Tag Archives: development

Should Baltimore provide $535 million in TIF funds for a new private development?

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The CEO of Under Armour wants to develop roughly 260 acres of land in Baltimore but is asking for public funds. A large debate has ensued:

The problem is that Plank, despite being a self-made billionaire, wants a lot of help to make his vision for Port Covington a reality. To that end, his real estate firm, Sagamore, has asked the city of Baltimore for a record-breaking $535 million in so-called tax increment financing. TIFs, as these types of loans are known, are used to fund infrastructure by selling municipal bonds to private investors, and then property taxes generated by the new development are used to pay them back. Though beloved by titans of commercial real estate, TIFs tend to draw scrutiny because they divert so much money away from a city’s general fund. MuniCap, a consulting firm that Sagamore hired to analyze its TIF application, projects that Plank’s development would not yield property tax revenue for Baltimore’s coffers until about 2040, even as the site would require substantial city resources in the interim…

“[We are] outraged that, one year after the world bore witness to the decades of disinvestment in poor neighborhoods and communities of color, city leaders would respond by bending over backwards to back a $535 million playground for the rich,” Charly Carter, the executive director of Maryland Working Families, a progressive political advocacy group, says. “This is the new Jim Crow—black and brown families subsidizing wealthy developers while our own neighborhoods crumble.”…

The campaign to remake Port Covington has been aggressive and well-funded. Sagamore has already spent hundreds of thousands of dollars on marketing the development to the public, and its forceful slogan—“#WeWill build it”—suggests that the project is a fait accompli.

Which isn’t far off the mark. The Baltimore Development Corp., a public-private agency, approved Plank’s $535 million TIF request in March, and the city’s Board of Finance backed it in April. Now all it needs is the Baltimore City Council’s final approval, which could come as early as August. Activists have urged the council to postpone its vote to give the public more time to comb through the 545-page proposal. But according to Councilman Carl Stokes, who heads the body’s economic development committee, Sagamore wants the deal approved by the end of the summer.

This is often how such things are done: a wealthy business leader wants to make more money in real estate development and asks for a tax break from the city or state to help make it more profitable. (There’s nothing in this article to indicate that the Plank has threatened to move to another city.) The big city, often desperate for large projects that supposedly bring lots of jobs but also spruce up areas that few developers would be interested in, doesn’t want to hinder business. The approval is made, the money is diverted, the big development occurs, and the business leaders behind the scenes are the ones who profit the most. This is the essence of the growth machines model in urban sociology and it often involves tax breaks for developers.

What will be interesting to see is if such a project would be voted down or the money significantly cut. Again, most cities are not in the business of angering leaders of big business. But, it isn’t unheard of to negotiate for some changes to the development that might benefit more people or reduce the dependence on public funds.

Fear the growth machine in Flagstaff

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One concerned citizen of Flagstaff, Arizona warns of the actions of a local growth machine:

Even though I bought into Flagstaff a scant nine years ago, the town that I bought into is no more. It was a town of vision and limited growth, of respect for nature and dark skies, with a government that deferred to public over narrow corporate interests.

Today it resembles nothing so much as urban sociologist Harvey Molotch’s famed “City as a Growth Machine.”

Our city government has been captured by outside interests and a mayor who promotes the well-discredited, but widely accepted, falsehood that growth is good for a city, that it brings jobs, wealth, and cheaper housing. Whereas the opposite is demonstrably true: Job opportunities bring increased population which increases unemployment and housing shortages with yet more growth as the alleged cure.

The falsehood originated in Chicago School of  sociology, but look at Chicago today, or Los Angeles, or even Santa Barbara. Now think of these ugly monstrosities coming to Flagstaff with ugly names like Standard, Core, and Tank. Envision the Weatherford just down the street from a looming modern hotel and ask yourself if it’s still the Weatherford. Finally, ask yourself how mindless urban development solves the hot social problem of the moment, gridlock traffic.

And if he wants to continue the critique offered by Logan and Molotch, he might add: who profits the most from new growth, particularly new development and infrastructure? It tends to be corporate interests who use their influence and capital to make money off the growth that is supposedly good for everyone.

I’m not sure I quite understand what is going on with this chain of events: “Job opportunities bring increased population which increases unemployment and housing shortages with yet more growth as the alleged cure.” More jobs leads to more unemployment?

