Episode 27: Minimum Lot Size Reform with M. Nolan Gray

Shane Phillips 0:00
Actually, do you want me to call you Nolan Gray or M Nolan Gray or

M. Nolan Gray 0:04
Nolan Gray is just fine.

Shane Phillips 0:05
Okay.

M. Nolan Gray 0:06
Call me M.

Shane Phillips 0:19
Hello, this is the UCLA Housing Voice podcast, and I'm your host Shane Phillips. Each episode we discuss a different housing research paper with its author. Our goal with these interviews is to help you our listeners translate that research into positive change in your own communities. After a short break, we are back with the first episode of podcast season two. And just like season one, we are kicking this off by interviewing a UCLA colleague, this time doctoral student Nolan Gray. Our conversation centers on Houston's 1998 Subdivision reform, which Nolan wrote about a few years back with co author Adam Millsap. The key change here was reducing the minimum lot sizes on which new housing could be built to as little as 1400 square feet in the city's more urban core. Previously, building a new home typically meant buying at least 5000 square feet of land first, which means accessing housing too expensive for many households. The reform led to the construction of a lot of new relatively low priced housing, where it's really needed most and I would argue that it deserves partial credit for keeping Houston relatively affordable, with a median home price still under $300,000. As listeners may know, Houston is the only major US city without a zoning code. That matters for a lot of reasons, and we will talk about some of them. But one that's especially germane to this conversation is the city's reliance on private deed restrictions to achieve many of the same goals as a zoning code. This approach is in some ways more customizable and tuned to resident preferences than a top down zoning code. And Nolan argues that the local opt out process employed by Houston may have been critical to minimum lot size reform actually happening in the city. It might also show us a pathway to making similar reforms in other cities. The housing Voice Podcast is a production of the UCLA Louis Center for Regional Policy Studies, and we receive production support from Claudia Bustamante and Olivia Urena. As always, you can send me your feedback or show ideas at shanephillips@ucla.edu. And we hope you'll give the show a five star rating and a review on Apple podcasts or Spotify, and share it with your friends and colleagues. That is the only way we grow. With that. Let's get to our interview with Nolan Gray.

This week, we are joined by Nolan Gray The Once and Future city planner according to Twitter, Nolan is a doctoral student here at UCLA, a regular contributor to Bloomberg and the Atlantic and elsewhere, a maker of brackets and author of a new book, which you can preorder right now titled Arbitrary lines, How Zoning Broke the American City, and how to fix it. Nolan, welcome to the housing boys podcast.

M. Nolan Gray 3:10
Thanks so much for having me. It's a pleasure to be here.

Shane Phillips 3:13
And we got Mike Manville co hosting today. Hey, Mike.

Mike Manville 3:16
Hey, guys, good to be here.

Shane Phillips 3:17
So let's get started with our tour. Nolan, you're originally from Kentucky so tell us a little bit about Kentucky or your hometown, and where you'd want to take Mike and I if we were visiting you there.

M. Nolan Gray 3:29
Yeah, well, this is the perfect time of year to go. It's like a two week period where it's not totally miserable. It's a beautiful place, I'm from Lexington which is in the heart of the bluegrass - not to be confused with Louisville, the main city that people think of. Lexington is a second biggest city in the state and the home of the University of Kentucky. It's got a lot of great bourbon distilleries so if you guys come visit, we'll probably go there. And it's got probably the most beautiful horse track in North America, which is Caitlin. A lot of people think of Churchill Downs, no disrespect to Churchill Downs. But Caitlin is so much more beautiful. So we probably go there, play some bets. lose a few hundred dollars and then talk about housing.

Shane Phillips 4:12
That sounds about right. Yep. So our topic for this episode is something that is often overlooked as a way to increase housing choice and improve affordability. And that is minimum lot size reform. Nolan here has been on this beat for a while along with some other folks like Emily Hamilton, and he's drawn a lot of much-needed attention to it. We're going to talk about a paper you published with Adam Millsap, 'Subdividing the unzoned city and analysis of the causes and effects of Houston's 1998 Subdivision reform' but before we get there, let's talk about your book since it's coming out in just a week or two after we publish this episode. Once again, it's called Arbitrary Lines, so what's it got to say and what will people learn if they decide to pick up a copy of the book.

M. Nolan Gray 5:02
Yeah, so the book comes out on June 21. If you've been following it on Twitter, if you preorder it today, sometimes copies are going out early because supply chains are in chaos but it's exciting. It's been published with Island Press, which just did a fantastic job, it's a beautiful book. And essentially, I'm trying to do two things in arbitrary lines. The first is just to to explain what zoning is, you know, and where zoning comes from. We're in that kind of unique position now, where zoning is almost like a mainstream issue or as close as ever is going to be to a mainstream issue. But I often talk to people and they have opinions about zoning, but I find that they don't necessarily have a clear sense of what zoning is or how it works, right? So they'll say things like, oh, Minneapolis banned single-family zoning, you can't build a single-family home there and say, "well, you know, that's not what single-family zoning does". Or they'll say, "Oh, how can we liberalize zoning, you know, look at this building, you know, in my community just burned down, how could we have looser zoning", and it's like, well, you're thinking of the building code. So first part of the book is just what is zoning and where does it fit into the broader planning ecosystem, what does it do, righ? tSecond part is, I think, going over some of the most salient critiques of zoning today. So the relationship between zoning and housing affordability, you know, as you all have talked about, ad nauseam, zoning and housing costs, right, zoning limits mobility and high opportunity regions, like the Bay Area, or Boston or New York City. Zoning entrenches patterns of racial and class-based segregation, and in many ways, that's the intended effect. And zoning forces, lower densities, forces sprawling patterns of development that make more environmentally friendly modes of living, car free living or multifamily living, making this illegal. So I cover those four critiques. And then the third part of the book is solutions, you know, what can we do about it? So, of course, again, something that your listeners are probably familiar with, there's a lot of ways you can reform zoning, and a lot of UMB groups are doing great work on that. We have folks at the state level, and even some federal bills that are trying to rein in zoning restrictiveness, I take the argument a step further and say, you know, let's go back to basics, what do we want land use regulation to do. In many cases, zoning hasn't really done, you know, what we want land use regulation to do, which is separate incompatible uses, control negative externalities, and coordinate growth with investments in infrastructure. I don't think anybody would argue that, that local and state and federal governments have some obligation to be doing that type of planning. Zoning hasn't done that type of planning. But I think we can work our way toward a system of land use regulation that does that, and it would probably end up looking very different from zoning.

Shane Phillips 7:50
And I mean, maybe it might look a little bit more like Houston, I guess we'll get to that, and you can let us know how you feel about that. But let's move on to the research paper, and first just set some context. You're looking at subdivision reform in Houston, Texas in 1998, both how it was adopted and what impacts it had. The reforms resulted in 1000s of homes being built on lots as small as 1400 square feet, whereas in most cities, minimum lot sizes are usually at least 5000 square feet. Some neighborhoods within the inner freeway loop were really reshaped by this reform, doubling their population densities even as the city's physical footprint expanded, and its average density remained pretty much flat. And this was in neighborhoods that I'm sure many of the residents would have described as, "built out prior to the subdivision reform". It's been really impressive, I think, and so we're excited to hear some of that story today. As some listeners may know, Houston is unique among major US cities for not having a zoning code. Euclidean zoning for those not familiar, these codes exist primarily to segregate land uses and restrict densities. And Houston just doesn't have one. But it uses a bunch of other regulations and development standards to really achieve a lot of the same ends. So Nolan, to start us off, could you paint the picture of Houston's land use regulations and the ways that they're similar to and different from other cities with traditional zoning codes?

