Managing Texas' Growth Mixed-Use and Density
By: Robert (Bob) H. Voelker
Texas Real Estate BusinessSeptember 2008
The Texas real estate market is experiencing a radical transformation brought about by the reversal of over 50 years of centrifugal forces that propelled development to the fringes of the state’s major cities. To grasp these trends, we first need to review a brief history of real estate in America.
In the early 20th Century, advances in infrastructure (water and sewer facilities, in particular) allowed for the growth of large cities. Prior to thattime, cities could not grow beyond a certain size without health issues arising from too many people living in close proximity to one another. With the advent of mass production and the need for factory workers to live close to employment centers, the trend was clearly set for in-migration from rural areas to denser inner city dwellings. The automobile was new on the scene and still too expensive for most people, so work, home, shopping and church were all placed within walking distance.
Read remainder of article --> http://www.munsch.com/files/managing_texas_growth_mixed_use_density.pdf
Sunday, May 31, 2009
City Assistance for Mixed Use Revitalization Projects
City Assistance for Mixed Use Revitalization Projects
by: Bob Voelker
Inner city revitalization can involve costly site acquisition, demolition, environmental remediation and infrastructure upgrades and unproven markets for retail, restaurant office or residential tenants or owners. To fill gaps in the budget or buy-down the inherent marketing and development risks of these projects, developers frequently request City assistance, which can take many forms. These forms of City financial aid to the project are typically outlined in a Development Agreement between the City and the Developer.
Discounted Land and Environmental Clean-Up: With a view toward redevelopment, the City may condemn dilapidated structures or buy up land in the path of a new transit line. The City can then attract developers and associated new job growth, enhanced retail taxes, etc. by donating or discounting the land – whether sold in fee or long term ground leased to the developer. As part of the land sale or lease, the City can also agree to remediate any environmental contamination on the site.
Relocation Assistance: Many of the larger urban revitalization projects involve the acquisition and demolition of existing buildings and, either by local law or as a requirement of the City's Request for Proposal under which the redevelopment is occurring, existing tenants in these buildings must be compensated for their moving costs and the costs of renting new space – even if their leases are expired or are expiring – and the developer can ask the City to fund this compensation to existing tenants.
Favorable Zoning: The developer and City planners can collaborate to enhance the function and desirability of the project with zoning that creates synergistic value through higher rental rates for retail, office and residential tenants and property values for the for-sale components of the project (restaurant out parcels, residential condominiums, hotels, etc.).
Public Infrastructure: Inner City land parcels are often not served by adequate roads, parking, water, sewer, telecommunications and other infrastructure to support a dense urban development. As part of the overall package offered to the developer, the City can fund upgrades to this infrastructure. The City may have Community Development Block Grant (CDBG) or other forms of federal money that can be tapped for these improvements.
TIF's, PID's & Issuance of Public Supported Indebtedness: Without diving into the myriad rules on what can and can't be financed with tax-exempt versus taxable debt issued (and possibly backed) by the City/county, many of the "public" improvements that are part of the redevelopment can be funded through the issuance of long-term bonds supported by the increased tax revenues (property and/or sales taxes) generated by the new development. These funding mechanisms are frequently referred to as Tax Increment Financing ("TIF's" or sometimes "TIRZ's") and/or Public Improvement Districts ("PID's"). Obviously, the current credit crisis has dramatically curtailed the current use of tax-exempt bond financing.
Support for Other Governmental Financing: For redevelopment projects located in lower income neighborhoods, federal funding may be available for certain portions of the mixed-use project, such as New Market Tax Credits (typically for office, retail and warehouse type improvements) or Low Income Housing Tax Credits (for multifamily housing); however, securing these funds may requires political support, homeowner support, local financial support, etc. which the City can facilitate.
Tax Abatements: Developers can also ask the City, county, school district and other taxing authorities to abate taxes, and if the abatement period is long enough this reduction in expenses of the project (and subsequent increase in net cash flow) can be capitalized into a larger mortgage on the project, providing more financing. School districts (which typically make up the vast majority of the property tax burden) may be sensitive to these requests, particularly if the redevelopment will increase school attendance.
Waiver of Permit, Inspection, Impact and Other City Fees: As part of a significant revitalization effort, and the resulting increased tax and employment base, most cities will offer a full or partial waiver of these fees.
Enhanced Public Space: The City can improve adjacent parks, roads, bike paths, pavilions and convention centers, add City uses to the area by relocating libraries, City halls and other City offices and fund "public art" in the area.
City Contribution Toward Common Area Charges: Post-construction, most urban mixed use projects have common area charges assessed through leases, restrictive convenants, owner associations, etc. To the extent that the project's sidewalks, trails, lakes/ponds, landscaping, bicycle racks, etc. benefit the public at large, the City can agree to contribute its share of the cost of constructing maintaining these facilities.
