Tag Archives: development

Developer’s son wrong; Naperville residents and leaders made decisions long ago that mean the suburb can’t go back to the 1950s

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Naperville is considering a new project, the Water Street Development, but the developer’s son is not happy with the opposition to the project from the Naperville Homeowner’s Confederation. In a recent email, here is how he made his case:

In his email, Bryan Bottarelli said the council has been “politically intimidated by a group of old-economy thinkers who call themselves the Naperville Homeowners Confederation.”

“This group claims to represent all the homeowners associations in Naperville. But in reality, it consists of a handful of older residents who are bored — and who have nothing better to do than to try keeping Naperville the same exact way it’s been since the 1950s,” the younger Bottarelli wrote. “They’re afraid of change — and they’re using fear tactics to red-light this project. And be honest — what they’re doing has been working. They know how to work the local political system to their advantage.

“And, since they have so much extra time on their hands, they’ve committed their days to bombarding city council with emails, letters, and phone calls in complete opposition to this deal.”…

“The confederation is disappointed at the tone of the email by Mr. Bottarelli’s son,” President Bob Buckman said in a written statement. “This is not in keeping with the tradition of respectful public discourse in Naperville that we all value. It is unfortunate that his description of us does not in any way represent the confederation’s members, or our many contributions to civic life in Naperville. Since 2006, the confederation board and its members have carefully studied, dissected, looked for alternatives, met with the developer, submitted a comprehensive report in 2007 and testified at plan commission and now at city council on this proposed development.”

Here is the problem with his argument: regardless of what current residents want, Naperville can’t turn back the clock to the 1950s. Naperville is little like what it was in 1950 and residents have been part of the process in changing Naperville. I know Bottarelli mentioned the 1950s but a number of the changes to Naperville started occurring at the end of this decade so I’ll make a comparison to 1950. Indeed, my research on the topic suggests Naperville, leaders and residents, have made numerous decisions over the decades to pursue growth.

Here is how Naperville was different in 1950:

1. It had a population of 7,013 in 1950. Today, Naperville has around 142,000 residents. This means the population has expanded by a factor of 20.

2. Along with a significantly larger population, Naperville has significantly increased in land size. Today, the city is over 39 square miles and it can take a while in certain traffic conditions to drive from one end to another. The size is large enough that the city added a second city hall-like facility, it now has two commuter railroad stations, and the city has sought ways to create social space and a community feel on the southwest side because it is a distance away from downtown (for example, planning for a commercial node at the northwest corner of Route 59 and 95th Street).

3. Basically none of the post-World War II subdivisions had been built by 1950. Harold Moser, the local developer who was responsible for a large percentage of the subsequent growth, was just getting started. The homeowner’s associations Battarelli is disparaging didn’t even exist in 1950.

4. Naperville’s downtown is quite different today. There is a renowned Riverwalk. There is a municipal center and Naper Settlement. The downtown has a number of national retail stores. There are plenty of restaurants and bars. There is a new performing arts center (in conjunction with North Central College) along with a carillon tower. In short, the downtown is a suburban entertainment hub. Even if the Water Street development gets turned down, it is not because Naperville hasn’t wanted to have a successful and vibrant downtown.

5. I-88, the highway that runs alongside the north side of Naperville, hadn’t even been built yet in 1950. It opened in the late 1950s and the first major facility, Bell Laboratories, was built near to the Naperville Road interchange in the mid-1960s. The moving of this facility near town helped kicked off Naperville’s rise as a white-collar job center which also helped fuel some of the other changes.

6. The Naperville of 1950 was not known for being one of the best places to live (Money in the mid 2000s), having a top 10 library, or the other accolades Naperville has accumulated in the last ten years or so. In 1950, the community had a small liberal arts college, a swimming pool converted from a quarry, the Kroehler furniture plant, and was known as the community that was once the county seat of DuPage County before Wheaton took the honor in the 1860s.

In other words, the Naperville of 1950 bears little resemblance to the Naperville of today. The cow is already long gone out of the barn on this one. Over the years, Naperville has consistently chosen to annex land, approve development, and grow even as it tries to retain its small-town charm. So if this particular project doesn’t succeed, this doesn’t mean Naperville residents or leaders want to live in the Naperville of 1950: even with some heated discussions over the decades about how much Naperville should grow and whether the new changes would irrevocably change the character of the community, Naperville has consistently pursued growth and change.