M. Nolan Gray 9:29
Yeah, absolutely. So Houston is really fascinating from a land use planning perspective. Just to kind of set the table, Houston is America's fourth largest city now. It's gaining on Chicago. Part of that is because Houston is still sprawling out, but part of it is because Houston is getting denser. And that's sort of what I'm looking at here. So it's also worth studying because as you mentioned, it doesn't have zoning. So in virtually every US city, zoning was kind of quickly adopted usually by a city council vote, you know, decades ago - (19)20s 30s 40s, depends on you know, when the city experienced the growth spurt. Houston, unique among cities, put zoning to a citywide referendum. So they had three referenda - 1948, 1962 and 1993; the first referenda was among property owners so it was a small election but 62 and 93 were city-wide, and voters rejected both times. There's a lot of great research on what happened there, who voted against it, it seems like lower income, moderate income, populations of all races heavily voted against it, middle-income households tend to vote for it, and then in the most recent election, strangely enough, high-income households also voted against it, we can get into some of the reasons for that. But so it's not to say that Houston doesn't have any land use regulation. In fact, Houston has almost everything else you would expect in a city. So a lot of nuisance regulations stuff like noise, you know, more and more wetlands development, historic preservation rules. There are, you know, a limited set of rules for particular nuisance uses. So, for example, you can't drill oil within so many feet of a given use, that may surprise people, you know, given their stereotypes about Houston

Shane Phillips 11:13
and also the fact that we have oil rigs in the middle of Los Angeles. Yeah, we're probably doing worse than them on in that respect.

Mike Manville 11:22
Zoning has not helped LA stop someone from having and operating an oil rig in their backyard.

Shane Phillips 11:29
Yeah, yeah. Unfortunately. Yeah.

M. Nolan Gray 11:31
well, you know, Los Angeles is much more conservative than Houston, so. And so they have these forms of public... crucially, they have subdivision regulations, which we can talk about here coming up. But an interesting thing about Houston, and the way they make it work is that they have a lot of private land use regulation, right? So homeowners who have a preference for stronger land use regulations, can voluntarily opt in to what people would recognize as maybe a deed restriction or an HOA. So you and all your neighbors can come together and sign an agreement regulating how you are and are not going to use your property. Generally, this is set up by the developers when they build a new community, because it's just so hard to get unanimity in an existing community. But in Houston, in some contexts, you know, people have done this on their own. And as part of the compromise that makes this broadly very liberal land use regulatory framework work, the city actually will enforce deed restrictions on behalf of homeowners. Because in most contexts, right, if I'm subject to a deed restriction that requires me to mow my lawn once a week, and I don't do it, my neighbors have to take me to court, right, it has to be a private action, they have to enforce it themselves. But part of the compromise that makes us work in Houston is that the city will do that on behalf of people, to help them enforce their restrictions, and, you know, it seems the compromise that basically works, right. You know, I would argue this is kind of key for why Houston didn't adopt zoning in 1993. Because most of the people who had a strong preference for stricter land use regulation already had it, they had through private means that didn't set up the citywide system where everybody gets a say over everything, and it becomes harder to build, right? And then I would just add, I mean, this is a little bit of a tangent, but people often say, "oh, this is basically zoning, oh, this is basically the same thing as zoning". You know, I would, I would point to the work of Bernard Siegen, who did pioneering work in a book that was recently republished, called 'Land Use without Zoning', and he sort of makes the case that these are very unlike zoning in a few respects. So first is, if they're not enforced, they go away. So you know, if the neighbors implicitly acknowledged that they don't really care about the rules enough to even complain. If after so many years of violations or non-enforcement, they basically lose their power. So that's very different from zoning right? You know, I had a Planning Professor when I did my masters, and he said, there's gonna be two things that make you feel like apocalypse, cockroaches, and single-family zoning. Of course, you know, that was a lifetime ago, that was like, six years ago before the NIMBYS kind of broke onto the scene but so deed restrictions they can go away. Second is they have to be opted into, so they can't be imposed onto a community. And sometimes people will say, "hh, well, the developer impose them by writing them in before they sell the lots". Okay, but on some level, people understood what they were getting into when they bought the home, and the Houston market is large enough that people can reasonably select for homes that broadly reflect their preferences. And that's another key thing too - deed restrictions are subject to market pressures in a way that zoning is not. So for example, if a home is subject to deed restrictions that are far more restrictive than the average person's land-use preferences, then the value of that home is gonna be lower right? Personally I would not want to buy a home with a deed restriction that required me to go to the neighborhood council if I wanted to change my curtains. To me, that would be a less valuable home and I would pay less for it, and that would be priced into the home. On the other hand, It might be the case that, you know, maybe I wouldn't want to be in a neighborhood where my neighbor can start operating a strip club out of his garage. And so a neighborhood with rules to that effect is more valuable to me. And so you get something of a market for land-use regulations and something closer to reveal preferences and land-use regulations that we often don't get in zoning. And I won't go down that rabbit hole. But they're all you know, of course, your listeners are probably familiar with the ways that zoning set and how very unrepresentative groups often drive the policy.

Shane Phillips 15:29
So what you're looking at in Houston is the city's subdivision regulations, and specifically, the minimum lot size requirements within those. Prior to 1998, you basically had two choices on most of these inner loop parcels - this is where the subdivision reform took place within the freeway loop in Houston. One option was you could build a detached house on a lot that was at least 5000 square feet in area or you could build townhomes on parcels of at least 2500 square feet, both needed to provide at least two off-street parking spaces, and the buildings had to be set way back from the street. The reason many people think this is the problem is that if you're trying to buy a home or rent one for that matter, you've got to spend a bunch of money on land that you may not really value all that highly or just straight up can't afford, you might prefer to split the cost of that land with more households most often in the form of apartments or condos. But minimum lot sizes are one of several kinds of regulations that make that difficult, if not impossible. Is that like a fair summary of what's going on here?

M. Nolan Gray 16:37
Yeah, absolutely. I mean, just to kind of talk a little bit about minimum lot sizes for a minute, right. So I think, in the land use reform space, we become very comfortable talking about single-family zoning, and we've become very comfortable talking about minimum parking requirements, thanks to UCLA's own Donald Shoup. Minimum law says is kind of unexplored in a weird way. There's not nearly as much research on it. But the research that has been done, including by you know, me and some co authors indicates that it's one of the more binding forms of land use regulation. So what do I mean by that regulation is binding, it's forcing development to take a form that it might not otherwise have taken, right. So for example, in the case of minimum parking requirements, if a developer wanted to build one parking space per unit, but the requirements force her to build two parking spaces per unit, we would say that regulation is binding. If the regulation was point five parking spaces per unit, but she builds one parking space per unit, we would say it's not binding. So in some of the research that I've done, you know, preceding actually the Houston research with Salim Furth at the Mercatus Center, we looked at four different Texas excerpts of you know, so outer suburbs, land abundant context context, where you would think that there would be the least evidence that minimum lot sizes are binding, right, because land is abundant, and it's cheap. We found that when minimum a lot sizes creep up, you know, we basically did a distribution of every, you know, single family home lot, and we compared it against these breakpoints of minimum lot sizes. And we found that when lot sizes creep above 5000 square feet, when you force each home to sit on a lot that's larger than 5000 square feet, you start seeing clustering, right? At the minimum, where you probably expect something more resembling a normal distribution of lot sizes, of course, you know, probably, you get some probably drop off point around 1000 or 500 square feet, but nobody wants a home on a lot that desk. It's that small. I don't want to say nobody.

Shane Phillips 18:26
But, but it has to be six storeys tall to fit 2000 square feet at a certain point. Yeah, it just doesn't work.

