Title:Land Value Capture for Infrastructure Finance | 2018 Daniel Burnham Forum
پانل تخصصی که در انجمن امسال دانیل برنهام در مورد ایده های بزرگ با مشارکت موسسه لینکلن برای سیاست زمین ارائه شد، به جذب ارزش زمین به عنوان ابزاری برای تامین مالی زیرساخت های شهری پرداخت. آنها به این موضوع پرداختند که تصرف ارزش زمین چیست و چگونه ایالت ها و محلات از ابزارهای انتخاب ارزش زمین استفاده می کنند و نمونه هایی از استفاده مؤثر از ابزارهای ثبت ارزش زمین را ارائه کردند. این پانل سیاست های نوظهور را با توجه به ارائه استراتژی ها و داستان های موفقیت برجسته می کند که به رهبران محلی که تکنیک های مشابه را در نظر می گیرند کمک می کند. این انجمن با تأکید بر تغییرات سیاست های ایالتی و محلی که رویکردهای مؤثری را برای جذب ارزش زمین امکان پذیر می کند، نوآوری ها – و مهره ها و پیچ های عمل گرایانه مورد نیاز برای تحقق آنها – را به اشتراک می گذارد. سخنرانان عبارتند از آنتونی فلینت از موسسه لینکلن سیاست زمین. جولی کیم، دکترای مرکز پروژه های جهانی دانشگاه استنفورد؛ جرالد کورنگولد از دانشکده حقوق نیویورک؛ و مایکل دی الکساندر، AICP، از کمیسیون برنامه ریزی منطقه ای آتلانتا. درباره انجمن بیشتر بدانید: https://www.planning.org/burnham/ (برچسب‌ها برای ترجمه تصرف ارزش زمین
قسمتی از متن فیلم: I want to welcome you all to the 2018 Daniel Burnham forum on big ideas for those of you who don’t know me my name is Cynthia Bowen and I’m the president of the American Planning Association it truly is my pleasure to welcome you tonight to this great event and the
Kickoff of a piays policy and advocacy conference of which I might note that we are completely sold out we will also be hosting a record number of planners on the hill on Tuesdays so I’m really excited about that as well I would like to extend my sincere thanks and
Appreciation to our presenting sponsor and Burnham Forum collaborator the Lincoln Institute of land policy tonight’s program is about one aspect of partnership with Lincoln APA is pleased to work with them on a range of educational programming and together we are advancing the state of planning in the United States tonight’s topic is
Very timely our experts are going to look at the state of practice on the use of value capture for an infrastructure investment infrastructure has been one of the themes of my presidency and APA has advanced a range of advocacy research and educational work in this critical area this work includes new
Principles for infrastructure policy as well as the continuation of our infrastructure task force but the issue at the heart of tonight’s discussion how can we afford the infrastructure we need is so important there are a few issues where the desire and the demand for investment so constantly outstrip the
Will and the innovation to find the funding and so finally that may be changing I’m really hopeful for the discussions like the one we’re gonna have tonight will lead to new tools and new leadership so tonight we’re going to focus on the solutions and fact-finding policy solutions will be
Something you’re gonna hear about throughout the conference once again thank you for joining us for this year’s Burnham Forum now I’d like to invite Anthony Flint from the Lincoln Institute of land policy to the podium to moderate tonight’s discussion Anthony thank you thank you so much it’s a great pleasure
To be here I really just have to commend your bravery and courage and actually coming to Washington to talk and think about policy and federal programs that could make our cities better places it’s it’s really extraordinary and I’m sure the next two days are going to be really
Productive for all of you what I’d like to do is introduce the topic at kind of a high level and take the big picture framework and and then we’ll turn it over to our panelists who will present for about ten minutes each and then we’ll have a conversation and
Then we’ll all have a conversation just loading up the first slide all right so well the great urban expansion project of the 21st century surely continues and we don’t need to spend much time in this room reminding everyone about the huge challenges that our cities face existing infrastructure is deteriorating and new infrastructure
Is critically needed as cities try to plan for the future there isn’t enough affordable housing successful urban environments have open space and libraries and good transit that’s accessible to all planners are up to the task making big plans or incremental steps sometimes as well that’s ok too but the challenge remains
How to pay for it all this infamous headline is from going about 50 years ago now when New York City was on the brink of bankruptcy but maintaining good municipal fiscal health has only become more demanding cities have been caught in a kind of vise forced to make some really bad decisions
Over the last half-century putting off maintenance and investing in new infrastructure putting off investing in new infrastructure while trying desperately to deliver basic services to all residents there’s declining federal support of course and state aid in many cases and the property tax the one stable sustainable local source of revenue for
Metropolitan regions has been battered in many places by restrictions backlash and dysfunction then there are of course the estimated 1 billion people living in informal settlement currently projected to continue that upward trajectory possibly doubling as the world’s population grows to 6 urban population grows to 6 billion
A more humane future means safe and affordable housing clean water sanitation and transportation options we know how to do this more sustainable and equitable Urban Development it’ll take good planning but also a lot of investment the health of cities has everything to do with infrastructure infrastructure supports cities and we’re
Not doing very well in this regard in the u.s. of course we get a degrade by the American Society of Civil Engineers we’ll need three point six trillion dollars in investment just to get roads bridges transit and other critical infrastructure in a state of good repair
That’s about 20% of u.s. GDP a credible infrastructure plan appears to have been a clique eclipsed by other matters at the moment under the current administration globally it’s estimated that we’ll need as much as 40 trillion dollars to bring existing infrastructure up to snuff and to provide basic services to that burgeoning world
Population that is about two-thirds of GDP well our first caveat in this discussion about land value capture is that there is no substitute for government funding and borrowing for infrastructure and affordable housing and the like but there is a policy that could vastly help if it was implemented as a more standard
