GETTING IT BUILT: OVERCOMING THE IMPLEMENTATION BARRIERS TO SMART GROWTH February 15, 2014 New Partners for Smart Growth Dena Belzer
Challenges to Implementing Smart Growth
The Typical Smart Growth Vision Walkable, Mixed Use/Mixed Income Higher Intensity Land Uses Complete Streets Transit Options 3
There Are Typically 5 Primary Barriers to Attaining This Vision 1. Existing Development Context 2. Scarcity of Development Parcels 3. The Evolving Role of Retail 4. Limited Public Resources 5. Mismatch Between Local Land Use Policies and Market Conditions
1. Physical Context for Development Existing Downtown/ Urban Business District Major Suburban Employment Area Legacy Industrial Area Mixed Use Neighborhood/ Main Street Downtown Boston Boston, Massachusetts Tyson s Corner, Virginia Arts District Los Angeles, California Lincoln Square Chicago, IL Auto-Oriented Commercial Corridor Industrial/ Distribution Area Low Density Residential Neighborhood Major Greenfield/ Infill Site \ University Avenue Twin Cities, Minnesota South Boulevard Charlotte, North Carolina Bethel Park, Pennsylvania NUMMI Plant Fremont, California
2. Scarcity of Developable Parcels Minimum developable parcel is ~0.35 acres, with most development occurring on sites of 1-2+ acres Many infill areas characterized by: Small, shallow, or irregularly shaped parcels Fragmented ownership Adjacent single-family residential neighborhoods
3. Evolving Role of Retail Internet sales growing 3X faster than brick-and-mortar Fastest growth in restaurants, grocery stores, personal and business services Some aging retail no longer conforms to modern requirements Redwood City Mountain View
4. Limited Public Resources Limitations on role of new development in funding public improvements Stronger market locations: Private Development Public Sector Financing Strategies Infrastructure and Amenities Challenging/weaker market locations: Public Sector Financing Strategies Infrastructure and Amenities Private Development
5. Mismatch between Local Land Use Policies and Market Conditions For example: Low height or density requirements do not permit new development High rise development is envisioned, but not supported by market conditions Zoning for ground floor retail exceeds demand On-site parking requirements drive up development costs Ground Floor Retail Zoning in Belmont
What Are the Economics of Density Developer Profit in Jillions Common perception of density $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $0.0 5 10 15 20 25 30 35 40 45 50 55 Density (units/acre)
Different Densities Require Different Building Types
Average Revenue per Unit 17 17 16 16 15 15 14 14 13 13 12 12 11 11 10 10 9 9 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 b1 b1 b2 b2 b3 b3 b4 b4 Stories Underground Parking Units FAR 55' 75' 85" 100' 120' 140' 180' Seventeen Five story Seven story Seven story Nine story Eleven story Thirteen story story 40 50 50 56 68 80 104 4.0 4.9 4.9 5.6 6.5 7.5 9.5 5-Story 7-Story 7-Story 9-Story 11-Story 13-Story 17-Story
Average Cost per Unit 17 17 16 16 15 15 14 14 13 13 12 12 11 11 10 10 9 9 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 b1 b1 b2 b2 b3 b3 b4 b4 Stories Underground Parking Units FAR 55' 75' 85" 100' 120' 140' 180' Seventeen Five story Seven story Seven story Nine story Eleven story Thirteen story story 40 50 50 56 68 80 104 4.0 4.9 4.9 5.6 6.5 7.5 9.5 5-Story 7-Story 7-Story 9-Story 11-Story 13-Story 17-Story
Residual Land Value (per Square Foot Land) 17 17 16 16 15 15 14 14 13 13 12 12 11 11 10 10 9 9 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 b1 b2 b3 b4 b1 b2 b3 b4 Stories Underground Parking Units FAR 55' 75' 85" 100' 120' 140' 180' Seventeen Five story Seven story Seven story Nine story Eleven story Thirteen story story 40 50 50 56 68 80 104 4.0 4.9 4.9 5.6 6.5 7.5 9.5 5-Story 7-Story 7-Story 9-Story 11-Story 13-Story 17-Story
Community Benefits Contingent on Development Feasibility Return on Investment Development Infeasible Potential community benefits Minimum threshold for feasibility Low Medium High Likelihood of Development 15
Projected Feasibility for Different Building Types 2013-2035 (Oakland, CA)
Strategies for Implementation
Three Strategies 1. Plan for vibrant activity nodes 2. Align land use regulations with market and physical conditions 3. Coordinate public & private investment to create walkable places and support desired development Colma BART
Strategy 1: Plan for Vibrant Activity Nodes Focus public investments and higher intensity development in concentrated activity nodes Support successful mixed-use districts Encourage pedestrian activity and transit use Save the city money Top of the Hill development and streetscape improvements in Daly City
Identify Key Activity Nodes Early in the Planning Process Consider: Walking distance (1/4-1/2 mile) Transit access Market momentum Opportunity sites Two different kinds of nodes: San Antonio Center (above) and Downtown Mountain View (below)
Focus Retail to Create Activity Centers Castro Street, Downtown Mountain View ~1,300 ft Burlingame Ave, Downtown Burlingame ~1,200 ft
Plan for the Corridor, not just the Street Downtown Belmont Activity Node Mountain View Study Area v. Half-Mile Corridor
Strategy 2: Align Land Use Regulations with Market and Physical Conditions Set zoning, parking, and other regulations to: Enable new investment to occur in the short-term Support the long-term vision for transformation Redwood City Palo Alto
Adjust Zoning to Allow Feasible Building Types $150.00 Impact of Density on Financial Feasibility $100.00 Residual Land Value $50.00 Development Feasibility Threshold $0.00 Lower Density Mixed-Use (58 du/acre) Medium Density Mixed-Use (80 du/acre) Medium Density 100% Residential (90 du/acre) Higher Density Mixed Use (98 du/acre) ($50.00) Retail rents at $2.25/s.f.; condo prices at $510/s.f. Simplified diagram based on Daly City analysis. Source: Strategic Economics and VMWP, 2013.
Reduce On-Site Parking Requirements Works best in places with good transit service and/or as part of a comprehensive parking management strategy $80 Residual Land Value $70 $60 $50 $40 $30 $20 Development Feasibility Threshold $10 $0 Mixed-Use with On-Site Retail Parking Condo prices at $500/per s.f. Diagram based on Mountain View analysis. Source: Strategic Economics and VMWP, 2013. Mixed-Use without On-Site Retail Parking
Provide Flexibility on Ground Floor Uses Outside of Nodes Allow ground floor residential, community space, and office outside of nodes Office in Mountain View (left); housing in Los Altos (top) and Santa Clara (bottom right)
Strategy 3: Coordinate Public & Private Investment Make places attractive and functional for existing and new residents Encourage developers to invest in partnership with public investments Facilitate walking, bicycling, and transit ridership Belmont Palo Alto
Target Public Improvements to Activity Nodes Utilize scarce resources efficiently Support activity nodes and pedestrian activity Top of the Hill Improvements, Daly City Bike Share Station, Downtown Mountain View
Ensure New Development Supports a Walkable Environment Implement design guidelines and development standards to ensure that development supports desired character New retail development in Mountain View (left) and housing on the Los Altos/Mountain View border (right) is oriented towards the street and includes pedestrian amenities
Conclusion
Closing Thoughts Realizing the vision requires realistic assessment of economic, physical, regulatory barriers There are many tools at the local level to remove barriers and incentivize development