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Show Notes:
In this episode of the Freedom Cities Podcast, Edward Pinto discusses his work at the American Enterprise Institute Housing Center, focusing on the housing supply crisis and potential solutions. He emphasizes the importance of utilizing federal land for housing development, particularly through the Bureau of Land Management. Mark and Edward explore Freedom Cities as a solution to the housing shortage, aiming to make homes more affordable for first-time buyers. Pinto advocates for legalizing starter homes to stimulate economic growth and improve housing availability across the country.
Key Points From This Episode:
- Edward Pinto is the co-founder of the American Enterprise Institute Housing Center.
- He is working on making housing affordable for first-time buyers.
- The shortage of housing supply has been a growing concern.
- The Bureau of Land Management has significant land that could be utilized for housing.
- Pinto suggests that selling federal land could generate substantial revenue.
- Freedom Cities are proposed as new urban developments to address housing needs.
- Identifying potential locations for new cities is crucial for their success.
- Legalizing starter homes could revitalize the housing market.
- The development of new homes is essential for economic growth.
Transcript
[INTRO]
Welcome to the Freedom Cities Podcast where we explore bold new ideas and city building and improving regulations in the United States.
[INTRO ENDS]
MARK: Hello, welcome to the podcast.
EDWARD: Thank you, Mark. Pleasure to be here.
MARK: So first, why not tell the audience a little bit about who you are and what you’re working on?
EDWARD: I’m Ed Pinto, I’m the Co-founder and co-director of the American Enterprise Institute Housing Center. We’re located in Washington, D.C. and we’re a nonpartisan, nonprofit academic institution that does research on housing. And I’m currently working on Homesteading 2.0 making housing affordable again, especially for first time buyers, which would involve the sale of a literally minuscule amount of land owned by the federal government and managed by the Bureau of Land Management Out west in 10 states. We’re talking about maybe 850 square miles out of 279,000 square miles or less than a half a percent.
MARK: Cool, and so has this been what you’ve always focused on at AEI, on housing, or is this kind of new with the current administration?
EDWARD: My entire career has been in housing and housing finance. I’ve been at AEI since about 2008, starting about four or five about six or seven years ago. We started looking at the shortage of housing supply and how that might be addressed in about four or five years ago. We started looking at the Houses Act, which is a proposal from Senator Lee of Utah to get a law enacted in Congress to authorize the sale of Bureau of Land Management land. And that was about four or five years ago. We’ve been following that and looking at that then we noticed late last year, just before the election, that President Trump started talking about freedom cities and land that Bureau of Land management might have others started talking about that so we started looking into it.
Our core mission is to develop data, to really analyze rigorously policy ideas. So we’ve been figuring out where this land is located, how close it is to existing cities, where entirely new cities could be developed such as freedom cities. And we’ve basically come up with two solutions here one is to build housing near existing areas that already have housing. They’d be adjacent to those areas or near those areas, which also increases the likelihood that you already have utilities and other infrastructure nearby. And we’re talking about about 250 square miles for that and we think that could have about 1.5 million homes and 250 square miles. And then the second piece would be about 600 square miles that would be used for entirely new cities or freedom cities that could be in metropolitan areas they could be somewhat outside of metropolitan areas, but they’d be an entirely new city of about 600 square miles total.
We expect there might be 20 or 25 of those, and that would also lead to about 1.5 million new homes that would be over a much longer time horizon. The first million and a half, we estimate, could get built in about 10 years. And of course, the Freedom Cities would take 30, 40, 50 years to fully develop.
MARK: Great, and so when I was speaking with you the other week one of the things you mentioned and I might be misremembering, was that the Bureau of Land Management used to be the Bureau of Land Sales, and then in the 60’s they changed it and they still have on the books some statutory authority to sell land even though it’s functionally hasn’t really been exercised in like 50 years. So am I remembering that correctly.