How suburbs deal with the loss of a major big box retailer

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Big box stores can provide a lot of tax revenue so when a big box store leaves a suburban community, it can be a big blow:

The unexpected closure — it was announced in April and the store shuttered in May — forced village officials to approve a series of last-minute budget cuts totaling $216,000.The largest savings came by cutting hours for part-time firefighters, a move that limited response times out of one of the village’s two stations. West Dundee also moved its 54 employees to a cheaper health insurance carrier, reduced hours for part-time and seasonal employees, eliminated a community service position in the police department, canceled a National Night Out event and decided to hold fewer board meetings…

But Rolling Meadows officials found themselves scrambling in January 2010 when Sam’s Club abruptly closed after eight years in business, City Manager Barry Krumftok said.

The closure meant the loss of about $600,000 in various annual revenues from the retailer — nearly an 8 percent loss to the general fund…

The city responded by eliminating two part-time jobs and four full-time positions among the police department’s civilian staff, delaying the hire of a finance director, eliminating holiday decorations and glow necklaces for kids at the tree-lighting ceremony, ending a program reserved to commemorate employee and volunteer milestones, and holding off on painting its historical museum, digitizing city records and parkway tree replacement, removal and trimming.

In many cases, big-box stores leave one town to build a bigger, better store just out of the taxman’s reach.

To paraphrase a common saying, if you live by the big box store, you can also die by the big box store. I can see why communities would want big box stores since they generate tremendous tax revenues but at the same time, communities would prefer to have a diversified economy where a single employer or firm doesn’t control a sizable portion of the municipal budget. This hasn’t just happened to suburbs reliant on big box stores; it has happened to communities reliant on single factories or industrial firms that might be prosperous for years or even decades but when business dries up, the community doesn’t have much recourse. It doesn’t sound like the big box stores are as big of a loss as some factories to some towns but a 5-10% revenue loss can be huge, particularly in a down economy.

Once the initial budget adjustments are made, then the loss of the big box store becomes perhaps even more problematic for smaller communities: can they find someone else to lease or buy the property? Should the community continue to pursue big box retailers or does it pursue different directions? In an economy that in recent years has been built on a consumer economy, many suburbs will probably redouble efforts and continue to pursue more white-collar, high-tech jobs but there are not enough of these to go around at the moment.

Property values, city finances, and downtown development: controversy over approved senior housing in downtown Wheaton

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New development projects in already-developed suburban areas can attract controversy. Here is an example from downtown Wheaton, Illinois: the city council just approved a senior housing project but some of the neighbors are not happy with the change to the site and there are some questions about funding and whether the city will be left with a bill.

The council voted 4-3 this week to allow construction of a 167-unit facility on a site once slated for luxury condominiums as part of the Courthouse Square complex at the corner of Naperville Road and Willow Avenue…

The approval came after nine planning and zoning board meetings totaling more than 24 hours with testimony from experts, opponents and supporters. In a nearly unanimous vote in August, that board recommended the council deny the zoning plans.

The original proposal for the complex, supported by the council in 2004, called for a mix of townhouses and condos. But developers cited the housing market crash when they pulled the plug on what were supposed to be the second and third midrise buildings. Northfield-based Focus Development Inc. and West Chicago-based Airhart Construction Corp. partnered on the project.

The saga continued when developers asked to amend the plan to allow senior housing, angering some Courthouse Square residents who argued they were promised a strictly residential community when they bought their units.

I’m not sure how this will all play out in court and whether the current residents have a case against the developers. However, here are a few thoughts about this:

1. Senior citizen housing would be helpful in Wheaton. As a more mature community that is relatively wealthy, there are relatively less places in the community for seniors to live in affordable housing. Indeed, when communities like Wheaton do talk about affordable, they tend to be talking about seniors and young people who would like to be in the community but don’t have the resources due to their stage in life to remain.

