Tax Status and Assessed Value

Ultimately (but certainly not soon), DC's economic growth will be limited by its physical real estate, some 61 square miles which equate to about 29,000 acres--not counting roads and water. What is more unusual perhaps, is that only some 43% is taxable while the rest is tax-exempt. Of that taxable land, 54% is occupied by homeowners, another 21% by people who rent (mainly apartments), and 25% used for commercial and industrial purposes.

Of the tax-exempt acreage, about 10% is DC property--some of it virtually unused. Non- profits (churches, embassies, etc.) use another 19%--as do the major buildings of the federal government. But slightly over half of the tax-exempt properties is in federal parks with very mixed benefits to the city: some, like the national Mall, are the very epicenter of DC's existence; others, like Ft. DuPont Park in Ward 7, provide undeveloped natural spaces which could well someday become more central to DC's economic growth.

DC keeps track of the assessed value of all its acreage, and likes to make the point that the potential value of its untaxed property is 3/4 of that which is taxed. This equates to some $540 million in foregone taxes, not including another $70M in sales taxes foregone on purchases by the military and foreign embassy personnel. An additional unspecified amount is lost to income tax exemptions for elected officers of the federal government, Senate-confirmed presidential appointees, supreme court justices, and others.

Finally, it should be noted that the total taxes raised both in total and per acre are significantly higher from the city's commercial endeavors than from its residential population. More about this further on.

For further details see:
regional income tax trends

Productivity of Different Land Uses

NARPAC has used various (possibly oversimplified) techniques to estimate the productivity of DC's land uses as a means of illustrating the importance of higher density developments in a limited space. The three step increases on the three left- hand bars represent different numbers of floors in large office buildings, hotels, or apartment houses. The shading at the top of each bar shows the increase in net revenues with more favorable assumptions. The bottom two floors of each are used for shops, restaurants, or grocery stores.

Hence a 10 story hotel with 70% occupancy and a $130/day room rate might produce $5 million per acre, whereas a 15-story hotel with 80% occupancy and a $160/day room rent might produce $7 million. Note that apartment houses generally produce less because of the much larger floor space per occupant.

By comparison, single family dwellings take up much more space per taxpayer and also consume somewhat more city services (including schools, police, and in the poorer neighborhoods welfare). Public housing, of course, with its high concentration of needy is a very substantial drain on the city's resources.

The chart can also be used to estimate trade-offs in land uses: for instance, one acre of tall downtown office buildings can offset the costs of two acres of public housing; and one acre of middle income apartment houses/condos can produce revenues equivalent to 100 or more single family dwellings. These trade-offs are so powerful that the ability to balance city revenues and expenditures is virtually unlimited--in theory!

For further details see:
people and land productivity

Distribution of DC Jobs

It should come as no surprise that the vast majority of jobs available in the city are congregated in the city's downtown area. The stacked bars above represent thousands of day-time jobs per 'layer' but DC's major zip codes (200XX). These bars also indicative of the areas of the city from whence flow commercial tax revenues. As will be noted repeatedly, the number of jobs East of the Anacostia River (to the right on the chart) are minimal.

For further details see:
sources of DC employment

Residential Real Estate Values

By contrast, the areas of the city with the highest real estate values are quite different, and indicate where the city produces the most revenues from its residents. Note again however, that the area east of the river contributes relatively little. Again, the last two digits of each zip code are paited on the roofs of each stack.

For further details see:
DC's strong economic divisions

Net Residential Land Productivity

This chart attempts to depict graphically the vast difference in the net productivity of residential properties across the city, using the per-acre productivity of an earlier chart and the known distribution of low income/high crime rate parts of the city. The highest positive productivity comes in the high density well-to-do apartment house corridor of zip code 20008, while the deepest pits of city resource consumption are in the low income and slum area in both the Northeast and Southeast quadrants of the city. This comparison might be more dramatic if NARPAC had a better illustrator!

For further details see:
people and land productivity

Trade-Offs in Land Uses

From the foregoing it is not difficult to prepare trade-off matrices that illustrate the changes in property revenues by trading off one-for-one between residential and commercial property uses (the highlighted diagonal set of boxes) or by adding or subtracting 500 acres of either. For instance, using the nominal current values for each category of use (left-hand chart), the city could gain or lose $515M in net revenues by swapping 1000 acres between residential and commercial. If it can add 500 acres of each, it can expect to raise revenues by $383M at current averages, or $600M using higher, but more realistic "new" values for future years (right-hand chart). If the city chose to add only high density properties (rather than average), these numbers could be almost ten times larger

Remembering that DC feels that it is losing some $600M annually from foregone taxes, it should not be all that difficult to retrieve them from a relatively small number of highly productive acres from the totals shown in the box. It might however, require recovering a few tax-exempt acres--or obliging their current owners to make productive use of some portion of their properties.

This page was updated on Oct 5, 2000