Procedure in cities and it goes like this urban land and private development are made more valuable by public investments and government actions zoning an allowable height and density for example or a subway line or station nearby historically in the u.s. private land owners and developers have enjoyed this
As a kind of a gift or a windfall but what if you could measure how much that bigger building envelope or subway station actually increased the value of land and property and asked the private sector for a little something back for all the things that are enabling their
Success it turns out we can the concept is known as land value capture this is a policy that enables communities to recover and reinvest land value increases that result from public investment and other government actions also known as value sharing or sometimes value recovery it’s rooted in the notion
That public action should generate public benefit I daresay value capture is is quite well qualified to be considered as a big idea for this August tradition of the Burnham Forum in my brief remarks here again I’d like to provide some some background in context and in a big picture before hearing from
Our distinguished panel it takes a little unpacking so let’s start the tour land value capture is in use around the world from London we’re just one example of a project there is cross rail to New York City in the form of Hudson Yards which we’ll talk about a little
Later to Hong Kong the so called rail plus property model for funding a great transit system let’s also drop in on Latin America because there the experimentation and innovation has been particularly robust in Brazil there’s a new kind of building permit in place known as a CPAC translated from the
Portuguese as certificates of additional construction potential now we won’t spend much time on this but we’re and we’re gonna hear here more detail about this later but the basic idea is this if you own a piece of land and you want to build you start with a baseline F AR of
Just one you want to build anything bigger you have to go out and buy the right to do so the permits are actually auction on a stock market and the city collects the revenue the proceeds are used to pay for infrastructure and other things including affordable housing in public
Parks in Faria Lima more than three billion dollars was raised to pay for infrastructure improvements what this does is change the development equation distributing the profits of redevelopment for the surrounding area bringing about greater equity and more balanced urban growth with a less of the massive gap between the the rich and
Poor that we’ve seen throughout the urban world now that’s just one tool but it’s a good example of how to unlock or harness land values to fund improvements land is a commodity in fixed supply its value is determined almost entirely by its potential use and that’s framed by
The rules that we set in zoning and building codes land value capture prompts communities to step back and reconstruct a but think about that for a minute it helps to make clear why value capture isn’t really a tax it’s more of a recovery of the public investment that is inherent in development projects
Now one thing I can also tell you is that this is not a new concept indeed it’s very old in the course of human settlement going back to ancient times we see evidence in the construction and maintenance of roads and aqueducts in the Roman Empire it was used in the
Philippines in the 16th century in in France in the 18th and 19th centuries including Haussmann’s redevelopment of Paris the bridge of Commons pictured here was built in 1809 in Bogota Colombia using a form of a betterment contribution and fundamentally the concept goes back to this man Henry
George now you might think how could a political philosopher active at the end of the 19th century possibly tell us about financing infrastructure and keeping our cities financially healthy in the 21st century well we would argue that sometimes for innovation you have to go back a hundred years Henry George
Of course wrote progress in poverty a global bestseller when it was published in 1879 and George like Karl Marx was troubled by the widening gap between the rich and poor in the first Gilded Age he focused on land and landowners and real estate transaction as one way that an
Elite group of wealthy people got even wealthier and they didn’t even actually do anything to earn that wealth they were benefiting from government action which set the foundation in the context for improvements on property Henry George’s big idea was the land value tax or single tax on land where the true
Value of land in contrast to improvements on land is assessed based on its location and what can be built there economists recognize this is a very efficient tax for one thing if you don’t like it you can’t pick up the land and move it elsewhere it’s also a tax
Virtually free of having the effect of distortion for for example a gas tax or cigarette tax theoretically that can prompt reduction in consumption the land value tax has been attempted with granted mixed results from Hawaii to Pennsylvania but more recently explored in Connecticut which has a pilot program aimed at struggling but potentially
Regenerating legacy cities there such as Bridgeport and new London Mayor DeBlasio has also proposed what is essentially a land value tax to encourage redevelopment of vacant lots that are being held in speculation in new york city voters in oakland approved a measure very recently to do much the
Same thing nobody wants to pay taxes on land that’s not working for them so they’ll either build or sell so someone else can value capture is based on a similar concept although it’s important to point out we didn’t want to get too heavily into theory here but in the
Absence of a land value tax actually capturing the revenue it works a little differently if we had a land value tax technically speaking we wouldn’t need value capture but the common denominator is the value of land and what creates that value when government puts in a new transit line for example the property
That’s developed around the stations is hugely profitable so we can change the entire development paradigm and ask the private sector to help fund the things that are creating that value value capture works best when it’s structured as part of projects from the start as in perth western australia pictured here
