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On the Just Distribution of Land Use Rights

Published online by Cambridge University Press:  01 July 2015

Ronit Levine-Schnur  and
Avigail Ferdman
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Abstract

The current system of decision making in land use law is not transparent and is open to biased or personal corruption. This gives rise to the possibility of unequal treatment under the law, especially given the judicial reluctance to interfere in reviewing the decision making process. Our solution is an auction mechanism to overcome these problems, under which the local government would be bound to award land use rights to the highest bidder and where offers will be examined in light of their contribution to the society’s best interest. Such mechanism has possible benefits in terms of transparency and insurance against favouritism or arbitrariness. The auction mechanism proposes the use of a simple metric (i.e., revealed private value of the competing claims) by which the local government can give a transparent, non-arbitrary, observable, and verifiable response. This mechanism, so we argue, treats each and every person’s choices with equal concern and respect. In this sense, the auction is procedurally fair by being conducted between potential bargainers that enjoy equality in background conditions and when means for offsetting brute bad lack are utilized.

Keywords

land use rightsauctionDworkin
Type
Research Article
Information
Canadian Journal of Law & Jurisprudence , Volume 28 , Issue 2 , July 2015 , pp. 317 - 342
Copyright
Copyright © Canadian Journal of Law and Jurisprudence 2015 

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References

1 See Frank I Michelman, “Property, Utility, and Fairness: Comments on the Ethical Foundations of ‘Just Compensation’ Law” (1967) 80 Harv L Rev 1165 at 1182-83; Daphna Lewinsohn-Zamir, “Compensation for Injuries to Land Caused by Planning Authorities: Towards a Comprehensive Theory” (1996) 46 UTLJ 47 at 53.

2 The Township of Scarborough v Bondi, [1959] SCR 444 at 451 (“On one side of an arbitrary line an owner may be prevented from doing something with his property which another owner, on the other side of the line, with a property which corresponds in all respects except location, is free to do”). See similarly Village of Euclid v Ambler Realty Co, 272 US 365 at 387 (1926) (“The line which in this field separates the legitimate from the illegitimate assumption of power is not capable of precise delimitation. It varies with circumstances and conditions”). See also Wesemann v La Grange Park (Village of), 94 NE (2d) 904 (Ill Sup Ct 1950); Lindquist v Pasadena (City of), 669 F (3d) 225 (5th Cir 2012).

3 Petro-Canada v North Vancouver (District of), 2001 BCCA 203; Robert G Doumani & Jane Matthews Glenn, “Property, Planning and the Charter” (1989) 34 McGill LJ 1036 at 1050 [Doumani & Glenn, “Planning”].

4 E.g., Roncarelli v Duplessis, [1959] SCR 121 at 140; Brown v British Columbia (Minister of Transportation and Highways), [1994] 1 SCR 420 at 442; Nanaimo (City) v Rascal Trucking Ltd, 2000 SCC 13, [2000] 1 SCR 342; Entreprises Sibeca Inc v Frelighsburg (Municipality), 2004 SCC 61, [2004] 3 SCR 304 at para 21.

5 Cohen v Calgary (City) (1967), 64 DLR (2d) 238, 60 WWR 720.

6 On the American practice, see Koontz v St. Johns River Water Management District, 133 S Ct 2586, 568 US __ (2013); Lee Anne Fennell & Eduardo M Peñalver, “Exactions Creep” (2013) Sup Ct Rev 287 [Fennell & Peñalver, “Exactions”].

7 Ontario Planning Act, RSO 1990, c P13, Section 37. See Ed Morgan, “The Sword in the Zone: Fantasies of Land-Use Planning Law” (2012) 62 UTLJ 163 [Morgan, “Land-Use”].

8 Aaron A Moore, “Trading Density for Benefits: Toronto and Vancouver Compared”, online: (2013) IMFG Papers on Municipal Finance and Governance no 13 http://munkschool.utoronto.ca/imfg/uploads/220/imfg_no_13_moorer3_online_final.pdf.

