Wednesday, October 30, 2013

Athens Wal-Mart Project Dies

So it's been quite awhile since my last post, but I felt compelled to share the end of the story about putting a Wal-Mart in downtown Athens, Georgia.  If you're a longtime reader of the blog you may remember that an Atlanta based developer proposed a mixed-use development, anchored by a Wal-Mart, in the center of Athens.  (See my previous post here.)  Although Wal-Mart never expressed official interest in the project, many local residents were highly opposed to the idea.

Yesterday the local paper featured a story saying that the developer has now abandoned the project entirely, due to market conditions.  The development featured student apartments as its residential component, and downtown Athens is already overbuilt in that category.  However, the site, while topographically challenging, is prime real estate.  I'm sure as market conditions improve something will eventually be built there.

Jamie Baker Roskie

October 30, 2013 in Community Design, Development, Downtown, Georgia, Local Government, Planning, Real Estate Transactions, Redevelopment | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 19, 2013

Lee on Eminent Domain's Just Undercompensation

Brian Lee (Brooklyn) has posted Just Undercompensation: The Idiosyncratic Premium in Eminent Domain, 113 Colum. L. Rev. 593 (2013).  Lee presents an interesting challenge to recent scholarship recognizing "confiscation of the uncompensated increment" to use Lee Fennell's terminology.  The article does not reject above-market compensation altogether but instead criticizes premium approaches for redistributing wealth to the already well-off.  Here's the abstract:

When the government exercises its power of eminent domain to take private property, the Fifth Amendment to the U.S. Constitution requires that the property's owners receive "just compensation," which the Supreme Court has defined as equal to the property’s fair market value. Today, a well-established consensus exists on three basic propositions about this fair market value standard. First, the standard systematically undercompensates owners of taken property, because market prices do not reflect owners' personal valuations of particular pieces of property. Second, this undercompensation is unfair to those owners. And third, an appropriate way to rectify this problem is to add fixed-percentage bonuses to the amount of compensation paid. Several states have recently enacted laws requiring such bonuses, and prominent academics have endorsed their adoption. This Article, however, argues that all three of these widely accepted propositions are false. First, examining the economics of market-price formation reveals that fair market value includes compensation for more subjective value than previously recognized. Second, much of what market value leaves uncompensated should not, in fairness, receive compensation. Third, although justice may require paying compensation above fair market value in certain situations, this Article argues that the solution favored by academics and recent state legislation is itself unjust, undermining the civic and moral equality of rich and poor property owners by relatively overcompensating the rich while undercompensating the poor for losses which have equal value to rich and poor alike. The Article concludes by showing how an alternative approach can avoid these fairness problems.

Jim K.

June 19, 2013 in Constitutional Law, Eminent Domain, Property, Property Rights, Property Theory, Redevelopment, Scholarship | Permalink | Comments (0) | TrackBack (0)

Thursday, March 7, 2013

Furman Center report on Housing & Superstorm Sandy

The NYU Furman Center has issued a timely report called Sandy's Effects on Housing in New York City.  From the announcement by Vicki Been and Ingrid Gould Ellen:

We are pleased to share with you our latest fact brief: Sandy's Effects on Housing in New York City (PDF) Our report is the first independent, comprehensive analysis of the Superstorm's impact on housing in New York City.

 

The study revealed some surprising insights into the impacts of the Superstorm Sandy. It found that low-income renters were disproportionately impacted by the storm's surge; over half of the victims were renters, 61 percent of whom make less than $60,000 per year, instead of middle-class homeowners. It also exposed the age of the housing stock affected by the surge; 82% of the properties hit by Sandy were built before 1980, before the latest flood maps and building standards were established.

 

The report also summarizes newly available information about the characteristics of properties in the area in New York City flooded by Sandy's storm surge, as well as demographic characteristics of households that have registered to receive assistance from FEMA. The study was released in partnership with Enterprise Community Partners, who provided a similar analysis on Long Island and New Jersey.

 

The press release (PDF) and report (PDF) are now available online.

