NIMBY Towns, Fake Parks, and Eminent Domain

Happy Tuesday and welcome to another edition of Rent Free. This week's stories include:

But first, our lead story about a family-owned hardware store challenging the government's ability to seize their land just to stop development.

Can the Government Steal Your Land Just to Stop You From Building on It?

Zoning puts plenty of roadblocks in the way of homebuilders and business owners trying to make productive use of their land. Still, there are at least some checks on local governments' zoning powers.

Spot zoning, where a rezoning affects just one property, is illegal. Protections for "non-conforming" (grandfathered) uses also limits local governments' ability to shut down currently legal businesses by changing the zoning code.

But a recent court ruling out of New York state might give NIMBY local governments a new, unbeatable power to stop development they don't like: eminent domain.

The Brinkmanns' Would-Be Store

Since 2016, brothers Ben and Hank Brinkmann have been trying to get the permits necessary to turn a commercially zoned vacant lot in the Long Island community of Southold, New York, into the next location of their family-owned hardware store.

The town government of Southold has fought them every step of the way, with the town supervisor at one point vowing, "I will never allow anything to be built on that property."

To prevent the Brinkmanns' code-compliant project from moving forward, Southold has pulled out all the stops—requiring multiple studies of the project, imposing a building moratorium in a small area covering the site (while granting exceptions to that moratorium to adjacent property owners), and eventually, trying to seize the land to turn it into a "passive use park."

In 2021, the Brinkmanns sued in federal court to stop that seizure, arguing the plans for creating this "passive use park" (meaning a park the town wouldn't spend any money improving) were a pretext for stopping their store. Therefore, the seizure failed the U.S. Constitution's requirement that land taken by eminent domain be for "public use."

"It's pretty obvious that there's a pretextual taking when the asserted public use doesn't appear until after years of the private party trying to get permits to do their thing," says Jefferey Redfern, an attorney with the Institute for Justice (I.J.), a public interest law firm representing the Brinkmanns.

Federal Courts Acquiesce

Where similar cases have been litigated at the state level, courts have struck down such pretextual takings, says Redfern. A federal court that heard the Brinkmanns case doesn't challenge the town's pretextual motives for a park either.

"The [Brinkmanns'] complaint alleges facts sufficient to support a finding that the decision to create the park was a pretext for defeating the Brinkmanns' commercial use," wrote the majority in an opinion for the U.S. Court of Appeals for the 2nd Circuit in March 2024.

In that opinion, the appeals court also described the town's various efforts to interfere with the sale of the lot in question and even mentioned a county government finding that Southold's building moratorium wasn't based on any supportive evidence.

Nevertheless, a 2-1 majority of the 2nd Circuit dismissed the case. While the town's seizure of the land might be motivated by a desire to stop development, that would only be a problem if the seizure were intended to benefit a private party.

A pretextual, unimproved "passive use park" still counted as a public use, reasoned the 2nd Circuit majority, writing that "courts do not need to search the motives of public officials who prefer a public park to an eyesore in the form of a large hardware store with the prospect of 80 vehicles at a time parked and circling."

So, this past week, the Brinkmanns petitioned the U.S. Supreme Court to hear the case.

Redfern argues that if the 2nd Circuit's opinion is allowed to stand, local governments could effectively stop any use of private property they don't like.

"If these pretextual cases are okay, then basically it turns into plenary authority over all property," he tells Reason. "Under this regime, any small-town mayor can veto any use and any owner that he wants."

While local governments would still have to buy the land, the ability to conduct pretextual takings would be a power threat local governments could employ to scare off sponsors of unwanted projects, Redfern says.

California Legalized ADUs. So Why Are So Many Still Being Built Without Permits?

Since 2016, the California Legislature has passed a slew of bills requiring local governments to allow ADUs on effectively all residential land, and clamping down on impact fees, parking requirements, and other red tape that can make them infeasible to build.

The documented result is an explosion in ADU construction. The undocumented result might be even more impressive.