9 The term “land use right” or “development right” is used to denote the legal right to pursue a specified mode of use or construction of an identified property that was granted by an authoritative decision-maker (including the initiation of a new or amended plan, amendments to zoning ordinances, variances and special use permits, and means for rezoning such as conditional use zoning, bylaws, etc). For example, if the local zoning commission approves a property owner’s application for rezoning, it grants her a right to use the property or to add construction in a manner or for a use that would not otherwise be permitted.

10 See Re North York Twp, [1960] OR 374, 24 DLR (2d) 12; Kaplinsky, Eran, “The Zoroastrian Temple in Toronto: A Case Study in Land Use Regulation, Canadian-Style” in Tucker, Eric, Muir, James, & Ziff, Bruce, eds, Property on Trial: Canadian Cases in Context (Toronto: Irwin Law for the Osgoode Society for Canadian Legal History, 2012) 223 at 243 [Tucker, Muir & Ziff, Property].Google Scholar See also Carlos A Ball & Laurie Reynolds, “Exactions and Burden Distribution in Takings Law” (2006) 47 Wm & Mary L Rev 1513 at 1533.

11 David A Dana, “Land Use Regulation in an Age of Heightened Scrutiny” (1997) 75 NCL Rev 1243.

12 Daniel P Selmi, “The Contract Transformation in Land Use Regulation” (2011) 63 Stan L Rev 591 at 628-30.

13 We assume truly consensual and not coercive agreements which reflect an authoritative conduct on behalf of the local government.

14 Rachelle Alterman, “Planning Laws, Development Controls, and Social Equity: Lessons for Developing Countries” (2013) 5 World Bank Legal Rev 329.

15 Lee Anne Fennell, The Unbounded Home: Property Values Beyond Property Lines (Cambridge: Harvard University Press, 2009) at 69.Google Scholar

16 RH Coase, “The Problem of Social Cost” (1960) 3 J L & Econ 1 at 1-2 [Coase, “Social Cost”].

17 Other proposed rationales have included the claim that zoning law clearly defines presumptive rights of property ownership, allowing for accuracy in evaluating property as an investment. This effect is presumably the initial justification for property rights generally. See Joseph William Singer, “The Rule of Reason in Property Law” (2013) 46 UC Davis L Rev 1369 at 1409. See also Sterk, Stewart E & Peñalver, Eduardo M, Land Use Regulation (New York: Foundation Press, 2011)Google Scholar at 1–5.

18 “Knowledge and true opinion of various kinds, understanding, wisdom” are detailed in Frankena’s comprehensive list of intrinsic goods. See Frankena, William K, Ethics, 2d ed (Englewood Cliffs: Prentice-Hall, 1973)Google Scholar at 87–88.

19 Mariner Real Estate Ltd v Nova Scotia (Attorney General) (1998), 65 DLR (4th) 727, 168 NSR (2d) 1; Cherie Metcalf, “Property Law Culture: Public Law, Private Preferences and the Psychology of Expropriation” (2014) 39 Queen’s L J 685 at 697-99.

20 Canadian Pacific Railway v Vancouver (City), 2006 SCC 5, [2006] 1 SCR 227. See Russell Brown, “The Constructive Taking at the Supreme Court of Canada: Once More, Without Feeling” (2007) 40 UBC L Rev 315 at 355.

21 Harris, Douglas C, “A Railway, a City, and the Public Regulation of Private Property: CPR v City of Vancouver” in Tucker, , Muir, & Ziff, , eds, Property, supra note 10, 455 at 474–77.Google Scholar See also, Douglas Harris, “Opinion: City, CPR Need to Get on Same Side of Arbutus Corridor Tracks”, Vancouver Sun (3 June 2014).

22 Compare Doumani & Glenn, “Planning”, supra note 3 at 1053-55.

23 Carol M Rose, “Planning and Dealing: Piecemeal Land Controls as a Problem of Local Legitimacy” (1983) 71 Cal L Rev 837 at 841 (referring to piecemeal changes as “the everyday fare of local land regulations”); Fennell & Peñalver, “Exactions”, supra note 6.