EDWARD: You’re remembering everything correctly except the date, it was 1976 when the new Bureau of Land Management statute with the name change was enacted. People may remember from social studies learning about Homestead, the first homestead, which was enacted in 1862 under Abraham Lincoln. It led to the settlement of large areas out west, actually west of Mississippi, and then all the way to the West Coast And it was very successful in settling the West. The federal government ended up with a lot of land left over from that process of settling the West. The 279,000 acres just out in these ten states Alaska has another large chunk and the Bureau of Land Management Act, when they changed the name to management from sales, of course, bureaucrats they focus on that word management and therefore their job is to manage the land not really to sell it. Even though the Bureau of Land Management has two mandates and the first mandate is to “promote thoughtful development in the right places to drive economic opportunities for local communities” Well, economic development basically means jobs. Jobs basically means housing. Housing basically means you need land for housing. Bureau of Land Management has done very little for that. The only area in the country that they’ve done any significant amount has been in Clark County, Nevada which was pursuant to a statute that Harry Reid, senator from Nevada and a very he was a minority leader, majority leader. So he had a lot of power in Congress. He was able to get a bill through for the southern Nevada Land Management Act and which authorized the sale of Bureau of Land Management land. They authorized the sale of some 68,000 acres in 1998. They have so far sold for residential properties about 18,000 of those acres. They still have 27,000 acres to go. So here it is, 1998 we’re in 2025, 27 years later Congress in 1998 said this is an emergency. Las Vegas is the fastest growing city in the country. So what happened while the Bureau of Land Management dawdling all these years and selling this land off in relatively small chunks. Home prices in Las Vegas have been the second fastest growing metro in the country after Boise, Idaho. And ironically, much of the west because of California and because of the federal ownership of land has some of the highest house price to income ratios in the country led of course, by California. But places like Montana, Utah, Nevada, Idaho, also have very very high home price to income ratios.
MARK: Yeah, and so basically right now, I guess the secretary of the interior, so Burgum has the they have the legal right to sell land up to 2500 acres of BLM land Per Parcel And if it’s over 2500 acres, then they give it to Congress for, what, 30 days to veto it?
EDWARD: Yes, they basically have a negative veto but you have to comply with a land use plan and again, given that the Bureau of Land Management doesn’t focus on the portion of the land that actually be usable for economic development, namely of the type with jobs and housing most of those plans focus on the other rest of the 278,000 square miles that we’re not talking about. And they might have to put together some of these plans although ironically, in the 1998 ACT, congress waived that. They basically recognized that if you’re going to build near existing development, which is what they were authorizing, you didn’t need a land use plan. You could just identify the land and then put it up for auction. By the way, this land would be sold at auction, that’s what the statute provides for at market prices. And we estimate the entire 850 square miles would bring about $100 billion in today’s dollars for that land. And that’s based on what has been gotten selling the land in southern Nevada for the last 20 something years. So we think that that also allows it to be included in a reconciliation package because a reconciliation package is all about revenue. $100 billion is a substantial amount of revenue over ten years, and therefore that would allow some waivers to be built in through a reconciliation provision like the 1998 act waive some of the requirements that were waived back then which would speed up the process. We also suggest that when the Bureau of Land Management does this, it sets some time limits to when this land would get developed. Once it gets sold, you don’t want it just sitting there unused. And so if you set some time limits that’s going to force the states and localities to cut some of the red tape that would slow down building this housing number one and some short clocks on permitting and things like that. So the federal government could put some requirements that if you want to participate in this and actually get the economic development and the housing that you need, the housing you need to support economic development, then you also have to let the housing be built. So we think this can be put together relatively quickly and the states that want to play would participate. Again, there are ten states around the west. Maybe California doesn’t participate for a few years, but Utah and Idaho and Nevada and Colorado and Arizona might be interested in playing pretty quickly.
MARK: And so just one kind of side question. Would it also be possible for the federal government to lease the land to developers like just instead of doing an outright sale say look, we’ll lease it conditional upon development?
EDWARD: The statute provides for the sale of land at market prices. That’s what the statute provides for.
MARK: All right. And so where else other than you’ve mentioned these ten states, there’s a bunch of federal land outside of Vegas where else is there federal land because a lot of federal land is in the middle of nowhere where it’s not practical to develop it. So in addition to Vegas, what other kind of cities are having some of their growth being constrained by federal land that’s not being sold to developers.
EDWARD: So we’ve looked at where this land is located, and there’s land near Alamogordo New Mexico Bakersfield Delano, California, Bend Oregon, Castro Wyoming, Elko Nevada, Eugene Oregon, Farmington New Mexico, Gardnerville Nevada, Lake Havasu, Arizona, Las Vegas, we mentioned Phoenix Mesa Chandler, Reno Nevada, Riverside San Bernardino, and St George, Utah to name you know, most of the ones we’ve identified. And we’ve identified that there’s enough land for say, the first phase which is the 10 year phase of building near existing development that we’ve identified and we’re suggesting 250 square miles would be enough for about 1.5 million new homes We have identified probably 500 or 600 square miles of land that could be selected from. And over a 10 year period land that’s 3 or 4 miles away from the closest development would then in eight years become right next to development. We actually found in the case of Las Vegas in Clark County that in a 5 or 6 year period you could actually fill in an undeveloped six mile stretch of land that was six miles wide, which was a bit surprising that it happened so quickly. But again, Las Vegas at that time period was in the early 2000, was one of the fastest growing cities in the country.
