Turning a large suburban office campus into a “metroburb”

There are plans in the works to transform the former 150-acre campus of AT&T in Hoffman Estates into a “metroburb”:

Village officials announced in mid-April that they were in talks with representatives of Somerset, who had recognized an opportunity to apply the lessons learned on their conversion of the 2 million-square-foot former Bell Labs building in Holmdel, New Jersey, into the mixed-use Bell Works project to the 1.6 million-square-foot AT&T buildings.

The key similarity apart from their overall sizes is the large central atriums both properties have, Somerset Development President Ralph Zucker said.

“All of our retail is facing that center court,” he said of Bell Works. “It’s really a vibrant street scene … literally a small downtown.”

Somerset’s concept plan proposes using the existing AT&T buildings for 1.2 million square feet of offices, 60,000 square feet of retail shops and 80,000 square feet of conference space, while new construction would add 375 apartments, 175 townhouse units and possibly a 200-room hotel.

Zucker said the term he coined for this concept at Bell Works — “Metroburb” — is one he hopes will become generally used among other developers.

Successful redevelopment of sizable properties is crucial to both cities and suburbs. Once companies make decisions to move away from existing properties, communities have two goals in mind. First, they need to find ways to make that land attractive to other users. Even a nice facility may not meet the needs of many other users or it may be sized wrong. Second, they often hope to turn the property into something that can generate more for the local tax base. At the least, property taxes are helpful but if retail can be incorporated into the property, sales tax revenue can be generated. The redevelopment proposed above seems to tackle both of these issues: it splits up the space into multiple desirable uses (and there are not that many single firms that need 1.6 million square feet) and has multiple uses (business, retail, and residential). This might have the bonus holy grail of redevelopment: the potential for a mixed-use property that could become a vibrant community on its own.

Given the initial use of this campus, it would be fun to see the AT&T history incorporated into the redevelopment. Bell Labs has an important research and development legacy in the United States and featuring its accomplishments could help set this redevelopment apart from other suburban palces that have less character or history.

Santa Clara: from small city to Super Bowl host

How did Santa Clara come to be the home to Super Bowl 50? It involved particular decisions made from the 1970s on by local leaders about zoning and land use:

Newly elected mayor Gary Gillmor and city manager Don Von Raesfeld were determined to keep Santa Clara comprised of specific sections — with residential property assigned a large but non-elastic section.

This meant buying undeveloped land in the north and east parts of the city for business and industrial purposes and building a robust tax base. McClain doesn’t recall much about the vacant land other than a dairy where families bought their milk if it wasn’t delivered.

The city already had three major highways and expressways that funneled into the undeveloped area, where high-tech companies such as Intel, Applied Materials, McAfee and National Semiconductor gradually started and became a large part of what is now Silicon Valley.

Gillmor, 79, cited three factors that helped Santa Clara maintain its preferred blueprint: a strong middle class, a huge industrial base for tax purposes and its own municipal power plant that reduces residents’ electric bills to about half of what is charged in neighboring cities…

A convention center and another large chain hotel were built in 1986, but the city’s fondness for the 49ers surfaced during the height of the team’s dominance.

The 49ers were given a sweetheart deal to move their training facility from Redwood City — 18 miles north of Santa Clara. Then-mayor Eddie Souza enticed then-49ers owner Eddie DeBartolo Jr. with a deal that gave the team 12 acres at $1,000 an acre with a 4 percent annual increase for 55 years, according to the San Francisco Chronicle.

Today, Santa Clara is a wealthy place as a city with over 122,000 residents: the median household income is $93,840, 53.9% of adults over 25 years old have a bachelor’s degree or more education, and Intel, Texas Instruments, and other semiconductor firms have thousands of jobs in the city. But, this sort of growth doesn’t just happen. Decisions made by civic and business leaders – operating as a growth machine trying to boost profits – often help execute a particular vision of growth. As suggested above, it sounds like land in the city was intentionally set aside for business use and the city was able to attract a number of companies. Not everything can be controlled by civic leaders but they can set themselves up to take advantage of particular opportunities.

On the other hand, having a football stadium is not necessarily a win for a city. This is particularly the case if local tax dollars are used for the stadium. The stadium might be a status symbol – note that the San Francisco 49ers now do not play close to San Francisco – but they often bring other issues.

Anger at idea that suburban taxpayers should bail out Chicago Public Schools

The city-suburb divide can often be quite wide (and require therapy to overcome) and John Kass illustrates another dimension of this chasm:

In today’s angry class war politics, if you’re a suburban taxpayer in a blue state like Illinois, you might get the feeling you’ve done something wrong. But all you’ve really done is work your tail off and go without to take care of your family.

