On the Mixing of Incompatible Uses and Incumbency

houses-pollution-nuclear-power-plants-industrial-plants-factory-_557745-47I noticed an interestingly ironic thing today.

The usual argument for the necessity of use-based zoning is that it protects homeowners in residential area from uses that would potentially create negative externalities – ie: smelting factory, garbage dump, or Sriracha factory.

Urban Economics teaches us that such an event happening is highly unlikely in today’s marketplace. (nevermind the fact that nuisance laws should resolve these disputes) The business owner who is looking for a site for a stinky business would be foolish to look in a residential area where land costs are significantly higher.

However, as Aaron Renn pointed out in the comments of my last post on Planned Manufacturing Districts, the inverse of this is happening in many cities as residential uses begin to outbid other uses in industrial areas:

I think part of the rationale in this is that once you allow residential into a manufacturing zone, the new residents will start issuing loud complaints about the byproducts of manufacturing: noise, smells, etc. I know owners of businesses in Chicago who have experienced just that. They’ve been there for decades but now are getting complaints from people who live in residential buildings that didn’t even exist when the manufacturer located there. This puts those businesses under a lot of pressure to leave as officials will almost always side with residents who vote rather than businesses who don’t get to.

It’s clear this is a more relevant defense of use-based zoning than the one we usually hear. Of course, I’d argue that segregating uses through zoning isn’t a just way to resolve these disputes, and my last post discusses some of the detrimental consequences for cities.

It seems ironic, because it inverts the usual argument in-favor of zoning.  Residents are choosing to move near established industrial firms, and PMDs are a tool used to defend incumbent industries from residents.  Despite it’s lack of economic soundness, zoning is typically rationalized through an emotional appeal to defend incumbent residents from dirty industry.

This doesn’t decisively refute use-based-zoning in itself.  In-fact, I’m afraid it may bolster the case, but it does help expose the appeal to emotions used to defend zoning.

Planned Manufacturing Districts: Planning the Life Out of Districts

Chicago’s Goose Island and surrounding Planned Manufacturing Districts

They are called different things in different cities, but they are similar in form and intent among the cities where they are found.  For simplicity’s sake, a Planned Manufacturing District (PMD), as they are called in Chicago, is an area of land, defined by zoning, that prohibits residential development and other specific uses with the intent of fostering manufacturing and blue-collar employment.

Proponent of PMDs purport to be champions of the middle-class or blue-collar workers, but fail to consider the unintended consequences of prohibiting alternative uses on that land.  At best, PMDs have little effect on changing land-use patterns where industrial is already the highest-and-best-use.  At worst, they have the long-run potential to distort the land use market, drive up the costs of housing, and prevent vibrant neighborhoods from emerging.

A Race to The Bottom

Before getting into it further, it is important to examine the economic decisions industrial firms make in comparison to other uses.  Earlier in the industrial revolution, industry was heavily reliant on access to resources.  Manufacturing and related firms were very sensitive to location.  The firms desired locations with easy access to ports, waterways, and later railways to transport raw materials coming in, and products going out.

However, the advent of the Interstate Highway System and ubiquitously socialized transportation network have made logistical costs negligible compared to other costs.  Where firms once competed for locations with access to logistical hubs and outbid other uses for land near waterways in cities, they now seek locations with the cheapest land where they can have a large, single-floor facility under one roof.  This means sizable subsidies must be combined with the artificially cheap land to attract and retain industrial employers on constrained urban sites.

Additionally, today’s economy is has become much more talent-based rather than resource based, and patterns have shifted accordingly.  In contrast to industrial, residential and office uses are still very sensitive to location.  In fact, residential preference for urban locations are increasing.  Likewise, most office and other commercial firms seek to locate where they can best attract talent or customers, or simply put, convenient to residential.  To the dismay of the politicians, blue collar jobs are destined to leave cities to seek cheaper land in less desirable locations.  We should expect industrial firms to prefer exurbs and sites close to negative externalities, such as near highways and airports where noise and air pollution drive out residential uses.  Efforts to stem the tide of these realities will surely incur dead-weight losses.