 

Lots of interesting maps and data in this report, which should be of interest to anyone researching law, land, housing, and disaster planning

 

Matt Festa

March 7, 2013 in Affordable Housing, Beaches, Coastal Regulation, Community Economic Development, Environmentalism, Federal Government, Housing, Local Government, New York, Property, Redevelopment, Scholarship, Water | Permalink | Comments (0) | TrackBack (0)

Monday, August 6, 2012

Interesting Set of Interviews with Staff of New York City Planning, and a Note on Pruitt-Igoe

Over at Next American City there is a five-part series of interviews being conducted with staffers from New York City’s Department of City Planning, discussing changes to city zoning.  The first two installments provide some interesting insights into two innovations to the zoning code.

The first installment looks at the FRESH program, a combination of zoning and tax incentives that are intended to encourage the entry of grocery stores into underserved neighborhoods throughout the city.  The zoning incentives include a bonus allowing the construction of a larger mixed-use building if a developer includes a ground-floor grocery store as well as the easing of parking requirements.

The second installment looks at Zone Green, a set of changes to the zoning code that relax barriers to adding more environmentally friendly features to new and existing buildings.  Installing such features can often require lengthy approval processes to allow elements not permitted by the building code.  Both posts are worth checking out. 

On an unrelated note, following up on Stephen’s recommendation of the Pruitt-Igoe Myth, which I strongly second, I wanted to mention a proposed design for the current site, much of which remains empty, that I came across a while back.  It offers a neo-classical approach that tries to link the site back with the surrounding grid.  

John Infranca

August 6, 2012 in Economic Development, Environmentalism, New Urbanism, New York, Redevelopment, Zoning | Permalink | Comments (0) | TrackBack (0)

Thursday, July 26, 2012

The London Olympics & Land Use--The Atlantic Cities' Coverage

As Jessie noted in her post on the Olympic Villages, there are many land use issues involved when a city hosts the Olympic Games.  For a fantastic overview of these issues, with numerous in-depth stories, there's no better place to start than The Atlantic Cities' "Special Report" Olympics 2012: London Gets Ready for the Summer Games.  Feargus O'Sullivan has been reporting from London for months, and in the past couple of weeks many of their other writers have contributed excellent stories on a slew of land-use-related Olympic issues.  Here are just a few examples of the wide range of topics they've addressed:

Whether hosting the Olypmic "boondoggle" is good or bad for your city; homelessness and tourism; security issues; public attitudes--politicians telling "whingers" to "put a sock in it"; transportation concerns; architecture; planning for post-Games facilities use; affordable housing; the always-controversial of building new stadiums (stadia?); and many, many other important issues that come up when a big city offers to play host to the world. 

The British media, of course, have lots of excellent coverage.  But for a more specific focus on land use, local government, and urban planning issues, I highly recommend starting with The Atlantic Cities' Olympics 2012 page.  They're posting several new stories each day. 

In the meantime, I hope you all enjoy watching that important land use event known as the Olympic Games!

Matt Festa

July 26, 2012 in Affordable Housing, Architecture, Comparative Land Use, History, Housing, Local Government, Planning, Politics, Redevelopment, Transportation, Urbanism | Permalink | Comments (0) | TrackBack (0)

Sunday, June 3, 2012

Lefcoe on California Redevelopment Decision

George Lefcoe (USC) has posted CRA v. Matosantos: The Demise of Redevelopment in California and a Proposal for a Fresh Start.  The abstract:

This paper describes how redevelopment in California came to an end with the California Supreme Court’s decision in California Redevelopment Association v. Matosantos and how redevelopment could be resuscitated. The first part of the paper highlights the precipitating events leading up to the case: California’s unique property tax history, the successes and drawbacks of redevelopment, how redevelopment is financed, and the text and politics of Proposition 22, the state constitutional predicate for the Court’s opinion. The second section describes the arguments and outcome of the case in which the Court upheld a statute dissolving redevelopment agencies (RDAs) and simultaneously struck down a companion bill — a “pay-to-stay” law — that would have enabled cities and counties to preserve their RDAs by pledging local funds to the state. A concluding section proposes that California legislators consider a new redevelopment enabling law, modeled along the lines of Texas’s tax increment reinvestment zones (TIRZs). Such a statute would conform to the guidelines for constitutionality from the concluding paragraph of the Court’s opinion in Matosantos, and it would be fiscally responsible because it limits the use of tax increment financing.

