Happy Tuesday and welcome to another edition of Rent Free. This week's stories include:

• A federal appeals court slaps down the federal government's odd argument that it doesn't have to compensate landlords for its eviction moratorium because the moratorium was illegal.
• Vice President Kamala Harris sets a first-term goal of building 3 million middle-class homes.
• A Michigan judge sides with property owners trying to build a "green cemetery."

But first, a look at an under-the-radar federal regulation change that might make it easier for builders to create more small multifamily "missing middle" homes.

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Code Games

In his 1942 book Capitalism, Socialism, and Democracy Joseph Schumpeter praised capitalist mass production for bringing almost every basic commodity, from food to clothing, within the affordable reach of the working man. The one exception he highlighted was housing, which he confidently predicted would soon see a similar collapse in prices due to mass-produced manufactured housing.

As it happens, manufactured housing production—which is built in factories and then shipped and installed on-site—peaked in the mid-1970s and has been limping along as a small share of overall home construction ever since.

Nevertheless, the dream that cheap, factory-built homes can deliver lower-cost housing has never died.

It's certainly alive and well in the current White House.

This past week, the Biden-Harris administration released a "fact sheet" of actions it was taking to lower housing costs. It included an in-progress regulatory change that would allow two-, three-, and four-unit homes to be built under the federal manufactured housing code set by the U.S. Department of Housing and Urban Development (HUD).

"The HUD Code creates economies of scale for manufacturers, resulting in significantly lower costs for buyers," says the White House in that fact sheet. Letting small multifamily housing be built under the HUD code will extend "the cost-saving benefits of manufactured housing to denser urban and suburban infill contexts," it says.

IRC, IBC, IDK

The proposed change comes at an interesting time for small multifamily housing construction.

Across the country, more and more states and localities are allowing more two-, three-, and four-unit homes to be built in formerly single-family-only areas.

That liberalization of the zoning code (which regulates what types of buildings can be built where) has set off a follow-on debate about which building code (which regulates construction standards) newly legal multiplexes should be regulated under.

Currently, the options are either the International Building Code (IBC) or the International Residential Code (IRC).

The IBC and IRC are model codes created by the non-profit International Code Council, which are then adopted (often with tweaks and changes) by states and localities.

The IBC typically covers apartment buildings of three or more units, while the IRC covers single-family homes. Neither is particularly well-suited for the regulation of smaller multi-family buildings that cities are now legalizing.

The IBC, for instance, requires expensive sprinkler systems that don't do much to improve fire safety in smaller buildings but can make their construction cost-prohibitive.

Zoning reformers have responded by trying to shift the regulation of smaller apartments into the IRC. But that raises its own problems, says Stephen Smith of the Center for Building in North America.

"It's a complicated thing to do because the IRC is not written for small multi-family. It's written for detached single-family," he says. "For traditional apartment buildings with a single entrance and stairs and halls and stuff, it's not really clear how the IRC would work with that."

The White House's proposed changes open the possibility of sidestepping this IRC-IBC dilemma entirely by letting builders of manufactured, multifamily housing opt into a single, national set of regulations.

A Floor or a Ceiling?

The question then is whether this will actually make life easier for builders.

The effect of HUD regulation on the production of single-family manufactured housing is a topic of intense debate.

Prior to the 1970s, manufactured housing was governed by a patchwork of state and local building codes. In 1974 Congress passed legislation that gives HUD the power to regulate manufactured housing.

Critics of HUD regulation argue that its initial implementation caused the steep decline in manufactured housing production in the 1970s.

In particular, they point to the HUD requirement that manufactured housing must sit on a steel chassis as a regulation that increases costs and decreases production.

Brian Potter, a senior fellow at the Institute for Progress and writer of the Construction Physics Substack, contrastingly argues that HUD regulation has actually helped keep the cost of building manufactured housing down.

The production of all housing, not just manufactured housing, plummeted in the 1970s, he notes. Since the 1970s, the costs of non-manufactured, site-built housing have skyrocketed while the costs of building manufactured housing have risen much less, he points out. Potter argues that the effect of the steel chassis requirement is also overstated.

To this day, manufactured housing is the cheapest type of housing to produce when comparing smaller manufactured housing units to smaller site-built single-family housing units. The HUD code has less expensive requirements and allows builders more flexibility in the construction of units.

"The most interesting and attractive thing about the HUD code is that HUD code homes tend to be much, much less expensive than single-family homes," says Potter.

The hope is that allowing newly legal duplexes, triplexes, and fourplexes to be built under HUD standards would reduce costs compared to building them under IBC or IRC regulations.

Degrees of Change

While the HUD code has been in existence since the 1970s, its explicit exclusion of manufactured, multifamily housing is a relatively recent development. In 2014, HUD issued a memorandum saying that only single-family housing can be built under the department's manufactured housing standards.

In a 2022 public comment on the proposed updates, the Manufactured Housing Association for Regulatory Reform argues that the 2014 memorandum was in error and that HUD actually has no regulatory authority to cap the number of units that can be built under the code.

According to the White House fact sheet, the Biden administration's proposed updates to the HUD code would once again allow up to four units of housing to be built under the code once again.

If the HUD code critics are correct, then this will make a minimal difference. Under this theory, builders would just have another cost-increasing building code to choose from. If folks like Potter are correct, however, this should allow builders to opt into less demanding regulations. We might therefore see an increase in the number of two-, three-, and four-unit homes built.

Building code liberalization will still only be effective in places where zoning code liberalization has already happened. Cities and states still have every power to zone out multifamily housing and ban the placement of manufactured housing.

Where cities have made those "missing middle" reforms, however, it's possible the White House's proposed regulatory changes will increase the production of manufactured, multifamily housing while policymakers figure out whether how to change the IBC or IRC to allow more site-built multiplexes.

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If the CDC's Eviction Moratorium Was Illegal, Do the Feds Have To Pay for It?

When the Centers for Disease Control and Prevention (CDC) banned residential evictions for non-payment of rent in 2020, property owners responded with a flurry of lawsuits, arguing that the federal government owed them compensation for what amounted to a physical taking of their property.