Ultimately, using this growth machine concept to fight particular political candidates might be very effective in local elections as it highlights the actions of the politically powerful and questions their motives. In other words, people who are suspicious of leaders could find this theory complementary to their existing feelings. If faced with such criticism, officials and leaders would likely fall back to arguments about how growth is generally good (as Logan and Molotch note, this is not really up for debate in American cities) and that their actions benefit a broad range of residents. To counter, opponents should find significant projects that didn’t help many – like sports stadiums or big corporate developments –  and highlight the ongoing day to day issues that were not addressed like affordable housing and increased congestion.

The unusual development of Rosemont, Illinois

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Rosemont is a different kind of suburb and the Daily Herald sums up its unique growth over 60 years:

Before it was an entertainment and business mecca of the suburbs, Rosemont was an oft-flooded swampy area with pothole-ridden, unpaved roads, no streetlights and taverns that became hangouts for the mob…

Today, the 2.5-square-mile town on the edge of O’Hare International Airport has 4,200 residents — many of whom live in a close-knit gated community and are employed by the village. But what drives Rosemont’s economy is its estimated 100,000 visitors a day, drawn to the town’s 14 hotels, a shopping mall, offices and village-owned venues including a stadium, theater, convention center and entertainment district…

Almost from the beginning, Rosemont linked itself to O’Hare, which was on its way to becoming the world’s busiest airport. As other suburban towns fought airplane noise and expansion plans, Stephens was feeding off it…

In 1958, Stephens brokered a deal with Chicago Mayor Richard J. Daley for access to Chicago water in exchange for a 162-foot-wide strip of Foster Avenue that would allow the city to connect to O’Hare. Rosemont got the right to 4 million gallons of water per day at Chicago rates.

Three features strike me as consequential in this story: (1) geographic proximity to O’Hare Airport; (2) a unique vision from the Stephens family who has largely been able to guide the community; and (3) the success the suburb has had in attracting businesses and visitors. Many suburbs would like to have some of the features that Rosemont has today – particularly the regular visitors who bring tax dollars into the local coffers – yet all of those same features – a convention center, an arena, proximity to O’Hare, years of seeking out a casino – would not fit the character of many communities nor would they necessarily all come together.

In other words, a suburb like this is rare as not every suburban community can develop an entertainment base and have it pay off. (Unfortunately, this article doesn’t delve much into the suburb’s finances. How much debt is there? What is the local tax rate? What happens if one of these major centers or projects crashes?) The lesson to be learned here may be that this is a rare suburb in the Chicago region and it cannot be easily emulated.

Explaining the tunnel system under Liverpool

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Excavations have brought to light tunnels under Liverpool but it is unclear why a tobacco merchant created them in the early 1800s:

He also had men build tunnels. One entrance to the system even has been found in the basement of his former house. But why tunnels? Did he ask them to build his tunnels arbitrarily, for no other purpose than to be paid for work? It seems extraordinary. And yet there are no known records from Williamson’s time which offer anything like an explanation for their construction.

Instead, succeeding generations and historians have had to guess – leading to all manner of speculation. Perhaps Williamson wanted secret passages to get to and from buildings in Edge Hill. Or was a smuggler and needed the tunnels to carry out covert operations.

Or maybe he and his wife belonged to a fanatical religious cult that anticipated the end of the world, and his tunnels were designed to provide shelter during the apocalypse. Apparently, someone once made the suggestion casually on television, and the idea since stuck.

Those who have worked on the tunnels have now developed a new, somewhat more satisfying theory. Bridson points out a series of markings in the sandstone that he says are indicative of quarrying. There are channels to drain rainwater away from the rock while men worked, blocks out of which sandstone could be hewn, and various niches in the walls where rigs were once likely installed to help with extracting the stone, commonly used as a building material.

Bridson believes that before Williamson came along, these pits in the ground already existed. But it was Williamson’s idea to construct arches over them and seal them in. Properties could then be built on top of the reclaimed land – which otherwise would have been practically worthless.

I imagine there are interesting things lurking under every major city as evidenced by findings under Paris, Chicago, Seattle, London, and New York.