Matt Festa

June 3, 2012 in California, Caselaw, Constitutional Law, Local Government, Politics, Redevelopment, Scholarship, State Government, Texas | Permalink | Comments (0) | TrackBack (0)

Monday, May 28, 2012

Superheroes and Zoning

Yesterday I took my kids to see The Avengers, the ensemble superhero movie featuring Ironman, Thor, Captain America, and The Hulk.  But before all the world-saving action started up, I caught a throwaway line from the Gwyneth Paltrow character who plays Robert Downey Jr.'s assistant/girlfriend-- referring to their "Stark Tower" skyscraper in midtown Manhattan (powered by some futuristic sustainable energy source, natch) and their plans to build several more, she notes that she was planning to spend the next day "working on the zoning" for the other towers.  I made a mental note that this could be a humorous, quick blog post reaffirming my theory that there is a land use angle to everything, and then proceeded to watch the superheroes smash it out with the bad guys to my son's delight.

But just now, the majesty of the Internet has shown me how badly I've been beaten to the punch.  Via our Network colleagues at the Administrative Law Prof Blog, I found a link to a blog called Law and the Multiverse: Superheroes, Supervillans, and the Law, which has a blog post--nay, a 1,500+ word essay!--on this very subject called The Avengers: Arc Reactors and NYC Zoning Laws.  This is unbelievable--from the same offhand script line that set off my land-use radar, the author delves deep into the New York City zoning code, citing chapter and verse of the regulations; identifies where Stark Tower is on the maps (all with copious linkage); and then explains the legal options available to our developer/hero:

I. Stark Tower’s Zoning District

As it happens, we know exactly where Stark Tower is meant to be located within New York: it’s built on the site of the MetLife building at 200 Park Ave.

(Update: Early on some sources indicated that it was built on the site of the MetLife building and now others indicate that Stark built the tower on top of the preexisting building. This doesn’t change the analysis. Whatever the zoning status of the MetLife building, the construction of Stark Tower was likely a “structural alteration” of the building that would disallow a grandfathered nonconforming use. It certainly exceeded the kind of “repair or incidental alteration” that would preserve the nonconforming use.)

Here’s a zoning map of the area. As you can see, it’s in a C5-3 commercial district in the Special Midtown District, which means Stark Tower has a maximum Floor Area Ratio of 18 (3 of that comes from the special district). Basically this means that if the building takes up its entire lot then it can only have 18 full-size floors (or the equivalent). There are various ways to increase the FAR, such as having a public plaza on the lot. The sloped, tapering structure of Stark Tower means that it can have more floors without exceeding its FAR because the upper floors are much smaller than the lower ones. Given the size of the 200 Park Ave lot, it’s believable that Stark Tower could be that tall, given its shape and the various means of increasing the FAR.

Stark mentions that the top ten floors (excluding his personal penthouse, presumably) are “all R&D.” Is that allowed in a C5-3?

Apart from residential uses, the permitted commercial uses in a C5 are use groups 5 (hotels), 6, 9 and 10 (retail shops and business services) and 11 (custom manufacturing). Unfortunately, research and development is not allowed as a permitted or conditional use in this district. In fact, scientific research and development is specifically allowed in a C6 as a conditional use, which requires a special permit and approval from the City Planning Commission.

So Stark needs some kind of special dispensation. How can he get it? There are many possible ways.

The essay goes on to analyze the options for rezoning, variances, and the related issues of electrical power generation permits and FAA approval, again chock full o' links to the statutes, regs, and caselaw.  The author, James Daily, concludes that "while Pepper Potts may indeed have to do some work to get the next few buildings approved, it’s not far-fetched from a legal perspective."  Read the whole thing, it's wild, and quite sophisticated too. 

But I will draw this even more compelling conclusion: Even the world's greatest Superheroes are no match for the awesome power of the Zoning Code and the Planning Commission.

Matt Festa

May 28, 2012 in Architecture, Clean Energy, Density, Development, Green Building, Humorous, Local Government, New York, Planning, Redevelopment, Zoning | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 22, 2012

Strong Towns

Today I was listening to a podcast from the Congress for the New Urbanism's annual meeting last week (more on CNU 20 to come . . . ), and I heard a talk by Charles L. Marohn, Jr., the Executive Director of a nonprofit called Strong Towns.  The organization is dedicated to improving community life at the town and neighborhood level.  Here's a link to its ten Placemaking Principles for Strong Towns.