While those lawsuits were ongoing, the U.S. Supreme Court ruled in August 2021 that the CDC moratorium was an illegal overstepping of the agency's authority.

This armed the federal government with an audacious response to all those property owners' claims for compensation: Because the CDC's eviction moratorium was illegal and lacked federal authorization, the federal government wasn't required to pay any compensation.

Incredibly, the Court of Federal Claims agreed with this argument—citing past cases that immunized the government from having to pay compensation for clearly illegal, unsanctioned acts of its agents—and dismissed a property owners' lawsuit in the case of Darby Development Co. v. United States.

But this past week, the United States Court of Appeals for the Federal Circuit sided with property owners and reversed that dismal.

The appeals court ruled that the CDC eviction moratorium, while illegal, clearly did have the endorsement of both Congress and the executive branch.

"Taken to its logical conclusion, [the government's] position is that government agents can physically occupy private property for public use, resist for months the owner's legal attempts to make them leave, and then, when finally made to leave, say they need not pay for their stay because they had no business being there in the first place," wrote Judge Armando O. Bonilla in an opinion issued earlier this month.

The case is now remanded back to the federal claims court.

"The government should not be able to hide behind its own illegality to avoid paying damages for that very illegality," Greg Dolin, a senior litigation counsel at the New Civil Liberties Alliance (which filed an amicus brief in the Darby case) told Reason.

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Kamala Harris, Supply Sider?

In a speech this past Friday laying out her economic agenda, Vice President and Democratic presidential candidate Kamala Harris criticized state and local restrictions on homebuilding for driving up prices.

"There's a serious housing shortage in many places.  It's too difficult to build, and it's driving prices up. As president, I will work in partnership with industry to build the housing we need, both to rent and to buy. We will take down barriers and cut red tape, including at the state and local levels," said Harris, promising to deliver 3 million units of housing that's affordable to middle-class families by the end of her first term.

It's always refreshing to hear a politician accurately diagnose the cause of America's high housing costs as a matter of restricted supply. It's even better when politicians promise to do something about those supply restrictions. Harris' remarks are rhetorically a lot better than the explicit NIMBYism coming from Republican presidential contender Donald Trump.

Nevertheless, Harris' actual housing policies, including downpayment subsidies and rent control, will only make the problem worse. Downpayment subsidies will drive up demand and prices while leaving supply restrictions in place. Rent control has a long, long record of reducing the quality and quantity of housing.

Harris' speech was also peppered with lines attacking institutional housing investors who are providing much-needed capital for housing production.

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Town's Ban on 'Green Cemetery' Is Dead

If the government doesn't like your cemetery, can it just ban all cemeteries? The answer, at least in Michigan, is no, no it can't.

In the case of Quakenbush et al v. Brooks Township et al, a state circuit court judge sided with a married couple who'd sued their local government when it passed a ban on new cemeteries with an eye toward stopping their development of the state's first "conservation burial forest."

"We're excited and feel vindicated by this ruling. We are delighted that the judge understood that Brooks Township's ordinance violated our right to use our property," said Peter and Annica Quakenbush, the plaintiffs in the case. They were represented by the Institute for Justice.

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Quick Links

• Jim Burling, the Pacific Legal Foundation's vice president of legal affairs, has a new book Nowhere to Live covering the legal history of zoning in America, the courts' acquiescence to this restriction on property rights, and all the attendant consequences of high housing costs and homelessness that have flowed from it.
• A new paper published on SSRN estimates that a 25 percent reduction in permitting times in Los Angeles leads to a 33 percent increase in housing production.
• Calmatters covers the killing, or severe injuring, of various bills introduced in the California Legislature this year that aimed to pair back the California Coastal Commission's powers to shoot down new housing production. Read Reason's past coverage of the Coastal Commission here and here.
• Hawaii has legalized accessory dwelling units statewide, but they haven't made building them easy.
• If you build it, prices drop.

*UPDATED* (and still true)

When you build "luxury" new apartments in big numbers, the influx of supply puts downward pressure on rents at all price points -- even in the lowest-priced Class C rentals. Here's evidence of that happening right now:

There are 21 U.S. markets where… pic.twitter.com/BF9GY0YiFY

— Jay Parsons (@jayparsons) August 13, 2024

The post Code Games appeared first on Reason.com.

The question of why the chicken crossed the road is of secondary importance to who gets to claim the bird's carcass if it's killed while attempting the crossing.

For a long time, the rule in a majority of the country was the government got to keep the deceased animal. State laws prohibited drivers from claiming the meat of animals killed on public roads and highways for food. Instead, ownership of the corpses defaulted to whichever agency maintained the roads, wasting countless tons of farm-fresh, slightly battered flesh to rot.

In recent years, a growing number of states have been loosening their highway harvesting bans. The Associated Press reported in 2022 that "30 or so" states now allow people to harvest roadkill. The pace of reform doesn't appear to be slowing down.

Come July, a new Virginia law allowing anyone to claim roadkill all year round will go into effect. Current law allows only the driver who the killed animal to claim the carcass, and only if they hit the animal during hunting season.

Liberalizing roadkill harvesting also stands to unite animal rights activists and fiscal conservatives.

The animal rights group People for the Ethical Treatment of Animals (PETA) has endorsed roadkill as superior to supermarket-sold meat.

"Animals killed on the road were not castrated, dehorned, or debeaked without anesthesia, did not suffer the trauma and misery of transportation," says the organization on its website.

Virginia Del. Tony Wilt (R–Harrisonburg), the author of Virginia's new law, advocated for the policy change as a way of reducing the burden on the state's transportation department.

"Currently, if nobody takes the animal, it falls back onto [the Virginia Department of Transportation]. There are certain times of the year when those things can stack up," he said during a committee hearing earlier this year, per reporting from WRIC.

Libertarians would obviously be on board with these policies as well. Under an ideal regime of privatized roads, it's possible that road companies might claim animal carcasses for themselves. But so long as the public owns and operates the highways, it seems only fair that the public be allowed to harvest whatever animals are killed on them as well.

The open road, and all it has to offer, has long been associated with a particularly American vision of freedom. Expanding that freedom to what lies on the side of the road can only be considered a win for individual liberty.

