Happy Tuesday and welcome to another edition of Rent Free. This week, the newsletter takes a look at what are shaping up to be the housing policy implications of the 2024 election.
That includes what one of Donald Trump's latest cabinet picks might mean for the president-elect's plans for "freedom cities," Democrats' housing-lite postelection recriminations, and one final Election Day loss for rent control in California.
Doug Burgum, Housing Czar?
Last week, Trump said he'd nominate North Dakota Republican Gov. Doug Burgum to be secretary of the Department of the Interior (DOI) and serve as the chairman of a new National Energy Council that will "oversee the path to U.S. ENERGY DOMINANCE."
For all intents and purposes, that makes Burgum the incoming administration's energy czar.
Given what Trump and Republicans have said they want to do on housing, Burgum's perch at the head of the DOI could also make him the incoming administration's de facto housing czar.
During the 2024 campaign, Trump's major housing policy proposal was to build new homes on federal lands.
As early as March 2023, Trump was pitching the idea of holding design contests for 10 federally chartered "freedom cities" to be built on federal lands.
His eight-part plan for "mak[ing] America affordable again" likewise called for "open[ing] up portions of federal land for large-scale housing construction—ultra-low-tax and low-regulation zones—where millions of Americans will take part in settling these safe and beautiful communities."
The 2024 Republican platform offered the slightly more modest idea of "open[ing] limited portions of Federal Lands to allow for new home construction."
These proposals dovetail with Republican-sponsored legislation allowing the sale of Western lands currently managed by the Bureau of Land Management (BLM) for new residential development.
As head of the DOI (in which the BLM is housed), Burgum would be the cabinet secretary in charge of selling off those BLM lands. The North Dakota governor has also received plaudits from housing supply-siders for comments he's made about the deleterious effect of zoning and the need to build more walkable, mixed-use communities.
Those GOP-backed bills to sell off BLM lands went nowhere while Democrats were in control of the Senate and the White House. But with an incoming Republican trifecta government, an electorate more concerned than ever about housing, and an interior secretary interested in housing costs, some version of Trump's "freedom cities" might be an idea whose time has come.
Federal Control
To be sure, the federal government owns a lot of vacant land that could be used for housing. It currently owns 28 percent of all the country's land, including about 50 percent of land in the West. In eight Western states here, the federal government owns over 40 percent of the land.
A lot of this land is already serving as military bases, national parks, wilderness monuments, and other protected uses that leave it off-limits to development. But a lot of that land isn't.
About 40 percent of federal land in 12 Western states is managed by the BLM.
A 2022 report from Congress' Joint Economic Committee (JEC) Republicans points out that much of this land is adjacent to growing Western metros like Las Vegas, Nevada, and Salt Lake City, Utah. These Western metros have also seen huge booms in home prices as a result of COVID-era in-migration.
That JEC report estimates that building on federal BLM land could add 2.7 million homes. This would overcome 14 percent of the country's estimated housing shortage and 100 percent of several Western states' housing shortage.
Interior's Eternal Land Sale Process
Technically the BLM already has the ability to sell off its excess land for residential development, but the process is exceedingly complex and cumbersome. That's by design.
As the BLM website notes, the bureau "does not offer much land for sale because its congressional mandate, enacted in 1976, is to generally retain public lands in public ownership."
Federal law limits the BLM to selling off only those lands that are uneconomical to manage, were acquired for a purpose that has since been served, or are constraining the growth of existing communities and where there isn't nonpublic land that could feasibly service that growth.
Theoretically, a lot of land might still clear these high bars. But before it can be sold off, the BLM has to identify it as excess land in its land use plans. Those plans take a long time to put together and require environmental review under the National Environmental Policy Act (NEPA) and rounds of public engagement with state, local, and private stakeholders.
An individual sale of a BLM-managed parcel also often requires NEPA review and numerous rounds of public notification and public engagement. Federal law requires the BLM to notify local and state governments of a sale so that they can zone the land. It must also notify adjacent land owners and the members of Congress whose districts cover the land to be sold.
Congress has the power to disapprove larger land sales.