Where planners are fine-tuning a mechanism to enable a new light rail line in new york city in new york site of a version of land value capture at Hudson Yards a Governor Andrew Cuomo earlier this year proposed special districts around new subway stations where landowners would make these kinds
Of contributions some might call it a surcharge but again it’s more of a recovery of the value that the public created or is creating it’s tougher to try to do this after the fact though the concepts remain the same confronted by cost overruns in the proposed Green Line extension through Somerville Massachusetts transportation
Officials have floated the idea that private developers might bear more of the responsibility for stations along the new line so again in addition to the 2.5 billion dollars of taxpayer money being invested in the infrastructure itself there’s been a massive rezoning at the largely industrial areas at each
Stop each plan stopped all along the new line in Somerville some of all for those of you not from Massachusetts might be thought of as the Brooklyn of Boston right now and so this rezoning has taken places at all of the station stops the future transit oriented development is going to
Be immensely profitable and it’s made possible by the the public investment and government actions the private sector has long since recognize this win-win kind of equation Federal Realty funded the new orange line station at assembly Square also in Somerville and the New Balance Company participated in the financing of a commuter rail station
In Austin Brighton the city of Cambridge followed with a proposal for private developers to be more formally linked to the financing and maintenance of transit service in places like Kendall Square where the tea as we call it is such an integral part of the success of the area
The concept of value capture is inherent in many other ways and many other of the things that you all are actively engaged in we’re all well familiar with inclusionary housing where a portion of new residential development is required to be affordable but about that as the think about the basis
For that request the government is setting the zoning the building envelope so the contribution of affordable housing to the community has that kind of reciprocal character indeed there are many instruments in place across the u.s. that embody the concepts of value capture even if it’s not called value
Capture let’s look at just one it’s not a perfect illustration but Business Improvement Districts it’s the type of thing that’s of course increasingly common in in many of our cities and it’s founded essentially on the principles of value capture when a park enhances property values all around it it’s not
Asking for much for the private owners to chip in for maintenance land value capture redefines the way that our cities can grow in a more equitable way a new way of financing the future will create sustainable communities and promote municipal fiscal health we’re all working diligently to fine tune this
Policy and support cities in the all-important work of making the valuations and assessments of property value to more precisely track the increases that are associated with public investments there are ways to do this that are getting better and better this is a clear pattern of showing the increase in property values along a
Washington DC metro line so I hope that has been a suitably big-picture introduction for this big ideas forum and now we’re gonna dive into two greater with some greater detail we will hear from Jerry Korngold from New York law school covering more on the legal framework and issues of the Constitution
And property rights and enabling legislation at the state level Julie Kim who joins us from the Stamford global projects Center exploring the state of play of a variety of instruments and mechanisms and Michael Alexander director of the Atlanta Regional Commission Center for livable communities who’s going to bring
It all home and tell us more about the experience with value capture and its concepts on the ground then we’re going to have these series of crisp presentations and then I’m going to take the moderators prerogative and ask a question each of the panelists and then we’ll open it up for a wide-ranging
Conversation so with that I’d like to invite Julie to come up to the podium and onward we go thank you [Applause] I’m happy to be here to contribute to an important dialogue regarding land value capture I’ll build out a bit more into various tools introduced by Anthony and
I believe the other panelists or add more meat to the discussion with real case examples land value capture is an effective policy tool used by local governments to capture some part of land value appreciation to generate revenues for public benefit purposes along with land use and zoning land value capture
Can be the most powerful policy tool available for local governments to help them become more fiscally self-reliant value appreciation to be captured here can be generated both organically by basic supply and demand market dynamics and by positive public interventions such as infrastructure investments depending on the specific tools taxpayers property owners and developers
Variably share the financial burden and to make these tools more effective their use are sometimes accompanied by land use and zoning regulatory incentives the tools can be both funding there is they generate revenues and for financing there is raised money up front secured by these revenues property tax is perhaps the most basic
Form of land value capture tax increment financing or TIF is a financing tool linked to property tax that enables capturing upfront the anticipated increase in tax revenues to fund the needed public improvements in a designated area under TIF the property tax rate remains the same anticipated land value appreciation which is assumed
To come from the public improvements enabled by TIF financing is not always guaranteed or substantive if occur enter tax revenue falls short of TIF financing local government and tax payers are beholden to any residual liabilities use of TIF has become much more prevalent in the US where 48 states are now allowed
To use them also in addition to property tax the basis for TIF financing has expanded to include other sources such as sales tax hotel tax and vehicle license fees one of the major criticisms of TIF has been that it is over leveraged because the tax revenue projections are often inflated to
