The Unintended Consequences of Zoning

  • Blog Post by: Nathaniel Hood
  • September 19, 2012 - 9:14 AM

Zoning can limit supply, but not demand. This is an important thing to remember.

I had a chance to sit down with the co-chair of the student group opposing St. Paul's new regulations, Andrew Hasek, along with Streets.MN contributor Bill Lindeke, to discuss the issue on a podcast. I recommend checking it out. You can download it here!

“3 BDRM Home just outside of Student Rental Ban Area! 2 blocks to Macalester! 235 Amherst Ave!!”

These words will probably scare anyone who owns a home just outside of the Student Housing Overlay District. It is a headline for a rental housing advertisement in St. Paul. [Note: This is a nice house  in a nice neighborhood - Google Streetview].

The description continues:

“This is a beautiful home that is one block outside of the Student Housing overlay district. That means that as a St. Thomas student you can rent this house without having to worry if your landlord has a Student housing permit because this house does not need one!!”

It is clear that the student housing overlay district is already starting to fail after only a year. The demand for student housing hasn’t ceased and the limited supply near St. Thomas is spreading students further apart, and deeper into other neighborhoods. This is why I was surprised that the Mac-Groveland and Highland District Councils were overall supportive of the measure.

The issue revolves around the University of St. Thomas and its long battle against its neighbors. In this case, the City of St. Paul passed a moratorium on converting owner-occupied dwellings into rentals.  The stand-off is summed up brilliantly by a local Twin Cities blogger, Spencer of City of Lakes Urbanism and Streets.MN;

Lots of houses near the campus have been converted into duplex or triplex housing for students over the years. This angers homeowners, who prefer quiet at all hours and unhindered access to on-street parking in front of their homes. Given the nature of local politics, City Council members are more likely to respond to the needs of their homeowner constituents than their student renter constituents. In this case, St. Paul City Council members are considering banning students from entering into the neighborhood, purely because the homeowners don’t want them [Link].

He’s 100 percent right.

Homeowners are not happy about the spreading student population, and you can get a feel of their negative reactions in Finance & Commerce articles. Residents have reason to be concerned because students aren’t always the best neighbors.

Here’s a small work sample (circa 2004) from my days as a student in the neighborhood. It was a friendly prank on a group of friends who happened to live on Portland Avenue, but neighbors were likely displeased.

To really understand the problem in 2012, you need to rewind to 2003 / 2004. St. Thomas had just spent a decade expanding its student population to around 4,500 plus, and despite new on-campus residential buildings, student populations started to creep further and further into the neighborhood. Part of this was a result of affordability. On-campus housing at St. Thomas (and almost everywhere) is expensive!

Well-intentioned members of the City Council decided to increase restrictions on rental properties and limiting each rental home to include only up to four (4) unrelated people per household. Meaning, large 5, 6 or 7 bedroom houses could only house 4 students.

St. Paul tried to defy the laws of supply and demand. Now, this is where the law of unintended consequences kicks in. They restricted the supply of student housing while the demand remained the same. The market reacted and two things happened as a result:

  • Property owners did what was reasonable and responded by splitting large homes into duplexes so they could fill up the empty space. The market had an increase in duplexes, and often times, landlords took the time to add extra attic studio apartments. This lead to the situation to actually become worse. Now, instead of 5 people in a 5 bedroom house, you now have 6 or 7 people in a recently split duplex or triplex.
  • By initially limiting supply coupled with increasing demands, the ordinance increased overall rents; thus making it more appealing to convert a single-family home into a rental unit. In a way, the 2003/2004 zoning restrictions actually motivated more homeowners to convert smaller homes into rental properties.

Today, we now see advertisements boasting that they are close, but not too close, to the University. Who could have predicted this? Well – lots of people. The City of St. Paul just didn’t listen. Beside fellow bloggers, there was a student group that is currently lobbying against the proposal ["Like" them on Facebook].

There are other great issues that come up in regards to this topic. My favorite is from Bill Lindeke. He outlined his case very well on a recent Streets.MN post;

For me, though, the main issue is whether or not it’s ethically acceptable to legally limit where a certain types of people can live. Just because students are an “unprotected class” who are “generally transient” (as the city planner informed the commission), doesn’t mean they’re not equal citizens, and aren’t entitled to the same rights as anyone else. The whole thing reminds me of some of the more shameful moments of US urban history, things like restrictive covenants and redlining. There’s no way that we would single out a group of people according to race, class, religion, or sexual orientation, limiting where they could live. Why is it OK to do this with students?


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