Ballot-Box Zoning, Transaction Costs, and Urban Growth

Abstract

Planning through ballot-box zoning is becoming increasingly common across the nation. Unfortunately, little empirical work has been done to assess the consequences of ballot-box zoning on urban growth and development activity. This article uses a transaction-cost approach to land use planning to assess how public referenda on site-specific rezonings impact development activity in cities. An analysis of housing unit activity from 1980 to 1994 in 63 Ohio cities finds consistent and robust evidence that subjecting rezoning decisions to public referenda created a housing unit “growth penalty” for cities. Moreover, the empirical results were consistently negative irrespective of whether the city rejected or accommodated the proposed rezoning.