2. Wheaton has been on a longer program of introducing more housing into the downtown, starting with the condominiums built in the early 1990s across the street from the downtown train station. While higher-end housing might bring in more revenue and people who have more spending power to spread around the downtown, having some development in this space rather than none might be preferable.

3. Like in many suburban debates about development, it sounds like this is partly (mainly?) about property values. The existing residents don’t want their higher-end units to suffer because senior-citizen housing is built nearby instead of other high end units. This could be one of those situations where it would help to take a bigger view: Wheaton would like to offer more affordable housing for seniors and this land is available so perhaps property values can’t or shouldn’t be the overriding concern here.

4. More than ever because of the economic crisis, revenues matter in these situations. Some are concerned that the city, and therefore, taxpayers, might be on the hook if the development doesn’t work out in a certain way. This would be a strike against downtown redevelopment plans; the goal is to generate new revenues, property and sales taxes, not saddle the municipality with new costs.

Oddity of Illinois Home Rule allows municipalities to get into a lot of debt

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The Chicago Tribune has an interesting piece of how the Illinois oddity of granting Home Rule powers to municipalities starting in 1970 can lead to overborrowing:

The state used to cap how much towns could borrow on the backs of taxpayers. Even for loans under the cap, the state forced cities and villages to put many “general obligation” borrowing deals before voters. The intent was to protect taxpayers from massive debt.

But local officials complained they needed easier ways to borrow. Chicago’s first Mayor Richard Daley led the charge for municipalities to set their own rules. The result was the 1970 Illinois Constitution and a concept that transformed how the city and suburbs are governed: home rule.

It has let towns borrow as much as they want, and raise many taxes, all without direct voter input. Any town with at least 25,000 residents gets the power. Smaller towns can vote it in via a referendum measure…

The vast majority of states — including all of the largest ones — do not offer municipalities such blank checks.

Ken Small of the Florida League of Cities said he would worry if his state had Illinois’ loose rules.

Read on for details on how several Chicago suburbs have accumulated massive amounts of debt.

I don’t think I’ve ever seen any municipal leaders denounce or reject Home Rule powers. Indeed, they tend to accentuate the positive sides of the powers as they allow municipalities more local control and the ability to finance projects on their own rather than having to rely on outside funding. And this would seem to fit with what many suburban residents tend to want as well: more local control, meaning that “big government” doesn’t control everything.

But, as this article suggests, local government officials aren’t necessarily any better at handling financing and borrowing. I was struck by reading this piece and an earlier one featuring the plight of Bridgeview, Illinois that a number of these borrowing situations arose when smaller communities wanted to jumpstart economic development. Struggling to do things on their own, they borrowed lots of money for retail, residential, and entertainment projects intended to bring in more tax dollars through property and sales taxes. A number of these projects didn’t pan out, possibly because of unrealistic hopes and also because the economic crisis made it difficult even for established and more financially stable communities to pursue larger developments. The lesson here? Perhaps slow and steady really is better here as big change for small communities is difficult to attain.

Another issue: the article suggests Chicago led the way to get the 1970 legislative act passed. Were some communities opposed to this or did they get behind Chicago as this could also benefit them?

Of malls, Mormons, mammon, and Mitt

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A long article in Bloomberg Businessweek on “How the Mormons Make Money” discusses City Creek Center, a $2 billion “megamall” development that opened in March 2012 “directly across the street from the church’s iconic neo-Gothic temple in Salt Lake City”:

The mall includes a retractable glass roof, 5,000 underground parking spots, and nearly 100 stores and restaurants, ranging from Tiffany’s (TIF) to Forever 21. Walkways link the open-air emporium with the church’s perfectly manicured headquarters on Temple Square. Macy’s (M) is a stone’s throw from the offices of the church’s president, Thomas S. Monson, whom Mormons believe to be a living prophet.

On the morning of its grand opening, thousands of shoppers thronged downtown Salt Lake, eager to elbow their way into the stores. The national anthem played, and Henry B. Eyring, one of Monson’s top counselors, told the crowds, “Everything that we see around us is evidence of the long-standing commitment of the Church of Jesus Christ of Latter-day Saints to Salt Lake City.” When it came time to cut the mall’s flouncy pink ribbon [press release here], Monson, flanked by Utah dignitaries, cheered, “One, two, three—let’s go shopping!”

