Vetocracy, the costs of vetos and inaction

Just before the pandemic hit, 77-year-old Patrick Quinlan got approval to build 10 new units of housing on a 17,400-square-foot lot in San Francisco. Getting permission to build new housing isn’t normally a news story, but Quinlan’s became one because he has been working on the project most of his adult life.

Those ten units took over 40 years to get approval.

Late into 2019, Quinlan finally won support from many neighbors, including Kathleen Campbell, who lives in the area and had opposed the development since 1997. Mission Local, a SF based publication, covered the story and featured Campbell who said that, “The current proposal is the best option we’ve seen in over 22 years.”

Quinlan’s story is an egregious example of a common tendency in institutions. Excessive veto power halts progress. Political scientist Francis Fukuyama calls this vetocracy, a system characterized by excessive vetoes. Too many actors have veto rights over what gets built. California’s housing crisis is sadly the best example.

Cynics will often retort that California is uniquely mountainous and prone to earthquakes, meaning there will always be delays. But Japan has similar terrain, and the city of Tokyo builds. In 2018, Tokyo was home to 13.5 million people and built 145,000 new residences. California, a state with 39 million people in 2018 put up 58,800 homes. If California were to build at the same rate, they would have put up over 418,000 new homes. There are over 360,000 missing homes.

A big reason for the limited housing is the ease with which people can stop development. As Bay area resident Ryan Delk noted, “Something you may not know about San Francisco: There are ~6 people who oppose nearly every new development in SF (residential & commercial), successfully using various loopholes and review processes to delay them by months or years. Six people holding back an entire city.”

Vetocracy isn’t just limited to housing development. As the San Francisco Chronicle reported, when the city tried to shut down some streets during the depths of COVID, they were met with appeals filed by a handful of people. Each of the appeals cost about 100 hours of work, according to Director of Transportation Jeffrey Tumlin.

Funny enough, the appeals were a bit of a joke since they were directed to the city’s Board of Supervisors, which serves as the judge and jury in these cases. The appeals cost a combined $10,000 in city officials’ and attorneys’ time, “more time and money than it took to create the emergency programs in the first place,” Tumlin went on.

California seems uniquely affected by this problem and it goes to the top. As Anthony Zurcher wryly pointed out about the 2021 recall election of the governor, “It took a petition signed by 12% of California voters in the last election to initiate the recall. The recall cost the state $278 million. The race was effectively decided within 15 minutes of polls closing.”

The Golden State isn’t the only place afflicted by “the promiscuous distribution of veto power” as Larry Summers framed it. A good part of the rise in housing costs and home prices can be accounted for by these veto forces. Rail and other infrastructure projects face decades-long delays. Vetocracy restricts projects throughout the United States.

Indeed, the problem is one that is faced throughout many countries. In Canada, Germany, Australia, and the United Kingdom (UK) projects to better lives during the pandemic, to build clean energy, and to develop housing were stymied by excessive veto power. On Twitter, @DurhamFella called it the upper income trap.

To be clear, vetocracy is related but separate from the broader problem of red tape. Red tape, permitting, and other limitations regulate conduct. Laws that regulate conduct need to be judged by their own merits, but vetocracy isn’t regulation of conduct. Vetocracy is about the needless delays created through excessive veto points throughout our institutions. There are a lot of players involved in permitting and all it takes is one to slow everything down. Vetocracy is about the excessive accretion of voice that slows down normal processes.

Of course, voice is important to a healthy democracy, but excessive vetoes mean that work slows. This post is the first step, it is a collection of the costs. The second step, which will be in a follow-up post, will detail solutions that have worked in the past and some new ideas for breaking logjams.

What follows is an ongoing list of the ways in which excessive veto points have slowed development, transportation projects, housing, and people just trying to start a business. Far too much of the attention of public policy comes from big stories and events, but not enough attention is paid to the bottlenecks that everyone faces on a daily basis. Reversing these trends, which are detailed below, would mean more housing, clean energy, and better transportation infrastructure. Help us in this effort by sending me examples of vetocracies.

I am especially indebted to Josh Smith and Eli Dourado for their comments. Where possible, I have tried to cite Twitter accounts, reports, and authors where I have found information about vetocracy. Please email me at will at thecgo dot org for additions.