Public Façade Dedication: If the redevelopment involves either the retention of an existing historical building or the creation of fascades to match existing historical structures in the area, the developer may be able to claim that these facades are really "public improvements" and request that the City retain ownership of the facades (with a resulting lowering of the tax base for the balance of the structure) and contribute funds toward the cost of the renovation, construction, dedication and/or maintenance of the facades. In addition, in redevelopments with prime street frontage the City may desire public art display storefronts, which can also be dedicated to and paid for by the City.
by: Bob Voelker
Inner city revitalization can involve costly site acquisition, demolition, environmental remediation and infrastructure upgrades and unproven markets for retail, restaurant office or residential tenants or owners. To fill gaps in the budget or buy-down the inherent marketing and development risks of these projects, developers frequently request City assistance, which can take many forms. These forms of City financial aid to the project are typically outlined in a Development Agreement between the City and the Developer.
Discounted Land and Environmental Clean-Up: With a view toward redevelopment, the City may condemn dilapidated structures or buy up land in the path of a new transit line. The City can then attract developers and associated new job growth, enhanced retail taxes, etc. by donating or discounting the land – whether sold in fee or long term ground leased to the developer. As part of the land sale or lease, the City can also agree to remediate any environmental contamination on the site.
Relocation Assistance: Many of the larger urban revitalization projects involve the acquisition and demolition of existing buildings and, either by local law or as a requirement of the City's Request for Proposal under which the redevelopment is occurring, existing tenants in these buildings must be compensated for their moving costs and the costs of renting new space – even if their leases are expired or are expiring – and the developer can ask the City to fund this compensation to existing tenants.
Favorable Zoning: The developer and City planners can collaborate to enhance the function and desirability of the project with zoning that creates synergistic value through higher rental rates for retail, office and residential tenants and property values for the for-sale components of the project (restaurant out parcels, residential condominiums, hotels, etc.).
Public Infrastructure: Inner City land parcels are often not served by adequate roads, parking, water, sewer, telecommunications and other infrastructure to support a dense urban development. As part of the overall package offered to the developer, the City can fund upgrades to this infrastructure. The City may have Community Development Block Grant (CDBG) or other forms of federal money that can be tapped for these improvements.
TIF's, PID's & Issuance of Public Supported Indebtedness: Without diving into the myriad rules on what can and can't be financed with tax-exempt versus taxable debt issued (and possibly backed) by the City/county, many of the "public" improvements that are part of the redevelopment can be funded through the issuance of long-term bonds supported by the increased tax revenues (property and/or sales taxes) generated by the new development. These funding mechanisms are frequently referred to as Tax Increment Financing ("TIF's" or sometimes "TIRZ's") and/or Public Improvement Districts ("PID's"). Obviously, the current credit crisis has dramatically curtailed the current use of tax-exempt bond financing.
Support for Other Governmental Financing: For redevelopment projects located in lower income neighborhoods, federal funding may be available for certain portions of the mixed-use project, such as New Market Tax Credits (typically for office, retail and warehouse type improvements) or Low Income Housing Tax Credits (for multifamily housing); however, securing these funds may requires political support, homeowner support, local financial support, etc. which the City can facilitate.
Tax Abatements: Developers can also ask the City, county, school district and other taxing authorities to abate taxes, and if the abatement period is long enough this reduction in expenses of the project (and subsequent increase in net cash flow) can be capitalized into a larger mortgage on the project, providing more financing. School districts (which typically make up the vast majority of the property tax burden) may be sensitive to these requests, particularly if the redevelopment will increase school attendance.
Waiver of Permit, Inspection, Impact and Other City Fees: As part of a significant revitalization effort, and the resulting increased tax and employment base, most cities will offer a full or partial waiver of these fees.
Enhanced Public Space: The City can improve adjacent parks, roads, bike paths, pavilions and convention centers, add City uses to the area by relocating libraries, City halls and other City offices and fund "public art" in the area.
City Contribution Toward Common Area Charges: Post-construction, most urban mixed use projects have common area charges assessed through leases, restrictive convenants, owner associations, etc. To the extent that the project's sidewalks, trails, lakes/ponds, landscaping, bicycle racks, etc. benefit the public at large, the City can agree to contribute its share of the cost of constructing maintaining these facilities.
Public Façade Dedication: If the redevelopment involves either the retention of an existing historical building or the creation of fascades to match existing historical structures in the area, the developer may be able to claim that these facades are really "public improvements" and request that the City retain ownership of the facades (with a resulting lowering of the tax base for the balance of the structure) and contribute funds toward the cost of the renovation, construction, dedication and/or maintenance of the facades. In addition, in redevelopments with prime street frontage the City may desire public art display storefronts, which can also be dedicated to and paid for by the City.
