Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Wednesday, February 12, 2014

Resident approaches to planning based on the past with little concern about the future

I have been talking with a colleague about a piece I wrote but haven't published because it is somewhat controversial and one of the things we discussed is that there is significant opposition expressed to zoning and intensity changes in both DC and Montgomery County (and also in Reston and Tysons Corner, in response to the addition of Metrorail there, see "Fairfax approves 22000-home expansion for Reston over several decades," Post).

Opposition is just opposition.  He says that I am too kind in saying that opposition to zoning changes in DC has developed because the older and long-time residents "came to the fore" during the age of the shrinking city and lack the skills and perspective necessary for dealing with a city that has the opportunity to grow and improve.

He says that opposition to changes in Montgomery County was pretty similar to the opposition being expressed in DC--reflexive and often deliberately misleading--and that unlike DC residents, MoCo residents have dealt with a county that hasn't had a period of declining, in fact it has been changing significantly over the decades (although always focused around automobility) and its wealth has been increasing.

So maybe opposition is just opposition?

No change is best, but we'll take a park.  So the idea is that people don't want to accommodate change, they want things to stay the same, and they may in fact be oppositional just because they can be. 

A related point along these lines was made by Dan Malouff years ago in a comment on this blog, where he made the point that maybe people say that they want parks, instead of sites being otherwise developed, not because they want parks, but because they don't want any development whatsoever, and a park is an alternative.

More arguments:  any development is an unreasonable benefit for developer profits.  Another trope along these lines is opposition to just about any development because "developers are just doing this to make money" and there is no benefit to residents. 

My colleague argues that we don't do a very job as planners explaining how developments can--they don't always--benefit communities and residents specifically.  For example, I live in Greater Takoma, which is a neighborhood that includes sections of DC and Maryland.  Our commercial district (mostly in Maryland actually) is undergoing a renaissance, sparked in large part by the Main Street program there, but also by the construction and occupation of multi-unit housing around the Metrorail station.

Transit infrastructure is constructed only so developers and construction firms can make money.  This comes up more and more lately with regard to transit, especially if you have been reading the letters to the editor in the Gazette, a community newspaper covering Montgomery County, Maryland, over the past few years.

Lisa Korbatov, right, of Beverly Hills joins Rosa Miranda of the Bus Riders Union holding blank checks highlighting Measure J's corporate sponsors and beneficiaries during an October rally. (Gina Ferazzi / Los Angeles Times / March 31, 2013) 

In fact I came across a couple year old article about the streetcars in Tucson ("A Streetcar Named Development," Tucson Weekly) quoting Randal O'Toole, a known opponent of transit, who says that the only reason development happens in association with transit is because it is subsidized --this does happen but most such development is not subsidized other than the construction of the infrastructure. 

O'Toole has expressed this argument in a policy paper, The Great Streetcar Conspiracy, published by the Cato Institute.  Of course, Mr. O'Toole has a major blind spot when it comes to applying his thinking to road-based infrastructure. 

One legitimate criticism:  public-private "partnerships" aren't really partnerships, but financing deals.  Granted, I would say that the money giveaway idea can be somewhat true as it relates to so-called "public-private 'partnerships'." 

When one party on the side of a transaction is desperate for money (a good example would be former Chicago Mayor Richard Daley's long term lease of parking infrastructure) they often will sign a deal that is very much lopsided against the public interest.

3P projects are really financing deals and even a form of outsourcing, and aren't necessarily real partnerships.  They result from the fact that states and local jurisdictions have an extremely difficult time raising money, and the federal government hasn't stepped in to create and help fund a National Infrastructure Bank that could finance such projects (like how the World Bank does this in the 3rd World or the US Export-Import Bank finances the sales of equipment and infrastructure by US companies to foreign countries).

But also some of these kinds of projects are really big, and states and localities don't necessarily have the skill set in-house to manage such projects either.

Not considering the ramifications of planning decisions does have consequences.  Part of the reason this comes up is in response to an article in the Post over the weekend, about how neighborhoods in DC that have established ceilings on how many restaurants and/or night-time oriented establishments  can operate in their community are finding that their neighborhood commercial districts are languishing as a result of an inability to be flexible with the use of space.  See "From Georgetown to Adams Morgan, liquor license moratoriums face increasing criticism."

This is complicated by parallel changes in the nature of retail and eater-tainment, how commercial districts are shifting to food and beverage provision and how it is increasingly difficult to offer successful retail at the neighborhood commercial district level, depending on the population of the retail trade area and whether or not people outside the neighborhood also shop there.

Plus, the problem with creating hard numerical limits is that it takes a long time to change the rules, making it more difficult for local districts to change their rules.  By the time they get around to it, their moment has passed.