You might miss the city and ache for it, or you may be indifferent, but either way, you know you’re out there. My wife and I know. We did it for the kids. To send them to good, safe public schools. And many of you have done the same…

But the Democratic bosses of Illinois just told you that you’re going to pay some more, to bail them out of the fiscal mess they made of CPS…

But we don’t feel like bailing out a corrupt Chicago system that won’t change the way it does business.

This echoes one of the underlying reasons many Americans left cities in the first place: they didn’t want to pay/take responsibility/be party to/live near urban problems. The move to the suburbs was intended to provide a better home for their families and to pay taxes to a local government that could be more responsive to their own interests. And this move to the suburbs – particularly by wealthier white residents – left many cities in difficult situations with declining tax bases.

Does it matter that this argument is made in Illinois where political corruption is common? Arguably, taxpayers in Illinois should be suspicious of how all of their local and state tax dollars are used. Or, would typical suburbanites never want to contribute their hard-earned money to the city unless forced (and regardless of how well the money is used)? I suspect the second statement is fairly common among suburbanites – “my tax dollars should go to my community rather to other communities” – and this tends to get most loudly expressed when regional or metropolitan plans are suggested.

The unusual development of Rosemont, Illinois

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.

“Cloak-and-dagger building deal blows up on Naperville”

An intriguing headline leads to a story of how much suburbs are willing to do to attract companies and jobs:

SKF Group, a manufacturer of ball bearings, seals and lubrication systems, approached city officials through an attorney in July 2014. The planning and zoning commission approved the project without knowing which company was putting it forward…

“I don’t want to take a chance of messing up this deal. This is the kind of deal every city wants,” Naperville Mayor Steve Chirico said last year as a council member.

The 130,000-square-foot building at 1203 Warrenville Road was projected to employ 200 people whose research in materials testing would contribute to energy-saving products…

Naperville officials said they feel some disappointment that SKF changed course after all of their efforts to welcome the project into the city, despite neighbor concerns about traffic, noise and privacy disruptions. But having the company pull out before hiring local employees is not the worst-case scenario, Chirico said.

“The good news is we’re not losing existing jobs, it’s future jobs,” Chirico said. “It would have been a lot worse had we had a company that located here, hired people and then all the sudden they lost all their jobs.”

This is the sort of company that helped Naperville reach its lofty heights of population, wealth, and jobs: an international business bringing white-collar positions. Although the suburb didn’t offer them any tax breaks (the company would have received breaks from Illinois), Naperville leaders did go around their normal process to try to make this happen.

If this building sits empty for a while, things could get interesting. Naperville is not used to empty structures and any suburb would want the building and land to be a positive contribution to the local tax base.

The doomed black suburb of Lincoln Heights, Ohio

Here is a look at an early black suburb outside of Cincinnati that has fallen on hard times in recent years:

Then, as Lincoln Heights residents waited to incorporate, the county allowed white landowners in nearby Woodlawn to incorporate, giving much of the western part of what would have been Lincoln Heights to the white town. Then the county gave much of the eastern part of what would have been Lincoln Heights to another new white town, Evendale, including the land where the Wright plant was located. The residents of Lincoln Heights challenged this move in court but lost…

When the county finally allowed the city to incorporate, in 1946, the boundaries were radically different than black residents had once hoped, encircling about 10 percent—one square mile—of the original proposal. The village now included no major factories or plants and no industrial tax base…

But over time, Lincoln Heights residents found it more difficult to maintain that sense of community. For one thing, the jobs in nearby towns in factories and chemical plants started to disappear as American manufacturing began to shrink in the 1970s and 1980s. As unemployment rose, Lincoln Heights lacked a tax base deep enough to underwrite community development and other social-welfare programs. Soon, it became obvious to anyone who grew up in Lincoln Heights that if you wanted to make something of yourself, you had to get out. People who grew up in Lincoln Heights and were lucky enough to go away to college didn’t come back. Those who stayed largely were the ones who couldn’t get out…

Last year, two nonprofit groups, the Cincinnatus Association and Citizens for Civic Renewal, put out a study that concluded that Cincinnati and its suburbs needed to cooperate—consolidate local governments and share services—to thrive. The idea was supported by an editorial in the Cincinnati Enquirer, which argued that cooperation could reduce inequality.

This is a common story among American cities and suburbs: when annexation boxes in communities, they lose the possibility of enlarging their tax base through acquiring more land and development opportunities. See David Rusk’s work in Cities Without Suburbs for more about how elastic cities – those that could annex because of different state laws (primarily in the South and West as compared to the Rust Belt) – have more positive social and economic outcomes. Any suburb would have a hard time recovering from the loss of major job centers and that it was a black community only made it worse.

This case also contradicts the argument that minorities moving to the suburbs is necessarily a positive thing. There are many poor non-white suburban communities and it may be even more difficult to provide social services and pursue economic development there.

