Expanding Chicago’s downtown zoning; a good deal for poor neighborhoods?

Chicago Mayor Rahm Emanuel just released his plans to expand Chicago’s downtown which could provide new monies to help other parts of the city:

This week more details have emerged regarding Mayor Rahm Emanuel’s ambitious plan to expand the high-density “downtown” zoning designation to approximately 1000 additional acres outside the city’s central core to help fund improvements in underserved neighborhoods.

Under the scheme, the city will charge developers for the privilege of increased height and density permitted under the expansion. Each payment will be calculated by multiplying amount of additional space sought by 80 percent of the median price per square foot. In other words, if a builder wants to build an additional 5,000 square feet beyond what’s allowed under old zoning in an area where the median price is $30 per foot, the city will net an extra $120,000 for neighborhood reinvestment…

This week’s announcement also sheds some light on how the mayor plans to spend the extra cash. As reported by Greg Hinz of Crain’s, the administration plans to spend 80 percent of the money to help incentivize the construction of new grocery stores and cultural facilities in otherwise deprived neighborhoods. The remainder of the fund is earmarked for historic preservation efforts and streetscape and transit improvements.

The creation of this new value-capture mechanism is also aimed to supplement — if not help replace — Chicago’s reliance on its controversial TIF districts.

It sounds like Emanuel hears the criticism that poorer neighborhoods in Chicago need more resources and capital. However, is this the best way to do that or is it a deal with the devil? The idea seems to be that developers want new spaces to create downtown-like buildings and some of the revenue from this can be sent to help poor neighborhoods. The Neighborhoods Opportunity Fund – a description starts on page 2 of the proposed ordinance – can provide a unique pot of money to provide basic services, cultural and recreational opportunities, and help launch small businesses.

How much money will this generate?

The city says the plan will pull in about $50 million over the next several years. Eighty percent of the money would go to develop grocery stores, restaurants and cultural facilities in underserved neighborhood commercial corridors. The remaining 20 percent would be split among preserving landmark buildings, neighborhood streetscapes and public transit facilities.

I’ll leave it to others to consider how this money balances out with the goodies developers and others will get from the expanded downtown zoning…

Cities that build their own highspeed internet services

Several American cities have put together their own highspeed Internet services:

Chattanooga isn’t alone. Cities like Wilson, North Carolina and Lafayette, Louisiana have likewise given up on waiting for private companies and started their own ultra-highspeed internet services. But some community efforts have been stymied by state laws prohibiting governments from competing with private internet providers…

The debate over the future of municipal broadband is central to both the economic development of communities across the US—and to the future of investment in broadband infrastructure. Improvements to the state of broadband can’t come soon enough. The US lags behind countries like South Korea and the Czech Republic in both speed and cost of internet access.

Sure, the rise of Google Fiber has spurred competition both in cities lke Austin, where Google has only recently begun rolling out service, and areas that some providers think could be next on Google’s list. But there’s no guarantee that Google Fiber will spread beyond a very limited number of cities, and some communities are being left further behind in the broadband revolution than others. While 94 percent of Americans living in urban areas can purchase broadband faster than 25mbps, only 51 percent of rural Americans can purchase access at those speeds, according to the report.

The report also says that 30 percent of homes have no broadband connection, and high prices for access is a big part of that. Plus, there’s not much competition in most cities: 40 percent of US citizens have only one company in their area that can provide fixed line connections faster than 10mbps—if they have any option at that speed at all. “Without strong competition, providers can (and do) raise prices, delay investments, and provide sub-par quality of service,” the report says.

While this article tends to emphasize the public vs. private provision of the Internet, I wonder how much these projects are intended to help raise the profile of these cities and give them an edge in attracting businesses and residents. Cities compete through a variety of variables including tax breaks, the existing collection of businesses, the human capital of residents, the cultural and entertainment amenities that each place has. I would guess highspeed Internet could provide an edge, particularly for firms that want to be part of an innovative and enterprising community.

Cities using art as a development tool

USA Today describes the attempts of some cities, including Grand Rapids, Michigan, to use art as a development and economic tool.

This is not a new phenomenon. Richard Florida, in particular, has promoted this with his ideas about the “creative class.” But, perhaps we will see a rise in this sort of activity as cities look for non-traditional economic foundations.

h/t The Infrastructurist