What looks like the best feature is the excellent Strong Towns Blog, which posts in-depth original analyses three times per week.  Recent posts are on topics such as "The Micro City Beautiful"; Low-Impact Development (LID) vs. New Urbanism; and weekly news digests of interesting land use and planning stories.  Check it out.

Matt Festa

May 22, 2012 in Development, Local Government, New Urbanism, Redevelopment, Smart Growth, Urbanism | Permalink | Comments (0) | TrackBack (0)

Monday, May 14, 2012

Strategic “Blight” Designation in Missouri

As most land use professors are well aware, having land declared “blighted” isn’t always such a bad thing.    

The potential disadvantages of official “blight” designation are obvious.  Properties in declared “blighted” areas can be particularly susceptible to takings by eminent domain, as famously highlighted in Berman v. Parker, 348 U.S. 26 (1954).  Official designations of blight can also depress property values in some situations due to a perceived stigma commonly associated with blighted land.  

Why, then, would anyone want their real property to be declared “blighted”?  The reason, of course, is that officially blighted property can qualify for special tax benefits or programs in many jurisdictions.  If parcels are eligible for huge tax breaks only if they are officially labeled as “blighted,” then getting that label can suddenly be more a blessing than a curse.

An ongoing political debate in Columbia, Missouri, showcases this ironic aspect of redevelopment policy.  Missouri statutory law provides that new real property improvements in “enhanced enterprise zones” (EEZs) can qualify for generous property tax reductions.   Companies that invest in redevelopment within an EEZ can also receive state income tax breaks.  A group of government officials in Columbia have thus been seeking to have nearly half of the city designated an EEZ.  Unfortunately, EEZ designation requires that the entire EEZ area be declared blighted.  In Columbia, the proposed blighted area would encompass vast portions of the city where retail outlets are succeeding and businesses appear to be thriving. 

Sadly, those in favor of the EEZ proposal in Columbia argue that declaring half of the city to be blighted is necessary to enable it to compete statewide for new manufacturing and other jobs.  At least 118 Missouri communities--comprising one third of the land area of the state--have already declared themselves blighted to take advantage of the EEZ statute, giving them a leg up in attracting private redevelopment dollars. 

Should state redevelopment policies be structured such that local officials must declare large amounts of their communities to be blighted to have any chance of competing for private investment? 

Those interested in exploring this topic from an academic perspective will find plenty of published scholarship on LexisNexis or Westlaw to distract them from grading final exams for at least a few hours.  For a convenient launching point, consider Colin Gordon, Blighting the Way:  Urban Renewal, Economic Development, and the Elusive Definition of Blight, 31 Fordham Urb. L. J. 305 (2004).

Troy Rule

May 14, 2012 in Community Economic Development, Development, Economic Development, Eminent Domain, Local Government, Politics, Redevelopment, State Government | Permalink | Comments (0) | TrackBack (0)

Sunday, May 6, 2012

Schindler on the Future of Abandoned Big Box Stores

Sarah Schindler (Maine) has posted The Future of Abandoned Big Box Stores: Legal Solutions to the Legacies of Poor Planning Decisions, 83 Universtiy of Colorado Law Review 471 (2012).  The abstract:

Big box stores, the defining retail shopping location for the majority of American suburbs, are being abandoned at alarming rates, due in part to the economic downturn. These empty stores impose numerous negative externalities on the communities in which they are located, including blight, reduced property values, loss of tax revenue, environmental problems, and a decrease in social capital. While scholars have generated and critiqued prospective solutions to prevent abandonment of big box stores, this Article asserts that local zoning ordinances can alleviate the harms imposed by the thousands of existing, vacant big boxes. Because local governments control land use decisions and thus made deliberate determinations allowing big box development, this Article argues that those same local governments now have both an economic incentive and a civic responsibility to find alternative uses for these “ghostboxes.” With an eye toward sustainable development, the Article proposes and evaluates four possible alternative uses: retail reuse, adaptive reuse, demolition and redevelopment, and demolition and regreening. It then devises a framework and a series of metrics that local governments can use in deciding which of the possible solutions would be best suited for their communities. The Article concludes by considering issues of property acquisition and management.

Prof. Schindler's article addresses an important problem in communities across the U.S., and offers some innovative solutions.

