The Height Act and Vacant Land

One recurring theme in this Greater Greater Washington symposium on the DC Height Act is the idea that the presence of vacant lots in non-downtown parts of DC constitutes an argument in favor of the Act’s non-malignancy.

I think this is a big mistake. Consider some other inefficient rule about the use of downtown DC space. Maybe the City Council is proposing a rule that everyone in the downtown business district needs to wear blue on Monday, green on Tuesday, red on Wednesday, purple on Thursday, and yellow on Friday. Someone says “you know, that’ll be bad for business.” But the proponents of the new rule say “no way; not only will the impact be minimal, if anything it’ll help the city by encouraging investment in under-developed neighborhoods.”

I say false. The best thing under-developed DC neighborhoods have going for them is proximity and connectivity to the valuable land and economic activity in downtown DC. Measures that reduce the value of that downtown land and activity reduce the value of proximity to downtown DC, and impair the chances of development in under-developed neighborhoods. Repeal of the Height Act would, by lowering rents, increase the share of DC-area firms that are located in DC. This would increase the value of connectivity to downtown DC, helping under-developed neighborhoods, and also increase the city’s tax base, also helping under-developed neighborhoods. What’s more, lower rents would increase the entire metropolitan area’s capacity for entrepreneurship and start-ups outside the core politics-and-government industry. This would further increase the value of connectivity to DC-area business centers, further helping under-developed neighborhoods.

If what you think is that the aesthetic value of the Height Act is just so important that it’s worth everyone paying higher taxes, higher per capita pollution levels, impaired working class job opportunities, and reduced city services then fine. But I think very few people do think that. So cognitive dissonance produces a lot of creative thinking about why maybe this isn’t such a big deal, economically. The reality, however, is that it’s a huge deal. Look at the central business district of any American city. Then look at DC. Regulation is massively distorting the allocation of resources in this city.