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Regulation I Vote Against Liberty by
Jane S. Shaw Can you accomplish anything in
politics — even on the planning board of a small town — without
checking your ideals at the door?
Fifteen years ago, Klein Gilhousen, a founder of Qualcomm,
was looking for a town that he and his family could live in while he continued to
work in San Diego. He sought a university town with an electrical engineering
college that was not close to a big city, but had adequate air transportation,
and was near good skiing. Bozeman, Mont., was the only place in the country that
fit, he says, and he and his family have been here since 1991.
| | Jane S.
Shaw is a Senior Fellowof PERC — The Center for Free Market
Environmentalism in Bozeman, Mont. |
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The town may not be famous, but with its proximity to Yellowstone Park,
blue-ribbon trout streams, and ski resort, Bozeman has cachet. It is a western
"latte town," to use David Brooks' label — a small university town in a
beautiful setting that attracts affluent urban refugees. (Burlington, Vt., is
Brooks' prototype, but latte towns are scattered across the West.) Bozeman has a
population of 30,000 plus about 10,000 students at Montana State
University. Situated on a broad plain and surrounded by mountains, Bozeman
appeals to outsiders weary of noise, traffic, crime, and bustle. But Bozeman is
no Aspen, partly because billionaires prefer Big Sky, the ski resort about 50
miles south. And because Montana State University is grounded in agriculture and
technology (unlike the "dancing school over the hill" — the University of
Montana in Missoula), it is slightly more conservative than many college
campuses. Although housing prices are rising fast (the median price of a house in
2004 was $245,000), Bozeman still has some small-town feeling, a family
atmosphere, and working-class families. The average per-capita income is $16,104,
compared to $21,587 nationally. But Bozeman's attractiveness means growth,
and growth is a political hot potato. Bozeman seesaws from left to right and
back. University-affiliated people are mostly on the Left, and many are what we
used to call the "granola" Left — people romantically involved with the
outdoors, suspicious of capitalism in general and of old Montana businesses such
as mining and logging in particular. Since I moved here in 1984, new "granolas"
have appeared, setting up branch offices for the Wilderness Society, the Sierra
Club, and other environmental groups, and even the home office of American
Wildlands. On the other side of the political fence are developers,
old-fashioned conservatives, working people, and entrepreneurs (though plenty of
Chamber of Commerce types are on the left). There's also two libertarian
environmental organizations: PERC, the Property and Environment Research Center,
which I work for, and FREE, the Foundation for Research in Economics and the
Environment. Business booms here, as it does in most latte towns, and many of the
businesses are small firms nobody has heard of. Until a decade or so ago, most
children of Bozeman families had to search for jobs elsewhere after college, but
that seems to have changed.
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affordable housing, I was already an old hand at compromising my principles.
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About nine months ago, I became a member of Bozeman's planning board, which,
typical of small-town planning boards, writes and updates the 20-year plan that
is supposed to guide its growth and advises the city commission on whether
proposed subdivisions are consistent with the existing plan. Zoning is the
province of another commission. We meet twice a month, usually to go over
plans for subdividing property. So far, we have mostly rubber-stamped what the
city's planning department (the professionals) have already decided. Then we send
on our recommendations to the zoning commission, which sometimes overturns them;
I'm not exactly sure why. I've learned a few things from my experience on
the board. First, development in Bozeman is micromanaged to the nth
degree. Developers run what seems like an interminable gauntlet of
pre-applications and actual applications, reviewed by both us and the City
Commission, and they are allowed to do this only after many hours of dealing with
the city's planning department. They must meet an impressive array of
"exactions." A typical development will have very specific requirements for open
space, dedicated parkland, trails, and bicycle paths, not to mention setbacks
from watercourses and mitigation of "jurisdictional" wetlands. And the developer
almost always has to build a road, or at least half a road: the city counts on
the property owner on the other side of the road to pay for half, too. This
doesn't always work out, especially if the other owner is the county.
Bozeman's Unified Development Ordinance, which codifies its comprehensive plan,
is all about smart growth. Written at a time when the "granolas" held sway, the
plan promotes high-density housing, urban infill, narrow streets, garages at the
back (accessible by alleyways), and front porches. We don't have "mass transit"
here, but it's on its way. The plan also specifies future nodes of commercial
activity. Requirements are both comprehensive and detailed. A few years
ago a developer of low-cost housing said that he started preparing two housing
developments at the same time. The one in Bozeman's suburb, Belgrade, was
completed before the foundations were poured for the Bozeman project. Not too
long ago, the planning board had to vote on hiding mechanical equipment with
vegetation. Doing so was already required; the vote was to decide if the
vegetation had to be evergreen or if it could be deciduous. (I was absent when
the vote took place and don't know how it turned out.) Developers mostly
smile and agree to whatever they are asked. After all, in return for tolerating
bureaucratic demands, builders get high density (at least six units per acre) and
the opportunity to sell in a rising market. Some members of the public, however,
have become embarrassed by rising housing prices, and a few years ago they
successfully pushed for an "affordable housing policy."
| The downtowners quickly
asked the city to adopt an ordinance that excludes any first-floor business other
than retail. And I voted for it. I restricted freedom.