... There is a restaurant on 17th Street NW beloved by area residents called Trio.  Restrictions were put on its sale of alcohol by a community agreement, so they stopped serving breakfast, maybe even lunch, saying that the decision crippled their revenue and so they could no longer be open for parts of the day where profits were minimal.  The agreement was changed, and they are open at breakfast and lunch.  See the 1999 Post article, "Street Cafes: Amenities Or Menaces? Nearby Residents, Patrons Have Different Perceptions ."

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5 Comments:

At 2:07 PM, Anonymous rg said...

Re: developers making money. I always asked people who express that concern if they live in a house or building that was built by a non-profit, charitable organization. For the record, I'm pretty confident that the outfit that built my block in the early 20s probably turned a profit and that in the intervening century several realtors, mortgage holders, builders, etc. have earned a profit related to my house and those of my immediate neighbors.

 
At 5:23 PM, Blogger Richard Layman said...

one of the things we were talking about is how residents (and planners) don't have a good understanding of the economics of development, retail, etc.

Frankly, I don't know how to do a pro-forma either. (I've been thinking I need to read a textbook on real estate finance.)

But I understand the basics well enough of how stuff works, for general development, retail, etc.

Most residents do not. They shouldn't be expected to, but the reality is that things work in particular ways and when they don't work--e.g., failure of a business is an indicator, difficulty of raising money to construct a project is an indicator, etc.--that's usually an indication of defects in the plan.

e.g., http://urbanplacesandspaces.blogspot.com/2009/09/commercial-retail-rents-2.html

next week maybe I will get around to a post on mixing community and business objectives in for profit properties, +/-, partly as a response to the hullaballoo in NYC about Korean seniors being asked to stop hanging out at a McDonalds, and "the reading room" at Petworth Citizen.

Anyway, talking to that restauranteur, we were discussing the financial elements of his project, rents/s.f. and how much he needs to generate in gross revenue in order to ensure that staff make enough money to stay, so that they have high retention, don't have other jobs, etc., and how that leads to a certain level of price points for food and drink items, etc.

Or, years ago I organized the personal files for some rich people who happened to have a side development project and I was shocked at the "low" profit margins. About 20% gross, but that didn't take into account the opportunity cost of money, the length of time they had money tied up in the project, imputed wages, etc.

 
At 5:28 PM, Blogger Richard Layman said...

... it's just as bad for planners. Most projects are approved for retail space at levels far beyond what is supportable in the marketplace.

Developers are allowed to lead people into believing that they'll get the kind of retail they want, etc., when their expectations are disconnected from the realities of the market.

I'm not saying you can't get stuff close to what you want, but you might have to do really wild things to get it (like fund it, open it yourself, create multiple revenue streams, etc.).

But not understanding how it works dooms you mostly to failure.

Anyway, planners don't have a good sense on how this works. I participated a couple years ago in an AICP technical assistance project where all the people were APA members with AICP certification.

One of the people at my table was a developer. And the planners didn't really understand how he thought, his approach, that he only would do "community spirited stuff" to the point where there was a positive marginal benefit to profits. It was pretty interesting to watch their reactions.

2. Trying to figure this stuff out in DC, for H Street, places like Brookland, etc., led me to do an incredible amount of research and learning wrt how it works.

And everything I did, every interaction (ranging from people like Richard Lake or Doug Jemal to Herbert Haft) educated me, plus I spent a lot of time listening and processing. Not just talking...

 
At 3:23 PM, Anonymous Alex B. said...

RE: developers making money

I share RG's sentiment about the role of developers in creating our cities - most of these folks complaining about developers making a profit are living in a structure that was once developed for a profit.

I'll also take it one step further: there is some serious cognitive dissonance between the aversion to 'developers' making a profit, but without any concern for homeowners selling their houses for the full appreciation of the property's value.

If they're so concerned about undue profits, would they be willing to forgo the appreciation of their homes when it is time to sell? Would they limit their take to only the appreciation that tracks with inflation?

I won't hold my breath.

 
At 11:18 AM, Blogger Richard Layman said...

thanks for pointing out that contradiction. It's so obvious, it passes by us most of the time.

I was thinking about this in a different way, but haven't figured out how to write about it.

How long has it been since the idea of home ownership changed from having a house and a long term commitment to a place, to being about to monetize the house.

When I first came to DC, we were just at the tail end of an earlier property bubble, and the real estate market in DC proper tanked from about 1988 to 1999.

So when housing values went up, with home equity loans, people looked at their houses as another form not just of wealth, but money in their current account so to speak.

That's a pretty new phenomenon, although of course, getting second loans against your house isn't a new concept, people do it to finance businesses, etc.

 

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