CNU conversations: Striking before the neighborhood’s hot

DeKalb Market, Long Island University

Yet more thoughts from our (apparently quite long) lunchtime conversation about community-building.

We talked extensively about how, but where would these strategies have the greatest impact? It’s important to jump off the price escalator — to opt out of the gentrification process — early on, before outside capital floods into the neighborhood.

The “tipping point” in neighborhoods is always tied to outside money. First, an urban neighborhood is “discovered” by suburbanites looking to spend their extra $20s in cute restaurants, then by institutional investors looking for $2 million investments, and pretty soon the whole place jumps the shark. But if the small dollars are ever going to have a chance to win the game, they’re going to have to start early on — or else console themselves to small, subsidized slices of the neighborhood, post shark-jump.

“Favored quarter” locations in gateway cities are probably too far gone (more on this in a future post). Even the immediately adjacent areas have probably been bid up too far to be affordable without turning to outside capital. A Place Corp takes a substantial investment of time, rather than money, so the key is not to overpay.

One approach that can work where explosive change appears inevitable is what I’d call a “waterfall TIF.” This uses redevelopment revenue from a “sacrificial” area — for instance, an underutilized industrial corridor separating a gentrifying area from a stable area — to shore up the affordable housing stock in adjacent areas. Two examples:

  • The Hill District in Pittsburgh is a historically poor, African-American neighborhood overlooking downtown. The Lower Hill was demolished for urban renewal, displacing 8,000, but it was never fully developed, except for one arena. A recently adopted TIF to develop the site will direct property tax revenue “into two separate accounts: one for infrastructure needs in the Lower Hill and one for reinvestment in the Middle and Upper hill.”
  • In Houston, the Midtown TIRZ spent $15 million to purchase 34 acres of the adjacent Third Ward, including hundreds of vacant lots, which was then handed to nonprofits and thus taken off the market.

By the time the usual affordable-housing resources, like TIF funds and inclusionary units start to flow, it’s already too late — prices will already be on an upswing. For maximum effect, resources need to start flowing before new construction and new investment create new amenities, which raise property values. Of course, this requires neighborhood organization (and probably capacity-building) beforehand, to identify areas about to undergo change, and to plan for the process.

Think of it as an approach comparable to Transferable Development Rights, which have preserved many rural communities, just applied to urban communities instead. To use the photo as an example, imagine if some of the value created by the Downtown Brooklyn rezoning (affecting the sites in front of Flatbush) could also have steered capital funds towards rehabilitating and expanding NYCHA’s Ingersoll Houses (at back right).

Friday photo: Vanquished twin cities

Pittsburgh various

Vanishing twin syndrome” is an eerie phenomenon wherein one fetal twin seems to absorb another. Its counterpart, in the annals of American cities, might be called “vanquished twin syndrome”: where one city annexes another, then proceeds to obliterate any trace of its core through concerted redevelopment.

Three of the more notable examples are cities settled at confluences, which naturally offer a choice of multiple townsites on various riverbanks.

Denver faced Auraria across Cherry Creek, the Allegheny River separated its eponymous town (pictured above) from Pittsburgh, and the fork of the Milwaukee and Menomonee rivers fostered three towns — Juneau (east), Kilbourn (west), and Walker’s Point (south).

Yet as these towns were absorbed into larger cities across the way, the old downtowns of Auraria, Allegheny, and Kilbourn all declined into Skid Rows, offering a uniquely cheap combination of deteriorated, frontier-era buildings within a short walk of the principal downtown. Shunned and looked down upon by the ascendant city’s downtown elite and starved for resources (namely the intra-city transportation links that funneled commuters to the principal downtown), they became prime targets for urban renewal.

Kilbourn was wiped out early on, by a City Beautiful government complex. Allegheny’s center was leveled by Alcoa in the 1960s. Auraria was demolished for a university campus in the 1970s.

In a weird twist on the theme, Minneapolis absorbed its rival St. Anthony — but proceeded to tear down its own birthplace, while neglecting its rival for so long that it remained standing until the adaptive-reuse age could rescue it.

Friday photo: Bonsai, artificial limits to growth, and humility

Phipps: bonsai since 1960

Cities are living things that require supporting infrastructure: physical infrastructure, social infrastructure, green infrastructure. They also need room to grow and change.

The exception that proves the rule are bonsai, “the most unnatural nature that exists.” Trees can survive when confined to tiny boxes that constrain their growth. This 55-year-old Scotch Pine at the Phipps Conservatory would, on a managed plantation, have a trunk one foot wide — wider than the magazine at right, about half the diameter of the planter this tree lives in — and be 60-80′ tall.