Watching a religious leader celebrate a mall may seem surreal, but City Creek reflects the spirit of enterprise that animates modern-day Mormonism.

A few thoughts and questions:

1.  A new, $2 billion retail development seems quite aggressive given the current business climate.  Then again, Utah seems to be faring much better than the rest of the U.S. economically.  The state averaged a 6.7% unemployment rate during 2011, 11th out of 50 states (+DC), according to the Bureau of Labor Statistics (BLS).  More specifically, Salt Lake City’s 2011 rate was even lower at 6.5%, putting it at 52 out of 372 major metropolitan areas.  (If you’d like to see Utah’s unemployment rate over time and/or compare it with other state(s), Google has a wonderful interface for interacting with the BLS’ public data here.)

2.  City Creek Center (official webpage here) seems to be neither a traditional mall nor a “lifestyle center“.  Rather, it sprung fully formed within its urban environment (which no doubt contributed to its multi-billion dollar cost) as a rebuilding of Main Street rather than a “Main Streetification”.  If successful, could it usher in a new era of high-dollar, high-stakes urban retail (re)development?  Or does City Creek Center’s strong ties to LDS businesses constitute circumstances so special that they cannot be duplicated elsewhere?

3.  The Bloomberg article seems to connect City Creek Center to Mitt Romney, stating,

It’s perhaps unsurprising that Mormonism, an indigenous American religion, would also adopt the country’s secular faith in money. What is remarkable is how varied the church’s business interests are and that so little is known about its financial interests. Although a former Mormon bishop is about to receive the Republican Party’s presidential nomination, and despite a recent public-relations campaign aimed at combating the perception that it is “secretive,” the LDS Church remains tight-lipped about its holdings. It offers little financial transparency even to its members, who are required to tithe 10 percent of their income to gain access to Mormon temples.

The unstated implication seems to be that Romney’s savvy and secrecy with his own finances is somehow related to the LDS Church’s savvy secrecy with theirs.  Is this a fair conclusion to draw?  Is Bloomberg suggesting that there is something inherent within Mormonism that mandates this particular way of doing business?

 

What happens when there are 65 million vacant homes in China

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A review of a new book about China leads with this information about the recent “building binge” in China:

This spring in Beijing, I asked a businessman an obvious question about the risks to China of an economic crash-landing, to which I got a less obvious reply. It is impossible to travel around China without concluding that the place is in the grip of a building frenzy. In less than a decade, China has pumped around $4 trillion into property; tens of millions of houses and apartments as well as Ozymandian public buildings and factory estates – and what hits the eye is how much of it all stands empty. Across the country, uninhabited concrete blocks scab the land, not only in the megacities of the eastern seaboard but also in the sleepier southwest; from filthy mining towns in Henan, all the way to entire ghost towns in Inner Mongolia. With an estimated 65 million homes standing vacant, residential construction last year was still running at a rate of five times demand.

Dwarfing even the $2 trillion borrowed for the Railway Ministry’s high-speed networks since 2008, and the thousands of kilometres of 4–6 lane toll roads with barely a vehicle on them, China’s building binge is the most striking example of what Prime Minister Wen Jiabao famously, but impotently, denounced in 2007 as the country’s “unbalanced, unstable, uncoordinated and unsustainable” model of economic development. Now, with house prices and sales sagging in response to government restrictions aimed at deflating history’s biggest ever property bubble, and with local governments as deep in bad debt as the developers, I asked the businessman what was to prevent the bubble actually bursting, in a spectacular financial explosion?

His answer was that it wouldn’t happen. A lot of these empty apartments, he said, had been bought by Chinese families as investments, and they would patiently hang on to these speculative purchases because interest on savings was derisory. Secondly, although some developers would go to the wall, the bubble would simply not be allowed to burst for fear of public anger as well as economic chaos. China had massive reserves if need arose, he said, and would not hesitate to bundle nonperforming loans off into a state “bad bank”. Its plans to build 36 million “affordable” homes by 2015 would also help to offset faltering private sector demand. When in a hole, in other words, the Party keeps digging.

