Light-touch density (LTD) zoning may be an important part of the housing solution, but – as with everything – it’s not without tradeoffs. LTD can have a positive impact on a variety of financial measures of a municipality while sacrificing space, flora, and quality of life in its wake.
“The times they are a-changin’.” – Bob Dylan
Golden Oldie
The first time I recall hearing the song, Palisades Park, it was an adapted version featured on a local commercial for Pittsburgh’s beloved amusement park, Kennywood. It wasn’t much of a stretch. They simply changed the ride names to real Kennywood rides and (obviously) swapped “Palisades” for “Kennywood.” I didn’t realize until about 2 minutes ago that they actually had Freddy Cannon – the original “Palisades Park” singer – come to Pittsburgh to rerecord the “Kennywood Park” version. [You can find that complete story, along with footage of the Thunderbolt and other classic Kennywood rides, here.] It brings back many great memories of annual school picnics, Carpenter’s Picnics (my dad’s trade union), junior high first crushes, etc.
The other thing that Kennywood and Palisades Park have in common is that they both began as trolley parks, which (I also learned this only a few minutes ago) were the precursors to modern amusement parks – natural gathering points at the end of trolley lines. And per Wikipedia, Kennywood is one of only 13 such parks that have stood the test of time.
Palisades Amusement Park overlooked the Hudson River and northern Manhattan from atop the New Jersey Palisades (the cliffs that line the Hudson River) in what is now Cliffside Park and Fort Lee, NJ, but ultimately closed in 1971. Why? It was prime land for real estate development, of course. After all, the only thing better than a high-rise apartment is a high-rise apartment with an incredible view. Today we’ll use Palisades Park to learn more about the current housing crisis, one proposed solution, and a local perspective on the matter (mine!). Here we go!
Modern Times
While the amusement park is long gone, the Palisades Park name (aka “Pal Park”) survives as a borough in Bergen County, NJ. It’s not far from the original amusement park site of the same name (though both were independently named because of the local Palisades geography). If you heard “New Jersey” and thought “Sopranos,” you couldn’t be more wrong. Instead, if you walk down the main strip of Pal Park – Broad Avenue – you may ask yourself if you’ve just been transported to Korea. 65% of the municipality is of Korean ethnicity, and it is “the municipality with the highest density of ethnic Koreans in the Western Hemisphere and the home of both the highest Korean-American density and percentage of any municipality in the United States.”
Really interesting, right? But – vital to today’s discussion – there’s another line on the same Wiki page that could be quickly glossed over: “The borough’s population has grown by 40% since the 1990 census, accelerated by zoning laws that permit duplex homes on land previously containing a single-famly detached home.” [emphasis added by me]
Trees Company
Across the country, Ventura County, and specifically Thousand Oaks, CA, takes the prize as the “least affordable housing market in the United States.” Affordability compares incomes with home prices, so it’s not necessarily the same as “most expensive,” as the article goes on to say. The consensus is that Ventura’s land-use policies being the “most stringent…of any county in the United States” have something to do with the affordability issue. We may also venture (😊) to guess that a biotech explosion in this area, including the global headquarters of Amgen, was another key ingredient. High incomes, high housing demand, and limited supply sound like a no-brainer recipe for higher prices. What to do about it? Drive 41 hours back across the US for the case study that is Pal Park.
[notably, Thousand Oaks is part of the 101 corridor, which we touched on recently in Alts 101.]
An end to SFH tyranny?
If you ever walked down the street of a suburban town lined with single-family homes (SFHs) and thought, “Oh, the tyranny!” I’ve got an article for you. Centered on Ed Pinto, who grew up in Palisades Park (he’s also a senior fellow and co-director of the AEI Housing Center – so I think we can regard him as a subject matter expert), it’s a story about how the town’s friendly zoning laws have created a bustling and vibrant community with property-tax rates that are about half of neighboring towns, like Leonia, NJ. [David Bahnsen also hosted Ed Pinto on an edition of Capital Record podcast, which you can find here, for a more in-depth take on this topic]
This case study on Pal Park as a paradigm of what is known as the light-touch density (LTD) zoning, gives an in-depth perspective of Bergen County, NJ, and more about how the town compares to surrounding municipalities. LTD essentially means taking a single-family home or land plot and allowing “townhouses, duplexes, triplexes, and fourplexes” to be built there instead. Summarized on the first page of that study is a list of the advantages Pal Park has enjoyed, mainly courtesy of LTD:
- More housing construction;
- Greater population growth;
- Higher land values;
- Stronger commercial activity; and,
- Lower property tax rates
Doot, doot, doo lookin’ out my front door…
With gratitude for too many people to count, we purchased a home in Leonia this past May. It wasn’t turnkey, and we knew we were signing up for a bit (or, perhaps, more accurately, A LOT) of sweat equity and improvements to be made. Still, I would like to share with you the two most significant tradeoffs to our particular property: 1. We will probably need an addition to eventually house two teenage daughters, and 2. Our street is half Leonia and…wait for it…half Palisades Park.