In a race to the bottom, prohibition of housing and other uses in PMDs drives the value of that land down to the point it can compete on price with the most undesirable suburban locations. That is, until a non-manufacturing use compatible with the wording of PMDs emerges to crowd out industrial.

We are are in an interesting time, and are witnessing the first cases where the long-term consequences of PMDs are beginning to emerge for us to witness.

Google and Chicago’s Fulton Market

Over the past two decades, Chicago’s West Loop has become one of the most desirable neighborhoods in the City.  Developers flocked to the neighborhood to take advantage of the neighborhood’s proximity to Chicago’s Loop, and abundance of underutilized warehouses waiting to be converted to hip lofts.  However, Fulton Market and meatpacking district on the northern part of the West Loop remained immune to the radical transformation.  Neighboring West Town, River West, and West Loop blossomed during the housing boom.  Was Fulton Market less desirable?  Far from it – meaningful redevelopment was forbidden.

As developers began converting West Loop buildings in the 90’s, the Randolph Fulton Market Merchants Association proposed the formation of the Kinzie Street Industrial Corridor.  The Association ultimately triumphed in their lobbying for the district, which formed a PMD to protect them from the encroachment of competing land uses.  They also won a Tax Increment Financing district to fund subsidies, and other programs aimed at enriching incumbent and new businesses in the area.

Then, along comes Google.  According to the wording of the PMD, “High Technology Office” is a permitted use in the Kinzie Street Industrial Corridor.  Google, in search of an office with large floor plates for its Chicago headquarters, chose to move into a former cold storage building in the Fulton Market that is being converted into office.

As a result of Google’s impending arrival, Fulton Market has attracted a flurry of speculative real estate investment as other technology firms, hotels, restaurants, and entertainment venues flock to the area.  Land prices have been driven up to extent that no matter how much the subsidy, Fulton Market is no longer an economically viable location for industry or manufacturing.  We should expect politicians to scramble to fight this over coming years, but extinction of Fulton Market industry is imminent.  Efforts to hamper market-forces, millions of dollars of wasted subsidies, and unnecessarily higher housing costs were sacrificed to achieve nothing of lasting value.

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Vibrancy Thwarted

Possibly the biggest victim of the vast prohibition on uses of land in Planned Manufacturing Districts are the neighborhoods in which they are located.  In her treatise, The Death and Life of Great American Cities, Jane Jacobs discusses the ingredients of what makes urban districts flourish or fail.  Jacobs makes the case that great urban districts typical have a diversity of primary uses, short blocks, diversity of the age of buildings, and sufficient concentration of people.  Districts aimed at preserving and fostering limited uses, such as PMDs, stand in the way of all of these factors necessary for the emergence of vibrant city life.

Most obviously, if residential and other uses are prohibited, a diversity of primary uses and sufficient concentration of people are impossible.  Since the optimal sites for today’s manufacturing and logistics firms are very large, single-story buildings, firms are likely to demolish older multi-story buildings otherwise desired by residential loft-lovers.  They are also prone to spread their facilities over several blocks, sometimes incorporation what was once a street into their property.

Clybourn Corridor, Elston Corridor and Goose Island PMDs

Inspired by Fulton Market’s sudden success, some developers have begun to set their sights on other well located PMDs.  These developers intend to snatch up the preserved land at artificially low prices and entice technology companies to come.  One such developer, South Street Capital intends to do just that in Goose Island, straddled between River North and Lincoln Park to the east, and River West and Wicker Park to the west.  Developers also have also been eyeing the nearby site of the former Finkl Steel Plant.

Ironically, it was Finkl who successfully lobbied for the formation of Chicago’s first PMD, the Clybourn Industrial Corridor.  In the debates leading to the formation of the PMD, light manufacturing firms and developers were opposed to protections.  Light manufacturing wanted to keep the option to sell their land to developers and move to the suburbs.  As reported by the Chicago Reader:

On the other side were a handful of industrial-property owners from the area and their battery of lawyers, who argued that Eisendrath was offering them protection they do not want. Someday they may want to move, they say, because their buildings are too small, old, or obsolete. And they want the right to sell to whomever they choose–builders of shopping malls, condos, town houses, it doesn’t matter–at the highest dollar the market will bear.

