No Muslims In My Backyard?

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

• Vice President and presumptive Democratic presidential candidate Kamala Harris is rushing to moderate her former progressive position—except on rent control.
• California Gov. Gavin Newsom has issued an executive order intended to speed up the development of infill housing. Will it do any good?
• A study looks at the tendency to just keep adding more regulation.

But first, our lead story about a development moratorium in Minnesota motivated by standard NIMBYism, and potentially something much darker.

A Town Revolts Against a Planned 'Muslim-Friendly' Community

On Sunday, The New York Times published an in-depth look at a development battle in Lino Lakes, Minnesota, where a local farmer's plan to sell his land to a developer hoping to build a "Muslim-friendly" community with shops and a mosque provoked a backlash from residents worried about overdevelopment and, in more than a few cases, more Muslims moving to town.

The town has since passed a development moratorium pretty plainly aimed at stopping the planned community—a decision that project supporters chalk up largely to bigotry.

The leader of the slow growth opposition to the development stressed to the Times that he's not opposed to Muslims moving town but is concerned about the creation of a "segregated" community and overdevelopment generally.

Folks can read the Times story and decide for themselves how big of a factor bigotry played in prompting the town to adopt a building moratorium.

What's striking about the story is just how ordinary it is. But for the anti-Muslim backlash the planned community received, the Times story could as well have been about countless other efforts to stop new development in exurban America.

Just last year, I wrote about a startlingly similar case in Caroline, New York, near Ithaca. A local farmer wanted to sell some of his land for a new Dollar General store. Residents worried about overdevelopment organized and got the town government to impose a building moratorium. This then sparked a wider fight over whether the then-unzoned town should adopt a zoning code to check future suburban sprawl. (Spoiler: the pro-zoning forces eventually won.)

In Caroline, the slow-growth crowd wasn't anti-Muslim bigots, but rather largely liberal staff and faculty from nearby Cornell University worried about the environmental and aesthetic impacts of more commercial development.

Regardless of motivation, slow-growth politics ended up producing the same result in both towns. Farmers were stopped from selling their land and retiring. Developers weren't allowed to proceed with building something new. Average residents (or would-be residents) lost out on new homes and new places to shop.

Obviously, aesthetic concerns about chain stores are not as odious as outright racial or religious prejudice. Civil rights law and the U.S. Constitution offer people protection against such discrimination.

Yet, so long as local governments retain a veto over new homes and new businesses in the name of shaping the character of their community, they're going to use that veto.

Property owners are left guessing whether the rejections they've received from city hall are merely arbitrary or something more sinister.

It would be better to protect landowners' rights to develop their land as they see fit, and limit regulations to controlling nuisances and other major externalities caused by new development.

A Moderating Kamala Harris Doubles Down on Rent Control  

At her first major campaign rally last week, Vice President Kamala Harris re-upped her support for rent control as part of a strategy for bringing Americans' cost of living down.

"On day one, I will take on price gouging and bring down costs. We will ban more of those hidden fees and surprise late charges that banks and other companies use to pad their profits. We will take on corporate landlords and cap unfair rent increases," said the presumptive Democratic nominee.

Harris previously endorsed President Joe Biden's proposal to cap annual rent increases at 5 percent for existing buildings owned by landlords who own 50 or more units, for two years. In 2019, she also endorsed Oregon's passage of the nation's first state-wide rent control policy.

The fact that she's sticking to this position is conspicuous.

Since the start of her 2024 campaign, Harris has rushed to disavow her most progressive stances. The new Harris no longer supports banning fracking, single-payer health care, and a mandatory gun buyback program.

But on rent control, she's sticking to her guns. It's evidence of a remarkable shift of the Overton Window.

Rent control once had (and among economists, still does) a rock-bottom reputation. The policy might provide lower rents and more stability for some existing tenants but at the cost of new housing supply, housing quality, and (for anyone who doesn't get a rent-controlled apartment) higher housing costs.

A supermajority of economists surveyed by the Kent A. Clark Center for Global Markets at the University of Chicago's Booth School of Business agreed that the Biden administration's rent control policy would "substantially" reduce the availability of apartments.

Nevertheless, Harris is making federal rent control—a policy the U.S. hasn't had since World War II—a centerpiece of her allegedly more moderate 2024 presidential run.

Perhaps that's good politics.

Inflation and persistently high rents and home prices have made housing costs a more salient national political issue. The electorate has been willing to tolerate increasingly aggressive regulation of the rental housing market, from new state-level rent control policies to a Trump-initiated, Biden-continued nationwide eviction ban.

Still, good politics doesn't equal good policy. Rent control has been widely derided as a terrible, counterproductive idea for good reasons. If a future Harris administration succeeds in adopting rent control, those reasons will become painfully clear.

Newsom's New Executive Order on Infill Housing

This past week, California Gov. Gavin Newsom issued a new executive order to streamline the production of infill housing in existing urban areas.

The executive order includes a range of ideas, some more fleshed out and potentially productive than others. Most promising is the governor's direction to state departments to comb over the state building code to find opportunities to lower building costs and increase flexibility for developers.

University of California, Davis law professor Chris Elmendorf said on X that this could kickstart efforts to speed up the adoption of single-stair reform—that is, allowing new apartments to be built with only a single-stair case. Existing building codes require most multi-family construction to come with two staircases. Critics argue this requirement increases building costs and limits developers' ability to build family-friendly floor plans with more bedrooms and less common space.

New @GavinNewsom directive to his team: let's clear path & reduce cost of infill housing development.

Good idea! But what does/should it mean in practice? A short ????.
1/8https://t.co/ljB0ozlDnV pic.twitter.com/SF285DCXWB

— Chris Elmendorf (@CSElmendorf) July 31, 2024

Elmendorf is more wary about Newsom's plan to create a task force to explore "the use of infill housing as a mitigation strategy for transportation and housing projects with significant environmental impacts."

That could result in cities getting a powerful fiscal incentive to allow new apartments. Or it could see builders subjected to additional taxes when creating new greenfield development.

As with all California housing policy, the devil is in the exceedingly complicated details.

The One-Way Regulation Ratchet

Middlebury professor Gary Winslett has an interesting thread on X about a 2021 Nature study that finds a tendency to try to fix problems by adding features instead of taking them away.

There's an article from Nature a few years ago that I think about a lot when it comes to why there's so much over-regulation.
People have a strong bias in favor of adding features over removing them to solve a problem. Consider this Lego problem…
@scottlincicome @EricBoehm87 pic.twitter.com/WEfhmtmo0S

— Gary Winslett ???????????? (@GaryWinslett) August 2, 2024

This pops up time and time again in land use regulation, says Winslett. When zoning and other requirements raise the costs of building housing, policymakers don't respond by paring back regulation. Instead, they pile new mandates and restrictions on builders in the hopes that they produce more affordable housing.

Quick Links

• Over at The Atlantic, Derek Thompson asks where all the urban families went.
• San Francisco's futile encampment sweeps.
• Los Angeles hopes they'll be more successful at getting tents off the streets with more state resources.
• Michael Lewyn on Project 2025 and housing policy.
• The American Enterprise Institute has a new short documentary on the "forgotten solution to the housing crunch."