However, bonsai require a lot of care and feeding just to survive, including extensive pruning to thwart natural growth instincts. Without that pruning, the tree gradually consumes all of the soil’s nutrients and starves. All this intervention turns what should be a robust, independent tree into a fragile hothouse flower, subsisting on life support. At this juncture, even if it was freed from its constraints, this tree could never match the size of its wild counterpart. It’s a neat inversion of the usual relationship between man and nature, but like seeing a bored tiger at a zoo, it’s also a bit sad to see.

Natural systems also impose limits on their own sustainable growth, of course. Cycles see growth culminating in decline and death, then renewal and evolution. But nothing that’s alive stands perfectly still.

Those who propose to stop growth should have the humility to acknowledge that doing so will change the very nature of growing things. By giving themselves free rein to change the city, they are placing a tremendous burden on the resources of future generations.

Friday photo: Be careful what your zoning asks for

In the Penn Quarter neighborhood, as Mark Jenkins wrote in the Washington Post, “arts spaces are mandated by zoning, yet the arts scene is hard to find. Nearly a dozen exhibition spaces populate the area… most don’t have access to the street and aren’t clearly identifiable from outside. They are in lobbies or tucked away in office building interiors.” Here’s one, Terrell Place at the prime corner of 7th & F, that’s not entirely hidden — but also not exactly shouting its noble story to the public. Yet it’s somewhat striking in that it wastes what could be prime retail space across from the National Portrait Gallery and the Verizon Center arena.

The “arts” designation for the “Gallery Place” neighborhood was intended to foster a vibrant community of commercial art galleries alongside working artists, all in the shadow of the Portrait Gallery. Yet instead, there are scarcely any commercial galleries, which require considerable staff investment, and instead many pointlessly large office building lobbies which feature above-average displays of plop art. Perhaps some lawyers and lobbyists have their lives slightly enriched by walking past these paintings, but the general public now derives scant benefit.

The designation is so broadly written that at least two suspiciously spacious bars on E Street — Penn Social and Hill Country Barbecue — both owe their existence to the “arts” requirement. I’m glad that Penn Social has room to spare; it’s a reliable go-to for large events that might not otherwise fit into such a convenient downtown location. But was that really the intent of the zoning?

The situation illustrates the difficulty of trying to define great places, which depend upon a lot of “we know it when we see it” subjectivity, through legal means like zoning. Now that quality retail has emerged as the prime placemaking amenity — anywhere can have open space, but retail’s a lot more difficult — it’s also become something worth subsidizing for its placemaking value. Yet before you can subsidize something, you have to define it.

Doing so will be fiendishly difficult for public entities like municipalities, which will also run into arguments about whether retail is a public good or a private good. However, it should be easier for private entities seeking to cross-subsidize across revenue streams.

CNU conversations: If CBAs are broken, should they be turned upside down?

Demolition

Redevelopment of Alexandria public housing near Braddock Metro in 2013. The slightly taller buildings with gables in the back include replacement units.

A subsequent conversation at CNU bemoaned how “tollbooth zoning” (as Ben Ross calls it) has turned everyone into their worst nightmare of a money-grubbing Chicago machine pol, rasping “ubi est mea?” over a cigar.

In Chicago, it was simple — you paid, you played. You want to build something? Fine, pay up and we’ll talk. In cities today, it’s pretty much the same. We’re systematically under-zoning (and over-planning) everything to maximize the possible value granted through zoning relief, and demanding the difference back through legalized bribes we call community benefits agreements.

Yet because CBAs’ contents are up for negotiation at one point in time, communities end up with whatever’s convenient, not what’s actually needed. The results can be baffling. One local municipality has a surfeit of small, black-box theaters that don’t get used, since theaters can only be purchased in increments of one, and the cheapest performing-arts giveaway is a black-box theater. (Someday, I’ll pull together a tour of the laughable “arts spaces” that zoning’s required around Penn Quarter.)

The most obvious solution would be to buy upzones using cold, hard cash on a per-foot basis, but that’s not allowed — if it’s a tax (or impact fee), it requires a nexus. So instead, communities get whatever the developer feels generous enough to give. Not to mention that the entire process, since it’s all boils down to political power, favors those who already have political power — large, well-connected developers vs. squeaky-wheel communities. Small developers get shut out of any opportunity to build, and disempowered communities (the homeless, for instance) never get a chance.

