THE COST OF DOWNZONING


Typical Lanier Heights row house in its original form
Constructed circa 1900-1925



Typical building height = 40 foot
Single family use expanded to multi-unit dwellings, boarding and rooming houses. Today predominantly single family but many basements have been converted to separate dwellings. Three or more dwelling units per row house exist but are not common.

COMMENTS: Original construction typically used 60% (or less) of the "development by right" under current R-5-B zoning regulations.


Development by right under existing R-5-B zoning
Current Home Owner Property Development Rights




Maximum building height = 50 foot
Maximum number of dwelling units = 5

COMMENTS: Row house at full potential: using 100% of the "development by right" under current R-5-B zoning regulations.


Reduced home owner rights under downzoning



Maximum building height = 40 foot 
Maximum number of dwelling units = 2

COMMENTS: Downzoning allows only an additional 15% of the "development by right" under current R-5-B zoning regulations -- pushing the original 60% usage up to 75% by converting an attic level into a full 3rd story. Home owners lose the other 25% of the current development value of their property. Since many existing row houses already have a separate dwelling unit in the basement, no new dwelling units would be allowed for these homes.


SUMMARY

Under zoning rules desired by the downzoners, home owners who have not already developed their homes to the maximum amount allowed will lose 25% of their home's potential value. 

With row homes in Lanier Heights currently selling for an average of $900,000 (for a house developed to 60% of potential), simple math tells us that a 100% developed row house has a value of $1,500,000. Looked at another way, a home's potential value drops $375,000 when the home owner loses 25% of current R-5-B zoning rights.

Multiply that by the number of row homes in Lanier Heights that would be affected by downzoning (an estimated 150 homes) and the total loss comes to $56,250,000. 

Fifty-six million, two hundred and fifty thousand dollars. Gone. Forever.

Shockingly large as that number may be, it becomes even larger when the number of lost dwelling units are considered. The potential for developing a row house into a small apartment or condo building with 3, 4 or 5 units will be lost if the 2 unit maximum being pushed by the downzoners is adopted. 

Using our previous estimate of affected homes, the Lanier Heights neighborhood could lose 300+ new dwelling units to downzoning.

Lanier Heights is just a small neighborhood in Adams Morgan. If downzoning spreads throughout the city's residential neighborhoods, lost property value for home owners could very quickly reach as much as ONE BILLION DOLLARS city wide.


NOTES:
Obviously in this analysis we are talking average values: the exact numbers will be different for each house. The real estate market can rise and fall over time, although in D.C. the market continues to rise. Not every home in Lanier Heights -- or the city -- will be 100% developed. Some will be developed by the home owners themselves, some by professional developers, some will be a collaboration between owner and developer. Some homes will remain single-family, even if 100% developed. Others will become (or go back to being) multi-unit dwellings. 

We welcome comments, corrections, criticisms and debate.
Email Lanier.Neighbor@gmail.com

UPDATE:
A reader questioned the validity of our calculations based on the comparison diagrams pictured above. Our original calculations did not count the basement level as livable space since original basements lack the required ceiling height for habitation under current housing regulations. 

However, if the basement level is counted as livable space, the final result is similar to our original numbers. Our re-calculation shows a loss of 20% of potential development value (rather than 25%) and an estimated average loss of over $250,000 per row house (rather than $375,000). Based on our estimate of 150 row houses in Lanier Heights that would be affected by downzoning, the loss to our neighborhood is more than $38,500,000 (rather than $56,250,000).

Please note that converting a basement into habitable space requires either excavating the foundation or raising the level of the first floor (or perhaps a little of both). Either method is much more expensive than adding a full fourth floor. That extra expense decreases a home owner's potential development value.

While different assumptions will result in different sets of numbers, all point to a loss of home owner value under downzoning. 

The question is not really "How much value should a home owner sacrifice to satisfy the downzoners" but rather "Why do the downzoners believe they have a right to rob their neighbors of significant amounts of home equity?"