M. Nolan Gray 18:33
Suburban Texas is weird, but it's not that weird. So there's strong evidence that these are binding. And that's a problem because land is one of the largest costs with with a single family home. So the general heuristic is that land is about a third of the cost. But so when you're forcing people to consume more land, especially in urban contexts, where land is very expensive, that can significantly raise the cost of a home. And many people might actually prefer to buy a home on a smaller lot higher a lot coverage may be in an area that's closer and closer to their jobs. But in many cases, minimum lot sizes preempt their ability to do that and restrict developers from building smaller lots. And as you mentioned, Houston did this pretty conventionally until 1998. They had a minimum lot size of 5000 square feet for homes, which is which is standard, but in an urban densifying context, that's probably pretty restrictive, and preventing a lot of infill, and they had a kind of weird 2500 square foot minimum lot size for townhouses, but for reasons that I discussed in the paper, the the massing and loss size parameters just often didn't work. So 2500 square feet was a little bit too large for that type of development.

Mike Manville 19:39
Yeah, just real quick, I mean, a couple things. One, one, just to add on to what Noah was saying. I mean, I think one useful way of thinking about something being binding is it's, it's the regulation that matters, right that, you know, in an infill area, one of the reasons so much was don't like parking requirements is that in point of fact, it doesn't matter what the allowable density is. It does No matter what your fer is, because if you can't do the parking, that's what determines what you can build. And so conversely, out in the suburbs, the minimum parking requirement often isn't binding, because it's very unusual to build a detached single family home that doesn't have a driveway and garage. Right? That, that's just going to come with it. And so that's where a minimum lifetime really does become really interesting. And I think I just want to point to a piece of research that's now a little bit older, that did start to get to this, which was one of the first sort of big zoning papers that Edward Glaeser and Joe Gyourko did about, they didn't sort of phrase it as the minimum lot size, but the minimum lot size really was what they were studying, they talked about the the intensive and extensive margin of land, and said that, you know, in a, and this was not a by any stretch, a perfect test, but they said, Well, if you could imagine those two things should be equal. And what they meant by that was that if what really matters to a developer or to the sorry, the value of a home is how much land you have, then adding 1000 square feet of land to a parcel should increase the value of that parcel by the same amount no matter what the 1000 square feet is. Right? And what they find, of course, is that that's just not the case.

Shane Phillips 21:15
Just to spell that out is that like, so if, if you had a 5000 square foot parcel and a 6000, square foot parcel, and the home on it was otherwise basically the same thing, that 6000 square foot parcel property would be worth 20%, more or something

Mike Manville 21:30
along those lines. Yeah. And there's

Shane Phillips 21:32
they're adding 20% to the total, right?

Mike Manville 21:35
Yeah, because it fundamentally what's going on is like, land is a scarce resource, people want it and they pay more, because there's more land. That's what you'd expect to happen. And you know, anyone who reads this should keep in mind that it was never going to be quite like this, right? There's problems with subdivision, you can never totally reorganize land to really get down to that sort of perfectly equal thing. But their findings are big enough. And the gap between the sort of those two margins is large enough to really suggest and this is the point they make in the paper, that, that what matters actually is having enough land to let you build, right, and that's most of the value. And then after that, yeah, it's nice to have some more land. But like, if what you need to build something, or to build an another unit is like, say, 4000 square feet, then the value really comes at 4000 square feet. And then having 4100 square feet is like, Yeah, that's great. But it's just like a slightly larger backyard.

M. Nolan Gray 22:32
One, and I would say two, I mean, it seems that it's affirmed in some of the date, like over time, we know that lot sizes are getting smaller and smaller, and home sizes are actually getting larger. Right? So I think, exactly to that point, right? Once you get to 3000 square feet, you can fit the home that a person, you know, 2000 square foot home that the person wants on that, and how much do you value a marginal 500 square feet and yard space? Right? Probably not a lot.

Mike Manville 22:57
And again, everyone's different, but it's going to be nothing compared to whatever that threshold is, that actually lets you unlock the development potential of the site. Right. And that's what the minimum lot sizes,

M. Nolan Gray 23:09
I think minimum lot size is, you know, in an urban context are mainly sort of performing a like reduced density function, kind of a, potentially an exclusionary function. You know, I would say in in context, where there's not a sewer and water infrastructure, they do have a health and safety function, right? If people are using septic or they're using Well, you do have to have, you know, you can't have somebody, you know, drawing their water, feet away from where someone's getting rid of their fecal matter, right? You don't want that. So it's an ex urban, you know, or rule in some extra urban context, manual law says can perform a basic health and safety function. You know, I think, of course, that doesn't justify two acre minimums, like you see in New England, but that might justify a half an acre minimum, right. But that's very different from most contexts that we talked about, and that your listeners are probably thinking about, which is an urban context, where there is actually water and sewer. And you're actually just making all that infrastructure like less efficient by mandating large lot sizes, because then you just have to lay, you know, twice as much pipe. Yeah, that's, I think that's an important nuance. So let's get into what these subdivision reforms actually did in Houston. What was allowed that hadn't been allowed before. Basically, I mentioned that you could build homes on parcels as small as 1400 square feet. But what were the different options and what requirements did you have to meet to build on the smaller lots or to subdivide the smaller lots and then build on them. So this was the key thing that happened in 1998. The distinction between single family homes and townhouses and minimum lot size regulation goes away. And you get citywide minimum lot sizes can go as low as 1400 square feet. Now, of course, there are requirements about that. So for example, one of the big ones is this open space requirement, that's you have to set aside so much open space, but the rules were interpreted implemented in a flexible enough way where you know like modest lawns in front of homes, or shared driveways would satisfy that open space requirement. Now, of course this you know, when you think of open space, you don't necessarily think of the driveway courtyard. But I would argue that on net, this is probably better for the environment to have arrangements like this, and then you could, you know, have proper parks.

Shane Phillips 25:23
And so, and again, it's letting people make that choice about what they value, rather than making the decision for them

M. Nolan Gray 25:30
Absolutely. Yeah, I would say that there are still parking requirements in Houston which plays a big role in shaping the form that the city takes. Over the last few years, they've reduced their minimum parking requirements in various contexts. So downtown, they have what they call, very cleverly, the market-based parking area, so you know, I guess this is a maybe a more conservative friendly way to get rid of minimum parking requirements.

Shane Phillips 25:53
That's a name that would work in Houston, but maybe not Los Angeles yeah.

M. Nolan Gray 25:59
Yeah. So, you know, there are still a minimum parking requirements on most of these townhouses, two cars per unit, so you know, these are tucked under townhouses, so two car garage on the ground floor. But you know, just to kind of go back to our conversation about binding, it's not obvious to me that this is a binding constraint. You know, when I was doing the research for this, I was talking to developers about this. And they said, yeah, we probably couldn't sell a unit without at least a one car garage. And at that point, if you have, if you have one car garage, you're just going to do a standard two car garage for the ground floor. You know, they have creative solutions to incentivize rear loading townhouses. So that's basically the garage is on the back of the structure, and you enter through an alley to minimize my use of planning jargon. It's preferred over a front loading townhouse, or where the garage is actually visible from the street, because then you have people blocking the sidewalk, or you have to have significantly larger front setbacks. So you know, where possible a lot of developers were redeveloping entire blocks and then adding an alleyway to get this additional benefit. And I think that there probably was some, you know, I think people on some level do prefer that. I don't know if it would show up and a price differential. But, you know, for one off infill, where it's like, you're just redeveloping one lot, and it's in the middle of a block, it does have to be front loading, because you can't install an alley where there isn't already one unless you control the whole block. So it's basically opened up I mean, kind of back to the bigger picture here. It opened up infill in a really, really massive way in Houston so so much of Houston was characterized by this conventional subdivision ordinance that they'd had until 1998 that said, 5000, square foot home, you know, 25 foot front setbacks, two car garage, basically mandating, you know, Levittown style sprawl, in what was increasingly one of the largest cities in the country. They took a different path, and partly because, you know, I talked to developers, I talked to planners who worked on this at the time, there was explosive demand for housing, in Houston at that time, you know. Of course, Houston had a very rough 80s, 70s in particular, when the energy sector kind of bottomed out, and the 80s were rough as well. But by the 90s, Houston is roaring back to life, and a lot of people want to live in maybe a townhouse that might be on a smaller lot, but it's still the square square footage that they want, and it's closer to job centers. You know, in many cases, these townhouses are between two or three CBDs, because Houston has multiple business districts. And they, you know, especially among younger people, they wanted to move back into the city but there was enormous price pressure on the existing stock. And so they did this, and they opened up basically everything within the i-610 loop to be redeveloped. And I think our estimates, as of 2018, were that it had produced something like 25,000 units, of course, that's a very nice round number so that should tell you how roughly we had to approximate. But this was just based on the number of lots that had been planted since 1998, and were 2500 square feet or below because the old townhouse meant almost 2500 square feet.

