September 26, 2013

Prairie skyline towers over Washington D.C.

By Prairie skyline towers over Washington D.C.

A North Dakota businessman recently announced plans to develop a 352-foot tower in Fargo, North Dakota. Fargo is a small city with a population of 105,000. The metropolitan population of Fargo is only 3% that of Washington, D.C. However, even without this latest development, Fargo has more 200 ft. commercial buildings than our nation’s capital. This strange outcome is due to the district’s outdated building height restriction. Originally passed for fire safety, the law became antiquated with the invention of sprinkler systems.

Although outdated, the law has contemporary effects. It reduces the availability of office and living space thereby increasing costs by more than 20%. As a result, Washington, D.C. has some of the country’s most expensive housing, hotel rooms, and office space. This regulatory cost is the equivalent of a $1.4 billion tax on businesses and jobs. In turn, these costs are passed on to federal taxpayers as higher salaries for government employees. The city also has the nation’s worst traffic congestion. Further, because developers are unable to build vertically, they aren’t able to fit amenities – such as playgrounds or parks – into their projects. Even the ostensible aesthetic value of this restriction is debatable.

Washington, D.C. is not alone; municipal governments throughout the country have imposed similar zoning controls. Regulatory burdens impose an effective tax close to 50% in San Francisco, San Jose, and Manhattan. Unsurprisingly these cities are some of the nation’s most expensive. A study published in the New York Federal Reserve’s Policy Review, notes that although pro-government advocates push for costly subsidized housing, one of the simplest and most effective solutions to high housing costs is to remove zoning restrictions. Removing these restrictions would not only reduce costs it could also reduce traffic congestion.

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