For a look at some of the early black suburbs in the United States, see Andrew Wiese’s Places of Their Own.

When American communities try to limit the number of churches in city limits

This is a fascinating look at how American municipalities deal with the “problem” of too many churches. For example, here is the experience of Stafford, Texas which did not have a property tax and was located near highways outside Houston:

By 2006, there were 51 religious facilities in Stafford’s 7 square miles, according to city filings. And, at that time, the city had just a little over 300 acres that remained undeveloped.The costs in Stafford’s case were starting to outweigh the benefits…

Scarcella and city officials spent years poring through legal filings and spent a good dose of cash on attorneys to successfully craft a land use ordinance that would require a public hearing and process for new “places of assembly” — such as bowling alleys, dance halls, museums and religious facilities.To obtain a specific use permit under the regulation, applicants would have to address and adhere to a list of requirements related to elements such as acreage, parking and traffic mitigation.

The pushback was tremendous, Scarcella said, noting the town attracted national media and plenty of negative attention…

“I’m held in a fairly decent regard within my church, and I have a deep belief in Christ, and I believe in people’s right to worship, and I admire them for doing that,” he said. “But I also recognize that there needs to be a balance.”

 

Too many religious facilities that don’t pay property tax means that a community may not have a sufficient tax base to maintain all the infrastructure that religious facilities would use. One sociologist estimated that $71 billion in taxes is left on the table by religious institutions. Additionally, there is an opportunity cost involved where the land might have been used for purposes that would pay property taxes and perhaps even add sales tax revenues.

All of this could lead to a humorous situation: how about a suburban community near the nexus of multiple highways that zoned solely for industrial parks and churches/religious facilities? Given that many churches today have a tenuous connection to the community in which they are located, attendees don’t mind church shopping via car, and large churches want plenty of land and interior space for their campuses, this could minimize the pain for a number of other nearby communities.

Perhaps the drop in property values in Ferguson could prompt change

The fallout from last year’s events in Ferguson, Missouri continues including this look at the changes in property values:

For the city’s 2014 budget, approximately 20 percent of the city’s revenue came from the city’s courts, and 17 percent came through property taxes. But after a Department of Justice report found the courts were profiting off racial discrimination, the State of Missouri took over to implement reforms. Couple that with rapidly falling property values (which are used to calculate owed taxes) and it seems like key parts of the city’s business plan are falling out from under it…

The average selling price of a home in the city has been on a steady decline since the shooting of Brown last August, according to housing data compiled from MARIS, an information and statistics service for real estate agents. Prior to Brown’s death, the average home sold in 2014 was selling for $66,764. For the last three and a half months of the year, the average home sold for $36,168, a 46 percent decrease.

The trend has continued on through this year, with the average home selling for only $22,951 so far in 2015. Another negative indicator: in the eight and a half months leading up to Brown’s death, the average residential square foot in 2014 was selling for $45.82. In the eight and a half months since Brown’s passing, the average residential square foot in the city has sold for $24.11. That’s about a 47 percent downtick in one of real estate’s core indicators.

In the suburbs, where quality of life (including factors like crime, the quality of the houses, performance of the local schools) is paramount in (1) influencing housing values and buying and selling real estate and (2) building a tax base through attracting businesses and organizations, infamy is not a good thing. But, given the patterns of local treatment of people by police in the area, it is hard to see how this wouldn’t affect housing values and the tax base. When given options across the suburbs of St. Louis, how many homeowners or companies would choose to move to Ferguson? And, if we’re honest, hitting suburbanites where it really matters – property values and their tax base (the double whammy of housing and land values going down while property taxes may need to increase to close the gap) – may be what is needed to prompt change.

Oddities in St. Louis County that led to tensions: significant revenues from fines, permissive incorporation laws

Radley Balko points out some interesting features of St. Louis County, Missouri that contribute to racial and socioeconomic disparities:

Some of the towns in St. Louis County can derive 40 percent or more of their annual revenue from the petty fines and fees collected by their municipal courts. A majority of these fines are for traffic offenses, but they can also include fines for fare-hopping on MetroLink (St. Louis’s light rail system), loud music and other noise ordinance violations, zoning violations for uncut grass or unkempt property, violations of occupancy permit restrictions, trespassing, wearing “saggy pants,” business license violations and vague infractions such as “disturbing the peace” or “affray” that give police officers a great deal of discretion to look for other violations. In a white paper released last month (PDF), the ArchCity Defenders found a large group of people outside the courthouse in Bel-Ridge who had been fined for not subscribing to the town’s only approved garbage collection service. They hadn’t been fined for having trash on their property, only for not paying for the only legal method the town had designated for disposing of trash…There are many towns in St. Louis County where the number of outstanding arrest warrants can exceed the number of residents, sometimes several times over. No town in Jackson County comes close to that: The highest ratios are in the towns of Grandview (about one warrant for every 3.7 residents), Independence (one warrant for every 3.5 residents), and Kansas City itself (one warrant for every 1.8 residents)…

