Land as Airspace: How Rezoning Privatizes Public Space (and Why Governments Should Not Give It Away for Free)

Abstract

A popular but contested view is that mass rezoning is an essential policy measure to address housing affordability. Often obscured in debates about this measure is that rezoning involves the privatization of public space. We clarify the nature of the policy by recognizing that property rights over land are, conceptually, a bundle of socially negotiated rights to parcels of airspace. This view shows that rezoning to provide rights to airspace for existing landowners is not costless. It involves transferring valuable property rights from the public to existing private landowners for free, creating a more unequal distribution of property rights ownership without necessarily generating faster housing development. We argue that giving away public rights to airspace should not be done for free and explore what policy measures retain value from residential rezoning for the public.

Keywords:

• Housing supply
• zoning
• property rights
• airspace

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1 We of course do not claim that all zoning rules that exist are good. We are merely arguing that in a world where property rights are being modified by new zoning rules, the distribution of benefits matters to the overall outcomes.

2 We use the term “property” to mean a bundle of legal rights rather than physical space or buildings.

3 In English law the doctrine of “ancient lights” provided that an established period of enjoyment of direct sunlight crossing a neighboring property could establish an ongoing right to that light by way of an implied easement (Kerr, 1865). This doctrine has been repudiated in the United States, as described in the decision of Fontainebleau Hotel Corp. v. Forty-Five Twenty-Five, Inc. (1959) in the Florida Appellate Court.

4 For example, Canada retains rights to minerals for “the Crown” (Pearse, 1988).

5 For example, Australian anticorruption regulators pursue cases involving donations, bribery, and extortion by property owners seeking upzoning decisions. Two recent examples are Operation Sandon by Victoria’s Independent Broad-Based Anti-Corruption Commission (IBAC) and Operation Belcarra by Queensland’s Crime and Corruption Commission. More generally, developers are keen to have municipal authorities be receptive to requests for rezonings, and thus have invested in the promotion of supply-side narratives around housing affordability, including the YIMBY movement (see section 7).

Additional information

Notes on contributors

Cameron K. Murray

Cameron K. Murray is a post-doctoral research fellow in the Henry Halloran Trust at The University of Sydney. His interests include property markets, environmental economics, and corruption. He writes the Fresh Economic Thinking newsletter and co-authored a book about the game of grey corruption entitled Rigged.

Joshua C. Gordon

Joshua C. Gordon is a visiting research fellow in the Digital Society Lab at McMaster University. His research interests include housing policy, labour market policy, union movements, and the politics of immigration.