“I like doing business in Chicago,” says David Schopp, chairman of U.S. Sample Company, the second-largest manufacturing employer in the area. “But I don’t want to be restricted. I don’t think it’s government’s role to say who I can and cannot sell to.”

Now, it is Finkl who wishes for that option.

The southern part of Fulton Market, as much as zoning hampers it’s potential, should enjoy some vibrancy as adjacent uses spill over into the district. (further, we do expect the city to begin allowing more residential in it’s latest plans for the district)  However, without lifting the PMDs altogether, there is little reason to be optimistic about the Goose Island and Elston Corridor PMDs.  Unfortunately, development of the PMDs in line with current prohibitions will result in a large area devoid of residential uses and other essential ingredients needed to become vibrant districts.  The area currently lacks transit alternatives, so employees will get to work by car or bike, exasperating traffic on roads connecting Lincoln Park to the expressway. We cannot expect the area to be rescued by spillover from nearby residential areas, as the river acts as a border vacuum preventing interconnection and transit access is minimal.  Failure to remove the PMD before further development takes place will condemn the area to eternal dullness.

Chicago’s Goose Island, protected by PMDs

Other PMDs

There are a total of 15 PMDs in Chicago.  The PMDs mentioned above, in addition to the Chicago/Halstead PMD, are the PMDs that have successfully thwarted residential encroachment.  Because of their undesirable locations, the remaining PMDs are impotent at altering land use patterns.  Impotent PMDs only serve as a mechanism for politicians to pay lip service to manufacturing jobs, and window dressing that goes hand-in-hand with subsidies.

I often hear urbanists defend PMDs, repeating the Urban[ism] Legend that we need them to keep manufacturing jobs in the city.  We urbanists can do much to make these districts vibrant if we overcome our nostalgia for urban manufacturing and come to terms with how dangerous PMDs actually are.  Economically speaking, PMDs can only serve the purpose of keeping land prices low enough to compete with undesirable suburban locations for industry. PMDs nonetheless do little to overcome the enormous economic forces repelling industry out from desirable locations in cities.  At worst, PMDs permanently plan the life out of otherwise desirable areas in the long run after serving their purpose temporarily.  At best, PMDs are impotent to drive down land prices in already undesirable places any further than they already are.

At a time when housing affordability is a major issue affecting cities, one way to remove barriers to increased housing supply is to abandon our counter-productive nostalgia for urban manufacturing.  PMDs abolish urban vibrancy, and it’s time for cities to abolish PMDs before it’s too late.

See also:

2005 Study by the University of Wisconsin-Milwaukee on the performance of the Clybourn Corridor PMDs

 

Selling the Rights to Greater Density

At Next American City, Mark Bergen has an interesting long-form piece on municipal infrastructure financing. He argues that the property owners who benefit from public policies, such as infrastructure investment, should be required to fund these policies. He suggests infrastructure improvements should be paid for with Tax Increment Finance or value capture (PDF). I don’t necessarily agree with his infrastructure funding prescriptions, and may take these up in a future post. What I found even more interesting, though, is his suggestion that developers should pay for zoning changes.

The basis for this proposal comes from the Georgist land tax. Because in urban settings, land’s value largely comes from the amenities surrounding it, landowners do not have the exclusive rights to this value, according to Henry George. The suggestion that developers should pay for the rights to build on the land they own is based, Mark explains, on a policy from São Paulo, called Certificates of Additional Construction Potential (CEPAC). These bonds, representing rights to build, are transferable and are publicly traded. He quotes Gregory K. Ingram of Lincoln Institute of Land Policy:

“They’re essentially selling zoning changes,” explained Ingram. Crucially, the building fees have not eaten away at developers’ profits. By some accounts, the rates of return for real estate in the districts increase.

