In the interest of diversifying and protecting downtown Iowa City from the rowdy drinking crowd, the Iowa City City Council has passed rule after rule restricting bars, entertainment venues, and the drinkers themselves. Though the 21-ordinance has become a lightning rod for controversy, some other council moves have gone by almost unnoticed.

One of these is an ordinance passed in 2009 that prohibits new “drinking establishments” — bars or restaurants open between midnight and 2 a.m. — from opening within 500 feet of another such establishment.

That the drinking culture is so prevalent in Iowa City may be a point of embarrassment for city officials, and the 500-foot rule represents the city’s response. But despite good intentions, the ordinance is misguided.

Earlier this month, a Wisconsin bar owner wrote to city officials, hoping to obtain a license to create what would have been a bar, restaurant, and entertainment venue where the Field House used to be. But this venture was denied by the city, because it violated the 500-foot rule.

Protecting the downtown environment is one thing. But measures such as these are doomed in a free economy, where anyone can (in theory) create a business or service and help supply the demand. As it’s said, if you build it, they will come.

The ordinance, though designed to limit the expansion of the downtown bar scene and diversify the downtown landscape by preventing new bars from opening, has had an unintended side effect: It has prevented prospective businesses from setting up shop in otherwise unused spaces downtown.

The ordinance should be relaxed to allow market forces — not the City Council — to determine what kind of businesses can open up downtown. A new business of any kind is preferable to a vacant storefront.

There is some precedent for amending the 500-foot rule. When it was written, the ordinance did not take into account the varied sectors of Iowa City. Different zones with different atmospheres were treated the same as the alcohol-saturated Pedestrian Mall. The City Council took the first step toward correcting the 500-foot rule over the summer when it limited the scope of the ordinance to the University Impact Area — which includes downtown — and the Riverfront Crossings District.

But the ordinance is still in effect downtown, and this is troubling for the future of the city’s businesses. Competition is a vital part of preventing stagnation, and preventing new bars from opening downtown could stifle growth downtown by legally making permanent the status quo.

As we wrote Thursday, the 21-ordinance has shown itself to be a benefit to the community, reducing instances of alcohol abuse and crimes reported in the city. But the 500-foot rule seems to do little other than stifle the city economy. At the very least, the ordinance should be changed to allow the city to approve or disapprove new downtown bars on a case-by-case basis.

Some may say there are already enough bars in the city as a whole. However, punishing would-be bar owners looking to move into the city’s vacant real estate for the past sins of the downtown drinking scene makes little sense.

Progress has been made in the city’s fight to diversify Iowa City, but much of that progress has been the product of diminished demand for bars downtown, not the 500-foot rule. At this point, it is clear that the 500-foot rule is serving only to preserve the downtown area’s vacant buildings.