In the late 1990s, Congress created a process for auctioning off BLM land in southern Nevada to private parties. Sales through this relatively streamlined process still take between 12 months and 18 months. As a result, only 17,000 acres of BLM land have been sold in the last quarter-century since this process was created.
The HOUSES Act
Sen. Mike Lee (R–Utah) introduced legislation in the last two Congresses that would open up a lot more BLM land across the West for residential development.
Lee's Helping Open Underutilized Space to Ensure Shelter (HOUSES) Act would allow state and local governments to nominate parcels of BLM land for home construction. With the approval of the DOI, those state and local governments could purchase that land at below-market rates.
Those government purchases would come with a number of strings attached.
The newly purchased land would have to be zoned for a minimum of four homes per acre and at least 85 percent of the land would have to be reserved for residential construction and related community needs like schools, houses of worship, hospitals, and grocery stores. Only 15 percent of the land could be used for commercial development.
Those requirements would ensure that the sold-off BLM land is devoted to housing. But it would also limit the development of job centers and businesses that could make new exurban communities viable.
The Niskanen Center's Andrew Justus argued in a December 2022 article the bill as written would also leave a lot of new housing on the table.
The bill would still permit government entities to enact zoning laws that prohibit new townhomes, accessory dwelling units, and manufactured housing. While the interior secretary could evaluate proposed sales of BLM land to state and local governments, he or she couldn't prioritize sales to governments that had adopted more liberal zoning regulations.
Clashing Visions, Conflicting Priorities
Lee's HOUSES Act meshes well with the Trump administration's call for residential development on federal lands. There's a question of how well the bill meshes with Burgum's own views of housing.
At a February 2024 meeting of the National Governors Association, Burgum touted zoning reforms that would allow for more mixed-use, walkable neighborhoods, saying, "We've got to get the coffee shop, the barber shop, and law firms back into residential neighborhoods in ways that could help lower the cost and create services where you don't need a car for everything."
In those same remarks, Burgum also criticized greenfield development of auto-oriented, exclusively residential neighborhoods that require lots of "linear feet" of road, sewer, and water infrastructure.
In short, his support for mixed-use infill development would seem to conflict with the exurban, primarily residential development that would be allowed under Lee's legislation.
One way of squaring that circle would be to amend the HOUSES Act to require that state and local governments allow denser forms of housing and mixed-use neighborhoods on the land they purchase from the BLM.
Such amendments wouldn't require developers to build any particular type of housing. Indeed, it would ensure that sold-off BLM land is closer to the "ultra-low-tax and low-regulation zones" that Trump has endorsed.
Given the primary role the HOUSES Act would reserve for the interior secretary in approving BLM land sales, Burgum could play a major part in shaping the legislation should it be reintroduced in Congress.
Even if a compromise were reached on this point, there's a lingering question of what the DOI's priorities would be under Burgum's leadership in the new Trump administration.
The BLM runs the federal government's program for leasing federal lands for oil and gas extraction. As Trump has said explicitly, he wants the federal government to be more proactive about allowing more domestic energy production.
A Congressional Research Service report on BLM land sales from June 2024 notes that Bureau staff have "broad responsibilities that may compete for their time."
If the BLM prioritizes resources and staff time to permitting more oil and gas drilling, that could come at the expense of expediting land sales for residential construction under the HOUSES Act.
One solution would be to hire more staff at the BLM to do both. But then there's the question of how well devoting more resources to the BLM would mesh with the Department of Government Efficiency initiative to cut federal spending and bureaucracy.
Even when the watchword of the new administration is more private-sector production and less government, one aspect of a MAGA-inflected "abundance agenda" might have to give way to another.
These aren't necessarily unresolvable conflicts, but they are things the incoming Trump administration will have to work out via thoughtful policymaking.
Dems in Disarray (on Housing)
While Republicans try to figure out what victory in the 2024 federal elections will mean for their housing policy priorities, Democrats will need to figure out what defeat means for theirs.
Blue America's high-cost, high-regulation housing markets have led to a slow, mass exodus of people to more growth-friendly, Republican-dominated states. With those cost-of-living refugees go congressional seats and Electoral College votes.