Shane Phillips 29:08
Looking at the sort of graphs of subdivisions and development on these plots over a 20-30 year period, it looks like at least it's 2000, somewhere on the order of 1500 units per year. And, you know, Houston is a big city, it builds a lot of housing. That doesn't sound like a ton necessarily, but it certainly did result in specific neighborhoods, pretty dramatic change. And I think you've already covered the impact overall so we won't get into that in more detail yet but your paper did also include some regressions and some spatial analysis to try to figure out what characteristics were associated with more of this small lot development, both pre and post reform. I think we can focus mostly on the post reform, post 1998 development since that's when most of it happened, but what did you find there? I noticed that the hotspots seemed to be very concentrated in the West and the Northwest sections of the city, for example, and you note that it was mostly in middle income rather than the very low or very high income neighborhoods where a lot of this redevelopment took place.

M. Nolan Gray 30:17
Yeah, that's exactly right. So we did hotspot analysis of where these 2500 square foot lots were pre and post reform. So I'll quickly talk about pre. And this is interesting, because these lots were what we would call non compliant. So they weren't compliant with the subdivision regulations as they existed. They were below the legal minimum. This is interesting, because this can cause certain hurdles, when you want to do any sort of building on the property. And you might have to get some sort of regulatory relief. Those were overwhelmingly in East Houston, so predominantly, working class, predominantly Hispanic American communities. So these were areas that were planted out and built out before the subdivision regulations came online. Post, of course, it's a completely different story. So subdivision activity that sort of meets the standards of the new code overwhelmingly happened in West and Northwest Houston. When we were originally running regressions, you know, we were kind of confused because we weren't finding a linear relationship between this post 1998 subdivision activity and income, which was confusing, right, because if you know anything about Houston, West and Northwest Houston, certainly now, are generally the more affluent, you could say, more desirable areas within the 610 loop. So it was confusing, right? What's going on here, that there's no apparent relationship with income? What we ended up finding was that there's an inverted U shaped relationship. So there are three things going on here. The first is there wasn't a lot of subdivision activity in lower income areas. The idea being that they were lower income, they broadly were seen as homebuyers as less desirable, there wasn't a lot of pressure to create new units in those contexts. At the same time, on the far end, very, very affluent communities also didn't see a lot of subdivision activity. Now, you would think, well, they're affluent, they probably have some of the most desirable places in the city to be. And that's true. But these neighborhoods in many cases had very strict deed restrictions. And that was going to be the case, regardless of what the minimum law says rules were. So those people already in many cases had private minimal rules that were above 5000 square feet, right?

Shane Phillips 32:29
Even if you didn't have those deed restrictions, if you're making 150 or $200,000 a year, maybe you want 5000 or 8000 square feet of land, that's somewhere where that marginal value to you because you have more money, you might like that additional space privacy, etc, even if there's no legally binding, anything forcing that on you.

M. Nolan Gray 32:51
Yeah, absolutely. And in this context, people, you know, had that written into deed restriction. So they they read those rules, and they opted into them. The peak of the U is a lot of these middle income neighborhoods that were very desirable. In many cases, these are neighborhoods that in a Los Angeles context would be incredibly difficult to subdivide or build housing in. But in a Houston context where they didn't have zoning, and then these minimum lot sizes were reduced, you see a huge amount of subdivision activity happening. So this is one form that this redevelopment activity took. Developers, in many cases small local Houston developers, would buy a, you know, postwar ranch home on a 5000 square foot lot, and then turn it into three townhouses. And in an area that's middle income, that's generally seen as desirable that, you know, for political economy reasons is generally hard to build in. And so there was a lot of that activity happening. And that overwhelmingly happened and like we say, west and northwest Houston, places that if Houston had adopted zoning in 1983, you probably would have been basically impossible to build anything in these neighborhoods. So in many cases to the densities in those neighborhoods doubled or tripled, because you're literally taking 5000 square foot lots and putting three new townhouses on them. I would say another form of development that happened quite a lot was Houston, like every other city by this point has a lot of vacant industrial lots. And they're trying to figure out what to do with them vacant industrial, and I would say probably increasingly vacant commercial lots. And so a lot of the subdivision activity happened with developers purchasing some of these really large industrial lots probably having to do some remediation work, but then put it in, you know, townhouse entirely new townhouse neighborhoods. And so if you look, you know, I invite listeners to hop on Google Maps, you can look at neighborhoods like Rice Military, where entirely new townhouse neighborhoods have been built in the last 20 years. Again, this is infill development in a major American city. This is infill development on a scale that you almost never see an American cities today. And it's really striking and I would say to you know, the the city of course, has had its ups and downs on planning and in many cases Houston, other than zoning made the same mistakes as every other American city, right? They built huge urban freeways, they engage to a lesser extent and, you know, counterproductive, urban and rural programs. But they're getting better on some of these margins. And you look at some of these neighborhoods, and they have, you know, it's the new townhouse development, there are parks, there are greenways, and so I think it's actually a really interesting example. And I think we can I mean, we'll talk about this, but I think, you know, there were compromises that made this work right, and, you know, of course, the loss of active subdivision activity didn't happen everywhere but it did happen in a lot of places.

Mike Manville 35:31
I think, you know, the, the point about that inverted U distribution is really important. And it comes back to what we were talking about earlier about sort of the binding constraint issue, you know, because oftentimes, when a regulation isn't a binding constraint, the reason we don't consider it binding, in addition to maybe some other regulation being in is because there's a prevailing sense in the market, that there's a certain amount of amenity that just people want. And so the the example would be, well, if you're over in this neighborhood, people want 5000 square feet, or like to go back to our earlier discussion about parking requirements in a single family neighborhood, there's a sense of like, you just don't put up a detached single family home that doesn't have a driveway so it doesn't really matter that the city requires parking. And I think in many instances, that's true. But this point about what happens in these middle income neighborhoods also illustrates another benefit of deregulation, which is that it puts some of those prevailing sentiments to the test.

M. Nolan Gray 36:30
Yeah, I am a planner, so I'm not dissing planners, but you occasionally hear planners say that right? Like, "oh why should we get rid of that rule; nobody's gonna build anything not built to that standard" It's like, well, then what's the point of the rule right? Just to just to succinctly restate, I think exactly your point is well taken.

Shane Phillips 36:48
I think some listeners might be wondering, as you're listening to this, why do this - the minimum lot size reform, instead of allowing higher densities, for example, like apartments and condo buildings? What does subdivision reform and smaller lot sizes accomplish, that you couldn't just get with, you know, higher densities, higher floor area, taller heights, things like that, that we, I think tend to prioritize in in especially more urban environments and focus more on?

