Givings

November 26, 2019 Blog, Economics, Texas Comments (0) 1226

Recently the City Council passed a resolution that would require that any amendments proposed to the Uniform Development Code be subject to an economic impact analysis to see how much cost they would add to new developments. Many community activists are concerned that this would stifle public input, although the intention was to identify what extra costs would be passed on to consumers.

Like requiring materials that don’t burn so fast.

I don’t think it will limit public input, but the opponents raised a really interesting question. Why is the question of economic impact always one-sided, namely the side of the developer?

How many of these lights are private?

For centuries there has been debate over the issue of “takings.” “Takings” is when the government takes your property and has to pay you for it. About a century ago some clever lawyers came up with the idea of “regulatory takings” – whereby you put so many regulations on a property you stripped it of all its value. As with most clever concepts, it hit a hard stop in reality when even the prohibition of all development on a beach site in the Carolinas did not zero out property value (Lucas, 1989)

Mercury not so rising – Gotta love New York zoning 1960s style!

Here’s what gets me: Why doesn’t anyone talk about “givings?” Like when New York City doubled the zoning envelope in 1961, effectively giving every landowner a massive boost in asset value. Chicago did the same in 1957 – we were all going to be living on Mars by 2000 anyway, so it didn’t matter. Every bit of IDZ spot-zoning is a public “giving” to a private property owner. That’s what needs to be quantified.

One house becomes four! It’s magic! It’s Giving!

“Givings” are in fact central to the entire history of real estate. In the 19th century canals and railroads were financed by the sale of public land along their routes. Kind of like TIRZ (TIF). In the 20th century it was hard roads and then interstate highways. Today it is tax increment financing, bonds and incentive packages.

Check out legend lower right – a literal monument to hard roads.

The entire history of real estate development is a history of chasing public subsidies, primarily transportation. You hear “Location, location, location” and what that means is “transportation, markets, infrastructure.” Two-thirds of that recipe is public.

I’m not saying public support is bad. I have supported public subsidies of private developments that really made a difference. I’m just saying you need to count on both sides.

preferably without alienating the commodity

Back in the 1980s, there were so-called “impact fees” that municipalities would assess new residential developments that required new sewers, schools, streets, sidewalks, security, etc. That led to whining, which led to the era of “property rights” and by the 90s there were attempts in Congress to compensate owners for the reduction in the property value caused by regulations.

In a city that still has height limits…

That silliness aside, the question has always been formulated on only one side of the equation: What are they taking from the property owner?

I would like to see a strict accounting of what we are GIVING.

Happy Thanksgiving!

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Owning in an historic district

December 3, 2009 Economics, Historic Districts Comments (6) 1775

I own a house in a historic district and last year I blogged about how thankful I was for that fact. Real estate is an asset whose value is largely external – it comes from its location, which is to say, its surrounding buildings and environment. Because my house is in a historic district, its value is assured. Economic studies for over 40 years have confirmed this fact in communities across the United States.

If you look at the history of historic districts – which I did in my dissertation – you find that the first modern historic districts emerged in the 1950s in communities that were concerned about drastic changes to their environment and thus the value of their homes. Urban renewal was one threat, which proposed outright demolition. The other threat was posed by postwar zoning ordinances, which dramatically increased density and thus owners of brownstones or single-family homes faced the prospect of massive highrises next door.

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“Right” Zoning

October 16, 2006 Chicago Buildings, Economics, Historic Districts Comments Off on “Right” Zoning 1182

Jonathan Fine of Preservation Chicago spoke to my Preservation Planning class today and introduced them to an excellent phrase: “Right” zoning. This is more accurate than “downzoning” which is a phrase commonly used to describe what happens when a local alderman or city decides to reduce the allowable density in a district.

The recent book on the history of Chicago zoning describes the “downzoning” of the lakefront communities of Gold Coast and Lincoln Park in the 1970s and 1980s, which often followed landmarking of the area. Real estate expert Jared Shlaes opposed the downzoning in a 1980 report, and the book now judges that Shlaes was probably on the wrong side of history. Continue Reading

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