The land development theory is an interesting one. Williamson could benefit in two ways: by selling the excavated rock from below the surface and then also selling the land above it. Now, there might be separate rights to the above ground and below ground space but no such issues likely hindered Williamson.

New Naperville leaders say the suburb is in “maintenance mode”

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With little open land to develop, several new Naperville officials discussed what the city can do:

Chirico said that one of the highest priorities for the new council will be to find a way to ease the burden on property taxpayers.

He said that, with the city essentially built out, smart economic development is needed to maintain revenue to keep the city operating at its current level.

Chirico said that a good first step toward that smart development would not necessarily be new projects, but rather concentrating on existing structures that are either empty or not suited to modern commerce…

Chirico used the example of the former Kmart on Ogden Avenue, and the nearby intersection of Ogden and Naper Boulevard, as areas that could be ripe for redevelopment.

“We may have to rethink the entire area,” he said.

Hinterlong agreed, saying “We are at build out…we’re in maintenance mode.”…

Chirico acknowledged the [affordable housing] problem, saying that “it might take some political will” to address it.

On one hand, this is not too surprising. Naperville likes to think of itself as having small-town charm and this is enhanced by a high quality of life, lots of single-family homes, conservative fiscal policies that don’t take too many risks, and developments that don’t rock the boat too much.

On the other hand, I’m not sure it is possible to simply go into “maintenance mode.” Here are three reasons why this may be difficult:

1. Trying to maintain a certain quality of life plus rising costs (inflation, pensions, less funding from the state of Illinois) without significant new sources of revenue may be difficult.

2. While Naperville touts its small-town charm, the suburb is where it is today partly because of aggressive growth with annexations for subdivisions and businesses as well as working to build a vibrant downtown. Retreating into a protective shell doesn’t seem to suit Naperville’s desires to be a leader.

3. Other communities, from Chicago to other growing suburbs, will not hesitate to pursue different strategies for growth. If Naperville doesn’t want to do much, other places may. Just because Naperville has this current level of population, wealth, and jobs doesn’t mean this is guaranteed several decades from now.

This doesn’t necessarily mean that Naperville suddenly has to approve high-rise condo and office buildings – I don’t think it would be too difficult to find developers for such projects. Yet, “maintenance mode” can mean stagnation, something that businesses and local politicians really don’t want.

When Silicon Valley communities have too many tech jobs, new residents

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Many communities would love to have a tech company headquarters in town but what happens if that company is Google and it brings many residents and employees?

Google owns or leases about 7.3 million square feet of office space in Mountain View — roughly equivalent to three Empire State Buildings. That includes most of the property around its headquarters on the north side of the city near Highway 101, which cuts the length of the valley, according to Transwestern, a commercial real estate brokerage.

That success has brought Mountain View loads of tax dollars and a 3.3 percent unemployment rate, as well as skyrocketing home prices and intolerable gridlock. Good and bad, tech is responsible for most of it: Technology companies account for 27 percent of the jobs in the Silicon Valley region, compared with 7 percent in California and about 5 percent nationally, according to Moody’s Analytics.

The result is an existential argument that pits residents who want to halt the city’s growth against people who think Mountain View needs to grow up and become a real city.

Mountain View, about 40 miles south of San Francisco, has close to 80,000 people; with its strip-mall thoroughfares and streets of single-family homes, it looks like a sleepy suburb. But since hiring has boomed, the city’s roads swell with commuters during the morning and evening rush.

While this may get extra attention because it involves Google (does that do no evil pledge apply to the communities in which its offices are based?), this is a question that many suburbs face at one point or another. When new developments are proposed, whether commercial, industrial, residential, or something else, how might these change the existing character of the community? Jobs are often seen as good things: they provide employment and the buildings for employees generate property tax dollars, reducing the dependence on residential property taxes. Yet, what if those same jobs lead to new office parks that take up a lot of land, new infrastructure needs such as roads, water and sewer lines, and schools, and an influx of traffic? Or, what if such jobs require tax breaks or special deals for a single business or industry?

Two possible outcomes here (and this is not an exhaustive list):

1. Why aren’t urbanists calling for companies like Google to move to large cities? A lot of the issues with infrastructure and space could be more easily absorbed by a major city. Three Empire State Buildings worth of space is still hard to come by but Granted, this hasn’t gone smoothly recently in San Francisco but developing new land leads to particular challenges, especially in places used to a smaller population.