The post New Virginia Law Will Let Anyone Harvest Roadkill Anytime of Year appeared first on Reason.com.

In a recent essay in the journal Monash Bioethics Review, oncologist Vinay Prasad and health researcher Alyson Haslam provide a comprehensive after-the-fact assessment of the federal government's rollout of the COVID-19 vaccines.

Their basic takeaway is that the vaccines were a "scientific success" tarnished by flawed federal vaccine policy.

The two argue the tremendous benefits of the COVID-19 vaccines for the elderly were undercut by government guidance and messaging that pushed vaccines on the young, healthy, and previously infected when data suggested that wasn't worthwhile (and was in some cases counterproductive).

Worse still, the government even pushed vaccine mandates when it was increasingly clear the vaccines did not stop COVID-19 transmission, they argue.

To correct these errors for future pandemic responses, Prasad and Haslam recommend performing larger vaccine trials and collecting better data on vaccine performance in lower-risk populations. They also urge policy makers to be more willing to acknowledge the tradeoffs of vaccination.

That's sound advice. We'll have to wait and see if the government adopts it come the next pandemic.

There is one policy that they don't mention and doesn't totally depend on the government getting better at judging the risks of new vaccines: Charge people for them.

Had the government not provided COVID-19 vaccines for free and shielded vaccine makers and administrators from any liability for adverse reactions, prices could have better rationed vaccine supply and better informed people about their risks and benefits.

Without prices, people were instead left with flawed government recommendations, incentives, and rationing schemes.

Those who recall early 2021 will remember the complex, often transparently silly eligibility criteria state governments set up to ration scarce vaccine supplies. This often involved prioritizing younger, healthier, often politically connected "essential workers" over elderly people.

Prasad and Haslam criticize this as a government failure to prioritize groups at most risk of dying from COVID-19.

"While the UK prioritized nursing home residents and older individuals…the US included essential workers, including young, resident physicians," write Prasad and Haslam. "Health care workers face higher risks of acquiring the virus due to occupation (though this was and is offset by available personal protective equipment), but this was less than the elevated risk of death faced by older individuals."

Yet if the government hadn't assigned itself the role of distributing vaccines for free, it wouldn't have been forced into this position of rationing scarce vaccine supplies.

Demand for the vaccine is a function of the vaccine's price. Since the vaccine's price was $0, people who stood to gain comparatively less from vaccination and people for whom a vaccine would be lifesaving were equally incentivized to receive it.

Consequently, everyone rushed to get in line at the same time. The government then had to decide who got it first and predictably made flawed decisions.

Had vaccine makers been left to sell their product on an open market (instead of selling doses in bulk to the federal government to distribute for free), the elderly and those most at risk of COVID-19 would have been able to outbid people who could afford to wait longer. Perhaps more lives could have been saved.

Over the course of 2021, the supply of vaccines outgrew demand.

At the same time, as Prasad and Haslam recount, an increasing number of people (particularly young men) were developing myocarditis as a result of vaccination. Nevertheless, the government downplayed this risk, continued to urge younger populations to get vaccinated, and failed to collect data about the potential risks of vaccination.

That's all a failure of the government policy. Even if the government was slow to adjust its recommendations, prices could have played a constructive role in informing people about their own risk-reward tradeoff of getting vaccinated.

If a 20-year-old man who'd already had COVID-19 had to spend something to get vaccinated, instead of nothing, fewer would have. Prasad and Haslam argue that would have been the right call healthwise.

Without prices, that hypothetical 20-year-old's decision was informed mostly by government guidance, and, later, government mandates.

The government compounded this lack of prices by giving liability shields to vaccine makers. As it stands right now, no one is able to sue the maker of a COVID-19 vaccine should they have an adverse reaction. (Unlike standard, non-COVID vaccines, people are also not allowed to sue the government for compensation for the vaccine injuries.)

If pharmaceutical companies had to charge individual consumers to make money off their vaccines, and if those prices had to reflect the liability risks of the side effects some number of people would inevitably have, consumers would have been even better informed about the risks and rewards of vaccination.

One might counter that individual consumers aren't in a position to perform this risk-reward calculation on their own.

That ignores the ways that other intermediaries in a better position to evaluate the costs and benefits of vaccination could contribute to the price signals individuals would use to make their own decisions.

One could imagine an insurance company declining to cover COVID-19 vaccines for the aforementioned healthy 20-year-old while subsidizing their elderly customers to get the shot. (This is, of course, illegal right now. The Affordable Care Act requires most insurance plans to cover the costs of vaccination for everyone.)

Instead, the financial incentives that were attached to vaccination were another part of the federally subsidized vaccination campaign.

State Medicaid programs paid providers bonuses for the number of patients they vaccinated (regardless of how at risk of COVID-19 those patients were). State governments gave out gift cards to those who got vaccinated and entered them in lotteries to win even bigger prizes.

Leaving it up to private companies to produce and charge for vaccines would have one added benefit: It would make it much more difficult for the government to mandate vaccines or otherwise coerce people into getting them.

One of the things that made it easy for local and state governments to bar the unvaccinated from restaurants and schools was that they also had a lot of free, federally subsidized doses to give away. People didn't have a real "excuse" not to get a shot.

Had people been required to pay for vaccines, it would have been more awkward and much harder (politically and practically) to mandate that they do so.

Economist Alex Tabarrok likes to say that a "price is a signal wrapped up in an incentive." They signal crucial information and then incentivize people to act on that information in a rational, efficient way.

By divorcing COVID-19 vaccines from real price signals, we were left with an earnest, government-led vaccination effort. That effort got a lot of lifesaving vaccines to a lot of people.

But it also encouraged and subsidized people to get vaccinated when it was probably not a necessary or even good idea. When not enough people got vaccinated, governments turned to coercive mandates.

The post The COVID-19 Vaccines Shouldn't Have Been Free appeared first on Reason.com.

Congress has passed a five-year, $105 billion Federal Aviation Administration (FAA) reauthorization bill that will make it easier to install new air traffic control technology, and make it harder for small-time travel agents to earn a living, but otherwise leaves aviation regulation more-or-less unchanged.

