The Constitutional Case against Exclusionary Zoning

No one simple solution to this problem exists. But a crucial tool may lie in the Constitution: the takings clause of the Fifth Amendment. The clause requires that, when the government takes “private property,” it must pay “just compensation” (usually the fair market value of the property rights taken). As we argue in a forthcoming Texas Law Review article, because exclusionary zoning severely restricts property owners’ right to use their land, we believe that it qualifies as such a taking, and is therefore unconstitutional unless the government pays compensation. Consistent enforcement of this interpretation would severely constrain exclusionary zoning, limiting it to cases where policy makers believe the benefits are worth the costs of paying compensation—and where they have the resources to do so.

Just as there is substantial cross-ideological agreement on the policy aspects of zoning reform, there can be similar broad agreement on the constitutional dimension of this issue. One of us, Ilya Somin, is a libertarian sympathetic to originalism. The other, Joshua Braver, is a progressive living constitutionalist. We differ on many things, but agree here.

The most significant type of exclusionary-zoning restriction is single-family-home zoning, which restricts housing construction in an area to homes that house only one family. Some 70 percent of all land zoned for residential use in the United States is limited to single-family residences only. Other types of exclusionary-zoning restrictions in many areas include minimum lot sizes, parking mandates, height restrictions, and more.

Exclusionary zoning severely reduces the housing supply in many jurisdictions, thereby preventing people from moving to areas where they could find better jobs and educational opportunities. It also increases homelessness by pricing poor residents out of the housing market. Exclusionary zoning causes enormous harm.

In an important recent study, the economists Gilles Duranton and Diego Puga found that abolition of zoning restrictions in seven major urban areas would increase America’s GDP by almost 8 percent. That’s because zoning blocks many people from moving to areas where they would be more productive. Even many current homeowners in severely restricted areas stand to benefit from zoning reform. They can gain from the resulting growth and innovation, and from lower housing costs for their children, among other things. For these and other reasons, curbing exclusionary zoning unites progressives, such as the members of President Joe Biden’s Council of Economic Advisers and the former Obama CEA chair Jason Furman, with libertarian-leaning free marketeers like Edward Glaeser of Harvard and Bryan Caplan of George Mason University.

Exclusionary zoning also has a horrible history of racism and classism. In Buchanan v. Warley (1917), the Supreme Court ruled that explicitly zoning neighborhoods by race was unconstitutional. But as scholars such as Richard Rothstein and Jessica Trounstine have documented, many jurisdictions got around the decision by enacting facially neutral laws that effectively excluded poor minorities by making it impossible for them to afford housing in the area. Many jurisdictions similarly priced out white poor people as well.

In 1926, the Supreme Court upheld such practices in Village of Euclid v. Ambler Realty Company, despite the district court’s warning that doing so would empower local governments “to classify the population and segregate them according to their income or situation in life.” Judge David C. Westenhaver of the Ohio District Court also presciently warned that the decision would result in racial segregation. Euclid was a terrible mistake, one the Supreme Court should fix.

And it can do so: When the Bill of Rights was enacted, in 1791, the right of private property was generally understood to include a right not just to exclude, but also to determine the use of that property. William Blackstone, the great British jurist whose Commentaries on the Laws of England enormously influenced the founding generation, famously wrote that “the third absolute right, inherent in every Englishman, is that of property: which consists in the free use, enjoyment, and disposal of all his acquisitions” (emphasis added). Use undoubtedly included building a house on one’s own property. Blackstone’s formulation was echoed by many of the American Founders, including—most notably—James Madison, the principal author of the takings clause. At the time of the founding, like today, housing was one of the most common uses of land.

Some originalists argue that the Bill of Rights, when applied to state and local governments, should be interpreted as understood not in 1791, but in 1868, when the ratification of the Fourteenth Amendment extended the limitations of the Bill of Rights to the states. In the 1868 understanding, the takings clause protected the owner’s right to use his property at his own discretion even more clearly than in 1791. In his influential 1868 treatise on constitutional law, Michigan Supreme Court Justice Thomas Cooley wrote that “any injury to the property of an individual which deprives the owner of the ordinary use of it is equivalent to a taking, and entitles him to compensation.” Prominent federal- and state-court takings decisions around the same time also emphasized the centrality of the right to use, including the Supreme Court’s famous 1871 decision in Pumpelly v. Green Bay Company. All significant forms of exclusionary zoning constrain the right to use, and therefore at least presumptively violate the takings clause.

Not every restriction on an owner’s right to use qualifies as a taking under the original meaning. Regulations that fit within the so-called police-power exception were not considered takings. Although the police-power exception has never been precisely defined, it generally applies to regulations that protect against significant threats to health and safety, such as fire, flooding, environmental harms, and disease. The exact scope of the police-power exception is a matter of long-standing controversy, but at the very least it permits regulations that protect people against severe dangers, such as public-health sanitation requirements, building-code regulations to prevent the spread of fire, and the disposal of toxic waste and other industrial pollution. Few exclusionary-zoning restrictions fit within any plausible view of the police-power exception. Their main effect is to exclude low-income people, not protect against environmental or health threats.

