Market Demand-Based Planning and Permitting
Four prominent land use and planning professors introduced their new book, Market Demand-Based Planning and Permitting, at the Georgia State University College of Law in early November. Professor Julian Juergensmeyer introduced his co-authors and thesis of their work: that new real estate development should be approved only when there is a demonstrated market demand for it, an idea first conceived during the Great Recession. They argue that over-permitting was one of the major causes of that economic crisis.
Emeritus Professor James C. Nicholas, of the University of Florida Department of Urban and Regional Planning, tracked recessions in America over the 20th century until the Great Recession of 2008. He says, on average, the U.S. sees a recession every six years. Furthermore, he says, the country is approaching the longest period yet without a recession. He and his co-authors believe recent recessions have been much worse than necessary. Their solution is market demand-based planning and permitting.
Real estate has a long history of sinking American economies. The Great Depression was the first real estate driven recession, and the Great Recession was the most recent. In 2008, the market tanked after many banks made a habit of extending subprime mortgages to unfit borrowers. Prof. Arthur C. Nelson of the University of Arizona says this led to overdevelopment which, ultimately, led to foreclosure on many properties. These scholars argue that to prevent overdevelopment, local governments should implement methods to determine whether an area has demand for every proposed development. If the developer can show there is demand, a permit should be issued. If no studies or surveys show a demand for the proposed development, it should not be allowed.
However, to do any of this would require overcoming numerous legal impediments, says Professor John Marshall of the Georgia State University College of Law. Local governments would likely need to create institutions to issue these demand-based permits. Finally, local codes would need to allow demand to be grounds for denial of a permit. A certain level of uniformity across the state would be needed to have any recession-mitigating impact.
Marshall proposes that states adopt a land development information system, aggregating development proposals on an accessible platform. Another necessary ingredient is market studies examining aspects of demand within local communities. Cities should be encouraged to participate in the scheme either by interlocal agreement or state statute.
The co-authors argue this proposal is “evolutionary, not revolutionary.” Most permits, they argue, are granted when there is supporting infrastructure for the proposed development. They wish to add another “when” to that standard—permits should be granted when there is the needed infrastructure and when there is a market for the development.
Market Demand-Based Planning and Permitting was written by Professors Arthur C. Nelson, John Travis Marshall, Julian Conrad Juergensmeyer, and James C. Nicholas, and is available now in the American Bar Association bookshop at shop.americanbar.org.