Now, since we’ve established that the zoning is entirely arbitrary anyways, why not flip the equation and start with the community benefits? The quantity of stuff permitted on the site ultimately doesn’t matter as much as the quality of what goes there.

This “upside down pro forma” is already being done in several instances, notably in situations where municipalities are seeking to maximize affordable housing output. For instance, cities that have committed to 1:1 public housing replacement — as HUD’s Choice Neighborhoods program does — have long had to work backwards to find enough market-rate units to make the pro forma pencil out. Alexandria has operated under a 1:1 public housing replacement policy since 1972 (“Resolution 830,” PDF), and the results are very impressive — seamlessly integrated urban fabric, both socially and physically.

Canada never had HOPE VI as federal policy, and its municipalities have a firmer hand in land use control. (For instance, Ontario’s Section 37 permits cash payments within a negotiated CBA. Sounds filthy, but actually cash is nice in that it’s easily measured.) So, working backwards from the benefits to the proposal isn’t unusual.

Woodward's

The art inside the Woodward’s enclosed retail court shows a police riot that took place nearby.

In Vancouver, the mind-bogglingly complex Woodward’s redevelopment used a public RFP process to stack a vertical mixed-use community with just about everything onto an abandoned department-store block right on Skid Row.

In Toronto, zoning bonuses paid for a 68-unit artist live/work space. Regent Park’s redevelopment has created 1:1 replacement units, plus 15% so far. As part of the development agreement, space for social infrastructure was built early on; the Daniels Spectrum “includes several state-of-the-art performance spaces, a locally run café, a green roof, and two floors for various educational, arts and community groups that have long operated in and around Regent Park. Many relied on informal or rented space, and some had been uprooted when the demolition began. The need for this kind of social infrastructure remained.”

Regent Park redevelopment continues

Regent Park in Toronto, where a commitment to better than 1:1 replacement housing (and additional retail and social services) is resulting in much higher densities.

That’s certainly one approach for maximizing the community benefits, but it introduces a few huge risks. It still only works for huge projects, it still relies on political power, and it still subjects the CBA to the fads of the moment. And what happens if the approach fails? The developer might just decide there’s nothing in it and walk away. (Another argument for good phasing.)

High rises’ high costs, part 3: Maintenance costs

Earlier, I’ve written about how high-rises face higher up-front costs, stemming from both lower efficiency and higher construction costs. But the high-rise cost penalty doesn’t just apply to upfront construction costs — their ongoing maintenance expenses are typically higher than for low-rise buildings.

Eastgate Village & Mercy Hospital

Even within this one development, condo fees for 1-bedroom units are 30% higher in the renovated mid-rise than in the new low-rises.

The Institute of Real Estate Management publishes an annual benchmarking report for property managers, showing average operating expenses for 717,000 apartments nationwide. IREM’s 2014 report found that “elevator” buildings (both mid- and high-rise) have operating costs that are 43% higher per square foot.

IREM apt ops data

Frank Schliewinsky, writing in Strategics Vancouver Condo Report, analyzed MLS data to find that “Monthly strata [condo] fees for low-rise projects tend to be less than those for high-rise projects.” Fees averaged 22-25% higher per unit in high-rise buildings across metro Vancouver, both in low- and high-cost markets, and both for new construction and older buildings.

(Factors that may explain the discrepancy between the two figures may relate to definitions — many low-rise buildings still have costly elevators — and/or the smaller unit sizes typical in high-rises.)

Some of these increased costs stems from the upfront construction: high-rises have more materials and bigger systems to maintain, and their less efficient floor plans mean more common areas have to be maintained.

Another curious factor is at work, though. The higher costs for high rises creates a vicious cycle: Higher costs (per square foot, and per unit) mean higher rents are needed to justify high-rise construction. Those higher rents can only be achieved by aiming for that segment of the market which wants to pay higher rents — by definition, the luxury segment, who can be enticed to pay higher costs by adding ever more amenities. Those amenities further increase costs, both up front and in the long run.

None of this is to disparage high-rises, of course: I live in a high rise, after all, and enjoy its sunlight, views, sound attenuation, and proximity to services. When I was younger, though, I lived in lower-cost low-rise apartments and aspired to someday live in the sky.

The intrinsically high costs of building and maintaining high-rises makes it dangerous to recommend that high-rises will absorb a large share of housing growth — particularly in metro areas that already suffer from high housing costs, which don’t need even more housing that’s inherently costly.

(Again, to be continued.)