"This could have been much worse," says Marc Scribner, a transportation researcher at the Reason Foundation (which publishes this website). "It's not a great bill, but from what we could reasonably expect in the first reauthorization bill after COVID, it's hard to see Congress doing anything all that dramatic."

The House voted 387–26 in approval of the bill, days after the Senate passed it on a vote of 88–4, reports The New York Times.

During COVID, Congress appropriated a massive amount of money for airlines and airports. The major commercial airlines received $54 billion in bailouts across three separate aid bills. The massive infrastructure bill passed in 2021 also gave airports $25 billion to build and maintain their facilities.

As the Congressional Research Service notes, these direct taxpayer airport subsidies were a departure from the standard practice of funding aviation infrastructure with "user taxes and fees."

The bailouts and subsidies were based on the assumption that there would be a prolonged slump in demand for air travel, threatening the ability of airlines and airports to support themselves off ticket revenue and user fees.

As it happens, the airline industry has bounced back pretty quickly. Airline profits were way up last year. Transportation Security Administration (TSA) checkpoint data show travel volumes are surpassing pre-pandemic levels.

With this year's reauthorization bill, Congress was attempting to "get its bearings" by largely preserving the status quo, says Scribner. The most positive change is the bill's easing of regulations on remote air traffic control technology, he says.

A growing trend in Europe is to move air traffic controllers into remote air traffic control centers, which use infrared cameras and other digital technology to monitor flights. This improves controllers' ability to monitor air traffic in cloudy or bad weather.

The centers are also much cheaper to build, making it financially feasible to install this digital control technology at smaller airports that can't currently justify the cost of building a traditional, windowed control tower.

Because they don't need to be at the actual airports, these remote air traffic control centers could be set up to monitor traffic at multiple airfields at once.

In Europe, remote air traffic control technology is tested at the airports where it's going to be deployed. However, the FAA requires that this technology go through a yearslong vetting process at an FAA facility in New Jersey. That adds significant time and cost to its deployment.

The new FAA bill requires the agency to figure out how to test this technology outside that New Jersey facility. That will hopefully get the FAA to "take the hint" and start letting this technology be vetted at airports themselves, says Scribner.

The biggest critics of the new FAA bill are smaller travel agents, who say the fine details of some of the bill's "consumer protections" could put them out of business.

In April 2024, the Biden administration finalized regulations requiring that airlines issue automatic cash refunds to customers who'd had their flights canceled. If their tickets were purchased through a travel agent, the travel agent is responsible for providing the refund.

The trouble is that airlines are not required to immediately refund the travel agent for canceled flights, setting up situations where a travel agent might have to automatically dispense refunds out of their own pocket before they've been compensated by the airline. For a small travel agency refunding blocks of tickets at once, those costs could be ruinous.

Travel agents had been hoping the FAA bill would fix this issue. Instead, it's codified the existing rules into law.

"Travel agencies are not positioned to float the kind of financial obligations that policymakers are strapping on their backs," said Zane Kerby, president and CEO of the American Society of Travel Advisors, in a statement. "In the end, the consumer suffers, as travel advisors will be less inclined to book airfare, leaving the flyer without an advocate when travel plans go south."

The FAA reauthorization is also littered with missed opportunities.

It does not take up longstanding reform proposals to spin off air traffic control operations into an independent government entity or private nonprofit—an arrangement common in most other developed countries.

Proponents of an independent air traffic control entity say it would allow for quicker deployment of new technology and solve the conflict of interest created by the FAA both regulating and operating air traffic control.

The bill doesn't make any progress on privatizing airports. It doesn't give airports more flexibility to raise passenger facility charges that fund airport facilities. It doesn't touch onerous flight hour requirements that are contributing to a growing pilot shortage.

The FAA and most federal aviation programs have to be reauthorized every five years. The last reauthorization bill was passed in 2018. Congress has been making do with short-term extender bills since 2023.

The most recent short-term extension will expire Friday. President Joe Biden is expected to sign the bill into law before then.

The post Congress' FAA Reauthorization Is Good for Remote Towers, Bad for Travel Agents appeared first on Reason.com.

Seemingly overnight, artificial intelligence went from a far-future science fiction technology to a real thing that is supposedly on the verge of ushering in utopia and/or killing the human race. Lost in the shuffle of this discourse is serious discussion of what AI technology can actually do and what real-world effects it is having.

Explaining actual AI products is the core of Timothy B. Lee's excellent Substack newsletter Understanding AI. Lee, a journalist (and occasional Reason contributor), refreshingly covers AI like a normal newsworthy subject. His articles include a nice range of original reporting on the companies and nonprofits producing AI, service journalism on how ChatGPT compares to Gemini, even-handed analysis of the legal and regulatory questions AI has inevitably provoked, and explainer articles on what even is a large language model.

The biggest takeaway is that, for all the boosterism and doomerism, AI will be a normal-ish technology that will have normal-ish impacts on the world. One of Lee's best entries is a deep dive into how AI has affected one of the industries where it already predominates: language translation. Turns out that prices for translation have fallen and companies consume more translation services. That's an unambiguous win for consumers.

The labor effects are more mixed. Some translators are specializing in more complex legal and medical translations the machines can't quite nail (and where mistakes create huge liabilities). Nonspecialized translators are either using AI to boost their productivity or dropping out of the industry.

Love AI or hate it, falling prices, rising consumption, and increased specialization sounds like the normal process of technological advancement under free-ish markets.

The post Review: <i>Understanding AI</i> Helps Separate the Sci From the Fi appeared first on Reason.com.

A San Marcos, Texas, couple would like to remove a reference to a Ku Klux Klan supporter from the front of their home, but the local historic preservation board has said no dice.

The reference in question is a large metal "Z" bolted to a wrought iron Juliette balcony on the front of Kristy Kay Money and Rolf Jacob Sraubhaar's house in San Marcos' Burleson Historic District.

That "Z" is the initial of the home's owner and builder, Frank Zimmerman, a prominent local businessman and owner of the city's downtown historic theater who served as San Marcos mayor from 1949 to 1951.

Zimmerman also has ties to the Ku Klux Klan. His theater hosted Ku Klux Klan days and screenings of Birth of a Nation.

