[This article was originally published by the Independent Institute.]
What is America’s biggest domestic policy failure? There could be many answers, and they’d depend on the frame of reference of whom you had asked. For me, it’s a relatively-obscure one that has major consequences: land-use regulations blocking urban density.
That’s because urban density, by which I mean clusterings of people at a high rate, per acre, within taller buildings, is desirable.
Along with being a lifestyle preference for millions of Americans, urban living is better for the environment, can improve per-acre tax yield, and is more economically productive than other forms of habitation. Density creates scaling that leads to jobs, wealth, and innovation. For example, the New York City metro area has under 6% of the U.S. population but accounts for over 7% of national GDP. The numbers become even more skewed when comparing Manhattan, the city’s densest borough, with the rest of America.
The problem with anti-density regulations is they prevent more places from becoming like Manhattan. Cities as diverse as San Francisco, Denver, Chicago—and even other boroughs of New York City—have extreme demand pressures. There’s intense lobbying from developers to satisfy this demand by building towers, but regulations keep the cities low-slung. They avoid this type of efficient land use, and people must instead move to metros that have suboptimal, sprawling patterns. Below I list three leading regulatory culprits for this: limitations on building height, floor-area ratio (FAR), and dwelling units per acre (DUA).
Every major U.S. city has height restrictions, and they generally cover the whole city. Sometimes heights are dictated de facto by FAR and DUA restrictions, which I detail below. If much of a city is zoned single-family (1 housing unit per lot), for example, it won’t be tall anyway. Even in areas zoned for multi-family, however, there are often very severe height restrictions.
In Philadelphia, many parts of the city would organically grow above the entrenched rowhome character, except there are 38’ height limits to prevent this.
In Seattle, a neighborhood next to downtown called South Lake Union houses Amazon and several large medical facilities. It’s a natural place to extend the skyscraper agglomeration that begins downtown; but many parcels cannot exceed 65’, giving the neighborhood a squat character. Even Manhattan is rife with height limits that vary by parcel, and one preservationist group wants to cap all buildings at 600’, well under half the height of the Empire State Building.
Arguments against height are usually aesthetic, as people find tall new modern buildings overwhelming, but that argument’s never made sense to me. Tall buildings are among the most celebrated and distinguished symbols of most cities, after all. Manhattan would not be Manhattan without its skyline.
FAR is calculated by dividing a building’s total floor area by the amount of land it sits on. So, if a building is 1 story and covers a quarter of the lot, it has a .25 FAR. If it has 4 stories and 100% lot coverage on each floor, it has a FAR of 4. In many cities, the allowable FAR of a building is determined by zoning.
D.C. is one example of an interesting city for FAR, which reaches 12.0 in the central business area. Because the city has such limited height laws, that means developers can only maximize the FAR by building to the end of lot lines. That is why D.C. has such short, boxy buildings.
In other scenarios, relatively looser FAR is used to build skinny towers that reach a taller height because other parts of the lot were left as open space. New York City and Atlanta both have this system.
But the FAR for most lots, even in major downtown areas, is below 1. The rationale is often, as with height limits, aesthetic in nature—an attempt to limit the height, width, and bulk of buildings
Allowing for more dwelling units per acre produces density even more efficiently than alleviating height or FAR regulations. When you’re looking at common zoning code designations like R-1, R-6, etc., you are likely reading laws about DUA.
If a zoning law allows for 8 DUA, and you own a quarter-acre lot, that means you can only build two homes on the parcel. Other regulations often complement DUA in situating development on the land. Lot size minimums, which, per their name, prevent any unit from going on a lot below the minimum designated standard size, subdivide parcels in certain ways. Maximum occupancy laws limit the number of unrelated people who can then live in those units.
Just like the limits to height and FAR, DUA limits, and their accompanying regulations, can really micromanage the look and feel of projects. In my hometown of Charlottesville, the areas with relatively permissive zoning are often R-3, a medium-density designation of 80-101’ heights. But the DUA for R-3 is between 22-87. This means units must be large to fill the allowable space, making them expensive.
In other cities, I’ve spoken with developers who’ve said that between lot size minimums, setbacks, DUA restrictions, height limits, FAR limits, and parking requirements, it can be literally impossible to build on certain lots. The configurations just don’t work: meeting one aspect of the code requires breaking another, and the only escape for the developer is applying for a zoning waiver, which costs time and money.
All these rules and more strip creativity and artistic flair from the city development process. Ultimately they raise rents, preventing our cities from densifying, robbing the nation of wealth, productivity, and the opportunity for more people to live in economically vibrant urban settings. They’re perhaps the costliest regulations we have in the U.S., and, at least to me, make for our biggest domestic policy mistake.