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NJ Future Forum 2012 Dealing With Reality Antonicello


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Today’s political and legal realities have made the use of eminent domain a non-starter in most communities in New Jersey. To help move projects forward in this climate, developers and municipalities alike should consider new, creative approaches toward risk allocation with regard to development and property acquisition that focus on the economic development potential of the site and ways to include the property owners more directly, including structured seller financing and joint ventures.

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NJ Future Forum 2012 Dealing With Reality Antonicello

  1. 1. NJ Futures Forum 2012March 2012Evolving strategies for land assemblage, urban redevelopmentwithout eminent domain.The Evolving Jersey City Experience.
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  7. 7. Our Goal is trying to avoid this!7
  8. 8. Moving toward “Voluntary” land assemblage.The “goal” is real market based incentives to land assembly. 8
  9. 9. The “greed and avarice” scenario. The difficulty of assembling sites large enough to redevelop at higher density can and has hindered renewal in city centers and accelerate suburban sprawl onto large sites already in single ownership. A number of cities are looking at new redevelopment strategies encouraging voluntary land assembly. Graduated Density is one strategy now being used in California and Jersey City. Others are Land Assembly Districts “with the power, by a majority vote, to approve or disapprove the sale of the neighborhood to a developer or municipality seeking to consolidate the land in a single parcel”. Land Pooling and Land Adjustments are other scenarios being looked at in the United States and other countries. Canal Crossing is evolving to include a little of everything. 9
  10. 10. Graduated Density can create a new fear of being left out. Graduated density zoning which allows higher density on larger sites. This strategy can increase the incentive for owners to cooperate in voluntary land assemblage that can create higher land values. Graduated density zoning will not eliminate the incentive to hold out, but it can create a new fear of being left out. Holdouts who are left with sites that cannot be combined with enough contiguous properties to trigger higher density lose a valuable economic opportunity. Jersey City is presently using this strategy in Journal Square and McGinley Square Redevelopment Areas. 10
  11. 11. Journal Square Redevelopment Plan The original Journal Square Plan called for the an increase beyond the underlying zoning districts’ maximum FAR would be permitted through a District Improvement Bonuses (DIBs) and the Inclusionary Housing Bonus. Both of these tools were meant to provide more development options in the Square without overly enriching the existing property owner. The central purpose DIB was to “even the playing field” between the property owner and the developer, while providing much needed funds for infrastructure improvements. Journal Square is the ultimate “fragmented ownership” scenario. 11
  12. 12. The Study AreaRedevelop Journal Square 12
  13. 13. Journal Square Study Area13
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  15. 15. Journal Square Density
  16. 16. Base - FAR Plan
  17. 17. District Improvement Bonuses (DIB)EXAMPLEBase FAR of 10, eligible for anadditional bonus FAR of 20In this scenario, a 36 story buildingusing the total site area is proposedon a parcel with a base floor arearatio of 10. By contributing to theDIB fund they were awardedadditional floor area of 20. Thisbonus is applied by adding anadditional 20 stories to thedevelopment. By setting aside 10%of the gross floor area to workforcehousing, the developer earned anadditional 10% to the building area.
  18. 18. District Improvement Bonuses 1. Streetscapes and landscape improvements 2. Construction and maintenance of parks and plazas. 3. New Transit systems to service Journal Sq. 4. Infrastructure improvements 5. Deck over rail road cut 6. Remote and Local Parking intercept facilities 7. Street and intersection improvements 8. Intelligent transportation systems 9. Bicycle improvements 10. Preservation of Historical and cultural resources 11. Solar, wind and green roof technologies 12. Provision of work-force housing
  19. 19. Base - FAR Plan
  20. 20. Bonus - FAR Plan
  21. 21. Base- Maximum Height Plan
  22. 22. Bonus - Maximum Height Plan
  23. 23. Journal square zone 3, allowing up to 25 stories. Lot Area Minimum Building Maximum Building Approximate up to: Height HeightLot Dimension (square feet) (stories)/(feet) (stories)/(feet) 0 to 2499 3 / 32 3 / 34 25x100 2500 to 4999 3 / 32 5 / 54 50x100 5000 to 7499 4 / 42 8 / 85 75x100 7500 to 9999 5 / 52 10 / 105 100x100 10000 to 12499 5 / 52 18 / 195 125x100 12500 and up 5 / 52 25 / 265
  24. 24. McGinley Square Redevelopment PlanApproximate Lot Area Minimum Building Maximum Lot up to: Height Building Height Dimension (square feet) (stories)/(feet) (stories)/(feet) 0 to 2499 2 / 22 3 / 34 25x100 2500 to 4999 2 / 22 4 / 44 50x100 5000 to 7499 3 / 32 5 / 54 75x100 7500 to 9999 3 / 32 6 / 64 100x100 10000 and up 4 / 42 8 / 85
  25. 25. Canal Crossing Redevelopment AreaFinding a “new” model for large scale urban redevelopment. 25
  26. 26. In October 2010, the Agency received a $2.3million Tiger Planning Grant ( DOT/HUD) fordevelopment studies to work out the detailsand cost associated with the redevelopment ofCanal Crossing, this work includes a fundingand equity mechanism. 26
