Photo by Stefano Cobucci on Flickr.
Over the past 10 years DC has grown from being a virtual non-entity when it came to the tech sector to a vibrant center with almost 450 startups. Some firms such as Blackboard and LivingSocial have built national and international reputations. What has DC done to help this along, and what can and should it do to keep the momentum going?
Last week, Smart Growth America hosted a panel on the relationship between startup communities and startup places, featuring DC planning director Harriet Tregoning, CEO of iStrategyLabs Peter Corbett, and SGA Vice-President Ilana Preuss.
Tregoning and Preuss talked about many ideas we’ve often discussed here on Greater Greater Washington in other contexts, which tend to attract “creative class” individuals to DC, like investing in public transportation and providing access to low-cost office space.
As any entrepreneur can attest, creating a new business brings with it many inherent risks and living in an environment that is extremely expensive can make diving into working on a tech start up a challenge. Reducing transportation costs — making it realistic for residents to not need a car — is one such way to make urban living more affordable. DC has made progress on this front in recent years with innovations such as the Capital Bikeshare program.
Moreover, if downtown DC only has rents that are affordable to large corporations or the government, then startups are going to logically locate somewhere else. A study by real estate firm CBRE found that downtown Washington had the second-highest commercial rent in the United States — with only Midtown Manhattan being more expensive.
What can DC do to increase the supply of affordable commercial office space? DC took one step by helping fund 1776, a new incubator which offers startups some much-needed office space.
What about the height limit?
More controversially, there is the question of whether DC should allow its buildings to be taller. Congressman Darrell Issa (R-CA), who chairs the House Oversight and Government Reform committee, has held hearings on modifying the 1910 Height of Buildings Act, which limits building heights based on the width of the adjacent street.
I asked Tregoning what she thought of this proposal. She argued that lifting the height limit would not necessarily create less expensive office space, as the new taller buildings are costly to build. She also said that building farther upwards could take away some of the charm that makes DC such an attractive place to live.
Corbett: DC plan is “bulls**t”
The world of startups and government are very different, and people in the startup world have often eyed the world of government and policy with suspicion. Some of that seemed to be on display as Corbett criticized Mayor Gray’s stated goal of making DC the foremost east coast technology center, colorfully calling it impractical. Corbett said DC is not going to catch up to New York, which is already far larger and is constructing an “Innovation Island” tech center on Roosevelt Island.
However, that seems somewhat beside the point; it’s good for DC to set high goals for itself. Many startups set goals of being the market leader in their industry and people in tech companies often speak of “taking over the world” with whatever product they are building, even though few ever do so and many are profitable and successful without massive dominance.
Corbett also argued that DC should make itself more attractive for investment by lowering its capital gains tax rate, which is significantly higher than in Maryland or Virginia. Mayor Gray has proposed this, but the DC Council did not go along.
However, in response to a later question, Corbett also said that “it’s incredibly easy to get angel money in DC” and “anyone who’s gonna kill it in the tech sector isn’t going to let the location of their money stop them,” Aaron Wiener reported, statements which seem to bolster Ken Archer’s argument that the tax cut wouldn’t really make a difference.
These debates are incredibly important for the future of the District. DC is known for being a government town. In the future it could be known just as much as a place where startups and entrepreneurs come to thrive. That would be good for all residents and the District’s economy.