24 See Morgan, “Land-Use”, supra note 7; Levine-Schnur, Ronit, Agreements between Local Governments and Private Entrepreneurs as a Means for Urban Development (LL.D. Dissertation, The Hebrew University of Jerusalem, 2014) [unpublished].Google Scholar

25 See, e.g., Village of Arlington Heights v Metropolitan Housing Corp, 429 US 252 (1976), but see the exceptional case of New Jersey, as a result of Southern Burlington County NAACP v Mount Laurel, 336 A (2d) 713 (NJ Sup Ct 1975). Henry A Span, “How the Courts Should Fight Exclusionary Zoning” (2001) 32 Seton Hall L Rev 1.

26 See Leah P Boustan & Robert A Margo, “A Silver Lining to White Flight? White Suburbanization and African-American Homeownership, 1940-1980” (2013) 78 J Urban Econ 71.

27 E.g., Madden, David, “Gentrification Doesn’t Trickle Down to Help Everyone”, The Guardian (10 Oct 2013).Google Scholar

28 For example, we cannot anticipate the effect of adding 50% of existing land use rights throughout the city. For some properties, this allocation would translate into a million dollars of added value, while for other properties it would mean no or little added value because the value of these properties is so low.

29 Only a handful of cities, most of them in Pennsylvania, USA, employ some version of land value tax, levying the unimproved value of the land. Such a property tax creates incentives to actually execute a land allocation if it is an initial allocation, but the tax is not higher if an optional, potentially value-improving allocation is not in fact utilized. On Henry George’s advocacy of a land value tax, seeGeorge and Progress and Poverty: An, 1879 George, Henry, Progress and Poverty: An Inquiry into the Cause of Industrial Depressions of Increase of Want with Increase of Wealth: The Remedy (Garden City, NY: Doubleday, Page & Co, 1879)Google Scholar; Gary Sands & Mark Skidmore, “Making Ends Meet: Options for Property Tax Reform in Detroit” (2014) 36 J Urb Aff 682.

30 See Jeremy Waldron, “A Right to Do Wrong” (1991) 92 Ethics 21; David Enoch, “A Right to Violate One’s Duty” (2001) 21 Law & Phil 355.

31 CE Elias, Jr & James Gillies, “Some Observations on the Role of Speculators and Speculation in Land Development” (1965) 12 UCLA L Rev 789 at 792.

32 See Daphna Lewinsohn-Zamir, “More is Not Always Better than Less: An Exploration in Property Law” (2008) 92 Minn L Rev 634.

33 Coase, “Social Cost”, supra note 16.

34 See Michael A Heller, “The Dynamic Analytics of Property Law” (2001) 2 Theor Inq L 79.

35 Cf Thomas W Merrill, “The Economics of Public Use” (1986) 72 Cornell L Rev 61 at 64.

36 O’Flaherty, Brendan, City Economics (Cambridge: Harvard University Press, 2005)CrossRefGoogle Scholar at 176; William A Fischel, “Introduction: Utilitarian Balancing and Formalism in Takings” (1988) 88 Colum L Rev 1581 at 1583.

37 William A Fischel, “Equity and Efficiency Aspects of Zoning Reform” (1979) 27 Pub Pol’y 301 at 322 [Fischel, “Equity and Efficiency”].

38 Ibid at 305-06.

39 Guido Calabresi & A Douglas Melamed, “Property Rules, Liability Rules, and Inalienability Rules: One View of the Cathedral” (1972) 85 Harv L Rev 1089 at 1092-114.

40 James E Krier, “Property Rules and Liability Rules: The Cathedral in Another Light” (1995) 70 NYUL Rev 440 at 450-51.

41 A Mitchell Polinsky, “Resolving Nuisance Disputes: The Simple Economics of Injunctive and Damage Remedies” (1980) 32 Stan L Rev 1075 at 1111.

