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Speaking outside the U.S. Capitol late Tuesday afternoon, Environmental Protection Agency Administrator Christine Todd Whitman announced a new program to encourage telecommuting in five major metro regions: Denver, Houston, Los Angeles, Philadelphia, and Washington.

Under the pilot EPA "telework" project, companies that promote telecommuting can earn "credits" for emission reductions. Those credits can be traded or sold to firms with surplus emissions. The effect is to increase overall air quality by reducing auto emissions.

The concept is similar to TDRs long used in real estate. With a Transfer of Development Rights a property owner agrees to limit development and thus preserve open land. For instance, an owner might want to preserve his farm in a fast-growing suburban area. In exchange for not developing the property, the farmer gets "rights" which can be sold to other property owners. The result is that open land is preserved, the farmer gets money for the rights, and more valuable land is developed.

The EPA program, however, contains two significant limitations.

First, credits under the program are only available in five areas at this time. This number will surely increase if the pilot effort is successful.

Second, whether the program expands or not, local zoning rules often ban home offices. Such regulations were typically established long before the availability of the Internet, fax machines, and cell phones.

In those cases where home offices are permitted, the benefits go far beyond bad air reductions:

  • More people in a neighborhood are available to report crime, fires, and other safety problems.
  • Fewer commuters mean less road use and thus reduced repairs, a major capital expense.
  • There are important social benefits, including the ability to spend more time with children.
  • Given that computers and software used at home and at the office are largely identical, working from home does not automatically mean reduced productivity. In fact, given the commuting hours saved, it can be argued that teleworkers actually have a productivity advantage.

Montgomery County, MD -- just north of Washington -- maintains one of the most progressive home office zoning rules to be found. Under its no impact rules you can have a home office without a zoning hearing or permit provided you have no non-resident employees, do not receive more than five vehicle visits per week, and the home is not material changed.

What's the impact of more home-based businesses?

It's good for residential real estate -- another reason to get a larger house.

But home-based businesses are not so hot when it comes to commercial office development. If a typical office worker requires 200 sq. ft. of space, including common areas, then 500 home office workers mean there is less demand for a building with 100,000 sq. ft. of office space.

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