Section organization


Institutions

  • Stepan and Linz (2009) compares the American political system to that of 22 other peer nations, looking for “electorally generated veto points,” elected bodies that could block change. More than half of the countries in their sample only had one such veto point, the prime minister’s majority in the lower legislative chamber. Another eight had two veto players. Two countries, Switzerland and Australia, had three veto players. And only the United States had four. The four veto points include both bodies of Congress, the President, and the Constitutional amendment process. Hat tip: Ezra Klein.
  • The anticommons might be considered a species of the broader genus, vetocracy. Michael Heller first described this concept in a 1998 Harvard Law Review after observing that there were a lot of open air kiosks but also a lot of empty stores in many Eastern European cities after the fall of Communism. Upon investigation, he concluded that it was difficult or even impossible for a startup retailer to negotiate successfully for the use of that space because many different agencies and private parties had rights over the use of store space. Even though all the persons with ownership rights were losing money with the empty stores, and stores were in great demand, competing interests got in the way.
  • Paul Sabin, a historian at Yale, explains in his book, Public Citizens, that the most potent attack on government came from environmental groups: “Litigation by leading public interest environmental law firms in the early 1970s almost exclusively targeted the government for legal action. The Sierra Club Legal Defense Fund boasted of 77 legal accomplishments between 1971 and 1973. Approximately 70 sought to block government actions or to intervene in public proceedings to influence government regulatory and permitting practices.” The Environmental Defense Fund focused on government agencies in 60 of its 65 listed legal actions in 1972. For the National Resource Defense Council, only three out of the 29 of legal action initiatives from its first seven months directly named a corporate defendant.
  • US forest policy, especially in the Pacific Northwest, is best understood “as emblematic of larger systematic weaknesses of the American political system, which provides an overabundance of checks and balances and a proliferation of veto players,” Maiera and Abrams (2018) write. In 35 qualitative interviews with various actors involved in public forest management on the Siuslaw and Willamette National Forests in Oregon, they discovered, “how multiple and contradictory policies, combined with local stakeholder involvement, influence management decisions. We find that forest management takes place in a vetocratic and neoliberal institutional setting: the implementation of projects is contingent upon getting past numerous veto players who, at the same time, increasingly take on tasks formerly assigned to government entities.”