Given this legacy, Money and Sraubhaar decided they wanted to remove the balcony and its large "Z" from the front of their home.

But because their home is in a historic district, although not a historic structure itself, the couple needed to get the sign-off of San Marcos' Historic Preservation Commission to alter its façade. In May 2023 the commission voted unanimously to deny their application to remove the balcony from the front of the house.

In response, Money and Sraubhaar sued San Marcos in federal court, arguing that the city's refusal to let them remove the balcony and initial is an uncompensated physical taking in violation of the Fifth and 14th Amendments and an unconstitutional exercise of police powers under the Texas Constitution.

"It's an occupation of property for a public benefit. It's for an alleged public purpose, in this case, the people on the design review board want to look at it. So, we think that's a taking," says Chance Weldon, a lawyer with the Texas Public Policy Foundation, which is representing the couple.

In response, San Marcos filed a motion to dismiss the case, primarily arguing that Money and Sraubhaar should first have to appeal their case to the city's Zoning Board of Adjustment before taking their case to court.

The U.S. District Court for the Western District of Texas Austin Division is currently considering the case.

"We think it's wholly un-American that if you want to change something to the aesthetic of your property, you have to get sign-off from a board of unelected bureaucrats based on what they think looks right," Weldon tells Reason.

The post Historic Preservation Board Stops Family Removing KKK Supporter's Initial From Front of their House appeared first on Reason.com.

America's high housing costs got a brief shout-out in President Joe Biden's State of the Union address tonight, with the president mostly proposing policies that would subsidize demand of this heavily supply-constrained good.

"I know the cost of housing is so important to you. If inflation keeps coming down mortgage rates will come down as well. But I'm not waiting," said Biden, proposing temporary tax credits of $400 a month to compensate for high mortgage rates and the end of title insurance fees for federally backed mortgages.

In addition, Biden proposed cracking down on the price fixing of big landlords and urged Congress to pass his plan to build or renovate 2 million affordable homes.

That housing policy got a shout-out at all in a State of the Union address is somewhat rare, despite housing being the largest line item in most Americans' budgets. Regrettably, most of the policies Biden proposed would do little to address the cause of high housing costs and could make the problem worse.

Higher rents and home prices are a natural consequence of local and state zoning laws, labyrinthine approval processes, federal restrictions on mortgage financing, and environmental reporting laws, to name a few.

All these laws limit the supply of new housing, which drives up the price for any given level of demand. That's a diagnosis the Biden administration itself has endorsed in various housing briefs and "action plans."

Despite that insight, the president's proposals to subsidize home buying will, all else equal, increase demand while leaving supply constraints in place. That will only raise prices further. People who claim new federal subsidies will be no better off. Anyone who misses out on the subsidies will be worse off.

Biden's proposal to crack down on price-fixing landlords is likely a reference to the hot new idea that landlords are illegally colluding on rents by paying for third-party algorithms that propose market-clearing maximum rents.

The Federal Trade Commission and the Department of Justice released a memo earlier this month saying that this could be illegal, without offering any clear guidance on when it would actually be illegal.

Even property owners who set their rents below whatever a third-party algorithm recommends could still be guilty of price fixing.

"Even if some of the conspirators cheat by starting with lower prices than those the algorithm recommended, that doesn't necessarily change things. Being bad at breaking the law isn't a defense," read the memo. One shouldn't expect this garbled threat to do much to move the needle on rents.

In his remarks tonight, Biden didn't elaborate much on the policy he proposed to increase actual housing supply, his plan to build or renovate 2 million affordable homes.

A White House fact sheet circulated earlier today provides a little more detail. The plan, such as it is, would involve increasing the number of tax credits available for low-income housing developers—something the tax bill approved by the House and being considered by the Senate would do.

The White House fact sheet also calls for creating a $20 billion competitive grant program that would directly fund affordable apartments, "pilot innovative models" for affordable housing production, and, more interestingly, "incentivize local actions to remove unnecessary barriers to housing development."

When it comes to housing funding, $20 billion is a lot of money. It's nearly a third of the current budget for the U.S. Department of Housing and Urban Development.

As part of its existing "housing supply action plan," the Biden administration has allegedly retooled a number of federal transportation grant programs to incentivize local zoning changes. As I've written, that doesn't seem to have made much of an impact on where those grants go. San Francisco, the nation's beating heart of anti-development regulations, got one of the largest grant awards from one of these supposedly retooled programs.

Congress has also passed a smaller, $85 million "baby YIMBY" grant program more focused on paying local governments to change their zoning rules. Here too, the language of the grant program (and the applications it's received thus far from localities) suggests it will end up being more of a subsidy for routine planning work than a powerful incentive for liberalizing zoning laws.

Given the difficulty state governments have had trying to prod local governments into being more pro-housing with explicit zoning preemptions, I'm skeptical of how much federal carrots can do here.

Perhaps the best thing the president can do for zoning reform is to use his bully pulpit to argue for it. Biden had an opportunity to do that tonight, and he didn't take it. It was a missed opportunity.

The post Biden's Plan To Subsidize Homebuyers Won't Work appeared first on Reason.com.

Over the past decade, scientists working at the National Institutes of Health (NIH) have earned an estimated $400 million in royalties from third-party companies for medical treatments and innovations they've helped produce. The NIH often provides grants to these same companies and produces research on their products. Despite that, the agency has resisted disclosing how much its scientists are getting paid and by whom.

A bill moving its way through Congress would change that.

On Wednesday, the Senate Homeland Security and Governmental Affairs Committee passed the Royalty Transparency Act of 2024 by a 12–0 vote.

The legislation would require that royalties received by federal government employees be included in their financial disclosures and that those disclosures be made available online for the general public to view.

"This is just basic 101 of conflict of interest. We're letting the billions of dollars that change hands over at NIH and between NIH and Big Pharma to be completely unscrutinized," says Sen. Rand Paul (R–Ky.), the author of the legislation. "This is probably the first reform bill that actually has a chance to correct some of the things that are rotten in the system."

The NIH's lack of transparency about the royalties paid to its scientists has been a source of controversy for decades.

