This post originally appeared at https://www.badgerinstitute.org/coming-change-in-law-could-ease-wisconsin-housing-supply/

‘By-right development’ means simpler approval for projects that fit zoning codes 

Homes have become less affordable in Wisconsin, and some of the blame has been pinned onto delays that result from the public approval process for new development. Some relief might be coming in January, however, thanks to a law the Legislature passed last year.

The law, 2023 Wisconsin Act 16, will implement what’s called a “by-right” development policy. It decrees that local governments must approve any housing development that complies with existing zoning regulations. If a project is rejected, its developer can appeal to a circuit court, which is required to approve the proposal if it meets local standards.

The law is intended to reduce uncertainty and speed up the development process, minimizing delays caused by opposition. It passed into law by the Legislature on a bipartisan basis and signed into law by Gov. Tony Evers in June 2023 as part of an “affordable housing” package, along with other bills setting up state aid for housing rehabilitation.

“This bill sets that standard, saying, ‘Hey, communities, if you’re going to make those decisions, you just need to stick with the decision,’” said one of the law’s authors, Rep. Scott Krug (R-Nekoosa) at the time. “If you’ve got rules in place or your comprehensive plan in place, you need to follow those rules.”

In the public approval process for new development, municipal planners, city councils and community members determine the fate of housing projects. This process, though designed to gather community input, introduces uncertainty because developers can never be sure which aspects of a project might spark opposition.

Often, participants in such public meetings are not representative of the broader community. Meeting attendees are disproportionately older, white, male, and homeowners who have lived in the area for a long time, Boston University researcher Katherine Levine Einstein and colleagues have found. The authors also found a bias against new housing: In a survey of nearly 100 municipalities in Massachusetts, researchers found that 63 percent of meeting participants opposed new housing, while just 15 percent supported it.

However, a 2023 Pew Trusts survey suggests that this opposition is not reflective of the broader public, with large majorities favoring policies to enable more housing.

Existing homeowners often have an economic incentive to resist new development. Increasing housing supply can reduce home prices, potentially harming the value of homeowners’ most significant asset. In a survey of over 100 mayors across the country, Einstein and her colleagues found that 60 percent believed their local housing policy was shaped by a vocal minority rather than majority opinion.

The consequences are significant: higher rents, pricier mortgages, and slower economic growth. Future residents, who have no voice in the decision-making process, ultimately bear the burden of housing costs.

Wisconsin’s new law goes beyond by-right zoning. While it aims to bypass opposition to new developments that conform to a municipality’s existing zoning ordinances, many of those ordinances restrict development to single-family homes. Another provision of Act 16 modifies the process for amending zoning ordinances, making it easier to allow for greater housing density.

Under current Wisconsin law, if at least 50 percent of affected landowners object to a zoning change that would increase density, a three-fourths vote of the local governing body is required for approval. When it takes effect in January, Act 16 will lower this supermajority requirement to a simple majority. This change will make it easier to increase zoning density, facilitating the development of multifamily homes and other high-density housing options.

The law retains the existing requirement of a two-thirds vote for “down-zoning,” or reducing zoning density. In effect, Act 16 will make it easier to up-zone for increased housing density while keeping down-zoning more difficult.

While the bill limits local citizens’ ability to influence zoning codes directly, the opportunity for public participation remains at an earlier stage — the writing of municipalities’ comprehensive land-use plans. The Comprehensive Planning and Smart Growth Law, passed in 1999, requires local governments to outline a plan for housing, land use, transportation, and economic development.

While comprehensive plans don’t directly regulate land use, zoning ordinances must be consistent with them. If a zoning decision or land-use action is challenged in court, courts must consider whether it aligns with the locality’s comprehensive plan. If it doesn’t, the court can rule against the locality. This safeguard ensures that local development aligns with broader community goals, even if a particular zoning change faces resistance.

Moreover, comprehensive plans require public participation through open discussions and public meetings, providing a more representative process than housing approval meetings.

The urgency of housing costs has grown in recent decades: According to data from the Wisconsin Realtors Association, the median sales price of a home in Wisconsin has risen by over 50 percent between 2007 and 2022, increasing from $168,000 to $265,000, while Census data indicates that median household incomes in Wisconsin increased by about 20 percent over the same period.

A 2022 report by the Wisconsin Institute for Law & Liberty pinpointed the role of approval process delays in new housing developments, finding that it takes an average of 14 months to begin construction, largely due to a “tangled web of regulations.” The report estimated that such regulations add about $88,500 to the cost of each newly built home in the Midwest.

Nicholas McFaden is a researcher at the University of Wisconsin-La Crosse’s Menard Family Midwest Initiative for Economic Engagement and Research.

Any use or reproduction of Badger Institute articles or photographs requires prior written permission. To request permission to post articles on a website or print copies for distribution, contact Badger Institute President Mike Nichols at mike@badgerinstitute.org or (262) 389-8239.

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