The Problem with Land Use Controls

by Timothy Sandefur

I was up in the Lake Tahoe area this weekend and ran across a flyer for a property for sale. This little cabin is near Fallen Leaf Lake, which is a smaller lake at the bottom of a creek the flows out of Tahoe and over some gorgeous waterfalls. The cabin itself is tiny—768 square feet, a single bedroom and a single bathroom—and it does not have a lake view or a garage. It’s at the end of a quarter-mile single-lane road, so that to drive there you have to keep pulling over to let cars by. You can only use it during the summer months because it snows in completely in the winter. It’s on a small, quarter-acre parcel of land.

And yet, as you can see, the sellers are asking almost nine hundred thousand dollars for it.

Why? Note what it says on the flyer: “TRPA Site Assessment Completed,” “Topographic As Built Survey, House Plans.” In other words, this is a tear-down property for almost a million dollars. And that’s because the Tahoe Regional Planning Agency makes it so difficult to get permission to build on your land that even a tiny opportunity like this is valued at an astronomical price.

We often hear law professors and government lawyers claim that the building permit system actually increases your property value—that’s the claim, for example, being made by the City of Flagstaff in our Proposition 207 lawsuit. But obviously it doesn’t increase the value for the people who are prohibited from using their land. What it really does—what the inflated value of this property really represents—is a transfer of property value from those forbidden to build to those allowed to build. This little cabin is like a sponge that has soaked up the property values of other Tahoe area residents—values taken from those residents by the oppressive land use restrictions in the Lake Tahoe area.

And whatever you think about restrictions in the Tahoe area, the fact is that these restrictions do the same thing wherever they are put in place. In ugly urban areas no less than in a pristine wilderness. These restrictions violate property rights by taking away the right to use your property—and thereby drive up the price for the remaining property that still can be used. The results are higher housing prices and a higher cost of living for everyone in society.