Incremental densification auctions : A politically viable method of producing infill housing in existing single-family neighborhoods

Abstract

This paper examines the problem of convincing homeowners to accept new housing density in their neighborhoods. This paper proposes that densification that places additional housing units in preexisting single-family neighborhoods is socially desirable as a way of slowing sprawl, utilizing existing infrastructure, providing affordable housing, promoting consumer choice and slowing suburban decline. The paucity of such development currently occurring is argued to result primarily from restrictive land use regulation as there are strong indications that densification would otherwise be economically viable in many locations. This paper approaches the question of removing regulatory barriers from the perspective of devising a process that would effectively reduce homeowner apprehension about the effects of densification. Devising a system that explicitly regulates the pace of change and captures increases in land value attributable to densification is found to be essential to overcoming homeowner concerns about densification. Traditional land use tools are deemed inadequate to achieve these goals and thus it is proposed that local governments allocate densification rights through public auctions where the rights to densify are separate and distinct from any traditional real property ownership interest. This proposal for densification auctions is evaluated according to various legal restrictions courts and legislatures have imposed on the methods local governments may use to regulate land use. The proposed densification auction is found to potentially violate many of these legal rules. It is argued, however, that the underlying rationales supporting these legal restrictions cease to reason and therefore that they should be relaxed in the specific context of incremental densification.