Housing

  • Smith-Heimer and Hitchcock (2018) sent surveys to all 541 of California’s cities and counties and got 46 responses that accounted for 54 percent of all multi-family residential (5+ units) building permits issued between 2010 and 2017. Respondents cited the California Environmental Quality Act (CEQA) relatively infrequently among those issues constraining new supply. Instead, they tended to think that high development costs, lack of sites, lack of affordable housing funding, and importantly neighborhood opposition as more common constraints.
  • An NBER paper from Joseph Gyourko, Jonathan Hartley, and Jacob Krimmel found that the most highly regulated markets are on the coasts, “with the San Francisco and New York City metropolitan areas being the most highly regulated according to our metric.” Importantly, the number of veto points over new construction is increasing. “The number of entities needed to approve projects requiring a zoning variance is increasing in the typical place. This makes the process more cumbersome and increases the potential for projects to be vetoed.”
  • Glaeser, Gyourko, and Saks (2005) charts the rise of housing costs and pinpoint them to “increasing difficulty of obtaining regulatory approval for building new homes.” According to the authors, “Our preliminary evidence suggests that there was a significant increase in the ability of local residents to block new projects and a change of cities from urban growth machines to homeowners’ cooperatives.”
  • In The City, Rachel Holliday Smith has been reporting on the legal wranglings of three buildings in New York City. The venture includes 2,775 apartments to the area, 25 percent of which would be classified as affordable housing. Local residents, however, took the development to court to reverse a City Planning Commission decision, just to slow it down. In 2020, at least three separate cases were pending against it.
  • According to the Marin Independent Journal, Marin County property owners have taken longtime North Bay resident George Lucas, to court over his new vineyard, alleging potential violations of the California Environmental Quality Act. Instead, they don’t want anything developed. Curbed has more details.
  • In 2014, San Francisco’s Habitat for Humanity Greater proposed a 20-unit affordable housing project in Redwood City. Three years later in 2017, an attorney used CEQA to stop it, claiming that the City failed to evaluate the project’s impacts on traffic and scenic vistas including the one his home. As Carr, Dhillon, and Grunbaum explain in “The CEQA Gauntlet,” “The plaintiff ’s public statements underscore the realities of CEQA litigation. Rather than being used to ensure consideration of environmental issues, project opponents frequently use CEQA as a cudgel to delay projects, obtain concessions, or force developers to cancel projects altogether. In fact, the same attorney admitted that he had threatened CEQA litigation against other nearby projects, forcing one apartment developer to eliminate an entire floor to avoid litigation, while another developer abandoned its 91-unit condominium project.”
  • A project to build housing in the Balboa Reservoir area in San Francisco has a long history of being shot down, according to the Chronicle: “Three times in the 1980s, voters faced the question of whether housing should be built there. They first rejected the project, then approved it and finally voted it down a second time.”
  • From David Watkins on Twitter: “A prominent Seattle NIMBY who’s been instrumental in holding up hundreds of affordable units in a very wealthy also managed to use her extended vacation to convince a judge to add several months of pointless delay to the project.”
  • From MyNorthwest: “In 2019, the Seattle City Council unanimously voted to convert 35 acres of the city’s historic Fort Lawton situated next to Discovery Park into affordable housing. Nearly two years later, a court battle that has kept that project in limbo may finally be coming to an end.” As the report explains, a judge has dismissed the case because the plaintiff had not adequately proven how the development would negatively impact the Army, who owned the land and was working to redevelop it. In other words, the plaintiff was claiming that the Army was harmed and so sued the Army, as well as the city to stop the development.
  • An audit from the city of Los Angeles found that the average cost of building a home for the homeless in Los Angeles has risen to $531,000, “up from initial projections of $350,000 a unit.” For two projects in particular, “costs soared to nearly $750,0000 per unit” because of expensive appeals by neighboring building owners.
  • From the San Francisco Apartment Association, “While we advise potential business owners who will require a change in use permit and a custom build-out not to try to open a new business in San Francisco unless they have at least $350,000 to $500,000 in liquid capital, these kinds of permitting delays—most of which are out of a business owner’s control—can really drain a tenant’s bank account if they’re paying full rent on the space while waiting to simply open. These delays are also happening even in cases where an independent expeditor has been retained.”
  • The Boston Globe reported on long-planned homeless housing: “The roughly $105 million development, years in the making, is being built on the site of a Pine Street Inn-owned warehouse and financed with an array of public subsidies. It also had to overcome a lawsuit from a neighboring property owner—longtime Jamaica Plain landlord Monty Gold—who challenged the city’s decision to reduce parking requirements on the site. That lawsuit was settled, but during the nearly yearlong delay, Mitchell said, costs ballooned by roughly 10 percent.”
  • In Ireland, judicial reviews of housing schemes add at least €8,000 to €12,000 to the cost of new homes, the Society of Chartered Surveyors Ireland (SCSI) has estimated.

Transportation and infrastructure

  • Brooks and Liscow (2022) found that real spending per mile on interstate construction more than tripled from the 1960s to the 1980s. The cause isn’t due to geographic cost determinants, or increases in labor or materials prices. Rather, it is mostly due to the rise of “citizen voice” in government decision-making. As Brooks told James Pethokoukis, “[T]he only kind of public spending across states with which we could identify a really substantive relationship between interstate spending per mile is Medicare spending per capita.”
  • A Politico long read on the difficulties in building an extension to Penn Station in New York City highlights the role that delays had in extending out the project. Leadership at the US Postal Service, which now houses the Penn Station extension, “made an art of running out the clock. As shown in reams of memos that [one of the planners] preserved and then, decades later, saved from being washed away in Superstorm Sandy, the postal service successively cited concerns about the project’s environmental impacts, the landmark implications, how the train hall might affect the mail sorting that would continue on the backside of the building. At every turn, they voiced a new objection.”
  • Connor Harris of the City Journal pointed out that, “The estimated unit costs for California High-Speed Rail—that is, the costs per mile of track, viaduct, tunnel, or retaining wall—were actually in line with international norms; excess costs stemmed largely from over engineering and poor route choices with traceable political causes. The most egregious example of this, the crossing of the Tehachapi Mountains from Los Angeles to the Central Valley, again stemmed from excessive interference of local interests. Likely at the behest of Los Angeles County officials who wanted to encourage suburban growth, the California High-Speed Rail Authority designed a long detour through the exurb of Palmdale rather than following the natural direct route to the north-northwest along Interstate 5.”
  • A CEQA lawsuit delayed a bike lane in San Francisco by 4 years.
  • New York City’s newest park, Little Island, almost got abandoned mid-build because “Opponents of the project, including the City Club, a small civic organization; environmentalists; and the real estate developer Douglas Durst, had waged a legal battle in three different courts to stop the project. They argued that Pier 55 was developed in secret and without any consideration of alternatives for rebuilding Pier 54, the crumbling structure that the new pier was supposed to replace. They also questioned the need for another performance center in Manhattan, particularly one built over the river.”
  • Travel to Antarctica is severely limited because of all of the built-in vetoes. For those in the US, you’ll need to file an Advance Notice with the State Dept. Then, you’ll need to complete an Environmental Impact Assessment and then follow up by following a 300 page manual of do’s and don’ts.