2. At some point, Google could go the way of other companies and organizations and start making demands to push Mountain View to accept what they want. The end of the article hints at this; if Google brings in a lot of new employees, they could even sway local elections. Could Google hold the suburb hostage to get what it wants?

Chicago to get its first national monument: Pullman Park district

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George Pullman’s factory town on Chicago’s south side is to be named a national monument next week:

President Obama will designate Chicago’s Pullman Park district, an iconic site in African American and labor history, as a national monument next week, according to White House officials.

The area, which includes nearly 90?percent of the original buildings that rail car magnate George Pullman built a century ago for his factory town, was the birthplace of the nation’s first African American labor union. The president will travel to Chicago Feb. 19 to make the designation in person, said White House spokesman Frank Benenati in an e-mail…

“The people who are part of the Pullman legacy helped to shape America as we know it today,” Lynn McClure, Midwest senior director for the National Parks Conservation Association, said in a statement. “Pullman workers fought for fair labor conditions in the late 19th century and the Pullman porters helped advance America’s civil rights movement… Thanks to the president, Pullman’s story will soon be remembered and recounted for the millions of people that visit America’s national parks each year.”…

Chicago is one of the only major cities in the U.S. that does not have a national park.

Status-anxious Chicago now gets a national park and at least one symbol that its history is important. Some of the earlier discussion about this possible monument had to do with development opportunities; now that there may be a steady stream of visitors to the site, how can it help promote economic development? I’m not sure what I would imagine growing up around such a site; souvenir shops? Restaurants to help feed visitors?

Lesson of Glendale, Arizona: don’t put so much public money into sports stadiums

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The Super Bowl will be played in Glendale, Arizona but the suburb’s push to become a sports center has not exactly paid off:

As the Coyotes and Cardinals sought new facilities in the early 2000s and efforts failed to build them in other parts of the Phoenix area, Glendale stepped in. The city helped pay for the Coyotes’ arena with $167 million in bonds in 2003, and as the hockey team’s finances began to fade during the recession, Glendale went all-in to keep the team in Arizona. The city dished out $50 million earlier this decade to keep the team and continues to make annual payments toward the arena, but the money it is getting in return has not met expectations.

The football stadium was built in 2006, but Glendale was not on the hook for the costs of the $450 million retractable-roof facility. It was funded primarily with new taxes on car rentals and hotels in the Phoenix area, but that financing hit a snag last year when a judge ruled that the car rental tax was unconstitutional, leaving a major funding source for the Super Bowl venue in jeopardy. The issue is still being argued in the courts.

Glendale is far from alone. Cities and states nationwide have long struggled with how much public money to spend on stadium projects. The effort to build a new stadium for the Minnesota Vikings became embroiled in controversy over a financial commitment by the state that opponents said was excessive. The St. Louis Rams are at the center of a debate over whether to spend public money on a new stadium. Topeka, Kansas, is immersed in a fight over a motorsports track that has drawn comparisons to hockey in Glendale…

In the case of the Super Bowl, he believes the city is paying dearly. He said Glendale will actually lose a “couple million dollars” by hosting the event. It’s spending huge amounts of money on overtime and police and public safety costs associated with hosting the Super Bowl but getting very little in return.

Super Bowl visitors are mostly staying in Phoenix and Scottsdale and only showing up in Glendale on game day, meaning the city won’t see much of a boost in tax revenue. And the city was hoping the state would reimburse Glendale for its police overtime costs, but lawmakers have scoffed at the idea.

Teams and cities typically sell stadiums as engines for economic development. Think of all the fans who will be there! You can build around the new facilities! This will put your city on the map! But, such stadiums come with big costs including tax money that is often used as well as a whole host of other infrastructure concerns (from police to building hotel rooms). And the winners in such schemes are often the team owners who don’t have to pay completely out of pocket for facilities that can immensely boost the value of their team. (A thought: just imagine a team owner selling the team for a big profit – and many current sports franchises would turn such a profit today – and having to reimburse the community for costs incurred.)

