Skip the Line Permits: A Modest Proposal
Many theme parks now allow guests to pay a hefty surcharge for a “skip the line” pass. The economic logic is ironclad: Everyone says his time is valuable, but actions speak louder the words. To save the truly valuable time, charge a price and see what happens. Some people barely mind waiting, but others are truly desperate to get a move on.
Housing regulation has the same problem. While researchers usually focus on specific rules about maximum building height, density, minimum lot size, and parking regulation, one of the biggest problems with housing regulation is simply delay. Delaaaaaaay. If someone owns a $10,000,000 parcel of land, and the real interest rate is 5%, every year of wait time costs half a million bucks! Sitting on land you can’t develop is like sitting on ice cream in the Sahara Desert. All you can do is curse the sun as you watch your asset melt before your eyes.
I’ve kind of known this for a long time, but it wasn’t until I read Einstein, Glick, and Palmer’s recent Neighborhood Defenders: Participatory Politics and America’s Housing Crisis that I realized the severity of the problem. Even when a project is totally legal, hostile activists and politicians can and do covertly prohibit it by dragging their feet. Demand multiple hearings. Require studies of environmental, parking, and traffic effects. Extend the time frame of the study to make sure you’re not missing anything. Ask for revisions. When the revisions arrive, demand new studies.
How well do these tactics work? Einstein et al. describe one major Massachusetts project that took eight years to approve - and only two years to actually build! A vivid outlier, but multi-year delays are routine. Not just in Massachusetts, but around the U.S. and the world.
Which brings me to my modest proposal: Local governments should start offering developers Skip the Line permits. If you agree to pay, say, 10x the normal permit fees, you can break ground immediately, and are immune to further legal impediments.
Enlightened NIMBYs should love this idea; after all, local governments can use the piles of extra money they extract to fund better government services or cut property taxes for existing residents.
Actual NIMBYs, in contrast, will probably balk.
Why? Because they’re not looking for a lucrative deal. Instead, they’re looking for absolute certainty that nothing bad will ever happen in their neighborhood. Childish? Of course. But that’s local democracy for you. To repeat myself, the heart of NIMBY is not rational self-interest, but status quo bias, economic illiteracy, innumeracy, and sheer paranoia.
The only downside to this plan is it gives local governments an incentive to jack up the required permits, requirements and fees to increase revenue, waved away under "well, no one actually has to do those things, everyone just pays and gets it over with," while at the same time saying "it isn't too expensive to build! Look, you can do it for as low as X!" The end result would likely be a 20 year wait at the lower price or a staggeringly large fee to build now. That this would benefit large, wealthy and connected developers at the expense of everything else would be a feature for those making the rules.
I was really hoping this would be an analysis of theme park "skip the line" systems, as theme parks are a hobby of mine. Even if it ended up just being more housing stuff, I don't think I'll ever tire of the subject, so it was still an enjoyable read.