Matt Festa

May 6, 2012 in Architecture, Development, Economic Development, Green Building, Local Government, Planning, Redevelopment, Scholarship, Suburbs, Sustainability, Zoning | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 18, 2012

Forefront: New Online Planning Magazine (and more on Redevelopment)

Next American City, a planning website with a primarily "New Urbanist" bent, recently launched a new online magazine called "Forefront," which will publish long-form articles on planning issues.  The first edition of Forefront features an interesting piece by Josh Stephens, editor of California Planning & Development Report, on the end of redevelopment in California.  For those interested, this very blog also devoted some attention to the demise of redevelopment in posts here, here, here and here.

Ken Stahl 

April 18, 2012 in California, Eminent Domain, New Urbanism, Redevelopment | Permalink | Comments (0) | TrackBack (0)

Thursday, April 5, 2012

What's Buried Under Dodger Stadium?

A front-page story in today's LA Times throws some cold water on the celebratory mood surrounding the recent sale of the Los Angeles Dodgers and the upcoming 50th anniversary of Dodger Stadium in Chavez Ravine. The story recounts how the city of Los Angeles acquired the land to build the stadium by uprooting (through the use of eminent domain) more than 1,000 mostly Mexican-American families who lived in the area.  The story concludes with a chilling quote from one of the uprooted: "There's an old Mexican custom that where you're born, the umbilical cord is buried. Mine's buried under third base....And I hate home runs, 'cause every time they step on third base, my stomach hurts."  The story of Chavez Ravine has been well told before, including by my friend Matt Parlow in his article Unintended Consequences: Eminent Domain and Affordable Housing, 46 Santa Clara L. Rev. 841, 843–46 (2006).

Ken Stahl 

April 5, 2012 in California, Eminent Domain, History, Local Government, Redevelopment, Urbanism | Permalink | Comments (0) | TrackBack (0)

NPR on Demolition of Vacant and Abandoned Homes

On today's Morning Edition, NPR broadcast this story by WCPN on Cleveland's ramping up of demolition of vacant and abandoned properties.  The piece features a sound bite from Jim Rokakis, the dynamic founder of Cleveland's new county-wide land bank, which is using part of the $75 million that Ohio Attorney General Mike DeWine has appropriated for vacant house demolition from the State's share of the $25 billion AG settlement with five major mortgage lenders.  Rokakis wrote an op-ed in the Washington Post earlier this year urging national action on demolition funding.

As co-chair, with South Bend's new mayor, Pete Buttigieg, of the City's Vacant and Abandoned Property Task Force, I would have loved to see Indiana follow Ohio's lead, but last month the Legislature here decided to use its AG settlement money to resolve funding issues it was facing with the home energy assistance fund. 

For those interested in the land use implications of responses to vacant and abandoned property issues, you may also want to check out the stories NPR has done on land banking and "blotting" (the creation of multi-parcel open spaces in dense urban neighborhoods).   As always, the Center for Community Progress is a great general resource on all things vacant and abandoned.

Jim K.

April 5, 2012 in Density, Mortgage Crisis, Nuisance, Redevelopment | Permalink | Comments (0) | TrackBack (0)

Wednesday, February 29, 2012

Salkin on Callies on Regulation in Hawai'i

Patricia Salkin (Albany) has posted a review essay called David L. Callies, Regulating Paradise: Land Use Controls in Hawai’i (2d Ed. 2010) (Book Review), published in The Urban Lawyer, Vol. 43, No. 4, p. 1107, 2011. The abstract:

In 1984, Professor David Callies wrote Regulating Paradise to describe the regulatory scheme in Hawai’i. In 2010, he followed up that book with Regulating Paradise: Land Use Controls in Hawai’i to reexamine the issues as they have developed over the last 25-plus years: housing affordability, the subjects of development agreements, condemnation, defining open space and agricultural lands, takings, cultural sensitivity, environmental assessment, the prevalence of covenanted communities, and redevelopment.

This essay is a review of Professor Callies work which is a must read for anyone involved in land use in Hawaii. What emerges from his work are lingering questions about whether the regulatory scheme has over protected paradise.