  27. 27. Revitalization of this area has been hampered byoutdated infrastructure, large tracts of contaminatedformer industrial lands, and a road system that fails tosufficiently link up with the local regional rail network.The project focus will be to create a residential, mixed-use, transit-oriented development with access to openspace amenities in a community with a significant low-income population. The process will also develop aformal legal framework to ensure that redevelopment isequitable 27
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  36. 36. RELOCATION• As outlined, the Canal Crossing Redevelopment Plan converts former old industrial sites into new blocks for mixed use residential development. Wherever practical, it is the preference of the Jersey City Redevelopment Agency for existing property owners to participate in such manner that development of the proposed blocks can occur in accordance with this Plan. To that extent, this Plan and the Agency encourage the cooperation among the existing property owners in order for any block to realize its full development potential. Under this scenario, the relocation of persons or businesses should be significantly reduced. In terms of relocation, the vast majority of relocations will only affect businesses, since only one residentially occupied property is currently listed for acquisition.
  37. 37. The Challenge is!This doesn’t get us where we need to goas a community of property owners and asa city. It doesn’t address the brown fieldissue/chromium clean up. It doesn’taddress the flooding and other seriousinfrastructure issues, not to mentionplanning issues of new grid and transit.
  38. 38. Rincon Redevelopment Plan, San Francisco, Ca.
  39. 39. B. Owner Participation• To the extent compatible with the purposes of the Plan and appropriate redevelopment of the Project, owners of real property in the Project may, subject to rules and regulations including standards for rehabilitation promulgated by the Redevelopment Agency, be accorded the opportunity to participate in the redevelopment of the Project. Such participation shall be contingent upon execution by such owner of a binding agreement (hereinafter called “owner participation agreement”) by which the property retained or acquired will be developed, maintained, or rehabilitated for use in conformity with the Plan, the Declaration of Restrictions, and the Owner Participation Rules promulgated by the Agency.• Owner participation necessarily will be subject to and limited by such factors as the nature, condition, and use of the existing improvements; the reduction of the total number of individual parcels in the Project; the elimination of certain land uses; the realignment of streets; the construction of new public facilities and improvement in accordance with the Plan, the declaration of restrictions and in accordance with such controls as may be found necessary to ensure that redevelopment is carried out pursuant to this Plan.
  40. 40. D. Acquisition of Real Property• Any real property located within the Project Area may be acquired by the Agency by purchase, gift, devise, exchange, condemnation, lease, or any other lawful method, including utilization of the power of eminent domain, if one or more of the following conditions are met.• The building is substandard to a degree requiring clearance as demonstrated by a structural inspection of the property.• The property must be acquired in order to eliminate an environment deficiency, including but not limited to: incompatible land uses, small and irregular lot subdivision, or overcrowding of the land.• The property must be acquired in order to eliminate impediments to land development through assembly of land into parcels of reasonable size and shape, served by an improved street system and public utilities.
  41. 41. D. Acquisition of Real Property• The building must be removed in order to effect a change in land use as provided in this Plan.• Without the consent of an owner, the Agency shall not acquire any real property on which an existing building is to be continued on its present site and in its present form and use unless such building requires structural alteration, improvement, modernization or rehabilitation, or the site or lot on which the building is situated requires modification in size, shape or use or it is necessary to impose upon such property any of the standards, restriction and controls of the Plan and the owner fails or refuses to agree to participate in the Redevelopment Plan.
  42. 42. Anaheim Platinum Triangle.• The City Council identified a few criteria for the plan:• First, private property owners should drive development within the Platinum Triangle.• There would be no subsidies or other public incentives to achieve development goals.• Second, new mixed-use developments could not turn existing properties into nonconforming uses or buildings. Property owners would still retain the rights to develop and use property pursuant to existing zoning.• Third, recognizing that the area was composed of dozens of individually owned parcels, the private sector would have to assemble parcels if larger sites were to be developed. The city would not use eminent domain to acquire property.
  43. 43. Anaheim Platinum Triangle.Setting the table for development!Easier Permitting.First-Come, First-ServedPermits. Winner take allscenario!Broad-based EIR. Eminent DomainReduced BuildingRequirements. 44
  44. 44. Curt Pringle Mayor of the City of Anaheim While many owners decided toredevelop or sell their properties, othersmall businesses have decided to staywhere they are, which is exactly what ourplan allows them to do—keep theirbusinesses with out the threat of eminentdomain.
  45. 45. Six areas where public private partnerships create value in contemporary real estate development.
  46. 46. Site: Lower ownership, entitlement access, risk cleanupCo-investment: Debtinfrastructure and Fundingfacilities Equity Gap funding Funding
  47. 47. Thank You