Sales taxes are the primary source of revenue in most St. Louis County municipalities. Wealthier areas naturally see more retail sales, so the more affluent towns tend to be less reliant on municipal courts to generate revenue. In recent years a state pool was established to distribute sales taxes more evenly, but existing towns were permitted to opt out. Most did, of course. Perversely, this means that the collection of poorer towns stacked up along the east-west byways are far more reliant on municipal court revenues. That means they face much stronger incentives to squeeze their residents with fines, despite the fact that the residents of these towns are the people who are least likely to have the money to pay those fines, the least likely to have an attorney to fight the fines on their behalf, and for whom the consequences of failing to pay the fines can be the most damaging…

“Until only relatively recently, the state of Missouri had almost no rules for municipal incorporation,” Gordon says. “In just about every other state, when a new new subdivision would spring up in an unincorporated area, the state would say, ‘If you want public services, you need to be annexed by the nearest town.’ In Missouri, you didn’t have that.”…

“The state’s one requirement before giving you the power to zone was that you had to incorporate and draw up a city plan,” Gordon says. “That plan could be as simple as getting an engineer to slap a ‘single family’ zone over the entire development. Your subdivision is now a town.”

Some interesting individual cases – of both individuals penalized and municipalities acting badly – interwoven throughout the piece. But, a complex maze of issues: a number of communities with limited tax bases which leads to a heavier reliance on fines, hitting residents with multiple penalties, and incorporation laws that led to a lot of small communities that can set up their own systems and struggle (or if wealthier, thrive) on their own.

While it might be temping to these issues as separate and important issues in their own right, I was struck that this is the sort of system that arises when white and wealthier residents are determined to keep poorer and non-white residents out. This goal was widespread in the American suburbs after World War II but it sounds this mix of communities outside of St. Louis was able to put together a potent system for keeping blacks in other suburbs. Even with civil rights legislation, there are still plenty of “legal” means to limit or harass non-white residents in such a way to keep them out of white and/or wealthier suburbs.

As a suburb, Ferguson is not that unusual

The particular events in Ferguson, Missouri may have been particular but its social context is not that unusual:

Ferguson’s version of the story has several layers. Many of the aviation companies that were once a source of good jobs have shut down or moved away, leaving behind limited employment opportunities, especially for workers without a college degree. The tax base has shriveled, leaving the city dependent on fines and fees — including traffic tickets — for a disproportionate share of its funding. According to the city’s 2014 budget, Ferguson expected to take in $2.7 million in fines and fees in fiscal 2014 — 14 percent of the city’s revenue, up from 8 percent five years earlier.

The recession added to the challenges. Parts of the city were hit hard by the foreclosure crisis; of the 10 Missouri zip codes with the most seriously delinquent mortgages, four are at least partly in Ferguson and three others are in other North County communities. That has turned formerly owner-occupied homes into rentals, often with absentee investors as landlords. The number of Ferguson residents living in poverty has doubled since 2000; its poverty rate, at 24 percent, is one and a half times the national mark.

In all of that, Ferguson is typical of inner-ring suburbs around the country. It isn’t even a particularly extreme example. Ferguson’s schools are struggling, but unlike some surrounding districts, they retain their accreditation. Its foreclosure rate is high by Missouri standards, but is nowhere close to those in Florida, Nevada and Arizona, states that were at the center of the housing crisis. North County has lost much of its manufacturing base, but retains several large employers, including a multinational manufacturer, Emerson Electric Co., and a fast-growing prescription drug provider, Express Scripts.

Ferguson’s experience with poverty is especially typical. St. Louis’s suburbs now have more people living in poverty than St. Louis itself, a pattern repeated across the country. Concentrated poverty of the kind found in southeastern Ferguson is also becoming more common in the suburbs. According to researchers at the Brookings Institution, the number of suburban neighborhoods with poverty rates above 20 percent has more than doubled since 2000.

casselman.ferguson.0826-chart

A familiar story: deindustrialization and a loss of manufacturing jobs, a declining tax base, changing demographics, plenty of suburbanites living in poverty. And a pressing question: what can be done to reverse the fortunes of such communities? These sorts of inner-ring suburbs are not going to be the first choice of many gentrifiers and it can be difficult to switch economic emphases. One possible solution proposed by some is metropolitanization, sharing taxes more across communities in a metropolitan area. However, this requires buy-in from wealthier suburbs who often reject the notion that should provide help to less well-off suburbs.

It will be interesting to return to Ferguson in 5, 10, 20 years to see what has happened. While the shooting of Michael Brown led to a lot of attention, it won’t necessarily alter the course of the community.