[…]

The notes, sold by municipalities, are one of the world’s most innovative public financing techniques. Across many sections of São Paulo, if a developer hopes to build or do nearly anything with her property — adjust its uses, expand outward or upward — she must first buy a CEPAC.

On a fairness level, selling zoning changes seems wrong to me. Current zoning policies are an arbitrary starting point, so it doesn’t make sense that developers should have to pay for permission to change a policy that is limiting their rights. Additionally, the overarching objective of value capture, as Mark explains, is to facilitate progress toward Smart Growth objectives. To the extent that these objectives include affordable housing, walkability, and permitting denser development, great progress can be made toward these goals with upzoning alone without significant public investments.

On the residential side, increasing the housing supply is the only feasible path toward large numbers of affordable homes. On the commercial side, walkable neighborhoods cannot be achieved without permitting more mixed-use, dense development. From this angle,  São Paulo’s CEPAC policy would act as a tax on Smart Growth.

From a political perspective, it seems that the CEPAC policy would be subject to abuse. Those who oppose density on the conservative side would lobby for the issuance of few CEPAC bonds. Those on the progressive side who support increased public revenue for their favorite causes may also support the issuance of few bonds, requiring developers to pay high prices for the rights to build.

Despite these problems, though, as Mark points out in Brazil the program has led to increased developers’ profits indicating the program has not had these detrimental effects. I was not familiar with the program before reading Mark’s article, and I don’t know much about how CEPACs have played out politically in Brazil. However, I can imagine that paying for the rights to build would be an improvement for many U.S. developers, even though they act as a tax on density.

Currently, to achieve the zoning changes necessary for increasing density and market-rate affordable housing, developers have to spend significant resources of time and money to go through an uncertain political process. In some cities, as-of-right development is so limited that  the rule of law does not extend to urban development. Given this status quo, CEPAC bonds could benefit developers by removing some of the uncertainty surrounding zoning variances. Rather than spending money on lobbying for property rights they may never achieve, developers could simply buy these rights on the open market. This might also benefit small-business development if buying the needed bonds is cheaper than investing in a lobbying arm.

While I think many market urbanists would prefer to see more housing and walkable development allowed as-of-right, perhaps selling these rights is a second-best solution. Additionally, by compensating taxpayers for the damages to their light and air, CEPAC bonds could reduce the validity of NIMBY arguments. Is anyone more familiar with how the CEPAC program has changed land use rights in Brazil or other ways in which value capture has changed land use policy?

The Zoning History of Barcelona’s Eixample

Server glitch wiped the last few articles, so here’s a repose of the Barcelona one. Also, comments should be working now, should you deign to leave one…

Somehow I managed to visit Barcelona a few years ago and not learn about the history of the city’s Eixample (x pronounced sh in Catalan), or extension/widening (ensanche in Castilian). So to spare you all that fate, I’ve assembled a short history of Barcelona’s Eixample, which has parallels in eixamples/ensanches/zabalgunes (Basque!) across Spain.

So here’s the history, as told by Eduardo Aibar and Wiebe E. Bijker! (.pdf)

It starts in 1714, when Philip V, the Bourbon King of Spain based in Madrid and supported by the Castilians, conquered the Catalan capital of Barcelona, creating modern, unified Spain. Catalan culture and language was suppressed for more than a century, but more relevantly for urbanists…

The technical shape of society was also checked. An enormous military engineering project was launched to put the city under continuous surveillance of the Bourbon troops. A huge pentagonal citadel, designed by the Flemish military engineer Prosper Verboom, was built near the harbor to dominate the city. The army thus could bombard any target within Barcelona with heavy mortars. A high wall, fortified with bastions and fronted by a moat, zigzagged from the western face of the citadel up the north side of the city, around its back, and down south again to the port, meeting the sea at the ancient shipyards. This way, Barcelona became an enormous fort in which the military installations covered almost as much space as the civilian buildings.