This isn’t the first piece I’ve read suggesting that we could be headed toward a pop of the property bubble in China…

Richard Florida: homeownership not related to economic growth and development

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Richard Florida looks at some data and argues that homeownership is not related to several dimensions of economic growth and development:

The economic growth and development of cities and regions is generally thought to be driven by three key factors: innovation, human capital, and productivity. Homeownership, it turns out, is not related to any of them.

Take innovation and high-tech industry. Homeownership bears little relation to either, being weakly negatively associated with the concentration of high-tech industry (-.20) and not associated at all with innovation (measured as the rate of patenting).

Or consider the percentage of college graduates or share of highly-skilled knowledge/creative jobs. Again, nothing. The arrow in fact points in the wrong direction. Homeownership is weakly negatively correlated with both the share of college grads (-.27), and with the creative class share of the labor force (-.30).

What about productivity? Once again, no connection to homeownership. Homeownership is weakly negatively associated with economic output per capita (-.19)…

It used to be that homeownership signaled and led to economic growth. But that relationship was tied to the industrial era, when building and buying more homes primed the pump of America’s great assembly-lines, increasing demand for cars, appliances, televisions, and all manner of consumer durables. Those days are gone. The United States is a now knowledge and service economy; less than ten percent of Americans work in some form of manufacturing and just 6.5 percent are engaged in actually producing things. The stuff Americans buy is largely made offshore.

I wonder how this relates to the recent campaign from the National Association of Realtors regarding how building homes would lead to more jobs. While having more construction might lead to some good short-term outcomes, Florida is arguing here that homeownership doesn’t have a large influence on the economy.

Going beyond the economic impact of homeownership and building homes, these statistics don’t quite capture the cultural influence of homeownership in American culture. At the same time, the numbers might suggest that policymakers shouldn’t go all in for promoting homeownership for its economic benefits. Selling homeownership can be done by linking it to values of individualism or the American Dream but the larger economic angle doesn’t hold up.

I wonder what the story would be utilizing data that allow analysis beyond correlations…

Naperville cites traffic concerns and proximity to a residential area in rejecting McDonald’s near downtown

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Naperville’s City Council voted Tuesday against a proposal from McDonald’s to build a restaurant just south of downtown. The cited reasons: traffic and proximity to a residential area.

The City Council unanimously turned down the proposed fast-food restaurant at the southeast corner of Washington Street and Hillside Road citing concerns about traffic at an already busy intersection and locating a 24-hour business close to homes…

The proposal was backed by both city staff and the plan commission. However, in a discussion that lasted more than an hour, councilmen focused on the potential for traffic tie-ups…Addressing the myriad of traffic concerns, William Grieve, a traffic engineer hired by McDonald’s, said a traffic study showed travel time through the intersection would only increase by about a second and double drive-through lanes would prevent backups.  Stillwell said the company would be diligent about addressing any problems if they arise…

But traffic wasn’t the only concern. Neighbors said they feared there would be increased noise and lights coming from the restaurant if it was allowed to stay open 24 hours as proposed.

Both Judy Brodhead and Joe McElroywere among the councilmen who agreed and said having a restaurant open 24 hours so close to homes was a deal-breaker regardless of the traffic issues.

I’m not surprised by this result: not too many residents would willingly choose to have a McDonald’s nearby and few people want more traffic. However, this seems a bit strange for a few reasons:

1. Washington is already a fairly busy road.

2. This intersection is near homes but there are already strip mall type establishments at this corner. In fact, I’m not sure there any homes that back up directly to this site as the DuPage River is to the east and all of the corners at the intersection are already occupied. The McDonald’s would replace a Citgo gas station, not exactly a paragon of civic architecture. Across the street is a Brown’s Chicken establishment. The other two corners include a cemetery and another strip mall type establishment.

3. The traffic study from McDonald’s seems to suggest there wouldn’t be any issues.

4. I wondered if this had anything to do with protecting the downtown but it is three blocks south of the downtown so it shouldn’t contribute to congestion problems there.

I wonder if there isn’t more to this story. Indeed, here are a few more details from the Daily Herald:

Council members admitted they were initially thrilled that McDonald’s wanted to open a downtown store on the southeast corner of Hillside and Washington streets. But when it came down to a plan that included five zoning variances, three landscape variances and a sign variance, they just weren’t lovin’ it.