Justify the upfront financing in the past its use has also been overextended because the expert advisory community for TIF is often made up of professionals who have vested interest in the project the development projects themselves thus benefiting directly from TIF financing special assessments or also referred to as benefits or
Betterment assessments a most traditional land secure financing dating as far back as medieval Europe here public improvements in specially designated districts are paid by property owners themselves who benefit directly from the improvements assessment level levied assumed to be directly proportional to the benefits each owner receives with the general
Decline in property tax revenue the use of special assessments have grown dramatically in the last few decades they have been used to pay for improve it’s not only in residential areas but also in business districts and increasingly real transit stations and transit oriented developments as well because assessing specific benefits is
More of an art and science there are currently no standard guidelines in determining assessment amounts or their coverage areas they can vary greatly from one locality to another and sometimes influenced by the local political climate for example sidewalks storm drains sewers and utilities can be linked directly to specific districts
Whereas arterial streets interchanges schools parks and libraries have wider benefits beyond the districts themselves and whether special districts should pay for these wider benefits have often been debated with increasing burden on property owners the imposition of assessments have often been contested with increasing court actions court rulings have generally leaned towards
More restrictions and in some cases they have required 2/3 voter approvals no different than regular taxes in general the general practice is now that benefits that are assessed must be unique measurable and direct and the burden of proof must reside with the local governments developer exactions financial responsibilities their local
Governments place upon developers to provide some or all of public improvements necessitated by their development projects exactions that directly conditional upon land use entitlements and approvals the exactions usually take three basic forms developers can dedicate their land for public use or they can provide in-kind services of facilities such as extra
Security or street cleaning but by far the most common exaction former exaction is in luffy’s there are also three basic kind of in luffy’s the most the most common being impact freeze impact fees represent the cost of incremental public service capacity required by new developments and they can include a wide range of
Infrastructure improvements and services the other two are linkage fees which are typically associated with mitigating secondary effects such as affordable housing needs and finally tech fees which basically represent utility connection fees use of impact fees have been increasing rapidly in the u.s. there is however a shockingly little uniformity in how
Impact fees are determined due to a widely varying level of concessions offered by the developers that often depending on the local political and economic climate because develop egg’s actions are often contested local governments ability to collect them have accordingly been determined sometimes by lawsuits and court rulings in the last
Two or three decades courts have generally leaned in favor of developers the most critical legal and constitutional issues related to exaction is the regulatory takings concern which I believe professor Korngold will articulate further in the next briefing developers generally pass on the cost of exactions to property
Buyers when the real estate cycle isn’t in the upswing but they assume the cost in the down cycle learn use and zoning regulations are often used as an incentive to enhance the effectiveness of land value capture tools in particular for maximizing developer exactions in the u.s. zoning changes or up zoning are typically
Initiated patter map by developers based on their project needs in general up zoning approval rate is quite high especially when local master plan is outdated zoning changes are also used as a political tool by elected officials to raise funding for political purposes among others there are three important
Regulatory incentives of note the first is related to air rights local governments often use air rights to on publicly owned land for value capture purposes for example they transfer unused air rights above railroad tracks and transit stations to private developers often for free in exchange for major projects that can create
Significant new tax revenue base they can also choose to release ourselves such an use air rights and capture additional value from the the the lease or sales proceeds first adopted by New York City in 1960 a transfer of development rights or TDRs is a form of air right value captured tool that
Enables to attend a enables transfer of unused rights on historic landmarks and other sensitive areas requiring preservation to areas needing more concentrated developments for privately owned land TDRs provide financial relief to property owners by enabling them to sell their Layton rights to developers who need additional density elsewhere the
Value capture here is anticipated increase in tax revenue as well as exactions from new developers on the receiver site second incentive type is density bonus which is typically granted to developers in exchange for affordable housing in other public benefits finally best vested rights are often used for multi-phase long term projects to ensure
That no land use or zoning changes occur while the development project is being implemented there are two land value capture tools that are based on negotiated contracts development agreement or DEA and community benefits agreement or seed CBA they are designed to provide more flexibility in a voluntary and not mandated da is a
Legally binding contract between one or more developers and local government where the developers provide large upfront funding for public improvements in exchange for the local government granting them the vested rights where the land use and zoning regulation that apply to their project we made unchanged
For the term of the agreement one of the early successful examples of GA is the foothill circulation project in Orange County in California where a group of 19 developers a will to provide more than 250 million dollars in funding for public improvements in exchange for the vested right to build their projects CBA