Telecommunications and broadband

  • In a filing before the FCC, Internet provider Sacred Wind out of New Mexico explained that delays were routine in processing and review of its application. An application involving one section, one land owner, and one authorizing jurisdiction commonly takes two to four years to complete. Something more complex, that involves more than one land section spanning multiple authorizing jurisdictions, the process commonly takes anywhere from four to eight years to complete.
  • From a 2018 op-ed in the Santa Fe New Mexican: “The city of Santa Fe continually has denied applications for wireless cellular and broadband internet tower development, which I believe breaks federal law. For example, NMSurf has been denied right-of-way access to a city-owned tower since 2013 to expand and upgrade its network.”
  • According to the National Cable and Telecommunications Association (NCTA), “in some cases, cable companies have encountered significant delays in obtaining permission to access rights of way, including delays that can last for more than a year before requests for access are approved.”
  • Vetocracies exist at the hyperlocal level, like HOAs. Here is an interesting story from Plumas County, California about the effect of one homeowners’ association on broadband deployment: “Prior to commencing work on the broadband project, property owners had to appoint a project manager from the HOA, research project requirements, locate existing conduit and raise funds — which required a special assessment requiring a vote of the members.”

Healthcare

  • Chris Carr, Navi Dhillon, and Lucas Grunbaum documented in “The CEQA Gauntlet” that the law was used to stop hospitals being built: “On January 21, 2021, the University of California, San Francisco (UCSF) approved an ambitious expansion of its iconic Parnassus campus. The project will replace and renovate various portions of the century-old campus, including construction of the new 560,000 square foot Helen Diller Medical Center. This new medical center will increase the campus’ in-patient bed capacity by almost 60 percent and allow UCSF to serve thousands of new patients every year, including many who would be turned away in the absence of any expansion…. In February 2021, three organizations filed separate lawsuits in an effort to stop the UCSF project.”
  • On Twitter, Sean Galbraith quipped that, “Surprising literally no one, the approved 12-bed hospice was appealed to TLAB,” the Toronto Local Appeal Body. Galbraith was discussing Neshama Hospice’s addition, which got approval in 2020 but then faced appeals. Eventually the appeal was denied, but the extra time helped no one.
  • In Melbourne, Australia, a nursing home expansion proposed in one of Melbourne’s most desirable pockets was blocked by Greens and socialist councillors at the behest of residents. Clay Lucas has the story.