M. Nolan Gray 37:16
I would say two things. The first is in the Houston context, there weren't really prohibitions on multifamily - public prohibitions, I should be clear. Ofcourse, there were a lot of neighborhoods that had deed restrictions that blocked them, and that's probably part of the compromise that makes non zoning work in Houston. But the city didn't have formal prohibitions on that, I would say the closest thing you get to something like that is minimum parking requirements. So you know, minimum parking requirements, probably not binding in the context of a single family home in Houston, probably binding in the context of multifamily, especially if you're in Midtown or downtown. To the city's credit, they've eliminated or will soon eliminate most of those rules that they put out a climate action plan to eliminate parking requirements by 2030.

Shane Phillips 37:59
Is it technically possible then to you know, build a duplex on 1400 square foot lot? It's just you'd have to somehow provide four parking spaces or something.

M. Nolan Gray 38:10
I would have to double check. I think there might have been different minimum lot size rules for multifamily, but I'm not totally certain. That's a great question. But for example, a typical a typical multifamily development, there's no prohibitions on it, other than I would say, probably other than parking, that's going to be the big constraint there. I've talked to developers in Houston, who are trying to do those types of small lot multifamily developments, and they always just point to parking. I've never heard any other regulatory constraint raised.

Shane Phillips 38:38
Yeah, that makes sense.

M. Nolan Gray 38:39
You know, there are zero parking developments that are happening in Houston. So, but I want to get back to I think, the sort of heart of your question, one of the issues that they were dealing with is that people wanted to stay in Houston. They wanted to own their own home, they wanted fee simple homeownership, but they were priced out of the existing limited 5000 square foot lot supply. Right, so I think there's a certain part of the market and just this is there's a whole bunch of stuff going on here - cultural stuff, the way we've structured housing finance, Americans, you know, there's a spatial individualism, that Sonia Hart calls it, that people want to own their own home, on their own lot. There's a certain market that that's their preferred housing typology. And, you know, I think it's actually an important preference that land use regulation should allow to be realized. You know, so for example, one of the funny things about these townhouses I keep calling them townhouses. If you go there, most of the homes have three to you know, six inches side setbacks, you know, very, very small setbacks, and they have creative ways of dealing with this. So, for example, you can do zero side setbacks if the neighbor consents, but if the neighbor doesn't consent, you have to have three-foot side setbacks.

Shane Phillips 39:50
Zero-side setback just means you're sharing a wall.

M. Nolan Gray 39:53
That's right,

Shane Phillips 39:53
or maybe not sharing the wall but you each have walls and they touch

Mike Manville 39:58
it looks like you're sharing wall from the street at the very least.

Shane Phillips 40:02
Yes, yes, yes.

M. Nolan Gray 40:03
Yeah, and there are regulations, of course for fire protections when you do have configurations like that. But you know, you go to Houston, a lot of these townhouses do have small side setbacks and zoning where I talked to developers there to try to figure out why do you do that right? Like, this is really useless space, you know, you can't do anything in with that three-foot side setback. Maybe one side setback makes sense to me, so people can walk around their house outdoors but having you know three-footot side setbacks on both sides is weird. Certainly, if it's like a one-foot side setback, because then you can't even really comfortably walk through that space.

Shane Phillips 40:36
You couldn't even like paint it easily or anything like, you know, having it that way.

M. Nolan Gray 40:40
Yeah, I tweeted out a picture, and I was like, " how would you clean the site?" But yeah, so I asked developers, I'm like, why do you do this - if that person would get a little bit extra floor area, all these other benefits of energy efficiency? And they say, "look, people want something like a single-family home. It's just, there's a cultural factor there." And, you know, you got to understand the Houston context too, a lot of these people are probably first-generation urban residents, right, they might be coming from rural or suburban contexts where nobody they know lives in something with a shared wall. Tthis is still what their American Dream looks like. And maybe over time, like that'll change, and, you know, as America builds more of an urban culture and people become more comfortable with, with a condo, or, you know, a home in a multifamily development, but I think there is a cultural element there - people wanted a detached single-family home. Of course, I would say too, I don't think it's purely cultural. I think, you know, when you have things like shared walls, then you have to enter into agreements with neighbors, things get more complicated, you have to have some sort of common ownership of land potentially. And so you know, people have this preference, and I think it's totally valid for us to make that possible. You know, people always say, like, oh, the energy efficiency, but like, from an environmental perspective, the energy efficiency benefits of a shared wall would be huge, and I think that's right. But you know, if that person is never going to buy a townhouse, and if we make them move out to the suburbs to realize their preference for a detached single-family home, that's probably an even greater environmental disaster, if you know, their daily commute increases by like, five miles, you know, so I'd say like...

Shane Phillips 42:17
and they're living in a detached house anyway yeah.

Mike Manville 42:20
Right. I mean, you can just take it out of the housing, you know, sphere to make an analogy, which is that the energy efficiency and us all being vegans would probably be pretty substantial. But what's probably more realistic sometime soon as we all eat a little less meat, you know, and I think it you know, part of part of what we do as academics is we do try and make these calculations of, oh, you know, the classic urban infill neighborhood with shared walls, and walkability is, you know, that's a great goal for the for the goals that we've set out for ourselves and society. But part of what planners have to do, practicing planners in the world, is, you know, you have to meet people where they are. And especially in a place like Houston, as you say, you're not gonna turn them into Brooklyn overnight. But to have people living closer to where they work, consuming a smaller amount of space, right, is a big, big improvement, and probably a stepping stone toward, you know, making a market that's more feasible down the road for something that looks more like a classic townhouse with shared walls. And so I think we have a real tendency, because you know, we work at a university to make the perfect the enemy of the good. But that's just not how things get done.

Shane Phillips 43:33
I do think we'll have to someday in the future, do an episode on sort of financing for different types of housing as well, and the role that this plays and you know, how it tends to be easier to finance a detached house than anything that's attached to anything else. And certainly something in a condo or an HOA, that kind of thing.

M. Nolan Gray 43:52
I want to make another kind of related point, which I think will be especially interesting to your California listeners. This reform really grew out of developers saying, "hey, we can build these things, and there's enormous demand for these things". So for example, I think we actually do get into this in the paper. If you look at the 2500 square foot subdivision activity, there's like a pretty steady gradient through the 90s right so this, this development typology is getting more and more common. And then in 1998, the line of these types of developments is perfectly straight, and then we just draw a line at one point that's 99. You wouldn't even know their form happened if you were purely looking at subdivision activity. So essentially, what was going on is that local Houston developers had figured out "Oh, we can take this 5000 square foot lot ranch house, turn it into three townhouses and you know, immediately create a lot more housing and these things fly off the market". And then they take it to the City Planning Commission and say, "hey, we need relief from these rules". And of course, the City Planning Commission says, you know, "hey, absolutely, we're happy to do it, this meets our objectives of supporting infill and densifying Houston". So, you know, they were basically signing off on all these applications that they were getting.

Shane Phillips 45:04
I like how you take it as a given that they're like all on board with that, but that's a great reason

Mike Manville 45:14
And, you know, it's an interesting point that they had been able to demonstrate with some of the, I guess, some of the envelope that existed prior to this reform, that there was a recent market demand for it right. And I think that's something that in a lot of cities, a lot of zoning reforms we talk about, that's not there, right. Like, when we want to reform parking in California cities, we have to often go to the city council and say, look at your buildings from the 1920s. You know, people love to live in them. And that's true, and I think people should pay more attention to that fact. But the comeback is always like, "Oh, no one's built anything new, right, that doesn't have parking". And so the fact that as Nolan points out, these developers were able to say, like, I'm building these things, right now, people can't get enough of them, probably carried a little bit of extra weight, that was probably pretty significant in importance in getting this, you know, this reform passed. It's some it's an obstacle that a lot of other reforms, they don't have that benefit.

