First, we argue in Part III.A that binding, comprehensive plans allow legislators to create “contracts” across electoral districts that are otherwise impossible when zoning proceeds through piecemeal lot-by-lot bargaining. In a legislature unstructured by partisan competition (the dominant partisan character of big cities’ councils), every member defers to every other legislator’s decision with respect to zoning decisions in each member’s own district. Even when voters and legislators all acknowledge the overall need for more housing, individual legislators oppose individual developments in their own districts for fear of getting more than their fair share of housing growth. Binding comprehensive plans—that is, plans and maps that cover the entire city and that are difficult to unwind with subsequent amendments—can offer a way out of this prisoner’s dilemma by allowing legislators to create “contracts” across electoral districts, aided by mayors, who, as a result of their citywide constituencies, are usually the most pro-development figures in local governments. Second, we argue in Part III.B that parcel-by-parcel bargaining imposes high information costs on outside investors, thereby reducing the market for investment in new housing to a handful of local insiders with incentives to constrain supply. In the lot-by-lot bargaining system, outsiders must hire well connected zoning “fixers” who can grease the skids of the zoning approval process. These costs not only add to the price of new housing and lead to substantial delay in its construction but also deter outsiders from proposing new housing construction at all. Defining the rights to build ex ante in a comprehensive and binding plan that bars deals makes the land market more transparent, encouraging investment by a larger number of players by reducing information costs.
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