The result of Philip V’s project was to enclose Barcelona in a rigid straitjacket of stone that prevented any further civic expansion and industrial development. The walls soon became the main urban problem of Barcelona, and the whole military complex remained a hated symbol of Castilian rule for a long time. The walls were not only a physical obstacle for the city’s extension but also a legal one. Construction was prohibited in the so-called firing range-a series of overlapping semicircles with a radius of some 1.25 km and their centers at different points in the fortifications. This firing range created a no-man’s land outside the walls covering almost 61 percent of the territory within the city limits. In the nineteenth century, with the walls still there, it was impossible to propose any town-planning idea without making simultaneously an implicit political statement. One’s personal attitude toward the walls revealed much of one’s political position.

By the middle of the nineteenth century, living conditions in the city were dreadful. The population density, with 856 inhabitants per hectare, was the highest in Spain and one of the highest in Europe; the average population of Paris was, for instance, under 400 inhabitants per hectare. The average living space for workers was about 10 m2 per person. This extremely high density, a bad water supply, and a poor sewer system made for atrocious conditions of hygiene. Different epidemics broke out in 1834, 1854, 1864, and 1870 – each time killing about 3 percent of the population. Between 1837 and 1847, the average life expectancy of men was 38.3 years among the rich classes and 19.7 among the poor.

Nevertheless, all the different Spanish rulers since 1718 took great care of keeping the walls upright, until they were demolished in 1854-1868.

So here we are in the mid-1800?s, and Catalonia has gone from walled to the heart of Spain’s industrial revolution. The Ciutat Vella, or old walled city, grew in a relatively organic and unregulated fashion, but the advent of rail transit, the sudden expanse of new land, and, perhaps most importantly, the Enlightenment, meant that the expansion of Barcelona outside its old walls – the Eixample – would be much more orderly and controlled. (The old city did not have a grid forced onto it à la Haussmann’s renovation of Paris due to opposition by property owners, though it did have a few straight-ish streets carved through it, the most famous of which is La Rambla.)

Enter Ildefons Cerdà. He proposes a standard gridded street pattern, with the flourish of having the corners cut at 45 degree angles – “chamfered street corners,” they’re apparently called – to afford vehicles a wider turning radius (nowadays they’re mostly used as a place to park cars, as you can see in the first photo below). But he also lays out strict restrictions on bulk, calculated by a weird pseudo-scientific quadratic equation-like formula that he never bothered to explain.

There was some drama with the awarding of the prize for the plan, though, and Cerdà never actually earned any money off of his design, but it was the basis of the urban plan that was eventually enacted for the Eixample.

What’s interesting, though, are the changes that were made. Basically, it was made more dense (something that the authors of the paper, who analyze it in a Marxist framework, seem hostile to)…

Cerdà’s building bylaws were considered very demanding: buildings could not exceed more than 50 percent of the block’s surface (the other 50 percent should be set aside for gardens), they were allowed in only two of the four sides of the block, they should be less than 20 m high, and their maximum depth varied from 15 to 20 m.

After the Royal Decree a slow process of implementation began, in which a large number of small modifications were introduced, eventually resulting in big changes. Even the approved plan (1859) showed remarkable changes compared with the first version (1855). Evidently, Cerdà introduced them to diminish the resistance by his opponents. The average width of the streets was reduced from 35 to 20-30 m; the explicit concern with special housing facilities for workers, as a means of achieving a more egalitarian city, was completely abandoned; the depth of buildings was extended to 20 m in all cases; and the former regular distribution of parks (82.35 hectares) and public facilities was not made obligatory (Grau 1990).

Cerdà’s position as the governor’s expert in charge of the implementation of the extension plan was weakened by the threatening demands of the land owners of the Extension. The land beyond the walls – once cheap and useless-had become, thanks to the extension, an enormous potential source of income as the site for the new city. The owners wanted to control the extension development as much as possible to secure profits. Actually, to promote the building process – deliberately stopped by the land owners during 1861 as a sort of lockout – Cerdà had to give up and accept crucial modifications of his plan: blocks started to be closed (that is, with buildings placed along the four sides); narrow passageways splitting some blocks in two were allowed; and the depth of buildings grew to 24 m, thus reducing the inner garden space.

