PHILADELPHIA-The locally based Zell/Lurie Real Estate Center at the Wharton School of the University of Pennsylvania has issued a study on land-use regulation. At its heart is a first-ever index that measures the degree of regulation in more than 2,600 municipalities nationwide.

The Philadelphia MSA component of the study reveals that the average amount of control exercised throughout the MSA is higher than the nation’s average, exceeded only by the Boston and Providence, RI metropolitan communities. However, regulation varies widely among communities within the Philadelphia MSA, with the city itself being the least regulated. On the index of 1 to 3, for example, Philadelphia County is at minus 0.02 on the index, while suburban Chester County is at 1.59.

“Where there’s more regulation, there are higher costs of development,” one of the authors, Anita Summers, tells GlobeSt.com. “The puzzlement is that, while you would think that the densest areas would have the most regulation, that’s not the way it works here or across the country. Each community appropriately regulates as its citizens want it to.” In general, she says that where open space is a priority, citizens want more regulation and can afford it. The least dense places are not regulating more because they are in danger of running out of land.

“The association between the degree of regulation in a community and the recent increases in lot development costs strongly suggests that regulation is raising costs and, therefore, housing prices,” the Philadelphia MSA report says. “The lower density and more open space that flows from more regulation are valuable environmental goals–a social gain, but also protect capital gains of current owners–a private gain.”

Political pressure groups also impact land-use regulation. “The more financial contributions made by members of the construction and real estate industries in each locality to state legislators, the more lasssez-faire the regulatory environment,” according to the study. “This leads to less regulation,” Summers says.

In the study she and co-author Joseph Gyourko argue for a broader regional perspective in making decisions about local land-use regulation. The Philadelphia MSA report says, “It is a higher level of government, the state, that needs to take on the role of ensuring that social costs and benefits, not just private ones, are taken into account.”

“The dilemma of a democratic society lies in balancing the private and public interests –primarily affordable housing and the environment,” Summers says. “Until recently, the state had very little interest, but Gov. Rendell has become increasingly assertive.”

Nationwide, the study found that coastal states and communities in New England and the mid-Atlantic are the most highly regulated, while communities in the South and interior Midwestern states are least regulated. In addition to towns around Philadelphia, those around San Francisco and Seattle are among the most highly regulated, while communities in the metropolitan areas of Kansas City, MO; St. Louis and Indianapolis are least regulated.

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