Is between one or more developers and local community groups that can be initiated by either parties in CBA developers provide specific and amenities often social programs such as small local business set-asides childcare facilities and sometimes even affordable housing in exchange for the community’s support for the project
Often used in conjunction da and CBA’s are most effective for large long term multi-phase projects for developers by virtue of having das and CBS in place it becomes much easier for them to secure their financing the primary concern regarding das and CBS have been their lack of transparency also because they
Are relatively new tools they have to be they have yet to be tested on legal and constitutional grounds finally as Anthony alluded to briefly earlier when using land value capture tools local governments have to rely heavily on taxpayers property owners and developers to share the financial burden
But as their burdens increase so has their resistance to use these tools over the last decade city of Sao Paulo in Brazil has found an ingenious way of engaging private investors in the land value capture coil equation over and beyond local taxpayers property owners and developers the city created
Additional then use entitlement by upzoning above the current density and solve these incremental entitlements to private investors in public auctions as a tradable certificate each certificate called CPAC as Anthony mentioned entitles the buyer a unit of development space typically around 10 square feet there is vested for the term of the
Certificate the city used the proceeds from the auctions to pay for affordable housing and infrastructure needs allowing these improvements to be made early independent of potential delay in project development in helping to trigger land value appreciation early CPF also enabled market-based approach to assessing the value of incremental
Density created by the city instead of bottom-up developer to driven up zoning that occurs on a case-by-case basis in the u.s. sapelo established a top-down absalom policy tool designed to focus on areas that knees redevelopment and also encouraged Smart Growth in and Tod over the last decade cippec enabled SAP Hollow to
Raise over 15% of their total capital investment needs using less than 0.1% of the city’s total developable land Sipan can be a valuable tool they could potentially be added to the current land value capture tool box in the US to further help the local government thank you [Applause]
Okay good afternoon I appreciate the invitation to be here it’s good to talk with you what I would like you to come away with from my talk is this one thought land value capture might not be a phrase that you use a great deal think about a great deal I’ve heard about a
Great deal but I suggest to you that it is simply a phrase that captures a number of concepts that you are familiar with and a number of tools that are currently in existence and in use and legally recognized in the US these are tools that are available to you now that
Perhaps can be expanded upon this is not some odd newfangled idea it is part of u.s. municipal finance for well over 150 years land value capture is part of the system of financing cities it is not some odd Bolshevik plot okay now if I can work this alright let
Me go back to here I divide sort of devices for revenue capture into two buckets one I refer to as voluntary in the way that Julie describes some of these public-private partnerships community benefits agreements and development agreements which he Abele describe then there are mandatory arrangements or non-consensual arrangements meaning those imposed by
The government on the owner these include special assessments these can be one-off special assessments where the local legislature just votes to impose a special assessment on a limited district within the town or it can be through the creation of a special assessment district that has some ongoing life to assess the properties
Within the area and to continue to operate as such the next one is what we might generally call incentive zoning this is where under the zoning law an owner is entitled to build to a certain F AR and the incentive zoning part is that if the owner provides certain kind
Of public benefits according to the statute then the owner is entitled to build additional f AR this might be various kinds of plazas various subway entrances in urban areas parks these can all give the right to build a higher fer the next one is as we
Saw impact fees or some kind of exaction that’s required from the developer again these are all permissible these are legally recognized these mandatory non-consensual approaches these are permitted the key is the matter of degree and while we get valuable insights inspiration and models to begin thinking about from different legal
Systems just as I’ve written about the danger of exporting US legal structures to other countries we have to be careful in selecting other countries legal structures to import to the US they might not be consistent with the US legal requirements nor with our history culture and economic needs and system it
Is often a matter of degree whoops there we go sorry this is the guide for us this is the legal guide that determines what can be done by municipality it’s not merely a thought experiment she’d be really cool if we could lower far2 one and then have developers buy back if
They want anything above that here is the constraint you see the text there of the fifth amendment nor shall private property be taken for public use without compensation that’s it now there are two kinds of takings there is an eminent domain taking that is where it’s usually the local legislature though could be
The executive but where the local legislature passes legislation that says we’re taking the front 10 feet of all the properties down a certain street to widen it okay there’s a conscious decision to physically take a certain piece of property in order to widen it to provide a wider lane for car traffic
No problem there this is a public purpose and the only fight typically is about the compensation great the second is what we call a regulatory taking where government does not choose to physically take the property but government within its power of regulation passes a regulation that the
Owner says what you regulated in my property has the effect of denying me virtually all use of my property and this is the area regulatory takings that comes out and land value capture that is the bone of contention where the owner says what you did government you did not