The Aftermath of the Crisis: How It Will Affect the Way We Develop
By: Robert (Bob) H. Voelker
Hospitality & Mixed-Use LeaderFebruary 2009
By definition, a crisis creates dislocation and reorientation. After a crisis, we often think about our lives and the world around us differently. As painful as working through tumultuous times may be, they can be cathartic and create the potential for “epiphany opportunities” – if we carefully examine the factors that led to the problem and how we respond to the changing world.
To succinctly state the obvious, the following is a list of recent trends that helped cause the housing and credit crisis: easy credit; low interest rates; excessive consumerism; over-exuberant development on the fringes of major cities; $4 per gallon of gasoline; and Americans spend more than they earn. What happens as the economy recovers: inflation; higher interest rates; tighter credit; $4 per gallon of gasoline; and savings increases and consumption decreases.
There are a number of factors that stay with us throughout:
x Global warming – whether you believe the science or not, the political issue remains.
x Pollution – the health issues of carbon combustion alone should be a reason for change.
x Traffic congestion – commute times in major cities are getting longer, and the cost of commuting, when added to the cost of housing, creates an excessive burden on all but the wealthiest families.
x Growth of our major cities – for instance, Dallas is projected to grow by 50% in the next 25-30 years. Consider the impact of this growth on the other items above.
x Gen Y, Millennial Generation and Retiring Baby Boomers – more single and less married, fewer children that are being born later, desire urban excitement over suburban quiet and need smaller homes. The traditional family that made up 40% of households in 1970 now accounts for only 24% of households.
Some brief facts to consider:
x 70% of our carbon footprint comes from the built environment – our tendency is to want to address tailpipes and smokestacks, but the invisible polluter is not our cars or our power plants. x Reducing power demand in buildings will do more to reduce pollution and global warming than electric cars and alternative energy sources.
x The average American family spends 51% to 63% percent of their income on housing and transportation, and for those families earning less than $50,000, transportation costs exceed housing costs.
Two new urbanists, Larry Beasley and Chris Leinberger, recently addressed the Dallas City Council on urban living and density. As they spoke, a vision of the future of real estate began to take hold:
x More mass transit
x More development in the urban core and denser development in the suburbs along mass transit lines and even along highway corridors
x More toll roads, which will create a greater realization of the true cost of sprawl
x “Regionally significant places” (Chris Leinberger’s term) – nodes of more intense development on 100-300 acre tracts
x Tighter credit, higher interest rates and inflation will make single family homes less affordable and rental housing and more compact for-sale housing (condos, townhomes and row houses) will be in greater demand
x Mixed-use development where you can walk to the local grocery store, dry cleaners, restaurant, etc. – even in the suburbs – more “town centers” that include residential components, even rental housing (and including affordable housing to avoid gentrification and displacement and the resulting increased transit by entry level workers, those least able to afford additional transportation costs)
x Addressing our public spaces with development – parks, lakes, rivers and arts districts
In general, affordability (housing-transportation cost) and sustainability of the totality of our living environment is the critical issue for real estate development post-credit crisis. Although the suburbs will continue to grow, our real estate development activities will need to increasingly address affordability and sustainability. In Texas, these concepts are foreign and require a rethinking by the real estate development community, our politicians and our citizenry. We need to understand and educate on density and form-based and other forms of mixed-use zoning and get beyond our xenophobic fear of development that does not fit one universal model. Mass transit only works where there is density of population, but density done right can actually create enhanced living environments for those who live in nearby single family homes, providing more vibrant shopping, restaurant and entertainment venues than strip shopping centers and shopping mall.
By: Robert (Bob) H. Voelker
Hospitality & Mixed-Use LeaderFebruary 2009
By definition, a crisis creates dislocation and reorientation. After a crisis, we often think about our lives and the world around us differently. As painful as working through tumultuous times may be, they can be cathartic and create the potential for “epiphany opportunities” – if we carefully examine the factors that led to the problem and how we respond to the changing world.
To succinctly state the obvious, the following is a list of recent trends that helped cause the housing and credit crisis: easy credit; low interest rates; excessive consumerism; over-exuberant development on the fringes of major cities; $4 per gallon of gasoline; and Americans spend more than they earn. What happens as the economy recovers: inflation; higher interest rates; tighter credit; $4 per gallon of gasoline; and savings increases and consumption decreases.
There are a number of factors that stay with us throughout:
x Global warming – whether you believe the science or not, the political issue remains.
x Pollution – the health issues of carbon combustion alone should be a reason for change.
x Traffic congestion – commute times in major cities are getting longer, and the cost of commuting, when added to the cost of housing, creates an excessive burden on all but the wealthiest families.
x Growth of our major cities – for instance, Dallas is projected to grow by 50% in the next 25-30 years. Consider the impact of this growth on the other items above.
x Gen Y, Millennial Generation and Retiring Baby Boomers – more single and less married, fewer children that are being born later, desire urban excitement over suburban quiet and need smaller homes. The traditional family that made up 40% of households in 1970 now accounts for only 24% of households.
