The Steep Cost of Using Noncumulative Zoning to Preserve Land for Urban Manufacturing

In this Article, we argue that non-cumulative zoning is an idea whose time has passed, if there ever was a convincing case for it at all. The two major justifications for non-cumulative zoning are flawed, and alternative means could achieve the same ends with fewer costs. The large number of nuisance claims engendered by urban manufacturing could be addressed by creating a “right to stink” in certain zones, allowing residential and commercial users to move into these zones but prohibiting them from suing manufacturers who are not violating regulatory laws. As for the second manufacturer-subsidizing justification, subsidies cannot be justified in terms of a subsidizing city’s own welfare unless the external “agglomeration” benefits of manufacturing exceed the cost of the subsidy to the city. Moreover, the broader social perspective also requires that some cities are better able to capture those agglomeration benefits than others; meaning that competition between jurisdictions could result in total increases in wealth. However, non-cumulative zoning is unlikely to achieve either local or broader social efficiency. Its scope is not closely tied to any theory of external benefit; it encourages the inefficient use of land and the substitution of land for other inputs, and it hides the true cost of urban manufacturing subsidies from the public. If urban manufacturing must be subsidized, a direct cash subsidy system would be preferable, particularly if it could be funded directly from taxes on the increased value of land caused by the removal of a non-cumulative zoning designation.

Roderick M. Hills Jr and David Schleicher

The Univerity of Chicago Law Review

2010

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