But, if Glendale hadn’t built these stadiums, some other community might have fallen over themselves to make it happen…

“Using a Real Life SimCity to Design a Massive Development”

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As a massive SimCity fan, I find this use of predictive urban models intriguing:

596 acres, 50,000 residents, $4 billion dollars and even a 1,500-boat marina: Everything about the proposed Chicago Lakeside Development, developer Dan McCaffery’s massive micro-city being built at the former site of the U.S. Steel Southworks Plant, is on a different scale. It follows that the design process for this mixed-use project requires a different set of tools, in this case, LakeSim, an advanced computer modeling program. Developed as part of a collaboration between the University of Chicago, Argonne National Laboratory, Skidmore, Owings & Merrill and McCaffery Interests, this program functions like a customized SimCity, analyzing and simulating weather, traffic patterns and energy usage to help architects and designers plan for a site that may eventually contain more than 500 buildings.

“A lot of the Big Data approaches tend to be statistical in nature, looking at past data,” says Argonne scientist Jonathan Ozik. “We’re modeling a complex system of interactive components, running the data forward, so what we end up having is your SimCity analogy, energy systems interacting, vehicles and people moving. What we’re doing here is using a complex systems approach to tackle the problem.”…

The challenge for planners is predicting how so many different systems and variables will interact. LakeSim gives them a framework to analyze these systems over long timelines and run millions of scenarios much quicker than past models — hours as opposed to days — asking “hundreds of questions at once,” according to Ozik. The program is a step forward from similar modeling software, especially valuable at a site that in most respects is being built from scratch.

This seems quite useful at this point but it will be necessary to look at this down the road once the site is developed. How much time did the model save? How accurate was the model? Did relying on such a model lead to negative outcomes? If this is a predictive model, it may be only as good as the outcome.

Interesting to note that the commenters at the bottom are wondering where all the people to live in this development are going to come from. I assume that demand is appropriately accounted for in the model?

Addressing social change in Toronto’s inner-ring suburbs

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North America’s fourth-largest city has a number of changed suburbs that have more lower-class residents and immigrants:

David Hulchanski’s seminal 2006 study, The Three Cities within Toronto, documents the shift of poverty from the inner-city to the inner-suburbs of the 1950s, ’60s and ’70s. The University of Toronto sociologist also made it clear that the poor increasingly tend to be immigrants. The rich, meanwhile, have moved downtown. Only they can afford the cost of housing there.

The third of Hulchanski’s three cities, which encompasses Scarborough, North York and Etobicoke, has experienced the largest increase in immigrants, rising from 31 per cent of the population in 1970 to more than 60 per cent today. During the same time, incomes in those same areas declined almost 40 per cent, more than any other part of Toronto.

Though Toronto is the more tolerant and inclusive city of the two, the social mobility that historically took immigrants from the places they arrived to the places they finally settled has slowed or even disappeared. Low wages, high youth unemployment and a crumbling infrastructure don’t inspire confidence, let alone optimism.

That’s why Toronto’s future lies in its suburbs. That’s why their needs are the needs of all. It’s also why failure to deal with them will hurt the entire city.

So far, the response has been more focused on mollifying suburban discontent than transforming vast swaths of the postwar landscape into more urban configurations. Rather than squander billions on feel-good projects like the Scarborough subway, we need more programs like tower renewal. Transit is essential to move people and connect them; but in addition, many highrise suburban communities desperately need to be remade to 21st-century standards.

This mirrors the circumstances of a number of American inner-ring suburbs: as wealthier (and often whiter) residents have moved to more exclusive suburbs or gleaming high-rises downtown, more poor and non-white residents have moved to cheaper suburbs that often had more industrial and blue collar work. But, what works best to renew these communities? Continue to play up on their advantages in industry and manufacturing (cities and suburbs have been severely hurt in recent decades with the loss of manufacturing jobs)? Compete in new areas like suburban entertainment and culture (wealthier communities often an advantage here)? New housing is often needed in these inner-ring suburbs – their housing stock often dates to the decades before World War II – but it is hard to come up with money to undertake big changes.

One route is to play up their more urban aspects: they may offer a taste of suburban life but are still much closer to everything the city has to offer. Many suburban communities have pursued transit-oriented development built around subway, train, and bus lines that provide quick connections to amenities within that community as well as nearby.