42 Louis Kaplow & Steven Shavell, “Property Rules versus Liability Rules” (1996) 109 Harv L Rev 713.

43 Ibid.

44 Compare Dean Lueck & Thomas Miceli, 2007 Compare Dean Lueck & Thomas Miceli, “Property Law” in Polinsky, A Mitchell & Shavell, Steven, eds, Handbook of Law and Economics Vol. I (Amsterdam: Elsevier 2007)Google Scholar 183 at 235; White, Michelle J & Wittman, Donald, “Long-Run Versus Short-Run Remedies for Spatial Externalities: Liability Rules, Pollution Taxes, and Zoning” in Rubinfeld, Daniel L, ed, Essays on the Law and Economics of Local Governments (Washington: Urban Institute Press, 1979) 13 at 46.Google Scholar

45 Nelson, Robert H, Zoning and Property Rights: An Analysis of the American System of Land-Use Regulation (Cambridge: MIT Press, 1977)Google Scholar at 15–18 [Nelson, Zoning].

46 William A Fischel, “Zoning and Land Use Regulation” in Boudewijn Bouckaert & Gerrit De Geest, eds, Encyclopedia of Law and Economics Vol II (Cheltenham, UK: Edward Elgar, 2000) 403 at 404; Fischel, William A, The Economics of Zoning Laws: A Property Rights Approach to American Land Use Controls (Baltimore: John Hopkins University Press, 1985) at 33.Google Scholar

47 Ibid at 88; Nelson, Zoning, supra note 45 at 16 (“[I]n all except a very few instances, local legislatures can be counted on to follow the residents’ wishes in administering the zoning of a neighborhood”).

48 See Larissa Katz, “Exclusion and Exclusivity in Property Law” (2008) 58 UTLJ 275; Chris Essert, “The Office of Ownership” (2013) 63 UTLJ 418.

49 Dworkin’s work has attracted many critiques, for instance: Elizabeth S Anderson, “What is the Point of Equality” (1999) 109 Ethics 287; Samuel Scheffler, “What is Egalitarianism” (2003) 31 Philosophy & Public Affairs 5. Nonetheless, we view the basic idea of an auction as plausible and defensible in this context.

50 For a similar methodology, see Denis Cogneau & Jean-David Naudet, “Who Deserves Aid? Equality of Opportunity, International Aid, and Poverty Reduction” (2007) 35 World Development 104.

51 Dworkin, Ronald, Justice for Hedgehogs (Cambridge: Harvard University Press, 2011) at 363.Google Scholar

52 Ibid at 356.

53 Dworkin, Ronald, “Ronald Dworkin Replies” in Burley, Justine, ed, Dworkin and His Critics (Oxford: Blackwell, 2004) 339 at 349.Google Scholar

54 Dworkin, Ronald, Sovereign Virtue: The Theory and Practice of Equality (Cambridge: Harvard University Press, 2000) at 74.Google Scholar

55 Ibid at 99-109.

56 A defensible distribution is an egalitarian distribution which is technically possible, if we discount political obstacles to realizing it. Ibid at 169.

57 The “real real” world is our world, fraught with inequalities and injustice, where not only are there technical problems with applying the auction, but the political will is also lacking. Ibid at 172-73.

58 Ibid at 178.

59 Ibid.

60 Exceptional case is Modderklip East Squatters v Modderklip Boerdery (Pty) Ltd, [2004] ZASCA 47, where the South African Constitutional Court held that illegal occupants who trespassed on private property would not be evicted until the state provides them with alternative land or housing. See Gregory Alexander & Eduardo M Peñalver, “Properties of Community” (2009) 10 Theor Inq L 127 at 154-60.

61 The difference between developer X and developer C’s willingness to pay is not ideological. It is not that C opposes such governmental behavior. The difference in the willingness to pay rests upon the available resources that C has, as well as her estimation of the profit she could make, considering the specific characteristics of her property, as well as her experience in development projects, financial abilities, etc.

62 The idea is that once the area has changed and the first developer’s contributions were provided, there is no more need or justification to extract public contributions from developers to follow. Other reason for not asking future developers to make contributions might be a policy change by the local government, due to changes in the general attractiveness of the city or other socio-economical transitions.

63 Fischel, “Equity and Efficiency”, supra note 37 at 322.

64 RG Lipsey & Kelvin Lancaster, “The General Theory of Second Best” (1956) 24 Rev Econ Stud 11.