Regarding the “egalitarian city,” I can’t get access to the original Grau source so I’m not sure if he had other means of achieving mixed-income neighborhoods, but part of Cerdà’s plan was the grid itself: he thought that its uniformity would eliminate class-segregated neighborhoods. In reality, the wealthy clustered their modernisme mansions and apartment buildings by Gaudì and Domenech in certain neighborhoods, like always:

Another important transformation – against the spirit of Cerdà’s plan – took place during the first decades of implementation: a hierarchical [social] structure was superimposed on the regular geometrical grid. The zone around the Passeig de Gràcia was increasingly considered an aristocratic residential space. Land and housing prices were established as a function of their proximity to the Passeig de Gràcia. As a consequence of this slow process, during the 1890s the right (northeast) side of the Eixample had already achieved a higher level of quality than the left side (García 1990a, 1990b). To live in the right side of the Eixample remained for a long time a sign of distinction.

The authors say “was superimposed,” whereas I’d say “emerged,” but anyway, moving on…

But maybe the most important modifications were the ones introduced in the plan’s specifications for the blocks. In that sense, not only was the rejection of Cerdà’s bylaws crucial, but it was particularly remarkable that the land owners were powerful enough to act beyond the limits of the bylaws, with no serious opposition from the city council. In 1872, 90 percent of the buildings in the Eixample (about 1,000) were violating the building bylaws. Already in 1890, buildings occupied 70 percent of the block surface on the average-instead of the original 50 percent. The situation was worsened by successive building bylaws, and in 1958 the building volume of the block, that according to Cerdà’s bylaws should not exceed 67,200 cubic meters, reached 294,771.63 cubic meters.

(New York City has a similar trajectory before the 1916 unified zoning code, with many pre-1916 buildings being in violation of relatively unenforced limits on density.) The authors seem very dismissive of the increased density, although I see it as evidence of the inadequacy of Cerdà’s plan. Barcelona’s Eixample neighborhoods are beautiful, and I can’t imagine thinking they should have their density cut by more than three-quarters, but that was the plan.

These days, we’re much more deferential to urban planners, and property owners wield much less influence. Density is usually reduced from the original plan rather than dramatically increased, and there’s almost always affordable housing set-asides.

Today’s Eixample is inching back towards Cerdà’s original plan, but only inching. Apparently a law was passed in 1986 that encouraged the courtyards – many of which had been filled in to maximize floorspace and rents, as you can see in the photo below – to be cleared, although I’m not sure how much effect it’s had.


And here you can see the clear division between the Eixample and the Ciutat Vella:
Source: Institut Cartogràfic de Catalunya

The Zoning History of New York’s White Brick Apartments

530 Park Ave.

The rehabilitation of the postwar glazed white brick apartment building continues apace, with the condoization of 530 Park Ave., a 1941 (okay, almost postwar) 19-story white brick building. I happen to like New York’s postwar white brick buildings, and am even warming up to the red brick variants – I’ve always consider anonymous white brick to be the most New York of New York buildings.

One reason that I like them is that because of the history of New York City zoning, they have the form of prewar buildings, with the embellishments (or lack thereof) of the postwar era.

Up until 1961, New York’s developers were still building under essentially the 1916 code. While the 1916 code definitely restricted and guided growth in the dense commercial core, where it encouraged set backs and discouraged Equitable Building-like dense massings, developers in residential neighborhoods like the Upper East Side generally did not bump up against the zoning limits. The setbacks on 530 Park are slight and decorative, and likely built according to the style of the day (which was heavily influenced by larger buildings downtown whose shapes were dictated by zoning).