A 2005 investigation by the Associated Press revealed that NIH scientists were receiving royalties for companies' pharmaceutical treatments that the agency was also studying in clinical trials.

That investigation prompted the NIH to require its employees to disclose these royalty payments to patients in clinical trials. But that information was still kept from the general public.

In 2021, watchdog group Open the Books filed public records requests (and when those were ignored, a lawsuit) seeking more information on royalties paid to NIH employees.

Initially, the NIH only released heavily redacted documents showing which employees had received royalties but not how much they were paid, who they were being paid by, or what they were being paid for.

In 2023, the NIH at last released new documents showing which companies were paying royalties to NIH scientists and more information on what the royalties were for. But the agency continues to redact how much individual scientists are earning from these royalties.

Paul's bill would require individual royalty amounts to be disclosed. The legislation would also require that members of federal advisory committees that make public health recommendations produce financial disclosures.

"With the approval of the COVID mandates and COVID vaccine mandates, the committees approving these, we had the question, well, are there people on these committees who get royalties from the companies that manufacture the vaccine?" Paul tells Reason. "When I asked [Anthony] Fauci about this a year ago, his angry response was that it was none of our business and that he didn't have to tell us."

Having passed out of committee, Paul's bill will now need the approval of the full Senate and then the House of Representatives.

The post Rand Paul's Bill Would Require NIH Scientists To Disclose Royalties They Receive From Drug Companies appeared first on Reason.com.

Is a painting of a giant burger a sign or a mural? The answer to that question could determine whether Steve Howard can keep some half-finished burger art on the side of his restaurant or be forced to take it down.

Howard is the owner of The Cozy Inn in Salina, Kansas—a restaurant known for the sliders it serves with a generous helping of aromatic onions.

Back in November, Howard commissioned a local artist to decorate the side of The Cozy Inn with a large burger mural, some smaller slider-shaped UFOs, and a caption reading, "Don't fear the smell! The fun is inside!!"

Within a few days, a Salina official was telling Howard to halt the paint job. The city reasoned that because Howard's wall art would depict a product his restaurant also sold, it was not a mural (which the city doesn't regulate), but rather a sign (for which it has extensive rules).

Under Salina's sign code, Howard's business could only post signs totaling 62 square feet in size and he'd already used up 52 of those feet with existing signage. His planned burger wall art would take up 528 square feet. Downtown businesses' signs also need approval from the city's Design Review Board.

Since being told to stop work on his burger painting, Howard has been going back and forth with the city over whether he'll be able to complete the work. Earlier this month, the city sent him a letter telling him to hold off on the painting while it "reviewed" its signage regulations.

Rather than wait, Howard filed a federal lawsuit arguing that because the legality of his mural turns on the particular images it depicts, his free speech rights are being violated. If he had commissioned wall art of car parts or some other product his business didn't sell, he'd be well within his rights to proceed with the mural.

"In our view, this is a clear content-based restriction on speech," says Sam MacRoberts of the Kansas Justice Institute, which is representing Howard.

The U.S. Supreme Court theoretically put limits on this kind of sign regulation with its decision in the 2015 case Reed v. Gilbert, which struck down an Arizona town's regulations on temporary signs that applied stricter rules to nonpolitical signage.

"The town definitely was drawing lines based on what messages the signs conveyed," says Betsy Sanz, an attorney with the Institute for Justice (which is not affiliated with the Kansas Justice Institute). "The court said that was not allowed."

Nevertheless, cities post-Reed continue to enforce restrictions on business murals that include images of what the business sells.

The Institute for Justice has litigated multiple mural cases, pre- and post-Reed. It is currently representing business owner Sean Young in a First Amendment lawsuit against Conway, New Hampshire, which has told him a donut mural painted by local art students on his bakery violates the town's sign code.

Despite the likely unconstitutionality of many towns' sign restrictions, business owners are often reluctant to challenge them.

That means businesses will often just paint over their murals or change them so that they're no longer showing products the business sells.

In 2012, The Washington Post reported on a smoke shop in Arlington, Virginia (a hotspot of mural censorship), that changed its mural of a man smoking a cigar to a man holding a whale to comply with county regulations.

Sanz urges the Supreme Court to take up the issue of towns' regulation of business murals, saying, "There are still government bodies that wish to control speech. The Supreme Court is going to need to take signs up again to help clarify things for individuals."

The post Town Says Burger Joint's Mural Can't Show Any Burgers appeared first on Reason.com.

Hopes that the U.S. Supreme Court might strike down rent control this term were dashed today when the Court declined to take up the two remaining rent control cases on its docket. But a short statement from Justice Clarence Thomas otherwise agreeing not to take up the cases does provide rent control critics some optimism that the Court might reconsider the issue at a future date.

The cases, 74 Pinehurst LLC v. New York and 335-7 LLC v. City of New York, both involved New York City rental property owners' challenges to their state's stabilization regime and related New York City regulations implementing that regime.

The petitioners argued that the 2019 amendments to New York's rent stabilization law amounted to a physical taking because they prevented property owners from choosing their tenants or withdrawing their property from the rental market. They also argued that New York's post-2019 rent stabilization law amounted to a regulatory taking by tanking the value of their properties and removing avenues to "deregulate" (charge market rents on) their units.

Lower courts rejected these arguments. So, last spring, the landlord plaintiffs in both cases petitioned the Supreme Court to take up their case.

The fact that the two cases stayed on the Supreme Court's docket even after it had declined to take up another, higher profile, and more sweeping challenge to New York's rent stabilization law in October raised hopes that the justices might still take up these cases.

At a minimum, rent control critics offered some hopeful speculation that one or more of the justices might write a lengthy dissent to any court decision to not take up the cases that would outline how another rent control challenge could make its way back to the Supreme Court.

Neither of those things happened today. But today's order wasn't a total loss for rent control opponents.

Justice Clarence Thomas did issue a short statement saying that the "constitutionality of regimes like New York City's is an important and pressing question."

Ultimately, Thomas agreed with the Court's denial of cert, saying that petitioners' claims in their lawsuits "primarily contained generalized allegation." In order to evaluate their "as-applied" challenges, the Court would need to see more specific arguments about the circumstances of individual landlords.