Some brief facts to consider:
x 70% of our carbon footprint comes from the built environment – our tendency is to want to address tailpipes and smokestacks, but the invisible polluter is not our cars or our power plants. x Reducing power demand in buildings will do more to reduce pollution and global warming than electric cars and alternative energy sources.
x The average American family spends 51% to 63% percent of their income on housing and transportation, and for those families earning less than $50,000, transportation costs exceed housing costs.
Two new urbanists, Larry Beasley and Chris Leinberger, recently addressed the Dallas City Council on urban living and density. As they spoke, a vision of the future of real estate began to take hold:
x More mass transit
x More development in the urban core and denser development in the suburbs along mass transit lines and even along highway corridors
x More toll roads, which will create a greater realization of the true cost of sprawl
x “Regionally significant places” (Chris Leinberger’s term) – nodes of more intense development on 100-300 acre tracts
x Tighter credit, higher interest rates and inflation will make single family homes less affordable and rental housing and more compact for-sale housing (condos, townhomes and row houses) will be in greater demand
x Mixed-use development where you can walk to the local grocery store, dry cleaners, restaurant, etc. – even in the suburbs – more “town centers” that include residential components, even rental housing (and including affordable housing to avoid gentrification and displacement and the resulting increased transit by entry level workers, those least able to afford additional transportation costs)
x Addressing our public spaces with development – parks, lakes, rivers and arts districts
In general, affordability (housing-transportation cost) and sustainability of the totality of our living environment is the critical issue for real estate development post-credit crisis. Although the suburbs will continue to grow, our real estate development activities will need to increasingly address affordability and sustainability. In Texas, these concepts are foreign and require a rethinking by the real estate development community, our politicians and our citizenry. We need to understand and educate on density and form-based and other forms of mixed-use zoning and get beyond our xenophobic fear of development that does not fit one universal model. Mass transit only works where there is density of population, but density done right can actually create enhanced living environments for those who live in nearby single family homes, providing more vibrant shopping, restaurant and entertainment venues than strip shopping centers and shopping mall.
Top Large Cities for Job Growth in 2009
The top 5 cities are all in Texas --
Austin
Houston
San Antonio
Fort Worth
Dallas
What does this mean for our growth patterns for the next 30 years? What are the implications for mass transit and transit-oriented development, apartments vs. single family homes, the need for affordable housing? These are all issues that these major cities in TX will be facing as we plan over the next 5-10 years for what our cities will be like in 50 years.
DFW 2nd Best Place to Live in US
TUESDAY, APRIL 21, 2009
DFW Ranks as 2nd Best Place to Live in US
Dallas is tearing up the charts again. The Dallas Business Journal reports in an April 21 article that the Dallas-Fort Worth market ranks second in a new survey of “America’s Top 100 Places to Live for 2009.”
The annual listing is developed by RelocateAmerica.com, a Web site that offers relocating Americans information on local communities.
Dallas-Fort Worth ranks second behind only Tulsa, Okla., which secured the top spot. The Top Ten is rounded out by Pittsburgh; Raleigh-Durham, N.C.; Huntsville, Ala.; Houston; Albuquerque, N.M.; Lexington, Ky..; Little Rock, Ark.; and Oklahoma City.
RelocateAmerica.com determines the winners by evaluating nominations and interviewing local leaders and residents on topics such as the region’s economic environment, educational opportunities, crime, employment and housing data.
“With the increasing concern on our nation’s economy and recovering housing market, we approached this year’s list with a different lens than in previous years. We concentrated on the outlook for future growth and ability to rebound in the communities that we selected,” said Steve Nickerson, president and CEO.
“We looked at the local government and the business leadership in each community as we considered this year’s winners. We selected communities with visionary leaders, improving or thriving economies including housing and realization of 'green' initiatives.”
RelocateAmerica is operated by trueV New Media, which is based in Brighton, Michigan.
TX Urban Mixed Use Projects
TX is growing faster than any of the other large states in the US (TX, NY, CA) - estimated to grow by 40-50% in the next 30 years. Our major cities (Dallas, Houston, Austin, San Antonio) are already traffic congested and have pollution problems, and this future growth mandate that we retrench back in our urban cores, reduce sprawl, focus on transit-orientation and density with mixed use, mixed income development, an area that is largely foreign to us.
This blog will focus on the opportunities and challenges that are our future!
Bob
This blog will focus on the opportunities and challenges that are our future!
Bob
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