no third solution

Blogging about liberty, anarchy, economics and politics

Height Pollution

October 17th, 2007

The City of Houston (TX) is remarkable for the fact that it’s one of very few (if not the only one of substantial size) city in the U.S. that does not rely on restrictive zoning ordinances to plan the community’s development. Instead, Houston could be considered a poster-child for the success of restrictive deed covenants in accomplishing many of the tasks generally left to bureaucratic central planners. Yet, just as zoning ordinances are imperfect, so too are deed restrictions, as a recent spat between developers and property owners adjacent to a proposed condominium development demonstrates.

The dispute, however, is not an indictment of the impotence of deed restrictions vis-a-vis zoning ordinances. There will always be issues which arise due to circumstances unforseen, which affect (or are perceived to affect) the property rights of adjacent land-owners. Where deed restrictions are applicable, they are typically set forth by the developer to govern a generally contiguous parcel of land to be subdivided, and are covenants to which all purchasers bind themselves. In practice, they are difficult – if not impossible – to overturn, which provides an extra line of defense against the capricious whims of central planners and rent-seekers. Of course, the restrictive covenants are not binding on adjacent parcels, so when the developers decide to build a condominium development next to your subdivision, you are pretty much out of luck:

The site, originally developed as a grocery store in 1926, is not part of a neighborhood, so it isn’t governed by any deed restrictions.

Then when it went up for sale a few years back, the residents through their respective neighborhood or homeowners associations, should’ve bought the vacant land, and developed it (or not) as they saw fit. It could’ve been turned into a nature preserve, a park with picnic tables and tennis courts, a baseball field, community gardens, or even resold – with new deed restrictions – to a developer intending to construct houses or site-condos. They valued the serenity and security of owning the parcel less than the probable opportunity cost of allowing someone else to acquire and develop the property. Perhaps they miscalculated, but live and learn; such is life.

Ultimately, they didn’t buy it, and now (by what right?) they’re objecting to the designs of those who did.

Furthermore, if this ex post facto usurpation of property rights is permitted to go through, it’s a mere reversal of fortunes. The homeowners are upset that the high-rise may depreciate the value of their properties. But we know with certainty that if the homeowners’ complaints are heeded, the value of the vacant land will plummet. The investment in the vacant lot commanded a certain price based on expectations of sovereignty and the absence of zoning laws. If the neighbors are allowed to posthumously impose a sort of quasi-zoning, the value of the property is markedly less.

Thus, the developers will be forced to bear nearly all of the burden of propping up the value of properties they do not own even – a condition to which no sane person would agree. It might be of interest to note that the “1.7-acre parcel at the intersection of Bissonnet and Ashby streets [was previously] occupied by 67 outdated apartments surrounded by the pricey homes,” so it strikes me as unlikely that a tasteful, upper-class condominium development could be a drag on the property values – on the contrary, it might well cause the properties to become more valuable.

Allowing the dissatisfied homeowners to overstep the boundaries of common law and common decency in an effort to “preserve” the values of their properties at the expense of everyone else’s properties would be a dangerous precedent to step, and another blow to property rights once held sacred. It is rent-seeking of the basest form.

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no third solution

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