Negative Externalities

Negative Externalities

“We can’t tell someone what they can or can not do with their land.”

This is a common refrain that has been stated before the Planning Commission and City Council. If you sit through a few of these meetings, it won’t take long before you hear a representative for a land owner or developer stand up and state this as if it is a universal truth. Just last week, these words were spoken by City Council Member Roger Fawcett at the city’s Community Engagement Session on February 2nd. 

What do they really mean when they spout this? They mean that a landowner who wants to sell his land or a speculative developer who wants to buy and flip some prime agricultural land should be permitted to change it to residential, commercial, or industrial zoning. This will make the land more valuable and the landowner and developer can make more money off the land. The problem is that the argument is based on a false assumption. People who say this are trying to convince everyone that rezoning a hundred acres of farmland to be able to put down 300 houses is an act that every land owner is entitled to, but that is far from true. 

If I took my half-acre of land in a residential neighborhood and decided to raze my house to build a four-story apartment building, or a nightclub, or skunk breeding farm, am I entitled to because I own the land and no one can tell me what to do with it? Obviously, no one is going to agree with this. As a society, we have long held the belief that you are allowed to do whatever you want, so long as it does not infringe on the rights of others. Your rights end where my rights begin. And when it comes to property rights, cities have long held the ability to establish zoning to prevent one person from infringing on his neighbors’ rights, by preventing development and activities that would negatively impact those neighbors. 

In economics, they have a term for when production and consumption results in a consequence that impacts on a third party unrelated to the transaction. This is called negative externality. For example, a manufacturing plant that produces widgets, but with substantial pollution as a result, sells the widget to an eager market of widget users. They are the producer and consumer, respectively. Both are benefitting from the arrangement. However, that pollution that enters the air and the water affects nearby residents. Those people are suffering from the negative externalities of widget manufacturing. 

A property owner may want to sell his land. A developer may want to purchase it and build a warehouse on it. However, if the land is zoned agricultural, this can’t happen. The land owner is left having to sell his land to another purchaser who wishes to use it according to the city guidelines for which it is intended. This is the same for the homeowner in a residential neighborhood; he has to sell his land to someone that wants to buy a house, not to someone looking to build a gas station. Why do we readily accept the latter, but hear “We can’t tell someone what they can or can not do with their land!” whenever a developer wants to buy farm land?

There is a process by which the landowner can apply to the city to change the zoning. When this application for the rezoning goes to the city, the burden falls to the neighbors to oppose this if they feel they will be negatively impacted. The city then sits in judgment to ensure that the rezoning and development is an overall positive for all involved. We do need businesses and houses, but just because a developer shows up in Suffolk with a plan to turn some farmland into medium-density housing, doesn’t mean that that particular development is best for the city and the surrounding community. 

Negative externalities. If approved, it then becomes the neighbors’ problem. If there will be added traffic, if the schools will be overcrowded, or if there will be added truck pollution on a daily basis, these neighbors will now suffer the consequences. They do not benefit from the transaction like the landowner and developer making millions off of the deal. They are the third party who suffers the negative externalities of this transaction and down the road, and they will also be the ones who have to pay to fix these problems with their tax dollars. The city needs to take these negative externalities seriously and weigh these when determining rezoning applications.

The landowner is always able to sell his land. He can sell it with the same zoning he bought it with, and with the same zoning that has determined his tax rate all these years. The conversation has to move away from the faulty argument, “We can’t tell someone what they can or can not do with their land.” The conversation has to focus on “is this a responsible rezoning”. It is not the city’s responsibility to maximize profits for developers and individual landowners. It is the city’s responsibility to make sure development is done within an overall plan in place, that it offers positives for the citizens of Suffolk, and that it minimizes the negative externalities the community will face.