The Tullock paradox

Given how meaningful (and profitable) land use rule changes could be to property owners, it’s surprising how little money they spend on lobbying.

This is not something people really talk about.

As an example, assume a neighbourhood commanding $150 per buildable square foot (PBSF) for land. You buy a site with the expectation that you could build 7-storeys’ worth of gross floor area (GFA) on it, and work backwards to a residual land value on that basis.

Then, a big policy change: a secondary plan is introduced that supports 27-storeys’ worth of GFA on your site. That’s an additional 160,000 sf of GFA, or $24-million in additional land value.

$24-million, for one site, thanks to a new secondary plan impacting hundreds of sites.

Now, this is not to say that property owners don’t spend any money on lobbying. They do, a lot. But it seems to me that they should be spending more, and ensuring that every dollar gets put to its highest and best use.