For that reason, Thomas wrote, the 74 Pinehurst and 335-7 pleadings would "complicate" the Court's review.

"Any time you get something more than just a denial, I would say that gives you reason for optimism," says Mark Miller, an attorney with the Pacific Legal Foundation, which has supported constitutional challenges to rent control. "Oftentimes justices give statements like this to give you a roadmap for how to better tee up the issue."

In the meantime, however, New York City property owners are offered no relief from the state's rent stabilization regime.

Rent-stabilized owners argue the state's limits on rent increases are so punishingly strict that they can't finance basic repairs or turn over vacant units. The ongoing struggles of New York Community Bancorp, which lent heavily to rent-stabilized buildings, are only compounding this problem.

Without greater flexibility to raise rents or obtain private capital, "the future of rent-stabilized buildings is in the hands of the state government," said the Community Housing Improvement Program (CHIP) and the Rent Stabilization Association (RSA) in an emailed statement reacting to the Supreme Court's decision today. "Thousands of buildings housing hundreds of thousands of tenants are in financial distress. Without action, the homes of many hard-working New Yorkers will deteriorate.

CHIP and RSA had been plaintiffs in another challenge to New York's rent stabilization regime that the Supreme Court also declined to take up last year. Thomas' statement seems to have done little to raise their optimism about future rent control cases.

"We do expect there will be many more challenges to this law, which remains irrationally punitive," they said.

The post After Supreme Court Denies Cases, Clarence Thomas Offers Hope to Rent Control Critics appeared first on Reason.com.

Happy Tuesday and welcome to another edition of Rent Free. Despite the ink still wet on many state-level YIMBY reforms prodding local governments to allow housing, we're already witnessing a concerted counter-revolution from the forces of local control. This week's stories include:

• Slow-growth activists in the Boston-adjacent suburb of Milton, Massachusetts, have successfully overturned state-required zoning reforms that allowed apartments near the town's train stations.
• Local governments in Florida are trying to defang a new state law allowing residential high-rises in commercial zones with lawsuits and regulatory obstructions.
• A lawsuit against Arlington, Virginia's exceedingly modest "missing middle" reforms that were passed last year trundles on.

But first, our lead item is a short take on how America's overregulated, undersupplied housing market turns good things, like economic growth, into bad things, like more evictions.

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Why Evictions Go Up in a Good Economy (and Why It Doesn't Have to Be This Way)

In an article from last week, L.A. Times columnist LZ Granderson asks "If the economy is so great, why are evictions soaring?" Despite low unemployment and better-than-expected economic growth "evictions have spiked and homelessness has reached a record high," he notes.

Granderson's explanation for this incongruity is that it's all just the latest ill effects of Reaganite low taxes, slim government benefits, and underregulated corporations.

The more compelling answer is that evictions are up because the economy is so great (or at least better than it used to be).

Landlord Incentives

As Granderson notes, unemployment is low. The unemployment rate has been under four percent for the past two years. Real wages have also been growing.

For landlords, that means that there are a lot of workers with steady incomes out there who would likely make for steadily paying tenants. If their current tenant isn't paying rent or is behind on rent, a low unemployment rate boosts their confidence that they'll be able to find another one who will pay their bills on time. That makes it less risky to take on the costs of evicting a tenant and turning over a unit.

That's a counterintuitive answer. The intuitive assumption is that since evictions are a bad personal economic event, they'll happen more often when economic times are bad generally.

This was the assumption that prompted both Republican and Democratic presidential administrations, and almost every state government, to adopt eviction moratoriums during the pandemic. The fear was that sudden, mass unemployment would result in millions of delinquent renters being kicked out of their homes.

Lessons from the pandemic 

This turned out to be wrong. Even after most state moratoriums had lapsed, the federal moratorium had been struck down by the U.S. Supreme Court, and rental assistance programs expired, evictions stayed well below pre-pandemic averages.

Evictions did rise slowly over time, but there was never the sudden "avalanche" or "tsunami" of people getting kicked out of their homes that some housing activists predicted. Today, according to Princeton University's Eviction Lab data, evictions nationwide are slightly below pre-pandemic averages.

The fact that evictions fall during bad economic times and rise during good times might seem to validate the left-wing view that economic growth under capitalism just means more hardship for poor and marginalized renters. Therefore, the thinking goes, we need more legal restrictions on evictions, rent control, and/or direct government provision of housing to keep a roof over people's heads. That too is a mistaken view.

More homes, fewer evictions

All else being equal, economic growth and low unemployment will give landlords a greater incentive to evict a delinquent tenant. But economic growth and low unemployment should also raise the demand for housing, and therefore lead to new housing construction.

More housing supply will in turn make the housing market more competitive for suppliers. A landlord with a delinquent tenant can't be so sure they'll be able to find a replacement so easily, as the pool of potential tenants will have a lot more housing options. More housing supply will also lower housing prices, which in turn should result in fewer tenants risking eviction by falling behind on their rent in the first place.

Thanks to zoning, restrictions on mortgage financing, needless environmental reviews, and more, we're not seeing as much new supply as we would under a free market. That means we're also not seeing the eviction-suppressing effects of new supply.

The result of restricted housing supply in a time of economic growth and low unemployment is higher prices and higher evictions.

As Kevin Erdmann explained in his Substack last June, when there's not enough housing to go around, "somebody has to be displaced, and the displacement is achieved through rising housing costs, which tend to pile up the most on the poorest residents."

The good news in the short term is that in the places where evictions are going up the most (mostly booming sunbelt metros), there is a rash of new supply coming onto the market. This glut of new homes and apartments should cool price increases and evictions.

The better news in the long term is that many states are passing YIMBY zoning reforms that will make housing supply even more elastic. That is unless NIMBY forces manage to handicap these laws right out of the gate…

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In Massachusetts, A Popular Rebellion Against New Housing

This past Wednesday, 54 percent of voters in Milton, Massachusetts, an inner suburb of Boston, approved a ballot initiative repealing recently passed local zoning amendments that allowed apartments near local rail stations.

In doing so, the town has made itself non-compliant with Massachusetts' signature YIMBY reform—the 2021 MBTA Communities Law—which requires towns with rail transit service to allow apartments near rail stations.

