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Moratoriums have their place, but are easily misused

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Photo by sbluerock on flickr.

When is a moratorium, for liquor or otherwise, useful? When is it not?

Theoretically, local moratoriums on certain types of development can strengthen neighborhoods by encouraging a broader mix of uses. Unfortunately, they rarely actually work that way. More often, moratoriums are misused by opponents of growth in general, to try and slow or stop change.

As DC debates the possibility of a moratorium on liquor licenses on U Street, it’s worth discussing the issue more seriously than yesterday.

The basic truth of moratoriums is that they don’t usually stop things, but rather move them somewhere else. Banning bars on U Street doesn’t eliminate demand for bars, it simply pushes any new supply to the next best location. Residential moratoriums, which are sometimes used in fast growing suburbs, are the same.

So any discussion of a local ban on any particular use needs to consider where that use is most appropriate. It’s not enough to just say “I don’t want more of X in my neighborhood.” We have to plan where we do want that use, make sure it can happen there, and then plan what we want in the banned location instead.

Malls versus neighborhoods

One of the advantages suburban malls have over urban neighborhoods is total control of the merchant mix. Mall owners know that it’s important to have a wide variety of stores, so the best malls typically lease spaces to shops that will improve their mix, rather than those that will pay the highest rent.

When you’re at a mall and Verizon has a big luxurious shop, but AT&T and T-Mobile only have little carts, it isn’t because AT&T and T-Mobile can’t afford to outbid that shoe store down the hall; it’s because the mall owner will only lease out one big space to cell phone providers.

That isn’t limiting the free market. On the contrary, it’s taking a broad long term view of the market.

Urban neighborhoods usually can’t be as selective, because every building has a unique owner. Mall owners are concerned about the overall profit of the entire mall, so they can turn down high leases on individual storefronts if they think it will pay off with a little more business everywhere else. But if you only own one individual storefront, you’re going to maximize it with the highest paying tenant you can find.

That sometimes results in neighborhoods with a bad mix of stores. We certainly see that in DC, where many of our retail strips have a glut of bank branches, cell phone stores, and pharmacies.

So if used carefully, moratoriums can help level the playing field for urban neighborhoods with a lot of small land owners. If the neighborhood is desirable enough to fill all its storefronts regardless, and if the moratorium is thought of as more of a way to promote something new rather than limit something old.

But moratoriums shouldn’t be tossed around lightly. The key is to plan for what you do want and then make it happen. Moratoriums fail when they’re used without a master plan guiding them towards a specific goal.

And sometimes, it’s worth having a high ratio of certain things. For example, as a regionally-significant nightlife district, it’s acceptable for U Street to have a lot of bars.

 Cross-posted at Greater Greater Washington.

February 12th, 2013 | Permalink
Tags: government



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