Market Urbanism

Liberalizing cities | From the bottom up

“Market Urbanism” refers to the synthesis of classical liberal economics and ethics (market), with an appreciation of the urban way of life and its benefits to society (urbanism). We advocate for the emergence of bottom up solutions to urban issues, as opposed to ones imposed from the top down.

Bribery for Property Rights: Federal Charges in Chicago

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NBC5 has an update listing the people involved and video here: New Corruption Charges Hit Building, Zoning Departments

Chicago Tribune: U.S. to announce charges against 15 in city bribe-taking probe
(thanks to Dan M. for the tip)

Federal authorities are set to announce charges Thursday against 15 people, including seven City of Chicago employees, after an investigation into bribe-taking at the city’s Zoning and Building Departments.

City Hall’s zoning process is the subject of the Tribune’s ongoing “Neighborhood for Sale” series. The stories detail how millions of dollars in campaign donations greased zoning changes that transformed the city during the real estate boom of the past decade.

What’s scary is that land use is so regulated and the stakes are so high, that developers have to bribe government employees in order to exercise their own property rights. But, that’s how it works: politicians downzone areas, knowing that developers will have to scratch the politicians’ backs to build what the market tells them. There’s often the added political bonus of downzoning to pander to NIMBY factions.

The downzoning creates a barrier to entry so that only the developers who are politically savvy can get things done. (see Tony Rezko) It makes the whole planning/development system corrupt. Should we be a bit surprised bribery is happening?

Comments

  1. There is a black market for cars, cigarettes, and rent-controlled apartments, why not for zoning, right….???

    And isn’t bribery too ugly of a term? Maybe they should just call it something like “Inconspicuous Excise Fee for Alternative Zoning.”

  2. There is a black market for cars, cigarettes, and rent-controlled apartments, why not for zoning, right….???

    And isn’t bribery too ugly of a term? Maybe they should just call it something like “Inconspicuous Excise Fee for Alternative Zoning.”

  3. HA! It’s funny ‘cuz it’s true. It’s like gambling. The state controls it. So, they have a monopoly selling the limited number of permits. And there’s big tax money to be made by gambling.

    The black market dealers are the lobbyists and Tony Rezkos of the world….

  4. HA! It’s funny ‘cuz it’s true. It’s like gambling. The state controls it. So, they have a monopoly selling the limited number of permits. And there’s big tax money to be made by gambling.

    The black market dealers are the lobbyists and Tony Rezkos of the world….

  7. This is why zoning boards ought to accept cash payments for the changing of zoning laws. Jonathan Levine describes something like that in his book Zoned Out as an example of Coasean endowment-irrelevance with regards to zoning rights. If zoning rights are tradable (and municipalities act like private corporations, which is a big if), then it shouldn’t matter what the initial zoning regulations are, since any business will be willing to bid up to the total value of their producer surplus to have the rights changed.

  8. This is why zoning boards ought to accept cash payments for the changing of zoning laws. Jonathan Levine describes something like that in his book Zoned Out as an example of Coasean endowment-irrelevance with regards to zoning rights. If zoning rights are tradable (and municipalities act like private corporations, which is a big if), then it shouldn’t matter what the initial zoning regulations are, since any business will be willing to bid up to the total value of their producer surplus to have the rights changed.

  9. Aren’t you, in effect, saying that the development rights belong to the municipality until they are bought by the developer?
    How would the market price be decided? Would every cubic foot of development rights be for sale? To anyone, or just the owner of the ground?

    It would lead to some sort of monopoly-monopoly interaction between the property owner who has a monopoly on the ground and the municipality who has a monopoly on the air.

    How wouldn’t it give the municipality the incentive to downzone, in order the sell more rights? Shouldn’t the municipality be forced to pay for all unused air-rights for less dense development?

  10. Aren’t you, in effect, saying that the development rights belong to the municipality until they are bought by the developer?
    How would the market price be decided? Would every cubic foot of development rights be for sale? To anyone, or just the owner of the ground?

    It would lead to some sort of monopoly-monopoly interaction between the property owner who has a monopoly on the ground and the municipality who has a monopoly on the air.

    How wouldn’t it give the municipality the incentive to downzone, in order the sell more rights? Shouldn’t the municipality be forced to pay for all unused air-rights for less dense development?

  11. It’s a second-best option – the best option would be to get rid of the zoning boards to begin with. It would be a pretty radical shift to start thinking of the zoning board as a profit-making entity, and it would be pretty difficult to keep the boards insulated from NIMBY neighbors. So it’s not very realistic, but it would definitely be better than the current system, where you have to have strong personal connections (usually that’s what it takes to bribe someone) to push your projects through.

  12. It’s a second-best option – the best option would be to get rid of the zoning boards to begin with. It would be a pretty radical shift to start thinking of the zoning board as a profit-making entity, and it would be pretty difficult to keep the boards insulated from NIMBY neighbors. So it’s not very realistic, but it would definitely be better than the current system, where you have to have strong personal connections (usually that’s what it takes to bribe someone) to push your projects through.

  13. I agree that it’s a second-best option, but would worry it gives too much incentive to downzone, or would add costs to projects that are already ‘as-of-right’.

  14. I agree that it’s a second-best option, but would worry it gives too much incentive to downzone, or would add costs to projects that are already ‘as-of-right’.

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