Fifth Amendment protects the taking of property without due process or compensation - zoning is established through due process and provides plenty of compensation (in the form of quality of life, resale value, etc.)

  4. Charles: you palmed a card. You make the _assumption_ that the benefits of zoning actually _do_ provide "plenty of compensation" when the evidence doesn't support that. See the earlier posts on this blog about zoning.

  5. Charles -- thanks for the comment. With that sentence you've quoted I meant to critique the Supreme Court's reasoning that with a 75% diminution in value (the situation in Euclid) the landowner recovers nothing at all; however, with a 100% diminution, he recovers the full value (see the later case of Lucas). It's not the best analogy for zoning, I agree.

    Under Westenhaver's reasoning, however, it is the loss of right that triggers the takings analysis, not the loss of value. The value of the right is only relevant for purposes of calculating the compensation due. A loss of value without a loss of a right would not be compensable, even it involved state action. This happens all the time: the opening of a highway or the construction of a jail will cause a loss in value of nearby homes, but there is no takings issue in either case. The government is not a guarantor of property values.

    Going back to the thief example, though, the very point of a case like Euclid is that the property owner did not perceive any "tangible or intangible" good flowing from the regulation.

    What's more, in the case of thief, the money at least will be used elsewhere in the economy, and perhaps to better purpose. But in Euclid, the judge suspected that the taken value was not transferred but was simply lost. There being only so many good sites for industry along railway lines and close to population centers, the loss of one such site could not easily be made up elsewhere. Given the importance of industry to the economy of the 1920s, it could be guessed that the losses to the Cleveland-area economy vastly outweighed the speculative avoidance of a loss in the Euclid homeowners' property values.

  6. I don't have a problem with Euclid. I don't see it as a principle argument. Governments have exercised control over private property long before Euclid. See the controversy over building elevated trains in New York and late the subway. Who has rights beneath the ground.

    I take it that the real issue urbanists have with Euclid is the results. Because we live in a post industrial society and coal has largely been replaced or contained in distant power stations most of the issues surrounding manufacturing pollution are gone. So that leaves us with detached single family residences and parking lot requirements.

    But arent those things what people want? I suspect we are at a crossroads were younger people want a more urban experience, and things will change. They already are, very slowly. The markets will respond to new consumer demand and the laws will conform to demands.

  7. I think it's pretty easy to argue that zoning laws do increase property values.

    In the absence of them, people could build as much as they wanted on any parcel of land, meaning that far more people would be housed per acre, meaning that far fewer acres of land would be needed to house us all and land, on the whole, would be worth far less. (Other than housing, the only other use is farming, and that's not a very profitable use.)

    I'm not suggesting that the whole country would look either like Manhattan or virgin fields, simply that it would look more like it does in places where zoning is permissive, like suburban Dallas, than in places where it is restrictive, like suburban Seattle: 20 house per acre, rather than two. (I'd also note that property values are far lower in suburban Dallas.)

    This does not mean I support zoning laws beyond those clearly designed to prevent construction on one property from endangering people around it. On pragmatic grounds, I think we'd all be far better off with cheap land than valuable land. On idealistic grounds, I believe in private property, and your property isn't really your own if you cannot do what you want with it.

  8. A lot of this plays into luddite territory. People with low economic understanding feared that machines that increased productivity would cause permanent unemployment, while the reality was lower prices for goods and shifted employment to other areas.

    People fear land getting too productive and cheaper while the reality is that people could live with lower housing prices and benefit from higher density.

    Another issue zoning brings up is fire control. Do you mandate fire insurance like driving insurance? But the state also enforces car standards for safety and less important areas.

    I view such issues as a spectrum that decision makers closer to the ground make better decisions. If you want zoning, have a single owner group that sells lifetime rent perpetuities with maintenance agreements. So violates are always possible to evict and the burdens they place are economic if they want people to keep paying them.