So buildings erected before the 1961 code took effect tended to be lower than those that came after, but they covered more of the lot and their façades were flush with the sidewalk. Some of them included garages for the newly-motorized middle- and upper-classes, but they were small compared to those that came after. Above all they were governed by the laws of supply and demand. If you ignore the materials and lack of ornament, they were a lot like prewar buildings. But the brick apartment buildings of the ’40s and ’50s were the last in New York City built according to supply and demand, which is why I think we’ll come to hold them so dear in the future.

Goodbye free market, helloooooo 1961 zoning code! (Ruppert Towers, built in 1979, in Yorkville on the Upper East Side)

After the 1961 code went into effect, building form in New York City changed radically. The new FAR system combined with public plaza bonuses rewarded taller, thinner buildings (where new buildings managed to sprout at all), breaking the street wall, and perhaps encouraging architects to pay less attention to surrounding structures for context. It also downzoned the vast majority of the city just as people were seeking more living space per capita, meaning that these taller apartment buildings didn’t always hold more people.

And then there were the minimum parking requirements, which required huge garages and parking lots that forced developers to think of cars before they thought about good design, obliterating any trace of good architecture in the outer boroughs, where the buildings were the most modest and the margins were the slimmest. The parking minimums also did some damage in Manhattan, until the EPA stepped in and forced the city to stop requiring parking in neighborhoods south of Harlem.

Most of the city is still zoned according to the 1961 code, but the post-Jane Jacobs emphasis on the pedestrian view has corrected some of these issues. There are no longer plaza bonuses, and there are some incentives for ground-level retail.

But the overall densities of the 1961 code are still in effect, which means that virtually all construction in the desirable parts of Manhattan and Brooklyn bumps up against zoning limits, and land prices are so high that even luxury builders end up having to skimp on materials to make projects pencil out financially.

I know it’s a risky thing to say, considering how drastically aesthetic tastes change, but I have a feeling that 20 years from now, we aren’t going to feel as good about the architecture of the ’70s as we do today about white brick.

“This is the dirty secret of California’s Density Bonus law…”

Inclusionary zoning – everyone wants to talk about it! Dave Alpert at GGW started the discussion with his pro-IZ piece, and hot on the heels of Emily’s post earlier today, I got an email from a California developer who wishes to remain anonymous:

This is the dirty secret of California’s Density Bonus law: it’s primarily a way to give 100% affordable projects easy land use concessions. It has barely any effect on market-rate projects, despite all the attention it gets from affordable housing advocates.

Incidentally, the number of affordable units in market-rate density bonus projects – 212 – over the total number of units produced in L.A. during the same period – 53,000 – is 0.4%. Vanishingly few. The number of units produced exclusively with the parking concession – the 6 condo conversion units – is 0.01%. Statistically the same as zero.

If people really want to get affordable housing built, they would do much better to find more direct ways to pay for it – like through property tax revenues or other sources where everybody pays. Trying to pay for affordable units by constraining market-rate development and trying to the capture value that is “created” when those constraints are released is not only a pretty ineffective way to create affordable housing, it’s an excellent way to make market rate housing more expensive.

I’ve got some thoughts of my own on inclusionary zoning and the anti-density sentiment it can engender among some affordable housing activists, which I’ll hopefully post tomorrow.

Look beyond Fourth Avenue in Brooklyn for solutions to a lack of retail

Robbie Whelan’s got a column in today’s Wall Street Journal on Brooklyn’s Fourth Avenue, which is something I’ve been thinking a lot about since I moved to Brooklyn earlier this year. If you don’t recall, last year the City Council passed a zoning amendment to require new residential developments on the transit-rich, pedestrian-unfriendly avenue in South Brooklyn to include a certain amount of ground-level retail, to appease the ghost of Jane Jacobs and to stop burning the souls of all who walk the avenue.

Robbie’s column is outwardly critical of the city (he blames “bad decisions by Amanda Burden’s City Planning Department”), but on another level, he’s just cheering on what DCP already did (“the city finally got wise and passed another zoning change last year”).

