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F5 Linking Economic Development and Social Equity

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F5 Linking Economic Development and Social Equity

  1. 1. Linking Economic Development & Social Equity. . . . . . THROUGH BETTER ZONING
  2. 2. The New Code 09/25/2015 2
  3. 3. A Neighborhood Plan 09/25/2015 3
  4. 4. Community Support 09/25/2015 4
  5. 5. Zoning Best Practices 09/25/2015 9
  6. 6. Zoning Best Practices 09/25/2015 10 1. Use Based 2. Performance Based 3. Special District 4. Form Based 2015 Somerville Zoning Ordinance
  7. 7. A Predictable Code 09/25/2015 11
  8. 8. A Predictable Code 09/25/2015 12
  9. 9. A Predictable Code 09/25/2015 13
  10. 10. A Map Based on a Plan 09/25/2015 14
  11. 11. Meeting Expectations for Equity 09/25/2015 15 • Affordable Housing • Diversity of Housing Types • Job Training • Small Independent Businesses • Open Space • Traffic • Environmental Impact Mitigation • more . . .
  12. 12. One Predictable Form of Equity 09/25/2015 16 INCLUSIONARY ZONING 1. Density at which Inclusionary Zoning triggers (# of DU) 2. Percentage required (12.5%, 15%, etc) 3. Income categories provided for (Extremely Low, Very Low, Low, Moderate) 4. Rate of unit generation for each income category
  13. 13. The Method 09/25/2015 17 Plan . . . . . . . .
  14. 14. The Method 09/25/2015 18 Negotiate . . . . . . . .
  15. 15. The Results 09/25/2015 19
  16. 16. What is at Stake? 09/25/2015 20
  17. 17. There Has To Be A Better Way 09/25/2015 21
  18. 18. 09/25/2015 22 Somerville is Trying
  19. 19. 09/25/2015 23
  20. 20. A Developer’s Perspective  Real Estate is a Business  Large investments in land, buildings, and regulatory entitlement  Must pay a return for investors, commensurate with risk  Must make more than you pay your workers, taxes, insurance, debts, etc.  Competition  Profit commensurate with creating a valuable good/service for a low cost  Limits to transparency—If I show the city my pro forma, my competitors see it too  Real Estate is Very Risky  Uncertainty about future markets, costs, & regulation  You may lose all your money  Must generate a “risk-adjusted” return (10-20%+/-)
  21. 21. Predictability and Flexibility  Predictability  Reducing risk is very important  Any thing that I can make more predictable helps reduce risk, improve profits—and lower necessary risk adjusted returns  Permitting can be a major source of risk: 3 months or 3 years? Every month we may be spending $10k-100k’s (holding costs, consultant services, permitting fees)  Discretionary review is amongst the highest risks in development  Flexibility  Flexibility is not the opposite of predictability  Flexibility is important because real estate markets are constantly changing  My originally intended use may no longer work, can I change? Bigger building? Smaller building? Etc.  Take particular care of use regulations, you might be zoning out the things you want
  22. 22. The Pro Forma  Caveat: the development pro forma could easily be a whole session on it’s own  Essentially:  The pro forma is a model of the expenses and revenues of a project, conducted prior to starting a project, to understand if it is financially viable  We make many assumptions, grounded in experience, about expected costs, revenues, and risks  If we are wrong about the assumptions—costs more than expected, or revenues less—the overall profitability suffers, potentially causing the project to fail  Where community benefits fit in:  Money spent on “community benefits” comes from bottom line project viability  Depending on the overall profitability of the project, it may be able to bear some amount of community benefits, particularly if it improves the value  Large projects are typically much more able than small infill projects.
  23. 23. Thoughts on Community Benefits  Some philosophical problems I have with the CB approach:  Implication that new development is per se bad  Must be ameliorated with community benefits  Relatedly, assumption that our existing city/town is what we want, and therefore change is more likely to be bad than good  Private developers, typically operating before zoning, built that vast majority of the places that we love  Places the costs of fixing problems on new arrivals  Often fixing existing problems  Where are my (higher) property taxes going?  Free-rider problem—existing property owners who are not reinvesting benefit  Reduces the attractiveness of reinvestment, and puts drag on increasing tax base  Having all effected properties contribute would be fairer
  25. 25. Perception: ECONOMIC DEVELOPMENT local government community developer
  26. 26. COMMUNITY REQUESTS Trip Reduction and Traffic Management – Bicycle facilities; – Dedicated shuttles; – Car-sharing; – Transit passes; – Shared parking; and – Pricing parking separately from housing units (i.e. unbundling parking) Affordable and Workforce Housing – Housing affordable to households earning up to 80 percent of adjusted median income (AMI) and work force housing; and – Located near transit, services and existing job centers Community Physical Improvements – Reconnecting the street grid; – Quality pedestrian, biking, and Green connections; – Community gathering and green open spaces; – Recreational open space; and – Neighborhood-serving retail and services Social and Cultural Facilities – Arts and cultural facilities and uses such as providing public art and/or gallery space within building; and – Child-care, senior, or youth facilities as part of the project Historic Preservation – Preservation of historic structures or adaptive reuse to conserve exterior features
  27. 27. WHAT IS WANTED VS. NEEDED? More units or increased FAR Reduced requirements Access/easement agreement Streamlined process “essential nexus” raw nexus test requires (1) a legitimate state interest or purpose; (2) a connection between that interest and the land use exaction chosen to address it; and (3) a minimal connection between the impacts of the proposed development and the land use exaction
  28. 28. STATUS QUO Ad hoc & site specific Negotiated agreements Exactions/contributions/ “horse trading”!
  29. 29. SITE-SPECIFIC COMMUNITY BENEFITS AGREEMENTS (CBAS) Community benefits tools maximize returns on local government investment in development. Community benefits programs can transform regions through stronger, more equitable economies. Community benefits help generate public support for economic development projects. Delivering community benefits is smart business. CBAs hold developers accountable for their promises to local governments and residents. Public input results in better projects that benefit the whole community and attract local customers. Community benefits are part of a smart growth agenda. Time is money, and projects with CBAs often enjoy a faster, smoother entitlement process.
  30. 30. FEE-IN-LIEU Impact fees Value capture
  31. 31. BENEFIT DISTRICTS CBDs differ from Business Improvement Districts (BID) in that they are easier to create and dissolve, emphasize mixed-use districts, and require the participation of all property owners including those which are public or tax-exempt. CBDs do not require renewal, and involve the creation of a nonprofit board to guide and implement the Management Plan, which is the locally defined revitalization strategy. This bill does not replace the existing BID statute and represents another option for communities to pursue. MA House Bill 144 & Senate Bill 1070
  32. 32. POINTS-BASED PERFORMANCE Community needs analysis Benefits located where most required Menu of incentives clearly established Predictability for development community with flexibility

Editor's Notes

  • It even came with a map (click through this one fast)
  • Conserve our neighborhoods
  • Enhance our Squares
  • And Transform underutilized land
  • WANT is different than NEED
    Needed by development project and needed by the community
  • “rough proportionality”
  • To minimize subjectivity, an incentive program incorporated in the zoning approval process should avoid the type of project-by-project negotiations that typically apply to development agreements.
  • Fixed cost i.e. fee per unit type
    Value capture is a type of public financing that recovers some or all of the value that public infrastructure generates for private landowners
    Stops construction? Who actually builds the affordable units . . . Government as developer?
  • a defined area within which businesses are required to pay an additional tax (or levy) in order to fund projects within the district's boundaries