Location, location, location ... and what zoning allows determine what a property is actually worth

According to Crain's New York Business, this 85-year-old White Castle at 89-03 57th Avenue in Queens is selling for $15 million.

Having dealt with land use issues from the perspective of a revitalization advocate for about 35 years, I have come to belief that most less involved citizens think land use and planning decision making is a game.

That don't see it as a legal process with parameters.  Yes, a lot of the law preferences development if the project meets categories of approved use, height, and mass. Usually this means that those projects are called "matter of right" with no opportunities for citizens to weigh in.

Public notice for a zoning hearing in Detroit.  Flickr photo by Steven Vance.

If not, and a zoning changes of one or more elements are required to develop the property the way the owner wants, it triggers hearings and opportunities for citizens to weigh in on the matter, positively or negatively.

Similarly, with historic preservation if a building is landmarked individually or is part of a historic district, desired changes require approval, which unless minor also trigger a hearing process. 

Some cities extend this to demolitions, an automatic triggering of public review.

The same is true of environmental review when development proposals are located in sensitive areas, etc.

I call these "remedies," opportunities within the law to have input on the process.

Most citizens see approvals as a process that favors developers.  While the process does favor development--after all, cities make the bulk of their revenue from property tax, and commercial property tax is higher than on residential, plus cities have so much untaxed land between government and nonprofits like churches [see the Growth Machine argument]--it's not a slam dunk.

Based on the regulatory framework projects can be defeated.   Developers call when the zoning and review, and permitting process provides the go ahead to build, "entitlements."

The reason this property interests me is that it is seemingly similar to a property matter I dealt with in Salt Lake involving Sugar House Park ("Learnings from a recent zoning issue I've been involved in").  

There a single private property on the perimeter of the park exists as a historical anomaly predating founding of the park.  

Though zoned low density and neighborhood serving, the property owner valued it as if it could be rezoned to a high density use that wasn't neighborhood serving.  They refused to accept anything opposite their belief.  The failure to get approval for an upzone was based on the land use context and the clear language and history of master planning for that neighborhood-this site was never intended to be able to be densely developed.

One of my arguments against the upzone was that the property owner's intransigence shouldn't be rewarded with an upward revaluation of the property.  Ultimately it wasn't.

The Queens site is zoned for medium density residential (say 6-7 stories), and it wouldn't be a stretch given NYC's recent move to build more housing ("City of Yes") that they could get a slight upzone, but not a major one.

Different property.  Different "entitlements".  Different outcomes.  Different value.

Data centers

Aldie, VA - January 20: On what was recently farmland, Amazon data centers have been built as close as 50 feet from Loudoun Meadows houses on January 20, 2023, in Aldie, VA. As the data center industry expands its footprint in Northern Virginia, often building massive commercial structures near residential neighborhoods, communities push back with their concerns.(Photo by Jahi Chikwendiu/The Washington Post) 

From sports facilities to data centers, not all projects add to local economic activity in the way that they are touted by proponents.  Data centers don't have a lot of jobs after construction, and the facility in and of itself doesn't generate business development of other types.

Not an issue for me but they pose big issues in terms of electricity needs ("Power costs soar in PJM region as data center demand spikes," Reuters), and water.  WRT electricity, in part rates increase on all users to produce energy for data centers which is unfair.  

Also, it requires upgrade to the transmission system, which is overburdened as well.  

Because of the demand posed by data centers, adding renewable sources isn't enough.  They need to use fossil fuel generated electricity too, The water demands too are incredible, although to some extent the water can be recycled.  Here are some resources.

-- "Amazon data centers are not an investment in us," Philadelphia Inquirer

The truth is, Big Tech’s AI-fueled data center frenzy is hurtling us further and faster into environmental catastrophe. A single data center can use as much energy as an entire city. Tech corporations are demanding so much extra energy and water as they compete for AI dominance that entire coal plants scheduled for closure are being kept open.

-- "The AI Data-Center Boom Is a Job-Creation Bust," Wall Street Journal

“Data centers have rightly earned a dismal reputation of creating the lowest number of jobs per square foot in their facilities” said John Johnson, chief executive of data-center operator Patmos Hosting.

... The reality is data centers can employ more than 1,000 people in the several months or years it takes to build them, but rarely need more than one or two hundred once they open, according to Synergy chief analyst John Dinsdale. Stargate would have to be much larger than currently planned to create hundreds of thousands of construction jobs, let alone permanent ones.

