Sunday, August 21st, 2011

Building Suburbs That Last #6 – Limit Restrictive Covenants

This is another in my occasional series on creating suburbs that will remain successful over the long haul. To recap, I consider the suburban decay facing inner ring suburbs across America, especially those of the 60’s and 70’s vintage built on a modern suburban pattern, as one of the key challenges facing urban leaders over the coming decades. I outlined a lot of the case in my review of the book “Retrofitting Suburbia”. This series looks at ways to keep this same decay from happening to tomorrow’s suburbs.

The Market Urbanism blog recently ran a post called “Covenants as a Substitute for Euclidean Zoning.” As its name implies, this blog prefers free market type solutions to urban problems rather than government ones. In this case, they’d like to see voluntary restrictive covenants as a substitute for zoning in many cases. I tend to see covenants as a generally bad way to go.

I’m not sure when these really took off, but today it seems like basically every new subdivision comes with various restrictive covenants. These can restrict things like the types of materials or even paint colors allowed on houses, rules about where cars can be parked, the types of decorations that are allowed, banning fences, or even who can live in the house. The idea of these is to protect property values by making sure neighbors can’t do obnoxious things to their homes.

Part of the problem though is that unlike with zoning or other matters of purely public policy, restrictive covenants can be difficult or impossible to change over time. As someone who went through the process of amending his condo association incorporation declarations for something like this, I can attest to its difficulty. This tends to create a situation where it is difficult for the housing stock to evolve over time to meet changing needs, particularly when a development runs into trouble. It seems unlikely, for example, that the paint colors that are in fashion today will still be as fashionable 30 years from now.

Retrofitting Suburbia did a nice job of demonstrating how even the relentlessly monotonous homes in the Levittown developments were able to be adapted very successfully over time. People made additions, radically changed exteriors, etc. It’s hard to imagine these developments would have been nearly as long lasting as they were if the houses were legally required to have stayed more or less in their current state.

I think that the newer type subdivisions that are loaded up with restrictive covenants are going to face particular redevelopment challenges in the future. Those places without covenants may actually end up with long run competitive advantages because of their ability to adapt to change.

In fact, I predict that at some point in the future, as covenants make redevelopment aging subdivisions (or perhaps even just some of the failed projects caught out by the housing bubble bursting in the here and now) difficult in the future, we’ll see state legislatures (or perhaps even the courts) invalidate these as contrary to public policy.

In the meantime, I think lawmakers ought to take a look at what these might mean over the longer term. Perhaps covenants are ok in the short term, but longer term they should expire. This is already how they work in some cases and so perhaps this is a good balance of meeting present and future needs.

More Reading on the Suburbs

Review: Retrofitting Suburbia
End Property Tax Collection in Arrears

Building Suburbs That Last Series:
#1 – Strategy
#2 – New Urbanism and Parcelization
#3 – The Mother of All Impact Fees
#4 – Supporting Home Based Businesses
#5 – Redevelopment Insurance

7 Comments
Topics: Public Policy, Strategic Planning

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7 Responses to “Building Suburbs That Last #6 – Limit Restrictive Covenants”

  1. Benny Lava says:

    Covenants of one form or another are very old. In the 20s neighborhood covenants restricted all future homeowners from selling to black people (which was nullified by the Civil Rights Act of 1964). Not too surprising for a libertarian to argue in favor of covenants is it?

  2. Matthew Hall says:

    This kind of bad suburban policy has ironically kept downtown cincinnati relatively appealing by making densification and redevelopment harder in the suburbs. Cincinnati doesn’t have strong secondary centers like st. louis, kansas city and atlanta so downtown is the only dense urban game in the region.

  3. Danny says:

    I agree that covenants are a bad idea, but I don’t know where you get the idea that zoning is easy to change. I have never seen a zoning agency change a choice they had previously made without either enormous “fees” (AKA $50k bribes) or a ground up community uprising large enough that the mayor had feared for his reelection. Most zoning agencies would rather let property owners sink into bankruptcy than let them lease to a business outside of their zoning policy (I know this because I was once trying to lease from one of these owners).

    I don’t know if you have read much from Hernando De Soto, but the general theory behind his work is that increased property rights decrease poverty. And the method by which they decrease poverty is that they allow people to invest in their own home. Why bother installing a flushable toilet in your home, or installing a safer roof, if you are going to get forced off your land in the next year or two? In basic terms, without property rights, people won’t even try invest in themselves.

    The same phenomenon can be extrapolated to zoning/covenants, which is essentially a restriction on property rights. Why bother investing in your property if you can’t sublet to your nephew, lease to the guy who wants to work from the garage, or sell your bookstore to someone who wants to build a restaurant? Urban decay is a lack of investment and maintenance, and zoning restrictions are a huge impediment to that.

  4. FYI- The ability of covenants to bind future landowners is a function of statewide property law, not of local ordinance.

  5. Della Rucker says:

    Aaron–

    Well said, per usual. The other thing that I would add is that most subdivision covenants I have seen were either intentionally or ignorantly written to make it impossible to change (going through that in my neighborhood now.)

    The second issue is that, for homeowner’s associations in the Midwest, at least, those restrictions are almost impossible to enforce. Your only recourse is a lawsuit, and most HOA’s are understandably reluctant to take on that cost and that potential for nastiness with neighbors.

  6. david vartanoff says:

    and then you have homeowner assns refusing to allow rooftop solar panels on aesthetic grounds.

  7. j. england says:

    I seem to remember a case, I don’t remember where/when, that said restrictive covenants were a contract of adhesion – that is not voluntary – because you can no longer buy a lot and build a house per building codes, but must participate in a zoned, etc. community per gov. requirements, forcing you into a covenant filled subdivision. Also, if you look, most covenants consist of semi universal fit boilerplate often copied from California (like many fads) without a cursory glance at contents and fitness for purpose. Few attorneys want to pioneer their own covenant, and fewer developers wish to pay for it, when you get get one “just like everybody uses, etc.” basically free. Possible energy restrictions might be the best club, as in prohibiting “solar clothes dryer” d/b/a clotheslines, in favor of all electric clothes dryers. Of course there is the incongruity of stating that a hispanic lesbian with 2 black kids promotes diversity and higher property values, whereas painting your front door Behr medium gray and your neighbor painting his in Sears medium gray is too much diversity and will quickly destroy the community. Obviously people get an underlying message, and it ain’t friendly.

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