Shane Phillips 46:14
Having that flexibility already in place, where, you know, for one, the lack of zoning, I'm sure contributed to that. But just that openness to developers, or whomever showing up and saying, look, here's something I want to try out, and, you know, trying some things out and seeing what happens, and then making reforms based on that rather than just purely based on speculation, or, you know, looking back 100 years on what was built back then. And, yeah, that makes sense. That is important, people live in those homes now, and they like them, but having something just not be so all or nothing, I guess is sort of how we set up now; it's like you either, you have to follow the rules to the letter, and, it's very hard to get variances and that kind of thing these days. There's some benefit to that but I do think we miss out on these kinds of opportunities to try new things that in a lot of cases people might really like...

Yeah, and just to put a final pin on that thought I've been in conversations in Los Angeles, where the sort of implicit or explicit way to reject, you know, sort of, "we used to do this, and people really like it" is that like, well, what you see people liking is just a historical, and they're willing to tolerate that it doesn't have parking or tolerate that it has a smaller backyard. And you know, because of course, there's no way to actually sort it out, you just have to say, "well, I disagree but if you do have a situation, right, where again, someone really just build a subdivision on 1400 square feet of land, and it's an otherwise modern building, and people want it, you short circuit that objection.

M. Nolan Gray 47:51
Well, I mean, just two quick points on this that are relevant, the first is I'm often talking to planners around the country who were like, what's the most important reform we could do right? Like, should we try to get rid of parking requirements, should we try to lower lot sizes? I just say, what are you getting variance request for? Like, what are developers coming to you and saying, "hey, this is stopping us from doing this good thing that you want" right, like follow the variances. That's essentially what happened here, right? These subdivisions were happening, and the planners were like, "hey, everybody's comfortable with this development, let's just change our rules to allow it". We don't need to be doing CPC hearings for all of these things. So that's the first, right, this is like reform agenda setting. I think that's one of the lessons of this case. I would say two, I mean, the distinction I think of is you know how reform start. So you said like, you know, you guys were talking, people were doing these things right. In the California context, I think there's two examples here. The ADU is kind of following that line right at us are getting built in LA, we can either permit them and regulate them, and in some cases, provide incentives for them to be below market rate or they can just happen illegally right? And so I think, you know, in California that was I think one of the strong arguments for ADU liberalization was, these things are gonna happen no matter what. A very different type of reform to my mind is SB9, which in many cases, legalized developments that probably look somewhat like what Houston legalized in 1998. But it's a different approach. The reformers are trying to create a market, right, and so now what SB9 reformers and cities are in the process of doing is explaining to developers how to use these rules, right. And of course, a lot of companies are already out there, very sophisticated, and I always make the case, you know, we'll know SB9 was a success when you pull up to an intersection in LA, maybe on your bike, Mike, or in a car, and you'll see three signs - one that says I buy cars, I buy houses, right, one that says free ADU consultation, and....

Shane Phillips 49:46
Which you already see

M. Nolan Gray 49:47
You already see right and that's only cropped up in the last two or, you know, one or two years. And next couple of years, if you start seeing signs that say free SB nine consultation, you'll know that the program was a success, but it's a very it was a very different approach to reform where it was like, "we're going to create a new market, we're going to try to create a new market". And I think it remains to be seen if it works, but we'll find out.

Mike Manville 50:07
Yeah. And I think, you know, I'm optimistic. I think that's exactly right. It will work. But it is, you know, it really is different from Houston, because, you know, as they call it, the missing middle for a reason, like we just, we haven't had an industry in California that builds housing, like SB nine envisions and 70 years. And so people just have to figure it out. And, and we may well see, like, I would not be surprised at all, if in 15 years, we look back and we see that there was kind of an inverted U and the distribution, right that in higher income places, people still wanted very big, expensive houses. And it wasn't worth it to do the subdivision for that reason. But you're just going to unlock a lot of pre valuable land across the middle of the city, and people are going to figure out how to turn them into nice attractive for plexes that 20 years ago, people said nobody wanted to live, right? So I think that I think it's a very good analogy.

Shane Phillips 50:59
And I'm not sure we explained what SB nine was. So just to make sure everyone is aware, this is a law that just went into effect this year in California, where basically, every single family only parcel is now allowed to build is now allowed to be split into two parcels for one thing. And then on each of those parcels, you can build a duplex. There are other things too, but that's sort of the main proximate and...

Mike Manville 51:23
occupational hazard of listening to this podcast. Occasionally we just lapse into

Shane Phillips 51:29
yes, that will happen. And you know, it's good that you brought up ADUs because something I'm interested in is, you know, what made this specific development option, these subdivision options, so popular given that it is really a pretty marginal increase in density. I think in most circumstances, it's just not going to make sense to tear down a detached house just to replace it with three taller and narrower homes on a smaller lot. It's a big hassle for the owner ofcourse, they're getting no use out of the property during demolition and reconstruction. There's, of course, especially in Texas, plenty of land to build elsewhere if you want. I've been thinking about this in the context of two other reforms. First is California's ADU laws, and the second is Minneapolis is reform to eliminate single unit zoning and allow triplexes city wide. I'll also note for listeners that we did an episode on Minneapolis' reform with Dan Kuhlmann, Episode 10. Both of these could be characterized as incremental zoning reforms or very small-scale development reforms, the kind of thing that allows neighborhoods to grow incrementally a few units at a time, but as heralded as Minneapolis is reformed was and I think for good reason, in many respects, it's actually only produced a few dozen units in the past couple of years. Meanwhile, Minneapolis as a city is approving four or 5000 units a year now. It's just almost none of them are in these types of developments. They're in larger multifamily. And at the same time, we have California's ADU laws, which have been phenomenally successful and are producing or have produced tens of thousands of units. I'd argue that Houston subdivision reform is similar to both of these in some respects. But I think it's clear that it has been more on the kind of California ADU side of actually being successful. So I'm curious to hear your thoughts on you know, what has made this kind of incremental development feasible, and California's for that matter, whereas something like what Minneapolis proposed just hasn't, you know, borne fruit yet.

M. Nolan Gray 53:40
Yeah, there's a lot there. I would say the key is massing, right? It's all well and good to say single family zoning is dead. But if you are still subject 0.5 FAR, 25-foot front setback, 30-foot rear setback, two parking spaces per unit, you're not gonna get many duplexes or triplexes, just purely because of those massing and parking rules. You know, this gets, I think this is actually a really great sort of connection to what we were just talking about. The process that I think they approached the reform of Houston was different. You know, developers were coming to them and saying, we've kind of cracked the code, we've come up with a formula for building something that we know will sell, and that will allow the city to infill and get denser and achieve all these planning goals that you all have, and then make us a lot of money, which is, you know, the developers goal, right? And if you want to build housing, you have to be mindful of that - what can the developer build and sell. And so I think they started from that, you know, very Houston approach right. And I think you're exactly right about Minneapolis, I just want to say I think, units produced aside, it completely cracked open the overton window, and now every city in America is scrambling to get rid of, or excuse me, single-family zoning. And so in that sense, it's I think it's enormously valuable. But you're right, that it didn't yield many units, I think it's because the massing rules weren't changed to reflect that. And my colleague, Emily Hamilton has done some work on that, you know, why did it yield so few units, well because none of the other rules changed. And they're working on on fixing that but that's absolutely an important takeaway. And I would say, you know, one of the things I did in Houston, and I talked to some of the architects who were working in the spaces - they iterated over it. You know, they said, like, let's go through every rule, can this work with this setback, can this work with these parking requirements, you know, can't it give me a typical lot that we're doing this type of work on? Does, you know, increasing the side setback by two feet, wipe out, you know, 50% of the units that you could create? That's a really important question; if you don't get that right, then you get 12,000 fewer homes. So they iterated over it with a final product in mind, like, what are these developments going to look like? You know, I think that's something that even I'm sort of guilty of, is, you know, okay, just get rid of bad rules, get rid of bad rules one at a time. And I think there's good reason to engage in that type of reform but the Houston reform is very much like, we know what kind of housing development is possible, how do we get there, how do we make that legally...