Energy and environment

  • Benson (2022) assembled a novel data set on the design specifications of nuclear power plants (NPP) and was able to document a positive relationship between political decentralization and NPP development times that isn’t explained by reactor complexity. “The results are suggestive of the hypothesis that political decentralization creates conditions that slow NPP construction for nontechnical reasons.”
  • This geothermal permitting paper from the Idaho National Laboratory modeled out the cost of developing a geothermal power plant and found that “The fastest CEQA/NEPA review timelines would have the project completed in six years.” It continues, “In contrast, the project would take 13 years to complete if it were located in an area with significant environmental resources or cultural issues that required permitting from various agencies. It is important to note that the longest project completion timeline considered is arbitrary and the permitting for any given project could take more than 13 years.”
  • Christian Britschgi in Reason reports on the troubles faced by New York City’s congestion pricing scheme. It was supposed to roll out January 2021. Now it will go online in 2023. Federal environmental laws and restrictions on tolling are adding years to the rollout of New York’s congestion pricing program.
  • Planning a prescribed burn in California is exceptionally difficult. As Elizabeth Weil documented in ProPublica, “I’ve talked to many prescribed fire managers, particularly in the Sierra Nevada over the years, who’ve told me, ‘Yeah, we’ve spent thousands and thousands of dollars to get all geared up to do a prescribed burn,’ and then they get shut down.” Maybe there’s too much smog that day from agricultural emissions in the Central Valley, or even too many locals complain that they don’t like smoke.”
  • From Shawn Regan of PERC: “On Indian lands, companies must go through at least four federal agencies and 49 steps to acquire a permit for energy development, compared to as few as four steps off reservations. The effect of this complicated bureaucracy is to raise the cost of entering into resource development agreements with tribes or individual Indians.”
  • Via Robinson Meyer on Twitter: “New York State’s ambitious climate goals are being held back by upstate NIMBYs, such as this retired environmental engineer who uses a geothermal heat pump, says ‘I have no doubt…the climate crisis is coming,’ and opposes a nearby 600k-panel solar farm.”
  • Jonathan D. Brightbill and Madalyn G. Brown of Winston & Strawn LLP documented the environmental challenges faced by the Vineyard Wind project, the United States’ first commercial offshore wind project. A couple months after the project got the go ahead, a solar power company that also provided clean power in the area, Allco filed a lawsuit challenging the approval. Allco threw everything at it, arguing that approval violated the National Environmental Policy Act, the Outer Continental Shelf Lands Act, the Clean Water Act, and the Marine Mammal Protection Act.
  • By way of Alex Tabarrok, “Local opponents of the wind farms [in Germany] often go to court to stall new developments or even have existing towers dismantled. According to the wind-industry lobby BWE, 325 turbine installations with a total capacity of more than 1 gigawatt (some 2% of the country’s total installed capacity) are tied up in litigation. The irony is that the litigants are often just as ‘green’ as the wind-energy proponents—one is the large conservation organization NABU, which says it’s not against wind energy as such but merely demands that installations are planned with preserving nature in mind.”
  • The United Kingdom might run out of water because of vetocracy. As the UK’s Environment Agency chief, Sir James Bevan, said to The Guardian, “We have not built a new reservoir in the UK for decades, largely because clearing all the planning and legal hurdles necessary is so difficult and local opposition so fierce.” The government plans to streamline the planning process. “That will be controversial, but it’s the right thing to do.”

Starting a business

  • From YIMBY Neoliberal on Medium: “Flying Falafel wanted to open a second location in a vacant retail storefront on Castro Street. This requires a permit for conversion to limited restaurant…But in San Francisco, nothing is guaranteed. Discretionary Review allows anybody to appeal any permit for any reason (or no reason) and force a public hearing in front of the famously arbitrary Planning Commission. It’s the minotaur in San Francisco’s permit labyrinth. Shockingly, it is a cornucopia of selfishness and pettiness. This case is no exception. Gyro Xpress, an incumbent restaurant on the same block of Castro Street, filed for Discretionary Review to block Flying Falafel’s change of use permit.”
  • From Reason magazine comes the story of Joey Mucha, a national Skee-Ball champion who wanted to convert his warehouse into a restaurant, bar, and arcade featuring Skee-Ball. Then community activists intervened to stop.
  • By way of the San Francisco Chronicle comes the story of Yoko and Clint Tan, who taught themselves how to cook ramen that was recognized at the World Ramen Grand Prix in Japan. For five years they operated a noodle shop in Daly City, California, but when they tried to open something similar in San Francisco, they realized just how many government agencies they had to appease. As the Chronicle framed it, “All they wanted was to open a noodle shop. Their tangle with S.F. bureaucracy has them regretting they tried.”
  • When the brand “San Franpsycho sought to combine sales of apparel with a pie and ice cream café and also hold product launch parties at its store, the owners learned they had to undertake a public input and comment process. SF requires retailers to notify every neighbor within 150 feet of upcoming changes. Anyone can chime in and gum up the works. In the end, they were able to open the café, but the process was ‘pretty expensive and pretty painful,’” according one employee, detailed here.
CGO scholars and fellows frequently comment on a variety of topics for the popular press. The views expressed therein are those of the authors and do not necessarily reflect the views of the Center for Growth and Opportunity or the views of Utah State University.

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