The vote sets up a crucial test for the state law: can it prod reluctant local governments to zone for infill housing in a way that actually gets units built? Or will it be another state YIMBY reform that's bested by clever NIMBY intransigence?

The backstory

Prior to Wednesday's vote, it appeared most localities were complying with the letter of the MBTA Communities Law. All twelve of the towns required by the law to pass upzoning legislation by the end of 2023 had done so.

That includes Milton. In December 2023, the town passed the state-required zoning changes. But shortly thereafter, local activists gathered enough signatures to put the zoning changes up to a popular vote.

State officials, including Gov. Maura Healey and Attorney General Andrea Campbell, had warned the town that a vote for repeal would make Milton ineligible for numerous state grants and a lawsuit from the state.

Consequences

Having voted for repeal anyway, Milton is now ineligible for three grant programs, including the state's largest capital grant program for localities. It's uncompetitive for another dozen grants.

The attorney general's office has made clear that "communities cannot avoid their obligations under the Law by foregoing this funding." Campbell said in a sharply worded, pre-vote letter to Milton that her office would bring legal action to enforce the MBTA Communities Law "without hesitation."

Jesse Kanson-Benanav, executive director of Abundant Housing Massachusetts, tells Reason that there's speculation that developers could also sue non-compliant town governments should projects they propose that meet the state law standards are rejected.

The combined weight of all these potential enforcement actions is seemingly encouraging most communities to come into line. Milton is thus far the exception, and even there, the margin on its referendum was a little under 800 votes.

An uncertain road ahead

The longer-term risk is that communities will find ways to comply with the MBTA Communities Law on paper while thwarting it in practice. The zoning amendments Milton had approved, for instance, required that newly legal apartments come with parking spaces and below-market-rate units—both of which are a tax on new housing.

Kanson-Benanav suggests some towns might come into paper compliance by upzoning commercial parcels that wouldn't likely be redeveloped into housing or upzone near environmentally protected areas where development is infeasible.

"It's hard to know what's written on paper, what its impact will be in practice," he says.

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In Florida, the Backlash to the Law That Allowed Too Much Housing 

Was it too good to last? That's the question that YIMBYs in Florida might be asking themselves as local governments rebel against, and state lawmakers mull reforms of, the state's year-old Live Local Act.

The law allows developers to build apartments in commercial and industrial areas, local zoning be damned, provided the new housing includes affordable units.

Because the law's affordability requirements are turning out to be pretty modest, and its density allowances are turning out to be mouth-wateringly generous, developers have made ready use of the law to build massive new high-rises that would have otherwise been prohibited by local zoning.

Now the backlash. The Tampa Bay Times reports that Pasco County threatened to sue developers trying to use the law to build apartments. Another city adopted a six-month building moratorium to block a Live Local Project.

At the state level, the Florida Senate approved a bill that weakens the Live Local Act's zoning preemptions in one respect while strengthening them in another.

S.B. 328 would allow local governments to say no to Live Local projects that are more than 150 percent taller than adjacent buildings if its near a single-family neighborhood. In applicable areas, that's a significant reduction in the law's height allowances.

On the other hand, S.B. 328 would prohibit local governments from imposing floor-area-ratio regulations on Live Local projects. That would significantly pare back localities' ability to thwart Live Local projects they don't like.

All things considered, S.B. 328 doesn't appear to be a bad trade. It's now being considered by the Florida House of Representatives.

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In Virginia, Lawsuits Challenge Modest 'Missing Middle' Reform

Early last year, Arlington County, Virginia, approved a series of zoning changes that allowed up to at least four units of housing to be built in neighborhoods formerly zoned for only single-family housing.

The architects of the reforms described them as intentionally "small 'c' conservative" by only allowing a modest amount of new housing. A yearly cap on how many new duplexes, triplexes, and the like could be built made sure of that.

The cap's done nothing to mollify opponents of the missing middle reforms, who expressed heated opposition during the local legislative process and are now suing to undo the already passed reforms.

Last month, an Arlington Circuit Court Judge rejected a motion from Arlington County seeking to stop the lawsuit from going to trial later this summer. Also last month, residents in neighboring Alexandria, Virginia, sued to overturn that city's also-quite-modest ending of single-family-only zoning.

Zoning reformers might consider these lawsuits good news in a way. Middle-housing opponents lost in the democratic process, so now they have to resort to the courts.

On the other hand, local courts have recently issued some truly bizarre rulings overturning other state and city laws abolishing single-family zoning. The Arlington and Alexandria lawsuits will be an important test of whether even modest missing middle reforms can stick.

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Quick Links

• California's zoomer socialist lawmaker, Assemblymember Alex Lee (D–Milpitas), has introduced a bill that would ban corporations from purchasing and renting out single-family homes. Studies suggest such bans mostly work to exclude renters from living in more expensive single-family neighborhoods where they could afford to rent but can't afford to buy.
• Earlier this year, Rent Free covered the case of Vanie Mangal, who was stuck with an abusive, non-paying tenant for close to four years because of eviction moratoriums and New York's dysfunctional housing court system. Real Deal reports that Mangal is at last rid of her tenant (who trashed the place before she left).
• A Washington bill capping annual rent increases at seven percent statewide has passed the state House of Representatives. It will now be considered by the state Senate.
• A proposed Illinois bill would lift the state's preemption on local governments adopting rent control policies.
• "The most magical place on Earth's" plan to build a 1,400-unit affordable housing project is failing to enchant neighboring residents.
• The "year of the granny flat" is picking up steam. The Rhode Island House of Representatives passed a bill last week that will allow homeowners to build accessory dwelling units within the footprint of their existing home and on large lot single-family properties. It's a pretty modest ADU reform, all things considered.
• Is exclusionary zoning unconstitutional? Yes, say George Mason University law professor Ilya Somin and University of Wisconsin Law School professor Joshua Braver in a new article.
• The Federation of American Scientists argues the federal government should require localities to liberalize their zoning codes in order to receive federal highway funds.
• The Boston Globe has a new article on the perilous politics of zoning reform in Boston.

The post Good Times, Bad Times: Eviction Edition appeared first on Reason.com.