MARK: So far we’ve talked mostly about land being developed on the outskirts of existing urban centers. I briefly mentioned Freedom Cities, kind of like new city projects that are a little bit more detached from urban centers. So how are you thinking about that? How are you thinking about identifying potential locations for it as well as making sure they’re kind of plugged into regional economies and trade networks?
EDWARD: So we’re using as sort of our analogies things like Reston Virginia, which when Reston Virginia was developed back in the 60’s, it literally was in the middle of nowhere. There was very little development in Washington, DC, outside the Beltway and which is now Tysons Corners where the Beltway is and Reston is another 15 or 18 miles beyond that. You had Dulles Airport was opened up in the late 60’s I don’t know exactly when It’s about 25 miles or 30 miles away from downtown D.C It was literally in the middle of nowhere, which is why they were able to build a huge airport. Today, all of that is filled in Reston is a full scale commercial residential center. It now has a subway running from downtown out to the Dulles Airport. Columbia, Maryland is another example that was halfway between Baltimore and D.C. at the time again, there was very little developed there’s a lot of green space between those two cities. Columbia was put roughly in the middle, and today it’s almost fully developed from the D.C. boundary only to the Baltimore Beltway. And so those are kind of the analogies we use. There are other examples in United States that were put in not near a large city such as the villages in Florida, which now has 100,000 people. You have Georgetown Sun City in Georgetown, Texas, which is 30 miles, 40 miles north of Austin. But again, that area from Georgetown to Austin has now gotten pretty much fully developed given that Austin is also now one of the largest metros in the country. So those are kind of the examples we know that they take 40 years to fully develop an entirely new city. And so we’re looking for sites that are either somewhat like Columbia and Reston. So they’re in metropolitan areas, but they’re in areas that have access to the metropolitan area, maybe have access to an airport, they’re on a highway, etc.. But there’s plenty of room and there’s BLM land of 20, 30, 40 square miles that could be used to develop an entirely new city. There’s actually a new city going in, outside of Phoenix to the west of Phoenix, with 100,000 homes. The first homes are being built now, and eventually that’ll be 100,000 homes. That’s 300,000 people. It’s going to have I think it was 59, if I’m remembering right, 59 million square feet of commercial space so it’s going to be a freestanding city but it’s about 30 miles outside of Phoenix, Arizona. The second type would be in more remote, potentially more remote locations that still could be like the Villages case could be a freestanding city. And we’re still looking at what potential for those are. We have identified maybe 50 or 60 locations that meet the the first description I had, like the Columbia or the Reston, where they’re near highways they’re near an airport they’re in a metropolitan area. And what we’re thinking is given that there are ten states that have this Bureau of Land Management land, we’re going to rank all of these. We’re going to identify maybe the top five for each of the ten states and then maybe identify the top two within that and the thought would be well maybe if you had ten of these two in each of the ten states, that would be something that would get interest across all ten states.
MARK: Great, Thanks. And for the final question, why are you excited about Freedom Cities?
EDWARD: I’m excited about anything that really can add supply using market forces without subsidies, without income limits, things of that nature, and allows housing to be built for the full range, including starter homes. The problem we’ve had in this country is we’ve basically outlawed starter homes. We did that in the 1920s and we were tremendously successful at it. It took a very long time for the starter homes to get stamped out largely, but they’ve been substantially stamped out. By that I mean we used to have homes that were commonplace, 1200, 1400 square feet. Today, very very few homes of that size are built yet homes of 1400 square feet on smaller lots, which sell for much, much less than the current homes that are built today of 2500 square feet on quarter acre lot. This result isn’t because developers want to build on quarter acre lots of 2500 square feet. and it’s illegal to build the others in general. Let’s legalize starter homes If we were to legalize starter homes you’d have a lot more smaller lot again, these are still family sized homes. Maybe we found homes in the Las Vegas area 17 single family detached homes per acre. So that’s about 3500 square feet per acre. The homes were still three bedrooms, two baths, 1400 square feet. That’s a family sized home first home my wife and I purchased over 50 years ago was that size. And that’s a family sized home. That’s what we need more of If we’re going to have the economic growth that we hope to have as a country. So that’s why I’m excited about this I think this could really be a big step forward for the whole country and the 3 million homes would have a meaningful impact both out west and across the country.
MARK: Great, thanks so much for coming on the Freedom Cities podcast.
EDWARD: My pleasure, thank you Mark.
MARK: And if people want to find out more, where can they kind of follow your work? follow our work @AEI aei.org which if you just Google a housing center all the different websites will pop up.
MARK: Great, thanks so much
EDWARD: thank you, Mark
[OUTRO]
Mark: This is Mark Lutter and thanks for joining the Freedom Cities Podcast, if you enjoyed this episode, don’t forget to like, subscribe and stay tuned to more episodes.