If those trends continue, the Democratic Party will become less and less competitive at the national level.
But as Jerusalem Demsas notes in a new essay for The Atlantic, Democrats' postelection recriminations have been light on any consideration of what role housing policy is playing in their waning political fortunes.
"In the aftermath of Trump's reelection, as several Democratic governors have telegraphed their intent to act as bastions of resistance in the coming years, none has focused on the issue that has most hollowed out the promise of liberal America," she writes. "Nowhere in these headline-seeking pronouncements is a plan to address the housing and cost-of-living crisis or even a reckoning with the failures that produced the status quo."
Part of the problem is that there's a misalignment of incentives between state and national Democratic priorities on this issue.
More and more Republican voters leaving New York and California because of the high housing costs is good for Democrats in New York and California, even if it's bad for the party nationally. And state governments have a lot more say over housing than the federal government.
Perhaps this is one of the reasons that Democratic governors have focused on #resistance policies following Trump's victory rather than calls for liberalizing their zoning codes.
A more competitive Democratic Party is not necessarily the best argument for looser zoning regulations and more affordable housing. But it is certainly a good thing for the country if both parties see an electoral advantage in offering pro-growth, pro-market policies on housing and the economy generally.
Another Ballot Box Defeat for California's Rent Control Machine
California's slow-as-molasses vote counters preliminarily report that Proposition 34 will pass. That measure requires organizations benefiting from certain federal discount drug programs to spend almost all the funds they receive from those programs on direct patient care.
The seemingly housing-unrelated measure will effectively bar the AIDS Healthcare Foundation (AHF), a major funder of rent control causes, from bankrolling future initiatives.
Over the past six years, AHF has sponsored three statewide initiatives to repeal existing state guardrails on local rent control policies. This year's Prop. 33 would have completely forbidden the state Legislature from regulating local rent control policies.
These perennial efforts irked California's landlords enough to run with Prop. 34 to effectively defund the AHF's housing activism.
Voters roundly rejected Prop. 33 this year, with only about 40 percent of them approving the measure. Prop. 34 won by a much narrower margin.
There are valid critiques to be made of what was effectively a revenge initiative targeting one organization's activism. Nevertheless, one shouldn't shed too many tears over the fact that rent control initiatives promising to wreck the state's housing market even more will appear on future ballots.
Denver Legalizes Granny Flats
Notably, one of the few states that shifted blue in the latest election is the one Democratic-controlled state that's arguably done the most to loosen regulations on housing development.
This year, the Colorado Legislature, with the enthusiastic backing of Democratic Gov. Jared Polis, passed a suite of zoning reforms. That includes a law that requires localities to allow accessory dwelling units (ADUs), sometimes called granny flats or in-law suites, in single-family neighborhoods by June 2025.
Denver, Colorado, is getting a jump on this new state requirement. On Monday, the Denver City Council voted unanimously to allow ADUs in residential neighborhoods citywide. The zoning changes also remove owner-occupancy requirements that previously mandated that the property owner live on-site in order to build an ADU.
Quick Hits
- An Outback Steakhouse in Plymouth Township, Pennsylvania, is seeking relief from local zoning regulations that limit the size of its sign. What's next, zoning laws that regulate the size of bloomin' onions?
- Washington, D.C.'s Board of Zoning Adjustment has granted a zoning exemption to local bagel shop Call Your Mother that allows it to continue to serve prepared food at its Georgetown locations. It's a win for everything bagels and a defeat for "everything-bagel liberalism."
- Some Massachusetts communities continue to fight against state-level measures requiring them to allow apartments near transit lines. Read Rent Free's past coverage of Massachusetts' new zoning law and the local resistance to it.
- Last month, The New York Times reported on economists' criticism of the notion that increased immigration is primarily responsible for driving up housing costs.
- We finally have the full judicial decision striking down Arlington, Virginia's recently passed "missing middle" zoning reforms. It's reportedly "a doozy."
The post Will Doug Burgum Be Donald Trump's Housing Czar? appeared first on Reason.com.