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The city's affordable housing policy (which economist Robert Nelson likes to
call "guilt relief") can be easily summarized: developers must set aside 10% of
their subdivided land for smaller-than-normal lots, and the houses on these
"restricted size lots" have to be smaller, too. That's it. That's the plan. (Of
course, there are some specifications to the plan: the maximum size lot is 5,000
square feet for a detached home and 3,000 square feet for a townhome. And the
house can't take up more than about a third of the lot.) You don't have to
be an economist to realize that small lots in a fast-growing city are likely to
be purchased at just slightly lower prices than large lots. Indeed, with many
"snowbirds" inhabiting Bozeman, such a lot could easily provide a pied ˆ terre
for well-off part-time residents. On a per-square-foot basis, these lots may well
end up being more expensive than the normal lots. Given the low per-capita income
in Bozeman, there is no way these homes are going to be "affordable."
Nevertheless, on the one chance I had to vote on this policy, I supported it.
"Guilt relief" has its place if it holds worse options at bay, such as requiring
buyers to meet income limitations, or putting ceilings on house prices, or
putting in place other bureaucratic requirements similar to the rules that
emerged from rent control in New York City. All in all, inflicting a blow
against freedom, but taking a big step toward "reasonableness," I voted to keep
the plan. By the time I voted on affordable housing, I was already an old
hand at compromising my principles. I had started with Bozeman's downtown. This
area, a small section of Main Street and a few cross streets, contains boutiques,
restaurants, and bars (including an upscale wine bar). It is busy and successful.
A number of the early 20th-century buildings have been restored to their original
brick facades; the area is relatively easy to reach; and a tony residential area
is nearby. For years, the Bozeman Downtown Association has had a
gentlemen's agreement that the first floors of all buildings within the downtown
area would be retail stores. Retail, apparently, does not include real estate
agencies. A year or so ago, a real estate agent opened an office on a first
floor. Because she was a popular figure (on the symphony board and so forth), she
was allowed to operate in peace, especially since she also set up an art gallery
along with her business. But the downtowners quickly asked the city to adopt an
ordinance that excludes any first-floor business other than retail. And I
voted for it. I restricted freedom. Here's why. First, I have a
unscientific but still strong intuition that downtowns are disproportionately
important to their cities. If retail in every building is going to protect the
downtown, I'm for it in spite of its bearing on liberty.
| People living in the
neighborhood resented having their section of town called "blighted" —
perhaps not realizing the financial bonanza that being blighted provides.
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And then there is that "being effective" business. Even at the lowest levels
of political activity, you have to look "reasonable" and "open." Otherwise you
are written off as an ideologue and (perhaps more importantly) you lose the
potential for log-rolling. If I don't support some of their proposals, they won't
support mine, and my feeble attempt at log-rolling will be cut off in midstream.
I was bothered by some other things that the downtowners were doing (such as
inflicting payment for a parking garage on the rest of the city), and I thought I
might vote against some of those. So I set myself up for being viewed as
"reasonable," with the hope that I might get a little log-rolling going in the
future. It turned out that the downtowners made an end-run around local
government and got Montana's congressional delegation to earmark $4 million in
the 2005 federal transportation bill for the parking garage (do you get the
connection — parking lots and transportation?) So I never got to raise
questions about the parking garage (until it became a national issue, but that's
another story). On the other hand, I did have a chance to question other
maneuvers of a similar ilk. In fact, my one contribution to liberty was helping
spark a discussion about tax increment financing, or TIFs. A TIF is a
method of paying for improvements in a specific geographical area. Once an area
is designated as blighted and becomes an urban renewal district (required under
state law), all additional property taxes that come in (beyond the existing
level) will be set aside for use in that particular area, typically for
infrastructure. There is a time limit on the TIF, usually around 15 years.
The Bozeman City Commission has big plans for this method of financing. A few
years ago, I thought the downtown TIF district was a great idea. I didn't realize
that this new money was, in a sense, being withheld from the rest of the city's
taxpayers. All new tax moneys taken from downtown property (beyond the tax
collected annually before the TIF began) is used for the downtown rather than
general city purposes. So other city taxpayers have to shoulder a greater share
of the citywide burden. Even so, I don't mind the downtown TIF. It's all
the other proposed TIFs that bother me. One is in an old mixed-use neighborhood
that has been experiencing a renaissance. Some private developers successfully
pushed for designating it as "blighted" so that a TIF district can be created. In
fact, they hurried the designation along so that any investment the developer
made in 2006 would "count," thus maximizing the amount of taxes that would go
into the TIF. The process was so quick that it aroused an angry reaction from
people living in the neighborhood. They resented having their section of town
called "blighted" — perhaps not realizing the financial bonanza that being
blighted provides. Another street segment is going to become a TIF
district. North Seventh Avenue is an entryway to the city that is bordered by
dull commercial buildings such as a tire store and a U-Haul outlet, but it also
has a few restaurants and casinos. These owners will benefit if a TIF produces
revenues that can be used (as some hope) for new lights and sidewalks, to make
the street more elegant and inviting. Also in the works are two industrial TIFs
("TIFits"). A city commissioner justifies these on the grounds that Bozeman,
unlike most cities, doesn't give big tax breaks or special incentives to new
businesses. Just TIFits, he hopes. Well, this time I drew the line. I
raised questions about the TIFs, and ultimately we had a frank discussion about
them. I didn't change anything, but I introduced some transparency. And that may
be the best thing that this weak-kneed libertarian can do on the planning board.
Indeed, I may not be able to accomplish anything more because I think my
tenure on the board is about to end. The political winds are blowing, and the
November election will probably eliminate the conservatives' briefly-held
majority on the city commission, and they were the ones to appoint me in the
first place. My political career is probably going to be a short one.
Well, at least I can get back to being principled.
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