But walking down Fourth Avenue, and seeing all the vacant retail storefronts in apartment buildings sprinkled around the neighborhood from the last development cycle, it seems obvious that the real problem is a lack of demand, which Robbie derides as “the profit-above-all-else motive of some developers” (“some”…ha!).

Namely: the neighborhoods around Fourth Avenue are too auto-bound and not dense enough to support the retail and pedestrian traffic that would make Fourth Avenue a vibrant place. (The lots bordering Fourth Avenue may one day grow dense enough to support retail without the help of their side streets. But for now, only mid-rise development is allowed, so I don’t see Fourth Avenue being self-sustaining any time soon.)

Perhaps the biggest problem is the industrial zoning around the Gowanus Canal and Bay, a few avenues over from Fourth Avenue. Capital has replaced labor in U.S. non-service-sector jobs over the last century, and the only business that can take advantage of the zoning around Third Avenue are auto-oriented (manufacturers these days ship their goods by highways, not canals!). The “pedestrian shed” of Fourth Avenue retail is therefore limited on its west side to basically one avenue’s worth of housing.

And on both the east and west sides of Fourth Avenue, not only are the two- an three-story rowhomes relatively small, but they’re actually getting smaller! (…in terms of retail demand.) Two-story homes that used to hold six or eight people now only hold half that, and as gentrification gives way to aristocratization, the average number of people per house is only going to get smaller. There are a ton of streets that border on Fourth Avenue whose two-story, vinyl-covered homes would be ripe for redevelopment, but won’t be touched because of a planning mentality that refuses to look more than 100 feet past Fourth Avenue for solutions.

Furthermore, because the neighborhoods around Fourth Avenue are so sparsely populated and there’s less competition for street parking, it’s easier to keep a car, which many people in the neighborhood do. And rather than walk to Fourth Avenue and buy something in a store, they’re going to drive their Volvos to the new Whole Foods in Gowanus.

Essentially what the residents of South Brooklyn want – and what Robbie and the Department of City Planning think they can get – is all the amenities of density without the actual density. A handful of seven-story buildings on one street are simply not going to support the kind of vibrant retail that they want, and that Brooklyn deserves. Forcing developers to build retail that won’t rent in a neighborhood that continues to be auto-dominated isn’t going to change that.

TRD: Bushwick is staying industrial – no residential rezoning for East Williamsburg!

The Real Deal says that Bushwick, a neighborhood on the L that’s seeing a lot of housing demand spill over from Williamsburg, is not getting a residential rezoning.

TRD describes how the “sought-after northwestern area […] is zoned for manufacturing, so residential building is largely banned there,” but then buries the lede deep down:

And while the city passed a high-profile rezoning for the Williamsburg and Greenpoint waterfront in 2005 — paving the way for high-density housing in formerly industrial sites — no such rezoning is on the horizon in Bushwick, the department of City Planning said.

The North Brooklyn Industrial Business Zone, which encompasses a portion of Bushwick, was created in 2005 by Mayor Michael Bloomberg as “a sort of policy statement: ‘Hey, these are industrial and are currently used for manufacturing — and should stay that way,’?” explained Mitchell Korbey, head of the land-use department at law firm Herrick Feinstein.

The Bloomberg administration has done a record number of rezonings, but sources said the mayor, along with Brooklyn borough president Marty Markowitz, wants to keep Bushwick’s zoning predominantly industrial to preserve the city’s manufacturing base. Dolgin, for example, said he recently sold a 46,000-square-foot parcel at McKibbon and Bogart streets for $4.37 million, and the site will be used as storage for scaffolds.

In some southern portions of Bushwick, a mixed-use building can be redeveloped as residential, but a variance is required to do that in most of the popular East Williamsburg area, and they are rarely granted, Dolgin said.

The article says that the SoHo loft law is occasionally being used to convert existing structures, and that hotels and hostels are being built since they’re allowed by zoning.

Then again, Bloomberg’s rezoning days are over after the Midtown East upzoning, so his opinion on rezoning Bushwick isn’t terribly relevant going forward. The real question is, what does Christine Quinn think?