Matt Festa

February 29, 2012 in Affordable Housing, Agriculture, Beaches, Coastal Regulation, Environmental Law, History, Homeowners Associations, Property, Redevelopment, Scholarship, Takings | Permalink | Comments (0) | TrackBack (0)

Monday, February 27, 2012

Walmart in Athens: Now in Salon Magazine

The possibility of Walmart coming to Athens, GA has now made the mainstream (albiet on-line) media with this story in Salon:

The Athens, Ga., soul-food joint Weaver D’s has barely changed in the 20 years since its slogan, “Automatic for the People,” supplied the name of a groundbreaking R.E.M. album.

You could say the same about Athens itself. After businesses fled in the ’80s, downtown Athens rebounded as an alt-rock mecca that spawned the soundtrack of Generation X. R.E.M., the B-52s, Widespread Panic and thousands of other musicians and artists helped create what is, in many ways, today a dream city: a mixed-use, walkable urban core filled with small businesses, plenty of green space — and a music scene that rivals that of cities 10 times its size.

Cue “The End of the World as We Know It.” A multi-building mall-like shopping complex, likely to include the dreaded Walmart, has set its sights on downtown Athens. Renderings by the Atlanta-based developer Selig Enterprises show a bricked concourse surrounded by large-scale retail, including a 94,000-square-foot superstore, topped with apartments. It also includes three restaurants — two of which are over 10,000 square feet — and 1,150 parking spaces. This is new for downtown Athens, which unlike most college towns, has largely kept chains away.

“There’s an Athens style,” says Willow Meyer, a 37-year-old lawyer who moved here with her husband [UGA law prof Tim Meyer] two years ago, “and if you just import this kind of ‘Anywhere, USA’ development, the city loses something.”

Another group in metro Atlanta is also fighting a Walmart, proposed by the same company behind the Athens development.

My previous posts on this issue can be found here, here and here.

Jamie Baker Roskie

February 27, 2012 in Community Design, Community Economic Development, Development, Downtown, Economic Development, Georgia, Local Government, Planning, Politics, Redevelopment, Smart Growth, Urbanism | Permalink | Comments (1) | TrackBack (0)

Wednesday, February 1, 2012

The Opposition Heats Up or Wal-Mart in Athens Part III

Late last year I posted twice (here and here) about a proposal to put a mixed-use development, anchored by a 100K square foot Wal-Mart, into downtown Athens.  Today things heated up in a very Athens way, with Patterson Hood of the Drive-By Truckers unveiling a protest song and a group called "Protect Downtown Athens" launching an incredibly thorough website analyzing many aspects of the development.  This group is supported by members and management of R.E.M., and other local movers and shakers. Release of the song has already increased coverage of this issue in the national blogosphere and MSM.  This just keeps getting more interesting!

Jamie Baker Roskie

February 1, 2012 in Community Economic Development, Development, Downtown, Economic Development, Georgia, Local Government, Redevelopment, Smart Growth, Urbanism | Permalink | Comments (0) | TrackBack (0)

Thursday, January 5, 2012

City Journal's take on the California Redevlopment decision

I've been enjoying the outstanding posts on last week's landmark California Supreme Court ruling by Ken Stahl (here and here) and guest-blogger Stephen Miller (here and here) (I smell a great panel or symposium topic in the making).  Just now I came a cross an early analysis by Stephen Greenhut at City Journal, the always-interesting center-right urban affairs journal.  Greenhut has a strongly positive take on the decision in Crony Capitalism Rebuked California’s supreme court strikes a blow for property rights and fiscal sanity:

On December 29, the California Supreme Court handed down what the state’s urban redevelopment agencies (RDAs) and their supporters called a “worst of all worlds” ruling—first upholding a law that eliminates the agencies, then striking down a second law that would have allowed them to buy their way back into power. This was great news for critics who had spent years calling attention to the ways modern urban-renewal projects distorted city land-use decisions, abused eminent-domain policies, and diverted about 12 percent of the state budget from traditional public services to subsidies for developers, who would build tax-producing shopping centers and other projects sought by city bureaucrats. As of now, the agencies are history, though the redevelopment industry is working to craft new legislation that would resurrect them in some limited form.