Mike Manville 53:40
Yeah, that's an outstanding point. I think it our other podcast co host Paavo and I have written about, you know, the sense that the planning rules can be like hydra heads, right, that you get rid of one and it doesn't really matter, because two grow in its place. And I think what you just said is a very nice way of restating it, which is that if the city buys into the spirit of the rule change, and the spirit being presumably we'd like to build more housing. Right, then it's going to make all those other adjustments, but, you know, without casting too broad of a kind of aspersion on our home state, California cities, to the extent they're being dragged into reform, right, and there's been told, "well, you can't have X anymore". There's going to be an instinct, and if the city leaders don't want more development to say, "okay, if I can't have relax, then I'm going to change rule y&z to make sure people still can't build". So if the ultimate goal, the ultimate political goal is to not have development, you know, changing regulations is going to be a really long slog, right, just a giant war of attrition. But if you start with a political atmosphere where people agree that they want to see some development happen, then then as you point out, there's going to be iteration, there's going to have to be learning and so forth. But everybody's in and you're just going to get much bigger payback. And I think, you know, what happened with ADUs, ADUs had to be iterated in California and subsidies had to be sort of slapped around a little bit. But for the most part, people were okay with them. So the process of deregulating for ADU yielded a lot of units, and I think what we're sort of seeing what the beginning of SB9 is that some cities are, are actually actively engaged in ways to sabotage it.

Shane Phillips 57:59
I spoke when I was in Iowa last month about ADUs in a separate talk at Iowa State. And so I had to do a little research because I didn't know a whole lot about our ADU reform history here in California. But I learned, among other things that our first ADU laws actually passed in 1982. So we've been working on this for 40 years, and we passed maybe a dozen laws between 1982 and 2016, which is when things really broke open, and we started really building a lot and the reforms kind of took hold. But it was, you know, every three, four or five years, passing something else to kind of chip away, open things up a little bit more, and finally, it happened. And I do think, you know, SB nine is probably going to take a similar approach. And I think that's a common thing. But I like I really do like the Houston approach of like, if you can get everyone together and figure out what you want to do, and just identify all the roadblocks up front and address them all at the same time. That's ideal, just sometimes difficult.

Mike Manville 58:58
Sometimes you get everyone together and what they want to do is not have any housing.Then you you really have a little bit more of a battle.

Shane Phillips 59:06
Yes, yes. All right. I want to wrap this up. Just a few more questions here. Can you tell us Nolan just a little bit about the opt out process and what role you think that played in getting these reforms over the finish line? I think we talked about a little bit and sort of the general Houston context of the deed restrictions and everything. But this is basically something for this subdivision reform where local residents can vote to have a higher minimum lot size if they want. But I do think it's really important that you have to opt out of the lower minimum lot sizes. It's not an opt in process. So how was that approached, like how did it come about, and how has it evolved? Because I know it's changed a little bit since 1998.

M. Nolan Gray 59:47
Yeah, so I think this is this is absolutely crucial. The question of, okay, it's all well and good that Houston did this, but how right? Adam and I argue that this is one of the most dramatic liberalizations of land use rules in the last 20 to 30 years, how did it happen? You mentioned this opt-out provision, right? So of course, not everybody was hunky dory about this, of course, the developers are like, "yeah, we want to build these units, and the planners, of course, to their credit, we're like, yep, great, we want more infill, we want to relieve pressure on housing prices within 610". You know, I think, to a degree that you don't see in many coastal cities, the urban growth machine is still alive in Houston right? But that can only get you so far right, there were people who were opposed to this, and they were concerned about how it would change their neighborhood. So I think there was a compromise here that made this surform work. If a group of neighbors wanted to come together and voluntarily petition for a minimum lot size that reflects existing conditions, they could do that. And then they will hold a vote of all the property owners who would be subject to these rules. And if they approve them, then they can have their own local minimum lot size. So this is crucial, right? This is essentially following the same playbook as Houston did with deed restrictions. You know, so in 1963, Houston said, "Alright, well, the city voters have voted down zoning but for people who have strong preferences for certain types of land use regulation, to get these people to kind of stop advocating for something far more extensive and restrictive, we're gonna let you opt out of non-zoning. You can have something like zoning in your little bubbles". And this is actually an area where there's a lot of research potential, we don't really know what percentage of Houston is subject to these, I think I estimate, based on some of the research, like a quarter to a third of Houston, I don't know if the city as a whole or residential areas, are subject to deed restrictions. But that opt-out provision basically gives the principal constituency for zoning what they want, without all the other sort of harms that come with a citywide zoning ordinance. And Adam and I argue that something similar happened with minimum lot sizes, right, so there are a certain type of person who is opposed to the 1998 reforms, because they don't want subdivisions happening on their street. Well, okay, if your preference for a larger minimum lot size is so high that you will petition the city, and then campaign and have all of your neighbors vote on it, fine, you can have your own local minimum lot sizes. And you know, a lot of block, specially in the Northwest where this activity's been, you know, most pronounced, but I think we argue in the paper, that this was probably the compromise that was necessary to get this over the finish line. You give opponents to liberalization and opt out provision, and the broader reform can happen, right. And so I think, you know, a concern about these compromises, it probably got you less of fewer of these subdivisions in the most affluent places in Houston. And so to that extent, it's not necessarily advancing, maybe objectives of desegregating the city on the basis of income. But on the other hand, it paved a way for this very dramatic reform to happen. And in many cases, you know, just outside of these very wealthy areas, the subdivision activity is happening, which of course, as you know, we know, is almost probably would never happen in a place like Los Angeles. So you know, we're trying to get into the weeds of the political compromises that underwrite these reforms.

Mike Manville 1:03:11
And then one other thing, I'd add, I think that all those points are very well taken is that there's at least a possibility that, you know, some people because some people are exempt, you let this type of development go forward. And then because it goes forward, down the road, fewer people want to be exempt because they just understand, it isn't a big deal right? I mean, there's plenty of these examples. And you know, the fun ones are like, everyone in Brooklyn first hated the brownstones, right? Everybody in Washington, DC didn't like the row houses. And today, of course, they're some of the most charming parts of those cities, certainly some people will see this development that they they thought they didn't like, and they'll dig in. But oftentimes, once it's there, you know, you would walk past it, and never know that it caused such controversy. But it has to be there. So that next time someone says, you know, hey, maybe we're gonna change our minimum lot size to allow something like that, the neighbors can look at it and say, okay, yeah, that's fine.

Shane Phillips 1:04:09
Daniel K Hertz has a really good article on either on his blog or city observatory from years ago, about the sort of Immaculate Conception theory of neighborhood development - how people think these things just came into being, you know, from nothing, and everyone loved them. But even the example he uses was, was actually craftsman homes, which are like one of the most celebrated universal, but people hated them. They thought they were, you know, ticky tacky, and all these things and developer profits were the priority and, and so forth. And now, you know, like many other things, they're as beloved housing type as we have.

M. Nolan Gray 1:04:44
There's not a doubt in my mind that in 2070, we will have Houston townhouse historic districts. And we'll have you know, in cities across the country, you're going to have like early 2000s McMansions. Historically

Mike Manville 1:04:55
It's just coming right.

M. Nolan Gray 1:04:58
I would say another really Interesting thing about the opt out provision is it sunsets. So after 40 years, these rules go away. So, for example, in 1999, there was a big wave of neighborhoods, opting into these, those roles either go away or have to be renewed in 2039. And that was a feature of early deed restrictions, right, early deed restrictions were like, "Okay, this is gonna last the life of the mortgage, maybe 30 years, then after that they have to be renewed". And I think part of where deed restriction started to go south is they basically became impossible to get rid of, and Robert Ellison has great research on that stale deed restrictions. And that's a problem in the Houston context, too. But so I think this was really key is, "okay, you, you're gonna get these preferences written into law for 40 years, but then we got to reconsider this". And if you want these rules again, and 2039, you can renew them, but it's not going to be default.