-- "Tax Breaks For Data Centers Bring Few Jobs," Forbes 

Data Centers As Infrastructure Projects. As governments look to stimulate economic development, it is crucial to see the industries they are supporting for what they are—rather than what they’d like them to be. Data centers, while essential to the modern economy, do not serve as permanent and ongoing job creation engines anymore than the construction of a highway or a bridge does.

Data center construction more closely resembles infrastructure projects that provide a backbone for economic activity, rather than being viewed as economic activity itself. It is for this reason that private industry seeks to offload the cost of data center construction onto taxpayers—it is increasingly becoming merely the cost of doing business rather than a profit center or competitive advantage.

As such, it is more appropriate for public subsidies to focus on construction and development of these facilities and the infrastructure required to make use of them—rather than their ongoing operation and ownership. Investing in the construction and laying out of telecommunications infrastructure can be justified in the broader context of development in underserved areas.

Subsidizing ownership of data centers, through property and sales tax breaks for example, is less defensible. The tech companies that dominate the market for these centers are among the most valuable companies in the world, with market caps that regularly dwarf the gross domestic product of the states they are asking to foot the bill. These corporations have ample resources to manage their own operational costs without public support.

For example, building data centers as a project adjacent to enhancing digital connectivity, which in turn can attract other businesses and support economic growth, makes good policy sense. Similarly, ensuring data centers make use of renewable energy sources by subsidizing their provisioning returns broader social benefits.

Subsidizing ownership of data centers, through property and sales tax breaks for example, is less defensible. The tech companies that dominate the market for these centers are among the most valuable companies in the world, with market caps that regularly dwarf the gross domestic product of the states they are asking to foot the bill. These corporations have ample resources to manage their own operational costs without public support.

State governments should therefore reconsider their approach to supporting data centers, focusing on subsidies for the construction phase and overall improvement of internet infrastructure. Simultaneously, states must ensure that these investments are tied to clear public benefits such as job creation in the construction industry, environmental sustainability, and enhanced connectivity for under-connected communities.

-- "How a Washington Tax Break for Data Centers Snowballed Into One of the State’s Biggest Corporate Giveaways," ProPublica

-- "Beating back data centers," American Prospect

Virginia state lawmakers aiming to establish a regulatory framework have run into obstacles. The industry has established the Data Center Coalition, their own PAC, comprised of heavy hitters like Amazon, CloudHQ, Visa, and others. The coalition has been at work in the Virginia General Assembly, spending $70,500 in campaign contributions so far this year.

Several bills that would have established a set of regulations failed last session, including one proposed by Del. Josh Thomas that would have required applicants to perform site assessments that detail noise, water, agriculture, parks, registered historic sites, and forest impacts. Virigina Gov. Glenn Youngkin (R), a vocal proponent of the centers, vetoed the bill, citing infringements on local control and red tape.

... OpenAI’s GPT-4 uses as much as three 16.9-ounce bottles of water to produce a 100-word email.

-- Good Jobs First has a number of reports and articles on the subject, including "Community Benefit Agreements with Data Centers Can Help Mitigate Harms," which takes the position I do on sports facilities--if you can't beat them, get the best possible deal for the community.

-- "Data centers need to bring their own power supply, watchdog says," Bloomberg via Crain's Chicago Business

If apartment buildings are "forced" to join Business Improvement Districts, there must be a way for residents to be represented on BID boards independent of property owners

I have written about this issue from time to time concerning the NoMA BID in DC ("NoMA revisited: business planning to develop community," 2011) as well as the Capitol Riverfront BID ("Integrating citizen residents into "business" improvement districts: Capital Riverfront district as an opportunity and example of the need for change," 2014).

Apparently, DC's laws concerning the creation of business improvement districts tend to be specific to each district.  Currently, the NoMA, Capitol Riverfront, and Mount Vernon Triangle BIDs can include apartment buildings as qualifying for assessment, while this is not the case for the Downtown DC BID.

When I raised this issue with the then planning director for the NoMA BID years ago, she seemed shocked at my assertion that residents might have different interests than the property owners renting to them, and that resident interests may not be adequately represented.

The Washington Business Journal reports ("Live, work, play — and pay: Downtown D.C. BID eyes levy for condos, apartments") that Central Business District Councilmember Jack Evans has introduced legislation that would make apartment buildings assessment payers, condominium buildings--owner occupied, not managed for renters--would have the option to join if they want to.