Some of the shortcomings regarding our street would apply to any street that borders two towns, such as twice the amount of garbage trucks, alleged finger-pointing for the responsibility of street repairs, and different parking rules on the two sides of the street. But, what I admittedly like least is that, when we look out our front door and across the street, we stare directly at the effects of the Pal Park LTD housing solution – essentially an endless string of side-by-side duplexes. It may sound nitpicky, but my comment isn’t just aesthetic. The experience of walking down a block with yards, beautiful old trees, and (tyrannical 😊) single-family homes (like most of Leonia) is emotionally different from one where those features have been traded for nothing but concrete and side-by-side duplexes (e.g., most of Pal Park). And, numerically speaking, duplexes offer roughly twice the number of households, driveways, and cars (vs. the SFH setup), exacerbating congestion.
Forest for the Trees
I get it. The duplexes are often very lovely on the inside and require less property maintenance (no lawn care) than single-family homes. As such, there is a lot of demand for them, and the above list of positives for Pal Park are all true. One only needs to stroll a few blocks from our front door to confirm that “downtown Broad Avenue” in Pal Park has about a thousand more stores and restaurants than “downtown Broad Avenue” in Leonia.
But there’s No Free Lunch. Some local perspective on LTD math may be useful. It wouldn’t be uncommon for a builder to tear down an $800k SFH and build side-by-side duplexes in its place, which sell for about $1.2 million EACH. For easy math, let’s say the tax rate of Leonia is 2%. So, taxes for that $800k property were $16,000/yr. Given the example of Pal Park, the rate could be cut in half with LTD zoning. So, let’s say the rate drops by 50% overnight (magically), and our new rate is 1% on the total $2.4 million price of the duplexes. The taxes for the same land increased to $24,000 but are only $12k/yr for each of the new homeowners. Some may call that a win-win, but color me skeptical.
Trading places
What if the homeowner sold their $800k house for one of the new duplexes? They now have a $400k larger purchase price ($1.2M instead of $800k) with $4k annual tax savings ($16k minus $12k); however, they essentially get half the acreage and no yard along with it. Is that a good trade? Do you think the town’s original residents can continue living there? I believe that the answer is often “no.” Remember, even if the tax rates are coming down over time, the appreciating property value (see above case study) is considered a positive of the LTD solution. What could happen is that the original occupants take the equity and move to somewhere with a lower cost of living (call it “Florida”), perhaps putting upward pressure on other markets around the country.
In contrast, is it a good trade for someone coming from across the Hudson River, who may have otherwise paid $1.2 million for a New York City apartment, plus extra city tax as an NYC resident? That math is much (MUCH) more favorable.
Juxtaposition
Kennywood is no longer the rollercoaster capital of the world (that title now belongs to Cedar Point), but it still has incredible potato patch French fries (and good coasters). Along with its single-family homes, Pal Park’s population significantly evolved during the ‘80s and ‘90s – from predominantly Italian, Croatian, German, and Greek roots to Korean ethnicity. Yet, some establishments of the bygone era remain, like Donna’s Pizza, which may have the country’s best Sicilian pie (you be the judge, but I highly recommend it with pepperoni). Times will change, but greatness will persevere. I’m not here to fight change, and I’m also not here to do away with precious remnants of the past.
But do we have to force change down the throats of all US towns via Light-Touch Density zoning? Is it wildly utopian to let each locale decide what’s best? Should we consider that maybe there’s room (and land) for multiple approaches – old and new – even within the same town?
Some may appreciate greater density, lower tax rates, and flourishing business districts. Still, others may value more space and flourishing greenery in their neighborhoods and be willing to pay higher taxes (and accept more restrictive zoning) to keep that construct intact – at least on their side of the street.
Until next time, this is the end of alt.Blend.
Thanks for reading,
Steve
