What Is Zoning?
Zoning refers to municipal or local laws or regulations that govern how real property can and cannot be used in certain geographic areas. For example, zoning laws can limit commercial or industrial use of land to prevent oil, manufacturing, or other types of businesses from building in residential neighborhoods.
These laws can be modified or suspended if the construction of a property will serve to help the community advance economically.Key Takeaways
- Zoning allows local governments to regulate which areas under their jurisdiction may have real estate or land used for particular purposes.
- Examples of zoning classifications include residential, commercial, agricultural, industrial, or hotel/hospitality, among other more specific designations.
- Zoning laws can be changed by a local government as long as they fall within state and federal statutes, and a particular plot of land may be rezoned based on consideration.
How Zoning Works
Zoning outlines what types of developmental and operational use of land is allowed on a given tract. Municipalities tend to partition districts and neighborhoods according to a master plan. This may be done to promote economic development, control traffic flow, manage noise levels, reserve living space for residents, and protect certain resources.The presence of zoning restrictions can influence prices when purchasing a piece of property. Real estate might sell at a premium based on how many limits were put in place by the municipality.
In 1926, the U.S. Supreme Court ruled that properly drawn zoning ordinances were a valid exercise of states’ governing power. Zoning became constitutional by the court as a result of the case of Village of Euclid v. Ambler Realty.
Economic Theory of Zoning
According to Nobel Prize-winning economist Ronald Coase’s Theorem, in the absence of transaction costs, questions and disputes over land use and development could be solved optimally without government regulation. Under the assumptions of Coase’s Theorem, how a given piece of land should be used and what type of activities should be permitted could simply be negotiated among the parties involved to achieve an economically efficient outcome.
Coase’s Theorem illustrates why, in the real world—where transaction costs do occur and frictionless bargaining among stakeholders is unlikely—land use regulations such as zoning and other government-imposed solutions are the norm.Critiques of Zoning Law
There are varied critiques of traditional zoning implementation.Some critics claim that zoning creates and widens the disparity of quality of life among socioeconomic groups. For example, a township might maintain zoning laws that restrict heavy industrial and commercial development to tracts of land adjacent to lower-income neighborhoods. The effects of such policies would let more affluent parts of town avoid the associated noise and pollution.
Areas that continue to be zoned for low-density residential neighborhoods with a housing shortage are contributing to homelessness in their area by refusing to allow more residential housing units to be built. A more modern critique of zoning that segregates commercial and residential areas is that it makes residents dependent on cars. A more integrated, walkable neighborhood where people could get groceries, work, and recreate close to their homes would allow them to forgo the environmental and financial costs of car ownership. If zoning allowed for walkable neighborhoods, less space would have to be devoted to roads and more space could be reserved for housing and green space.