Matt Festa

January 5, 2012 in California, Caselaw, Constitutional Law, Development, Economic Development, Eminent Domain, Judicial Review, Local Government, Politics, Property Rights, Real Estate Transactions, Redevelopment, State Government | Permalink | Comments (1) | TrackBack (0)

Tuesday, January 3, 2012

The Future of Redevelopment in California

I want to be the second to welcome (Matt was first) our new guest-blogger, Stephen Miller. I appreciate Stephen's recent post on the future of redevelopment in California, following my initial post on the subject. I would like to pick up where Stephen left off, highlighting some areas where we agree and disagree.

I take Stephen's main point to be that given the fiscal environment in California (bad), cities desperately need redevelopment, specifically TIF, in order to finance just about any significant development. I agree with that premise, and I'll even add to it. The state of California is notorious for sticking cities with unfunded mandates, the most recent and significant of which is the landmark climate change legislation, SB 375. This legislation requires cities to take steps to address climate change, but doesn't give them any money to do this. And, of course, after Proposition 13, cities don't have any money lying around for this purpose either. Redevelopment seems nicely tailored for SB 375  (as the excellent CP&DR argues) because (a) TIF is one of the few sources of money cities do (or did) have and (b) eminent domain is thought to be an effective tool for "infill development" that can combat sprawl, reduce vehicle miles travelled and, thus, abate climate change.  The second point is debatable and I've seen evidence both ways, so I'll leave it for now and focus on the first, which is really the gist of Stephen's post.

In my view, the fact that TIF is one of the few sources of revenue California cities have to address unfunded mandates and/or undertake significant development projects is an indictment of California's present system of municipal finance, not a justification for TIF. It is true that TIF allows cities to assume debt to finance redevelopment, but any type of bonded indebtedness would do the same. What makes TIF different are the following: (1) it is the only type of debt California cities can incur without voter authorization; (2) it directs the incremental tax revenue to the redevelopment district, thus depriving other local governments of their share; and (3) it needs only a flimsy "blight" justification to be used. I elaborated on these latter two points in my previous post. This combination of factors, coupled with Prop 13, practically assures that TIF will be abused.  Surely this cannot be the best way to finance needed development in California.

Redevelopment agencies have gotten away with this because TIF rests on two fictions, both of which should be seriously questioned.   The first is that a city should not have to share the incremental tax revenue with other jurisdictions because that revenue is all attributable to the redevelopment itself having increasing local property values.  This fiction has obviously been proven false by the recent real estate downturn.  If redevelopment projects account for all the incremental increase in property values in a given area, can we also blame those projects when property values collapse?  The reality is that while improvements are certainly capitalized to some degree in local property values, other factors also affect changes in property value.  Thus, when we authorize local governments to use TIF, we are really making a policy decision that local governments should be able to funnel money away from schools, highways, affordable housing, etc and toward redevelopment, that redevelopment is a bigger priority than these other things.  California is contemplating a lot of hard choices right now, including releasing scores of inmates from prisons, deeper cuts to public schools, and laying off cops and firefighters.  TIF should not be immune from that discussion.

Ths second fiction is this "blight" idea.  The focus on blight is a throwback to the era of urban renewal, when it was thought, at least initially, that redevelopment was such a radical tool that it could only be used when a neighborhood was so economically depressed that it could not be saved by conventional means. Blight quickly evolved into rationalization that was used to justify the condemnation of viable but poor areas ("stable, low-rent neighborhoods" in Herbert Gans's formulation,) to turn them into something deemed more desirable (convention centers, stadiums, highways, etc.) Although the failures of urban renewal caused it to be repackaged as "redevelopment," little has really changed. Blight is still a vague, manipulable, and arguably culturally biased standard. States like it, and courts like it, because it gives the appearance that redevelopment actually has some limitations (This may explain some of the outrage over the Kelo decision, which refused to place any substantive limitations on the use of eminent domain). But blight isn't a real limitation. 

Even if blight were a meaningful limitation on TIF, it's not the right limitation.  If TIF's best use is either to finance development that could not be financed by other means or to implement unfunded mandates like SB 375, then those should be the criteria for its use, not blight.  Of course, with any standard there is the danger of it being manipulated.  I can just imagine Robert Moses justifying Lincoln Center as "infill development."  Hopefully the legislature will think through these issues when it considers whether to revive redevelopment. 