From the article:

Under the proposed legislation, introduced by Councilman Jack Evans, D-Ward 2, condominium boards could choose to join the BID but would not be required to. Condo associations would be charged $120 per unit per year. Some seem inclined to join and others will wait to make the decision, Bradley said. Forty percent of the BID's residential units are condos.

Apartment buildings, on the other hand, will be treated as commercial properties and automatically assessed by the BID. The BID has met with 80 percent of the owners of downtown apartment buildings and many have indicated that they support this, Bradley said.

Condo boards, obviously, would assess residents for the added costs. Apartment building owners could cover the cost themselves or factor them into resident fees.

“Our intention is to be as helpful as we can in promoting downtown living, residential living, and that will be something we’ll give special attention to,” Bradley said. “So they’re getting a service and a benefit from this.”

-- B21-0905: Downtown DC Business Improvement District Amendment Act of 2016, Proposed, DC City Council

According to the Downtown DC BID's annual report:

As of April 2016, Downtown is home to 35 market-rate residential properties – 15 apartment buildings (3,584 units) and 20 condominium buildings (2,428 units).

The Avalon at Gallery Place apartment building located in the Chinatown section of Downtown has 203 units.

The issue of including residential properties in assessment districts.  I don't have a problem with the creation of "community service districts" with residential members.

And the reality is that residents within the district are benefiting from the extra services provided by the BID, and it is reasonably for them to pay in towards those costs, just as commercial property owners do.

My only issue is ensuring that resident tenants have representation on the board independent of the property owner. And that resident owners, if part of condominiums, have representation as well.

While the law that authorizes the creation of BIDs lists residents as eligible for board membership, the law does not specify how each class of property shall be represented.  It is up to the BID and how it structures its laws of incorporation and bylaws on whether or not to include resident owners or resident tenants as board members.

Note that the Mount Vernon Triangle Community Improvement District does have some residents on its board, while the NoMA and Capitol Riverfront BIDs do not.  But the resident members come from condominium properties.  Resident tenants on not represented on the MVTCID board.

Baltimore's Community Benefits Districts.  The Charles Village and Midtown "Community Benefits Districts" in Baltimore have had residential members--and single family houses at that--since their creation in the 1990s, although in the Charles Village district there has been a minority number of residents militantly opposed from the beginning.  Board membership is a mix, including residents, community organizations, commercial property owners, institutions, and representatives appointed by the Mayor and City Council.

-- "Benefits district" articles collection, Baltimore Sun

San Francisco.  San Francisco created Community Benefits Districts more than 10 years ago. While many are organized as business improvement districts exclusively representing commercial property owners, the legislation authorizes a variety of types of members, depending on the choices of the organizing groups.

More recently the city has created a new type of district called a "Green Benefit District" where residents can pay a supplemental assessment to support and maintain, parks, sidewalks, and public = and open space in their neighborhood.  Interestingly, the first GBD, for the Dogpatch and Northwest Potrero Hill neighborhood, has three types of board members, "property owners," "tenants," and "green space advocates."

Conclusion:  Representation of residents is the issue, not whether or not residential buildings should be including in business/community improvement services districts.  As it is, I think independent residents should have membership on BID boards anyway, because by default, BIDs are the planners and managers of place and space that ultimately is publicly owned or of the public interest.

This is doubly the case for those BIDs that are "mixed use districts" incorporating residential properties, be they owner occupied or renter occupied.

Condominiums are owner occupied and BIDs with condominium properties as members endeavor to include representatives from that property category.

To ensure that residential tenants are represented on BID boards, BIDs should aim to have some board members be representatives from the apartment tenant category.  This is somewhat counter to the property orientation of representation that dominates BID boards now, but corrects a current defect in democracy as it relates to BID board leadership as it is generally structured.

Hearing.  The public hearing for the legislation is scheduled for Wednesday, November 16, 2016, 11:00 a.m., Room 120 - John A. Wilson Building/City Hall. "Those who wish to testify should contact Sarina Loy, Committee Assistant at (202) 724-8058 or sloy@dccouncil.us, and provide your name, organizational affiliation (if any), and title with the organization by 11:00 a.m. on Tuesday, November 15, 2016. Witnesses should bring 15 copies of their written testimony to the hearing."