Physically take my property but your regulation in essence so deprive me of the value that it is the same okay I’m going to learn how this works all right here’s the test you can read it yourself up there just as home some 100 years ago
How do we know if it is a regulatory taking when the regulation quote goes too far you like that there any engineers there like your eyes are just rolling back up into your head thinking about the precision of God this is how lawyers work well this is not only how
Lawyers work this is how the truly great Justice Holmes work if it goes too far we’ve been spending 100 years since trying to figure out does this particular regulation go too far does it not go too far and he recognizes that everything government does when it says
That you can’t throw out parts from a slaughterhouse on – you think your front lawn when government regulates that well that is an imposition on one’s property right is that a taking a regulatory taking everything government does every regulation inhibits property rights is that too far No okay don’t worry gang
That one no okay but the other ones that’s the problem when we see this a lot in the zoning area the landmarks area all of the preservation area that’s when we have questions about going too far we know it’s not absolute the famous Penn Central case where the US Supreme
Court upheld New York City’s right to landmark certain buildings to hold that the facades could not be altered on these buildings there could not be adjustments above them okay we’ll talk about though a bit how they did that okay here’s the regulatory taking dynamic you can read this this is from a
Recent case of a more conservative Supreme Court okay the flexibility of the takings doctrine we know government needs to regulate but we also know this court says we need to protect individuals right to use their property and from government being over intrusive okay all right that’s the tension when it goes too far
All right now that was a Supreme Court issue how does this play out here we had some cases in the 1980s the Supreme Court got really quiet for many years on this issue Nolan and Dolan came in the late 80s and what they involved were involved a determination by inadequacy
Adjudicatory body administrative body about granting a building permit and what went on there in the eyes of the owner and ultimately in the eyes of the court was that the government through this permitting process was trying to force the owner to give up something that had nothing to do with the problem
That the owner was creating with the new building they were saying oh you want that permit to put in a new house well we’ll do it but hand over an easement to us for unrelated purposes and what the Supreme Court and like as planners I don’t mean to offend you might like that
Right you might like oh this great opportunity we can get that conservation it wasn’t quite a conservation easement like a conservation easement we get that conservation easement we’ve always been wanting and we can get that easement of access down to the ocean that we’ve always been wanting this guy wants a
Building permit we say hey you got something we want we got something you want it’s what we call monopoly bargaining and the Supreme Court says no there has to be some nexus between the problem caused by what’s being built and what’s being demanded by government and there has to
Be some proportionality oh you want this permit how about 10 million dollars for it it’s God is somehow work out ok fine in order to get a physical transfer of land from the owner the next case that came in 2014 the Coons case here government said oh you’re going to be
Doing some digging around in this property it’s going to interfere with some of the water issues in the area we’ll let you do it but give us a big chunk of money that we’re going to use actually this one wants to create a conservation easement elsewhere to
Protect in the court for the first time said we’re going to apply scrutiny to charging money not to a fee and impact fee not just the exaction of physical land but an impact fee and has to meet the same nexus and proportionality test ok that’s are those are our guidelines
But man they’re pretty broad goes too far there has to be a nexus rough proportionality this is how litigators put braces on their kids teeth and send them to college right so what do we have we have this special assessment I’m just going to go through quickly sort of roughly applying these special
Assessments are valid why because as julie described for us the people who have to pay the special assessment part of the non constitutional law of special assessments the people who pay the special assessment have to receive a benefit equal to the amount of the special assessment they’re paying and the courts
Were to see this.even exchange here and it’s okay as a constitutional matter incentives owning this works right where you can buy extra f AR and here’s the difference with the CPAC or with the other examples in South America France also where they lower the FA R and then
The owner has to buy up it works in the US only if the starting FA R is high enough to meet the goes too far I’m a lawyer I’m going to weasel words this one right one if they are it’s not gonna work okay most probably in the u.s. how many hmm
No your facts got to know your town got to know what’s going on etcetera but if it’s too low it’s not going to be enough basic property right under the tests that we’ve been talking about that regulation will go too far but if it is high enough then you can do incentive
Zoning on top of that if you have as of right enough okay exact times and impact fees there okay to prevent the Free Riders the city puts in a sewer system and then somebody wants to build a development that’s gonna put a thousand more units flushing into it they should
Not get the free ride on the investment that the city put in before and so it’s okay to charge that oh this is more complicated than that and I got a it looks okay but there’s some problems with that okay incentive zoning some current examples public spaces subway stations affordable housing
That’s a tricky one though okay the Nexus we’ll talk a little bit more later about that okay I just won mention New York City 2017 past the Midtown East rezoning anybody here from New York represent okay so they passed this major rezoning Midtown East so think roughly
On the East Side Fifth Avenue to First Avenue 42nd Street and up 80 blocks there’s maybe like 40 landmark buildings there it’s an aging office stock and for various reasons aging office buildings losing competitive edge a desire to increase employment grand Central’s air st. Patrick’s Cathedral Weaver house a
