Restrictive Zoning’s Deleterious Impact on the Local Education Property Tax Base

Abstract

This paper employs a boundary-discontinuity research design to estimate land-use regulations' causal impact on residential value per student within Massachusetts municipalities. Zoning restrictions hostile toward small dwellings are found to actually reduce residential value per student. This is because small dwellings, although valued less than larger dwellings, house disproportionally fewer schoolaged residents than larger dwellings do. It is then shown that restrictive zoning policies, through their mitigating effect on the local stock of smaller dwellings, force municipalities to rely on higher effective property tax rates to self-fund a particular level of per-student education expenditure, holding all else equal.

Zoning and segregation in urban economic history

“…The debate in economics to date has largely centered instead on the tradeoff between "homevoters," who block housing construction in part to reduce pecuniary externalities and maximize the value of their properties (Fischel, 2001), and the reduced economic opportunity associated with limiting dense development in the most productive areas of the country (Glaeser, Gyourko, and Saks, 2006). Economists have pointed out that one of the primary assumptions of the homevoter perspectivethat smaller dwellings free ride off the tax base of rich jurisdictions does not appear to hold in many cases (Babcock andBosselman, 1963 andGallagher, 2019), potentially suggesting a racially exclusive motivation for the adoption of ordinances that block multi-family dwellings. Even in situations where density zoning is motivated purely by the desire to protect residential property values, the black-white wealth gap (partially driven by neighborhood differentials in housing price growth) may nonetheless lead to racially disparate outcomes (Flippen, 2004).…”

Zoning and Segregation in Urban Economic History

“…The debate in economics to date has largely centered instead on the tradeoff between "homevoters," who block housing construction in part to reduce pecuniary externalities and maximize the value of their properties (Fischel, 2001), and the reduced economic opportunity associated with limiting dense development in the most productive areas of the country (Glaeser, Gyourko, and Saks, 2006). Economists have pointed out that one of the primary assumptions of the homevoter perspectivethat smaller dwellings free ride off the tax base of rich jurisdictions does not appear to hold in many cases (Babcock andBosselman, 1963 andGallagher, 2019), potentially suggesting a racially exclusive motivation for the adoption of ordinances that block multi-family dwellings. Even in situations where density zoning is motivated purely by the desire to protect residential property values, the black-white wealth gap (partially driven by neighborhood differentials in housing price growth) may nonetheless lead to racially disparate outcomes (Flippen, 2004).…”