Height limits

There’s an interesting debate over D.C.’s height limits at Ryant Avent ‘s blog and the DCist.

Austin does not have height limits downtown; building mass is instead controlled by floor-to-area ratios.  But some — most notably, iconoclastic architect Sinclair Black — have argued that we need height limits.  They argue the absence of height limits encourages owners to bank their properties while they wait for the big score.  This saddles the rest of us with a bunch of surface parking and low-rise uses such as drive-through banks while we wait for the urban environment to fill in.  Better, they say, to impose hard height limits and encourage everyone to develop their properties now.

The surface parking lots downtown piss me off as much as anyone.  And I must say the land-banking theory is plausible, although I haven’t seen any study showing it’s true.  But I think there’s a better solution for encouraging the development of property then imposing an arbitrary limit on building capacity:  Simply jack up property taxes on the value of the land and slash property taxes on the value of capital improvements.  (The reallocation should be revenue neutral, of course.) Taxing capital improvements — surprise! — discourages capital improvements.  A property owner, however, can’t dig up his lot and cart it off somewhere else.  (See Henry George.)

Reallocating the tax burden would encourage property owners to maximize the value of their land right away rather than waiting for the big score.  It would also encourage them to build the optimally-sized building rather than settle for something slightly smaller or cheaper because of the distorting effect of property taxes.  It also might discourage premature teardowns.  I’m thinking of properties like the Fox and Hound pub, which has been torn down to make way for a new apartment building.  These lots can sit vacant for months, or even years, before the new development breaks ground.  I don’t know whether property taxes prompt premature teardowns, but reallocating the property tax burden certainly couldn’t hurt.

This would mark a radical shift in state tax policy, of course, and I’m sure would infuriate too many property owners to be politically feasible.   I suppose you should just file this one under “pipe dream.”

Update:  This organization advocates this kind of two-tier tax.  H/t Joshua (who provided other useful information in the comments).      

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