So the McDonald’s required too many deviations from Naperville’s guidelines? While the restaurant might have needed 9 variances, the city could have made it happen if they really wanted to. Just how much did the pressure from the neighborhood matter?

Study: home values increase several percent very near a Walmart

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A new study suggests that the value of a home increases a few percent if it is located within a half-mile of a Walmart:

It turns out, according to their recently published research, that values increase an average of 2 to 3 percent for homes within half a mile of a Wal-Mart store and 1 to 2 percent when the home is a half mile to 1 mile from a store…

The duo studied more than 1 million home sales between January 1998 and January 2008 near 159 Wal-Marts that were built between July 2000 and January 2006. They compared the prices of homes within four miles of a store that sold up to 21/2 years before an opening or 21/2 years afterward. The long time frame was picked on purpose, after the researchers discovered that the median number of days between when Wal-Mart announced a new store and when it opened was 516 days.

The study also noted that Wal-Mart’s entry into a market often acts as a beacon, generating other economic development nearby…

“On average, the benefits to quick and easy access to the lower retail prices offered by Wal-Mart and shopping at these other stores appear to matter more to households than any increase in crime, traffic and congestion, noise and light pollution or other negative externalities that would be capitalized into housing prices,” the professors wrote.

One interpretation of these findings: people are willing to pay a little more to be located near some commercial development. They may not want to live right next to it evidenced by the fact that most municipalities have some strong guidelines about how commercial areas to demarcate the space between development and residential areas, often with some combination of a berm, a fence, and trees/bushes. But, being a few moments away from a place where you can quickly buy groceries (and Walmart is the country’s biggest grocery store) and other goods is a plus.

One thing that is likely ironic about this data is that while homes close to the Walmart are a little higher, it is unlikely that residents walk to Walmart even though they could. You could interpret this data as evidence people want to live closer to some denser commercial development but having a Walmart nearby is probably not about walkability.

I wonder if these researchers could also tell how much development Walmarts tend to attract. Do they tend to act as anchors for one corner of a busy intersection? Is it enough for development on multiple corners? How many square feet of retail space, on average, can be successfully operated once a Walmart moves in?

I’m now going to look for real estate ads that mention the proximity of a Walmart…I’m not holding my breath.

The Thomas Kincaide housing development in Vallejo, California

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With the recent passing of Thomas Kincaide, one columnist takes a look at a development in Vallejo, California built with Kincaide’s name on it:

Named the Village, a Thomas Kinkade Community, it promised residents a “vision of simpler times” with “cottage style homes that are filled with warmth and personality.” Its slogan: “Calm, not chaos. Peace, not pressure.”…

The homes in the Village look a lot like other tract homes in Hiddenbrooke, but with Kinkadean touches such as steeply gabled roofs covered in faux-slate tile, gingerbread trim, front porches and stone facades.

Residents see their homes and neighborhood as unique and distinctive.

Teri Booth, an original owner, says she bought her home because “it didn’t look like every other McMansion.”

Homes here average 2,400 square feet. The four models were named after Kinkade’s daughters – Merritt, Chandler, Winsor and Everett. The styles might be described as pseudo Victorian, pseudo French provincial, pseudo New England cottage and pseudo arts and crafts.

The streetlights (electric) look like Kinkade’s gaslight logo and the walkways (stamped concrete) resemble cobblestones.

This reminds me of the Disney-built Celebration, Florida and Martha Stewart homes. Some homebuyers are looking for a distinctive house, a world of not “every other McMansion” but rather a Thomas Kincaide McMansion! (Interestingly, this article suggests that the Kincaide homes are a pastiche of styles, a common complaint about McMansions. These homebuyers also seem to like being tied to a famous person or company. Perhaps this is reassuring or perhaps it means that there might be a bigger market for the homes as they are distinctive. (Alas, as the article suggests, home prices in a Kincaide neighborhood can fall as well.) The Village also seems to promote nostalgia and traditional neighborhood life, as do many other developments and builders.

Why have just a painting when you can buy a Thomas Kincaide house?