Thursday, January 24, 2013

The High Cost of Strict Zoning

Urban land is expensive where demand for floor space is high but supply is limited. When firms and households can't afford a rent inflated by high land costs, they move elsewhere, resulting in long, polluting commutes, new infrastructure costs and revenue and job loss for the city. Businesses that do stay - from law firms to grocery stores to daycares - pass the real estate costs on to their clients, increasing the cost of living for all of us. So does it really make sense to regulate development so strictly? It depends.

For example, the map closest to the bottom in the graphic above shows that there is tremendous pressure to upzone and develop Yards Park, but most would agree that the social value of an active waterfront public space outweighs the potential environmental and economic benefits that development could bring.

Across town, the Wesley Heights overlay zone strictly regulates the bulk of the buildings within its boundaries for the sake of preserving the neighborhood character.  Is it ethical for the city government to mandate, essentially, that no home be built on less than $637,500 worth of land in certain residential neighborhoods?

The largest concentration of overly restrictive zoning (from an economic perspective) appears to be downtown, along Pennsylvania Ave and K Streets NW. If we value our designated open spaces, and won't concede the exclusivity of certain neighborhoods, but understand the environmental and economic benefits of compact development, then isn't downtown as good a place as any to accommodate the growth this city needs?


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