Mike Manville 1:05:53
And that makes the previous point even more salient. If there's, a built in point where everybody has to reconsider. And then you're you have probably very different residents who first opted in, or opted out as the case may be looking around and being like, "oh, my God, like, you know, we're so backwards". You know, we're the neighborhood that doesn't have these housing units that so many people want. You know, just having that, that process where you automatically have to revisit, it makes the chances of the reform expanding much, much larger I think,

Shane Phillips 1:06:26
For the last question here, I want to kind of focus on Houston, to take advantage of your expertise on it. It's a pretty unique place when it comes to land use and urban planning policy. So when asked two questions, first, what are one or two planning or land use reforms that you think Houston still needs to prioritize? What have they not yet done that you think they really need? And then second, kind of flipping that question on its head a little bit, what would be one or two of the top policies you'd like to see exported from Houston to other US cities?

M. Nolan Gray 1:06:58
Great questions, I would say, I'll give you two for Houston. The first is kind of a softball. You got to get rid of minimum parking requirements, had to say it. I am TAing for Donald Shoup this quarter, so I have to spread the gospel. But I actually think in the Houston context, the the minimum parking requirements are probably binding for commercial more so than residential. And so you know, if you could get rid of those then you would I think you would see a lot of interesting development, you might see stuff like corner groceries popping up in some of these townhouse neighborhoods. You know, I have friends and contacts in Houston, and they regularly send me garages in some of these townhouses on corners that have been converted into legally dubious, you know, or I probably not exciting to the neighbors, but somebody was I think selling, you know, medicinal marijuana.

Shane Phillips 1:07:54
Well, and this is something you know, these businesses, they are more likely to succeed because the density of the the subdivision developments as opposed to the more strictly medicinal housing.

M. Nolan Gray 1:08:07
I don't even know if it's legal on this side, I saw it, and I was like, "okay, this is mixed use in some form" right? I think the real thing with Houston is some of this like bread and butter planning stuff, actually, that's really important - the roads. I think the most important responsibility that city planners have, once we sort of dispense with a lot of frivolous zoning stuff is management of the right of way. And you know, and when I said earlier, you know, Houston made a lot of the same mistakes as every other American city. Yeah, Houston roads are wide, dangerous, high speed. Many cases, parts of the city don't have sidewalks, streets are designed to be too wide. There's no protected bicycle lanes, there's no protective bus lines. I think the city to their credit is getting better on a lot of the stuff; they packed a bicycle master plan. They recently overhauled their bus system. But I think that's where it's going to be really key for Houston going forward, you know, because Houston is going to keep getting denser. It's a desirable place to live, the weather's not so great, but it's unbelievably culturally diverse, and probably one of the best food cities in America. I mean, it is the most diverse city in America now.

Shane Phillips 1:09:12
And it's affordable. I think it's worth mentioning and all of this, we've been talking about all this housing stuff to know I think most people are aware that that Houston is a very affordable city, especially for how quickly it's growing and how many jobs are locating there. But I really like your point about the sort of the public space side of things and how I do think that gets under emphasized by planners and you know, I think the these townhouse style subdivision small lot developments are not my cup of tea in terms of like the design and architecture in many cases and like, who cares that's perfectly fine. But having you know, wide sidewalks and space for mature trees and that kind of thing, can really make up for a lot of that kind of thing. And that's what people really notice anyway.

Mike Manville 1:09:59
Cars go lie in front of your house at 50 miles an hour?

Shane Phillips 1:10:03
Yes. How about for exporting?

M. Nolan Gray 1:10:06
Yeah, exporting, I mean, where to start? I think Houston shows that when you don't comprehensively segregate land uses, your city doesn't completely fall apart. You know, I would say, in my book, Arbitrary Lines, which of course, everyone needs to go preorder, I sort of make the case for, you know, Houston as like a model for an off-ramp on zoning. So, you know, I would say, put some of the stuff, you know, when a new city or a new suburb is, as is mostly going to be the case, is adopting a zoning ordinance, put it to a referendum, write the ordinance, and then put it to a referendum. You know, like, I think these things are very, very important, and they're hugely consequential for how cities grow. And, you know, I think Houston reveals that the standard zoning mix of policies, not necessarily always going to be the most popular solution. You know, find ways to give vocal minorities who in most cases, completely dominate public hearings, give them opt-out mechanisms where they can have maybe some of the land use rules that they want, but they don't get to drive the whole city down with them. You know, I think Houston has successfully done that over the last, I guess, you know, probably 70 years now. And it's kept Houston affordable. It's kept Houston, one of the most diverse cities in America, and I think there's a lot of lessons there. You know, every city in America is or should be thinking about how are we going to wind down some of these rules that basically everybody knows don't make any sense, right? There's something approaching a consensus on stuff like single-family zoning, minimum parking requirements, large lot, and minimum lot sizes. The question now is, how do we back out of this, you know, highly dysfunctional status quo. And I actually think that this, this, these opt out mechanisms are sort of the secret sauce, right, that makes it work in Houston - let people opt out, put sunsets on these opt outs, you know, require people to actually put their money where their mouth is if they want stronger roles, and then otherwise proceed with with with reform.

Mike Manville 1:12:00
I would just add to that, to reinforce your point that the Houston demonstrates that, you know, without the strict separation of rules, you'll use rules that the city doesn't collapse. And conversely, many other cities demonstrate strict separation of use rules don't necessarily separate uses

Shane Phillips 1:12:17
or keep you from collapsing.

Mike Manville 1:12:19
Yeah, but I you know, is even more narrowly like, yes, there's areas where we don't let the smelter next to the kindergarten, whatever, but like, go up and down a Boulevard in Los Angeles and there's all sorts of use of gas stations and mechanic shops and they're next to small multifamily and a block away from single family. It's the idea of separation of uses, and there's not nothing to it, we really don't want a smelter next to a kindergarten. But the idea that this is something that you just overlay over a city and you magically get it, is I think actively disproven by almost every city in the country.

M. Nolan Gray 1:12:54
Well, I yeah, whatever I say anything about Houston, somebody pulls out one of these bizarre use mixes, and I can give you one of those in zoned New Jersey any day you want. Like, you want oil, you want an oil derrick next to a single family home, like come to LA, you know, you want like, I just tweeted this out the other day, you want like a heavy industry next to Country Club, like go to Hoboken, you know, this stuff happens. And of course, it's an important job for planners to sort of minimize those sorts of incompatibilities. I don't think zoning has done a very good job of that. And, you know, I argue in the book that I think we can do better.

Mike Manville 1:13:27
And that is the point, the point isn't that the incompatibilities are not problematic. It's the idea that you'd because you've written the zoning code, you can set it and forget it and they won't happen is just plainly false.

Shane Phillips 1:13:38
All right, Nolan Gray. Your book is Arbitrary Lines: How Zoning Broke the American city and How to Fix It. Guaranteed banger preorder now, thank you so much for being on the housing voice podcast.

M. Nolan Gray 1:13:50
Thank you for having me. It's a lot of fun.

Shane Phillips 1:13:54
You can read more about Nolan's research and find a link to his book at our website lewis.ucla.edu. Our show notes and a transcript of the interview are there to UCLA Lewis Center is on Facebook and Twitter. I'm on Twitter at Shane D. Phillips and Mike is there as Michael Manville six. Thanks for listening. Thanks again for sticking around for another year of housing voice podcasting, and we will see you next time