Monetizing community benefits for public space conversion and other considerations: Seattle

Over the decades, many alley spaces in Downtown Washington, DC have been "abandoned" by the city in response to developer requests for lot consolidation and development.  To my knowledge, little was provided back to the "city" in return.

Typically DC doesn't do a good job of monetizing the value provided to developers from zoning variances and other considerations (see the blog entry "Community benefits agreements (revised)" and Community Benefits Agreements: Making Development Projects Accountable) although because of the height limit, there is a significant ceiling on the value of considerations that can be provided.

In Seattle, Amazon is asking for alley abandonment in relation to some of its building development plans, and in return is offering almost $6 million in "community benefits" in return.  See "Amazon plan adds more streetcar trips: Amazon.com is offering $5.5 million in streetcar and bicycling improvements to compensate for taking city-owned alleys for its planned high-rise campus in Seattle's Denny Triangle" from the Seattle Times.

From the article:

The e-commerce giant wants to pay the city $5.5 million for streetcar and bicycling improvements that would help its employees get to work. The plan would also bring a public benefit, to compensate for Amazon taking city-owned alley space to build its high-rise Denny Triangle campus, Mayor Mike McGinn announced Friday.

Amazon intends to build a trio of towers, each 38 stories high, a few blocks south of its still-growing South Lake Union campus. Construction on the first tower could begin next year. ...

Amazon would buy a fourth railcar for $3.7 million and pay its operating costs for 10 years, allowing service every 10 minutes from 7 a.m. to 7 p.m. weekdays. ...

In addition, Amazon would pay for bike lanes, known as cycle tracks, on both sides of Seventh Avenue between its buildings, said Marybeth Turner, city transportation spokeswoman. Amazon would add $250,000 toward city design of the next cycle-track segment, on Westlake reaching Pine Street, Turner said. ...

Not everyone in Seattle thinks this enough. From the article:

John Fox, leader of the Seattle Displacement Coalition, says $5.5 million equates to "a few dollars for what will be an extraordinarily lucrative development." He suggests the city establish a more stringent system of charging traffic-impact fees, as some Eastside suburbs do. "They're going to point to projects like this, to legitimize further upzones in the area," Fox said.

Getting back to the previous blog entry cited above, I wrote about figuring out how to monetize the value of the zoning changes (based on the value of the total square footage that is enabled by the changes) and then figuring out what is a reasonable "return on investment" to the city in return.  

I don't have a solid answer, because it depends.  And it's complicated.  Because the increased square footage isn't valuable unless it is developed.  Of course it is developed, but you get to the same kinds of arguments that I have with Marx and the "surplus value of labor."  The reality is that all of the surplus value shouldn't be accorded to the laborers--that's what Marx assumed--because it is the organization of labor and the creation of the production process, the provision of inputs and a space to work, etc., that enables the creation of the surplus.

There are many ways to deal with monetizing the value of public considerations and/or transportation impacts and getting payments from developers:

- impact fees for transportation (DC doesn't do this, many other jurisdictions do).

- phasing allowable development density that is dependent on transportation infrastructure and successfully shifting trips to nonautomobile modes | in Alexandria/Arlington, development at Potomac Yards can be built only if certain mode split metrics are achieved, "incentivizing" the developers to do TDM.

Montgomery County charges impact fees and they do are also doing phased development intensity as part of sector planning, e.g., in White Flint and Chevy Chase Lake, plans propose allowing density increases only after certain types of transit infrastructure are in place.

- DC and Arlington's planned unit development zoning requires transportation demand management planning including the kinds of things that Amazon proposes, although in DC only a handful of development projects fall under this zoning process, but in neither case would it be likely that a developer would buy a streetcar or that the city/county would recommend doing so.

Note that my criticism of these kinds of negotiation processes is that the table of options that exists isn't updated every couple years based on new experiences and best practices so that the options become more dynamic and constantly improving.  Developers prefer a static and "predictable" list.

E.g., in Arlington a mixed use residential project doesn't have to provide showers and other accommodations for employees who bicycle because most of the focus is on providing accommodations to residents.  This is a gap in the services that are required, and should be addressed and incorporated into the requirements and options table of TDM improvements going forward.  Etc.