Ken Stahl

January 3, 2012 in California, Local Government, Redevelopment | Permalink | Comments (0) | TrackBack (0)

Saturday, December 31, 2011

Court to Redevelopment Agencies: Drop Dead! (Or, It's TKO for TIF in CA)

Happy Holidays to all and best wishes for a great new year! I've been on blog hiatus (blogatus? blogcation?) but simply had to report this piece of news. Two days ago the California Supreme Court put a huge lump of coal in the Christmas stocking of California's very naughty redevelopment agencies, issuing an epochal (or perhaps apocalyptic) but not entirely surprising decision that puts an end to redevelopment in the state of California, probably the state where redevelopment has hitherto been most popular. As of 2008, there were 395 redevelopment agencies in California, holding $12.9 billion in assets in 759 redevelopment zones. Now, after the court's ruling, they are all history. The court upheld a state law abolishing all California redevelopment agencies, and struck down a compromise bill that would have permitted redevelopment agencies to stay in business if they shared some of their tax revenue with other local government agencies, mostly school districts. Forlorn city leaders are already predicting all sorts of doomsday scenarios for cash-strapped California cities. Critics of redevelopment such as the Institute for Justice, are, as you can imagine, more pleased with the result. They must take especial delight in knowing, as I explain below, that redevelopment agencies basically brought this plight on themselves. Critics will be less pleased to learn that redevelopment is almost certainly not really dead, and will likely be back in a form hardly less objectionable to its critics than the original. According to this great recap from California Planning & Development Report (an excellent resource, by the way), this lawsuit was never about the merits of redevelopment itself, but was just the beginning of a complex negotiation over who is going to control the prized redevelopment money.

Much more below...

Continue reading

December 31, 2011 in California, Eminent Domain, Local Government, Redevelopment, State Government | Permalink | Comments (1) | TrackBack (0)

ULI Report on What's Next in Urban Land Use

As we head into the New Year, The Urban Land Institute has also been looking ahead at the future of land use.  ULI recently issued its report What's Next? Real Estate in the New Economy.  From the press release:

A new economy is unfolding over the course of this decade, driven by an extraordinary convergence of demographic, financial, technological and environmental trends. Taken together, these trends will dramatically change urban planning, design and development through 2020, according to a new report from the Urban Land Institute (ULI).

What’s Next? Real Estate in the New Economy outlines how every aspect of living, working and connecting will change in major ways, driven in large part by the values, preferences and work ethic of Generation Y, the largest generation in American history. . . .

Among the report’s findings:

  • Technology will reshape work places. Office tenants will decrease space per employee, and new office environments will need to promote interaction and dialogue. Offices will be transforming into meeting places more than work places, with an emphasis on conference rooms, break areas and open configurations. Developers will craft attractive environments to attract young, talented workers.
  • Major companies will value space that enables innovation. They will continue to pay more for space in a global gateway served by a major international airport, or in 24-hour urban centers. Hard-to-reach suburban work places will be less in demand.
  • The influx of Generation Y, now in their teens through early thirties, will change housing demand. They are comfortable with smaller homes and will happily trade living space for an easier commute and better lifestyle. They will drive up the number of single households and prompt a surge in demand for rentals, causing rents to escalate.
  • For most people, finances will still be constrained, leading to more shared housing and multi-generational households. Immigration will support that trend, as many immigrants come from places where it is common for extended families to share housing. This may be the one group that continues to drive demand for large, suburban homes.
  • The senior population will grow fastest, but financial constraints could limit demand for adult housing developments. Many will age in place or move in with relatives to conserve money. Developers may want to recast retirement communities into amenity-laden “age friendly” residences. Homes near hospitals and medical offices will be popular, especially if integrated into mixed-use neighborhoods with shops, restaurants and services.
  • Energy and infrastructure take on greater importance. Businesses cannot afford to have their network connections down, and more will consider self-generated power or onsite generator capacity. Developers, owners and investors are realizing that the slightly higher costs of energy- and water-saving technologies can pay for themselves quickly, creating more marketable and valuable assets. Ignoring sustainability issues speeds property obsolescence.

You can download the full report here

Matt Festa

December 31, 2011 in Architecture, Clean Energy, Density, Development, Downtown, Environmentalism, Finance, Green Building, Housing, Planning, Property, Real Estate Transactions, Redevelopment, Scholarship, Smart Growth, Suburbs, Sustainability, Transportation, Urbanism, Water | Permalink | Comments (0) | TrackBack (0)