Whole bunch of places and so they rezone did they increase the minimum if they are from 10 to 15 here’s the biggie under the New York City landmark in existing you could only transfer your excess that you could not build if you were landmarked if your landmark you
Can’t build as high as you normally could you could sell that excess but basically only to an adjacent property in this new special zone you could now sell it to anybody within this 80 Block zone so now it was an increased market for it and here’s the value capture
Anthony’s saying where’s the value capture jar okay here it is about 20 percent of the sales price of these development rights that the landmark building sells 20 percent goes to a quasi-governmental board city reps on there plus some community people and they have to invest this money I mean there’s a lot of
Details you know pages and pages of regs but they have to invest this money in the area this is the value capture parks plaza subway entrances all that stuff so the city is sharing out of that extra sale above that the landmark buildings could get now you talked about who can best do
This do you need a special market in order to make this happen do you need government to make this happen government has to own these and be a bank and and do you need a special online blockchain set up to make this happen markets are really powerful things right
Within six months JPM chase jumps right into it and they come out with a proposal they’re going to take their take down their existing headquarters on Park Avenue in the 50s take it down and they’re going to go up some 18 floors build 18 floors hire how are they doing
It they’re buying TDRs from landmark buildings Saint Luke’s Church and some from Grand Central right they never were able to build so Grand Central has a pocket of it right away and there’s another one that’s in the works too I’m out of here
I gotta say I was kind of sad but I saw the thank you I wanted you to keep going and I was taking notes so this is a really exciting work and of course I’m Mike Alexander and I’m from Atlanta I’m gonna sound a little Pollyannish tonight now I apologize for that
If you catch me drinking a beer later I’ll be not pollyannish I promise you but it is an exciting time in Atlanta it’s been a lot of hard work to get to where we are and so you’re gonna see a lot of the concepts that have been talked about earlier
In pictures and graphics as I get going so I always start my decks now with this slide it’s a mural when you’re regional planning agency and you actually have an arts program and you fundraise to do murals you think you’re a cool planner so this rise above is really really
Capturing a quote by Martin Luther King about rising above our narrow concerns and I think that’s so critical and important when you think about this work I know Lane land value capture is very technical but this is at the heart of good planning in America right now I
Couldn’t be happier to be here I couldn’t be happier the APA and the Lincoln Land Institute are doing this work because it’s critical for us as planners to have our heads up about this potential so I’m a regional planner at heart but I get to watch all this play
Out in our communities and really what I’ve come to understand is this is an ecosystem in Atlanta for us figuring out by hook or by crook at times ways to finance infrastructure to get things built in metro Atlanta and to show you the scale of this this is really just
The number of Community Improvement Districts that we have in metro Atlanta that’s a lot in case you’re wondering that’s a lot of Community Improvement Districts Dan Reuter quietly in the corner had a big hand and a lot of these coming into formation but that’s a huge land area we’re really property owners
Have made the decision to self tax themselves to finance infrastructure and the reason I think we’ve been so successful is because we immediately transition those leveraged funds and some of these see IDs are very some some of them are some of the biggest really employment centers in the United
States they engage in partnerships with Regional Planning agencies state agencies to take those funds that they’re saving and investing in their communities into real projects so for our CI DS if you look at any of the reports they’re gonna talk about leverage and leverage is so critical so
Really at the heart of that is these are self-imposed districts and you can read in detail more about that you have to have an enabling legislation passed down into state legislature and then the local government has to do another bill to allow you to form the CID so there’s
Some people in metro Atlanta that are literally experts at forming si IDs and they have gone door-to-door figuring this out so there’s a mix of capability and competencies within these si IDs but it’s been a very valuable tool so just to talk a little bit about that creation
As I’ve already done the one thing I wanted to put in these images is to content contextualize a place like Cumberland CID where the new Braves Stadium is they’ve been in business for 30 years now they’ve really leveraged over a hundred million dollars worth of investment and that that Center for the
Betterment of that area one of our newest a Dan worked on this one the aerotropolis CID how many of you flown into the Atlanta Airport it should be every that’s my every hand question you can’t not live in America not come to our Airport the problem with our Airport
Is that most of you I wish you would leave and go spend more money in our town but that land around the airport is actually underutilized and if you look at Europe and the way they maximize the value around their Airport we we really spun up these these Cid so relatively
New but trying to capture this idea of like how do we incentivize development around the airport to make it as powerful as possible so that’s another model of CID and then the one on the right the Yards is really a one parcel CID and it’s an old GM plant right
Beside a transit station so you can go we’re old we’re new big or you can go down to a single parcel so we now have a single parcels the idea could not be prouder of that right so the investment model is pretty straightforward you know the mil ranges
In the state of Georgia from 3 mils to 12 Mills and again a mil is one dollar on a thousand of value but the average across all the see IDs is about 4.7 mils and again this is all self-imposed right and so the good example of this if you
