From Nectow to Koontz: The Supreme Court's Supervision of Land-Use Regulation

Abstract

This is a preliminary chapter of my book in progress, tentatively titled The New Economics of Zoning Laws. This chapter selectively surveys court decisions on zoning over the past century. I offer new evidence on Nectow v. Cambridge (1927), the first case in which the US Supreme Court overturned a non-racial zoning ordinance. The Court got it wrong, at least by modern standards of review, because a master's report mischaracterized the history of the site and the purpose of zoning. The Court after Nectow has usually been deferential to state courts and local decisionmaking on land use, which I submit is appropriate given the Court’s lack of access to local knowledge. It has since 1987 insisted that the states not abandon the regulatory takings doctrine, but it has also put up substantial procedural barriers to moving cases into federal court. Its decisions create a modest price effect for local governments, which do not have to worry much about paying taxpayers’ money for a judgment unless their regulations leave no economically viable use or cause a physical occupation of the property. The Court’s departures from its deferential tradition have been in the exactions cases, most recently Koontz v. St. Johns River Water Management District (2013). These are economically questionable in that they appear to entrench existing regulations, thus lowering the opportunity cost of maintaining them. The decisions may, however, discourage governments from adopting regulations purely for the sake of obtaining general revenue. Zoning and related land-use regulations are highly popular institutions, though, so it seems unlikely that limiting the exactions process will discourage many of their excesses.

Keywords: zoning, land-use regulation, judicial review, regulatory takings, exactions

JEL Classification: K11, R14