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Welcome back.

In our previous discussion, we considered the ways

that development regulations can control and shape cities.

Now, we go onto the other side of the same process.

What can be done to give investors and

developers incentives to contribute to a better designed city?

Developers often claim, that the incentive they

need, is a relaxation of development regulations.

It is likely,

that if you apply to develop a major building in downtown Detroit.

And, you said that you needed a change in the development regulations.

You might, very well, get your wish.

And, there are some places, with what appear to be

strict regulations, which are actually zoned, come talk to us.

As the local authorities will be happy to negotiate changes.

And, there are also some places, where the development regulations

are so loose, that you can build just about anything.

There are no incentives, and not much in a way of controls either.

New York City has always been a difficult place to develop.

The zoning is strict.

There's an extensive public review process for any change, and

the state requires an environmental impact review for anything major.

The New York City Planning Department has gone ahead and rezoned

some parts of the city, in advance of any development proposals.

Their approach is to say, here is our vision of what the district should be.

In this

particular slide, it's for a corridor development in downtown Brooklyn.

We have rezoned it accordingly, and we

have done the environmental impact study ourselves.

If you are willing to build in accordance with our plan, please do so.

If you want to change, it will take a lot

of time, and we can't guarantee that you will be successful.

This might sound like an obvious way to write regulations, but it isn't.

Few cities do it, because they don't want to take

on the politics of development, ahead of a demonstrated interest by a developer.

But, smoothing the path to approval, is an incentive.

For getting the type of development that public policy would like to see happen.

Another form of zoning incentive is to give developers more floor

area, if they will supply amenities that will benefit the public.

In New York City, going back to Mayor Lindsay's administration,

the zoning code was amended to give floor area bonuses,

to provide a legitimate theater.

That is not a movie theater, but a full stage.

The intention was to save the concentration of Broadway theaters,

which were endanger of being wiped out by new office construction.

The theater in this picture was added by the developer to an office

building in response to the incentives in New York City's Special Theater District.

For these kinds of incentives to work, you need

both a strong real estate market, and a strict code.

Some cities give away so much density up

front, that there's nothing left to bargain with.

In other cities, there just isn't enough demand.

In New York City, a later set of

zoning requirements, asked developers to add electric signs.

A response to saving, The Great White Way, along

Broadway from the corporate look of new office buildings.

There was some resistance from investors, at first, but the signs turned

out to be immensely profitable, at little extra cost for the developer.

Another more traditional incentive for development, is

for the government to buy out individual landowners.

Put the land together into larger parcels, and make it available to developers,

as long as this action could be considered to serve a public purpose.

In the United States, after World War

II, it was actually federal government subsidy money.

To help cities purchase land, and make it available to developers at a reduced cost.

This is the process called urban renewal.

When the federal government money went away,

cities could still assemble land, but developers had to pay full price.

Gradually, however, the idea of governments taking private land.

And turning around and selling it for a

different type of development, has become increasingly controversial.

The map shown here is the Fort

Trumbull Municipal Development Plan in New London, Connecticut.

A woman, who owned a house within the renewal area, Susette Kelo, brought

a lawsuit, which eventually went all the way to the US Supreme Court.

In 2005, the court decided in favor of the City of New London.

But, the amount of support that Miss Kelo's lawsuit attracted, is likely to

make other U.S. cities think very carefully about using this kind of power.

Acquiring developed urban land to promote new development,

is also falling out of use in other countries.

Often, because older buildings are seen to have value.

A value that was less visible, in the

days when governments were following their corbusier's advice,

to tear down the old city, and build highways and towers.

Land assemblage is still a major method of creating

development in China, but is becoming controversial there, as well.

This is the most current renewal plan,

in New London, after the Supreme Court decision.

The city is still assembling the land into parcels, that can be sold to developers.

Besides, they're adjacent to a historic fort, but they

are also next to a municipal water treatment plant.

They may not be the most

attractive investment, even when assembled.

Governments own large amounts of land already, for such use as

in parking for school buses, or maintenance yards for public works trucks.

And these places can be repurposed to support development

objectives, if they happen to be in the right place.

There are often surplus school sites.

Sometimes, surplus government land can be

really large, and support significant new development.

We have seen this process already,

at Battery Park City, where the land was created

by filling in piers along the Hudson River waterfront.

The city of Austin is redeveloping the old Mueller Airport,

some 700 acres, as a residential community and a business park.

Aiming for an equal number of residents and jobs, about 10,000 each.

The residential community is well underway.

And, you can see the beginnings of the

commercial retail and office research development in the foreground.

This is a long

range development plan by the ROMA Design Group,

as restudied by the McCann Adams Studio in Austin.

And, seen from another angle in this aerial photo.

Austin will have used this surplus land to create

a complete new residential neighborhood, plus a major employment center.

Just having land available, in a desirable place, is

a major way for cities to attract economic development.

In Minneapolis, in the early 1970s,

the city assembled the land in a low

income neighborhood, on the edge of the downtown center.

This would not happen today, but years ago,

this kind of urban renewal was still considered routine.

To make the sites more attractive to developers, the

city commissioned a greenway design by Paul Freidberg & Partners.

Which connects from the Nicollet Mall in the center

of downtown, to Lorene Park, opposite the art museum.

To make the connection work, this greenway

bridge is over LaSalle Avenue.

To finance this project, Minneapolis turned to what

was then a new technique, Tax Increment Financing.

When new development was completed.

The amount of real estate taxes, each building pays, was predicted to

be much larger, than the taxes which were paid in the area before.

The amount of money was collected

from each property, as tax before redevelopment.

Continues to go directly to the city, once the new buildings are completed.

But the increment, increased taxes that are being

paid, because the development is now much more valuable.

Are set aside from other city income, and are promised

as an income stream to pay off a bond issue.

The money raised in the bond issue, is what was

used to finance the city's product of development, including the greenway.

The system works, and many cities use it.

But the cost is that the increased real estate tax money, is not available to

help pay for the rising cost of city services.

Here is a close up of the greenway plan.

And, here is how the completed

neighborhood looks in Google satellite view.

In Houston, and other Texas cities, Tax Increment Reinvestment

Zones, called TIRZ, can be established by property owners.

Who tax themselves from, in an increment above the regular city real estate taxes.

This money goes straight to a private organization run by the property owners.

Who use it to support bond issues for

capital improvements, for their district, such as landscaped streets.

Many cities now use Tax Increment Financing, either to support

city projects, or to support business improvement districts like the TIRZ.

Another way to channel real estate tax money to development,

is just simply not collect it in the first place.

This process is called Tax Abatement.

By abating real estate taxes for 10

years, in the Center City District in Philadelphia.

Which by the way is also a tax increment district.

The city of Philadelphia has encouraged development, and

has added more than 8,000 new houses and apartments.

And more than 2,000 renovated houses and apartments in downtown Center City area.

This photo from a Center City District report,

shows an old, smaller office building on Market Street.

Being enlarged and converted to rental apartments, because of tax incentives.

Another, often used, subsidie to encourage

development, is for the city to take on the cost of financing parking.

As cities can borrow money at lower municipal bond rates,

and the cost of parking, is taken out of developers pro-forma.

In this example, in Bethesda, Maryland, the city has built

a parking garage in the center of a private retail development.

The spaces have parking meters, which produce

the revenue needed to pay back the bonds.

But, of course, that could also be done

by collecting money, using tickets.

As you can see, the process of designing

cities involves developers, local

governments, and often, community organizations.

Progress requires agreement.

And agreement requires negotiation.

Gary Hack will talk about this, in the next segment of this course.

Incentives for Better City Design

Designing Cities

Meet the Instructors