Reason Foundation

Reason Foundation

Market Oriented Planning

Principles and Tools

Samuel Staley and Lynn Scarlett
November 1, 1997

Executive Summary

Under urban planning in the United States, virtually every major development is subjected to the vagaries of the rezoning process and the uncertainties associated with legislative review by planning boards and city councils. In many cases, the planning process creates unnecessary costs and delays and inhibits investments in land as communities evolve over time.

Surveys of the impact of zoning and other land-use controls suggest local regulations add 20 to 30 percent to the cost of housing. Moreover, planners are so absorbed by process and implementation that they spend little time on larger, strategic issues. A survey of 178 California cities, for example, found that landuse permit-processing and rezonings account for almost 60 percent of planners' time. They spent less than 10 percent of their time in general plan preparation. Moreover, modern planning has spawned an unbounded politicization of decisionmaking regarding land use.

Twenty-first century planning will need to incorporate the evolutionary and dynamic aspect of communities to be successful. This implies accepting and integrating the fundamental role markets play in allocating resources in a market economy.

Urban planning and land-use regulations need to adopt market-oriented principles and concepts that build upon a vision of communities as constantly evolving. Planning processes need to recognize the role markets play in meeting consumer expectations and preferences. And, planning practice must limit the politically arbitrary nature of development approval, moving toward a common law, nuisance-based standard for regulating land development. The focus should be on those directly and tangibly affected by the proposed development.

Several practical recommendations flow from these general principles. Specifically,

Planning that relies on end-state prescriptions and unbounded political intervention into landowner choices, even where tangible impacts are not apparent, is both costly and incompatible with dynamic economies. Market-oreinted planning offers both greater predictability and greater flexibility so that communities can evolve as economies and consumer preferences change over time.

Samuel Staley is Research Fellow

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