Regulating the Growth Machine: Campaign Contributions, Zoning Environments, and Housing Supply in U.S. Cities

• In Event: Political Institutions, Public Preferences, and Regulation of the Housing Supply in American Cities

Abstract

Money in politics is the subject of great debate at every level of government, yet it has principally been studied at the federal level in the United States. Comparatively little is known about the role of campaign contributions in shaping policy outcomes at the local level, where many consequential land use and development decisions are made. In this paper, we describe and leverage a novel data set of over 3 million municipal election campaign contributions covering thousands of cities in the United States. We focus on real estate industry contributions in the context of the acute housing affordability crisis across many American municipalities. In the United States, decisions on zoning and permitting processes are largely filtered through political rather than market channels, creating conditions in which organized interests may seek to shape housing outcomes through campaign contributions to local officeholders. Using generalized difference-in-differences panel designs, we find that increased contributions from real estate development groups lead to greater permitting of multi-family housing, while effects on single-family housing are null to slightly negative. Critically, this relationship varies with the local regulatory environment. In cities with above-median zoning regulation, donations are associated with increases in multi-family permitting but no change in single-family permitting; in less regulated cities, donations are associated with both multi-family increases and single-family decreases. These heterogeneous effects suggest that the regulatory context conditions the strategic behavior of developers and the responsiveness of local policymakers to industry contributions. However, the magnitude of these effects is real but modest relative to the existing housing stock of large, heavily regulated cities, limiting the practical significance of developer influence on aggregate supply. Together, our findings suggest that developer campaign donations are less a cause of housing supply distortion and more a symptom of a regulatory environment that forces housing supply decisions through political channels.

Author

• Jennifer Gaudette, University of California, Riverside
  Presenting Author