For those who reject originalist arguments, the main alternative framework of living constitutionalism, championed by many progressives, may be more persuasive. Living constitutionalism is a broad tent of theories about how to interpret the Constitution, which permits change over time. We argue at length elsewhere that multiple versions of the theory support striking down exclusionary zoning. Here we focus on the representation-reinforcement theory.

In Democracy and Distrust, the classic defense of representation-reinforcement theory, John Hart Ely argued that judicial review was not a counterweight to democracy, but rather a crucial facilitator of it. For democracy to prosper, voting rights and freedom of speech must be protected. The problem is that incumbent politicians and their constituents, seeking to maintain their power, would legislate to prevent political competition. Because these threats to democracy are produced by democracy, the solution must lie outside it, namely judicial review.

Exclusionary zoning is a perfect example of Ely’s fear of the “ins choking off the channels of political change to ensure that they will stay in and the outs will stay out.” In this case, the “ins” are a community’s current residents, and the “outs” are potential residents. To protect their home values and other perceived interests, residents vote for politicians who will work to prevent construction that would entice newcomers. The latter have no opportunity to participate in the process. Some evidence suggests that NIMBY (“not in my backyard”) resistance to housing construction is caused by ignorance of housing economics, rather than by self-interest. Either way, insiders block outsiders.

The standard solution to a lack of representation is simple: grant representation. But it is neither reasonable nor feasible for outsiders to have representation in a local government where they do not and may never live. The question is how to find another way to provide representation reinforcement for potential residents.

Here, judicial review can give voice to voiceless outsiders by providing them an opportunity to acquire the housing they need to move in, an idea Ely partly anticipated when he endorsed judicial protection for a “right to relocate.” The takings clause is the best option for this, given that it is the constitutional provision that protects private property from uncompensated government interference. And it is thus best fitted to the problem of exclusionary zoning, which limits the use of property.

Ely also worried that certain groups, especially racial minorities, were subject to prejudice and hostility by the majority and would systematically be on the losing end of political decisions. The racist and classist history of zoning provides further justification for using judicial review to curb the practice, especially because the disproportionate impact on racial minorities persists to this day.

The supreme court has multiple plausible pathways to using the takings clause to restrict exclusionary zoning. Currently, zoning restrictions are analyzed under a nebulous three-factor balancing test first established in the 1978 Penn Central decision, which requires courts to consider the “economic impact of the regulation on the claimant,” the “extent to which the regulation has interfered with distinct investment-backed expectations,” and the “character of the government action.” In practice, this much-criticized test is usually applied in a highly deferential way.

The best and simplest alternative to this framework would be for the Supreme Court to rule that exclusionary zoning is a “per se” (which is to say, automatic) taking, thus removing the need to consider the Penn Central factors. That would restore the original meaning, enforce the requirements of major living-Constitution theories, and minimize uncertainty. Alternatively, the Court could instead apply the Penn Central standards in a less deferential way.

The Court could make exclusionary zoning a per se taking or ratchet up scrutiny under Penn Central without categorically overruling Euclid. For complex historical reasons, Euclid never directly addressed the takings clause. Technically, it upheld exclusionary zoning only against challenges under the due-process clause of the Fourteenth Amendment. The Court could simply confine Euclid to due-process clause cases, while making it clear that different standards apply to takings clause challenges.

If all or even a large proportion of exclusionary zoning gets invalidated under the takings clause, the effect could be very great. If courts hold that a regulation is a taking, the government must pay compensation. Local governments could not afford to pay compensation to the many thousands of property owners whose rights are restricted by exclusionary zoning. They would likely be forced to repeal or severely constrain most exclusionary-zoning rules.

YIMBY (“yes in my backyard”) zoning-reform advocates have won important legislative successes, but those victories are still confined to a minority of jurisdictions. By contrast, a Supreme Court ruling would apply to the entire nation. To be sure, local governments are experts at evading restrictions on their authority. But even somewhat imperfect enforcement of constitutional constraints on exclusionary zoning could have a significant impact by eliminating the most sweeping and effective exclusionary policies, and the most obvious ways to circumvent restrictions. If the judiciary effectively addressed the most blatant forms of exclusionary zoning, advocates could focus on the next frontier of zoning issues.

In addition, stronger judicial enforcement of the takings clause could curb the use of state constitutional protections for local government autonomy to stymie zoning reform. The recent dubious California court decision striking down S.B. 9—a significant law limiting single-family zoning—is a notable example.

Historically, successful constitutional-reform movements have combined legal and political action, and have not relied on one to the exclusion of the other. That was true for the civil-rights movement, the women’s‑rights movement, advocates of same-sex marriage, gun-rights advocates, and others. The cross-ideological YIMBY movement should do the same.