A new paper published in the Journal of the American Planning Association (APA) by researchers Nathanael Jo, Andrea Vallebueno, Derek Ouyang, and Daniel E. Ho, estimated that some 75 percent of new ADUs built in San Jose, California, between 2016 and 2020 were completed without permits.

Researchers used a computer vision model and human annotations to identify detached ADUs that had been built in that four-year period, and then cross-referenced those findings with publicly available permitting data on legally built ADUs.

To filter out newly built sheds and garages, they also looked for signs of human habitation like windows, driveways, and paths leading to the street.

The finding that most ADUs are still being built illegally is surprising, particularly in San Jose. The city has actually been ahead of the state on liberalizing ADU construction, and providing pre-approved plans and permitting guidance to homeowners trying to get new units built.

Those reforms do appear to have increased the number of legal ADUs built. Local ADU permits have increased 30-fold since 2016. But black market ADUs still make up the lion's share of new construction.

One reason that might explain the persistence of unpermitted ADU construction is just timing. California state law permitting detached ADUs (the types of units this study examined) didn't pass until 2019. San Jose didn't incorporate those state changes into its zoning code until December 2019. On the local level, the city's first round of substantive ADU reforms also didn't happen until 2018.

So much of the 2016-2020 study period covers years when ADU policy was still relatively restrictive.

Denise Pinkston, the founder of Casita Coalition (an advocacy group that wrote some of the early California ADU reforms), suggests there are also a number of non-zoning barriers to ADU construction that would encourage homeowners to forgo seeking permits.

Homeowners seeking ADU permits could be required to pay for additional utility meters and sewage hookups on their property. They might have to abide by green building codes that increase costs or be required to add solar panels to the roof of an ADU.

"We make homeowners do things that make no sense. Homeowners know that, and so they don't go [the permitting] route," says Pinkston.

The Casita Coalition has endorsed a bill, A.B. 2533, that would make it easier, and cheaper, for homeowners to legalize unpermitted ADUs they have built.

The authors of the San Jose study caution against cities using satellite imagery for code enforcement purposes, writing that they hope their study design informs similar ADU amnesty programs and permit processing improvements.

Coastal Commission Keeps Shooting Down Housing Projects

The non-profit Circulate San Diego has released a new report detailing a number of housing projects "opposed, delayed, or killed" by the California Coastal Commission, a state body that has the final say over most development along the state's coastline.

In the five cases the report covered, including projects ranging from small condos to larger apartment buildings, the commission based its opposition on "parking, neighborhood character, views, scale and massing" and not more tangible environmental impacts, wrote the report's authors.

The report recommends ending explicit exemptions and existing ambiguities in current law that exempt the coastal commission from having to abide by legislation streamlining the approval of new homes and allowing a wider array of housing.

Reason has covered the Coastal Commission's crackdowns on property owners here and here.

Sen. J.D. Vance's Solution to Too Little Housing? Have Fewer People.

It's a bipartisan consensus that America has too few homes for the number of people that live here. Sen. J.D. Vance (R–Ohio) suggests fixing this problem by cracking down on the number of people.

"Not having 20 million illegal aliens who need to be housed (often at public expense) will absolutely make housing more affordable for American citizens," said Vance on X (formerly Twitter), re-upping similar remarks he'd made at a Turning Point conference on Friday, where he called for deporting "every single illegal alien who came to this country under [President] Joe Biden's regime."

Putting aside the many other objections one might raise about mass deportation, it's not obvious expelling millions of people from the country is a key to housing affordability.

Immigrants might consume housing, but they also build a lot of housing. Deporting immigrants will reduce demand, but it will also be a huge headwind on supply.

Texas has a lot of immigrants and housing is relatively affordable there. California has a lot of immigrants and housing is very unaffordable. The big difference between the two is that the former state builds a lot of housing and the latter doesn't.

When talking about housing affordability, populist politicians of all stripes like to point the finger at sources of housing demand that are allegedly illegitimate: immigrants, Wall Street buyers, gentrifiers, tourists, etc.

This obscures the core problem: government restrictions on supply that force everyone to squabble over an artificially scarce number of units. If the government let more housing be built, we wouldn't have to have these fights over who gets what. There would be enough for everybody.

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