Polycentricity and the Housing Affordability Crisis

In the last session, we looked at the kinds of institutions that foster public entrepreneurship and co-production in governance. We learned that local actors are less likely to devise solutions to social problems if they must first seek approval from central organisations and national majorities, or if they fear that such bodies will later overturn their decisions.

For self-governance to flourish, individuals must be granted a sphere of autonomy within which they feel comfortable taking initiative over social dilemmas that affect their lives. A ‘polycentric’ arrangement of institutions accommodates this kind of autonomy, allowing problems to be solved by numerous organisations and individuals rather than by a single authority.

The housing supply in major urban centres around the world is mostly governed in a monocentric, rather than polycentric institutional environment. Our colleague John Myers of London YIMBY notes in a policy paper that for most of the 20th century, urban planning and zoning was exclusively the responsibility of central or municipal governments. Even modern advocates of reform rarely stray from traditional state and market paradigms for managing urban spaces, recommending either better zoning laws or stronger property rights for individual homeowners. Assets that aren’t privately owned but commonly shared – local gardens, streets or walking paths – are often governed by public authorities regardless of what locals might want to do with these shared spaces.

Who gets a say over these spaces is an important question in contemporary debates about housing affordability. Urban planning laws tend to serve majorities of well-organised homeowners who wish to restrict the construction of new housing in their neighbourhoods. Such households represent legitimate community grievances about the potential effects of new construction on the value of their properties, increased crowding and traffic on their street, or changes to the aesthetic and historic character of their neighbourhood.

On the flip side, however, there are equally legitimate community grievances by lower-income or younger families who are priced out of the housing market due to these restrictions on the supply of housing. With fewer resources and lobbying power, these constituents are less likely to change zoning laws to allow for the construction of more affordable housing.

Which form of governance best resolves a conflict between two competing community interests? John Myers argues that part of the solution lies in enhancing the polycentricity of urban planning. If construction-friendly residents continue to require building permission from majority-homeowner controlled governments, they are unlikely to achieve new development or find ways to use their shared urban spaces creatively. If, on the other hand, they could appeal to a much smaller and more like-minded constituency, their chances of success are significantly higher.

How might this work in practice? London YIMBY proposes giving residents of single city streets voting rights on how to govern their street. By two-thirds majority, residents could choose to sell those rights to developers and receive compensation for the inconvenience caused by the new construction. Subject to negotiations with their neighbours, public entrepreneurs could build in the spaces between homes or add additional floors to their existing buildings. Increased housing supply in certain areas can impose downward pressure on home prices, making previously inaccessible city blocks more affordable for new residents.

Households on other streets could choose to hold on to their voting rights in favour of the status quo, limiting the potential devaluation of properties in their immediate neighbourhood. Such an arrangement offers lower-income communities a stake in the governance of the public spaces they inhabit without ignoring the concerns of long-established city residents.

In this view, a polycentric order in urban planning resembles a patchwork quilt of tens of thousands of street-sized communities making separate decisions about how to use their common spaces, authorising construction in some areas and restricting it in others. By reducing the scale of the collective action problem from a city-level dilemma to a street-level dilemma, communities can garner local consensus for their preferred vision more easily without imposing uniformity on others. Granting such autonomy to local city residents could gradually make cities like London or San Francisco more affordable and inclusive havens for people of all backgrounds.

Read more from the report by John Myers in the link below to explore this idea in greater detail.