If you’ve been to downtown we’ve rebuilt one of our streetcars and the CID in downtown Atlanta actually helped fund that that’s how powerful the CID property taxes are on that they were able to let it leverage those funds to do an actual transit projects shows you
The scale of that now the reality is that was a big investment for them and that’s gonna be a long-term investment for them so they are critically focused on how that’s impacting on the land use around that line now the the reality is on a Friday night the hottest district
In metro Atlanta is along that line on Edgewood Edgewood Avenue so if you want to go to a place like joystick and play video games and a bar setting that is a very very fun place to be on Friday night a little I’m a little too old for
That now but it’s a great great change in the land use intensity based on investments like that right so tax allocation districts you state if theis a tad Tad’s and Georgia are also popular and you’ve heard a lot about this tax increment financing already our biggest and best example is Atlantic Station
Right now so if you look at the photo on the left it really was a steel mill it really was a functioning steel mill that went out so there was a lot of environmental concerns about this and so when this when this was really proposed it was novel a lot of people thought
That it wouldn’t work there was just all those environmental concerns associated with a steel mill they ended up capping a lot of that with concrete and now as you can see it has filled in quite quite nicely and the value capture here is just ncredible that property wasn’t
Generating any real value and so you know the public investments about two hundred fifty three million dollars the private investment on that project now is over 1.6 billion dollars so a core property in our core that was blighted that we’ve completely turned around in metro Atlanta so Tad’s actually work the
Surprising thing is it’s been so popular in Georgia there are over sixty Tad’s now across the state in places that you might not otherwise think about so this is a map of all the tabs in the city of Atlanta you can see the city of Atlanta has been all-in on using tax allocation
Districts of course if you weren’t aware we had a terrible recession and of course you heard really one of the problems with this is miss estimating the pinch of potential revenue those properties fell off the good thing is the city was relatively conservative about allocating their tax allocation
District dollars so much all of these districts had pots of money they didn’t overextend themselves so we were in relatively good shape coming out of the recession and it has started to pay off so how many of you been on the Beltline come on your planners see that’s a good
Number so wrapping around the Beltline is a lot of tax allocation district investment the Old Fourth Ward Park which is really the world’s largest park detention pond I think built in the last twenty years but that is a park that’s designed to flood its storm water retention control but tax allocation
District funding was used to help build that Park and if you’ve walked that area of the Beltline you know there are a few places in the United States that have had the level of investment as that areas had so you put the Beltline together with tax allocation district
Financing you build a park and then you take a city eyesore like City Hall East which is now Pont City Market that I can tell you from economic development terms you do not want to compete against us when we bring in companies and they see pont city market they go holy cow
Right and so it’s really really been a boon for our economic development officials be able to take them to the top upon city market and play putt-putt and look out over the Beltline it’s it’s good work that has gone on with these tax allocation districts now another one
That may surprise you is actually standard strip shopping mall this is out in glénat County one of our suburban counties and Duluth Duluth has a tax allocation districts in a relatively small city they’ve used that tax allocation district a funding model to incentivize a multifamily development and doing what we’ve gotten more
Comfortable in doing is helping developers to provide structured parking through that type of financing so again you’ll see this public-private partnership that leads to things like parking on for development with the incentives of affordable housing baked into the multifamily development and that’s how we like to do things in metro
Atlanta so the other program that I want to talk about real quickly as a program of the Atlanta Regional Commission our livable centers initiative because it brings it all back together if you think of value capture and you’re willing to entertain a broad definition of what that actually means in this program is
The program we’re most proud of and it’s really started to get even more focused on our transit oriented development district areas in metro Atlanta so real quickly this is the MARTA station system as it stands today so we’ve been planning for these areas for a very long
Time and there’s just now getting the development pressure in areas that truthfully had been passed by again and again and again for development so the key bullet on this is gap funding right so how do you incentivize development at these Marta stations Marta owns the property but
It’s still really hard to make the numbers work especially in fast-growing areas where there’s a lot of development pressure to be at market rate because like most other places we’re really struggling to figure out affordable housing I think this is the number one issue in the United States and it’s come
Up in such a short period of time we’re in a recession I was making all these maps about underwater houses and now I’ve got whole decks about how certain areas of Atlanta aren’t affordable so a massive change in a relatively short period of time so we recognize these Tod areas
Combined with special financing and if we can layer all of this together we can do some pretty special work so we incentivize these planning studies on this is a nationally recognized program so federal transportation dollars get put in to studies it’s like you’re going your grandparents have decided to pay
For your college except they’re telling you what to major in which is more walkable communities more human centric planning so that’s that’s the way we focus this work but the big incentive is that our board agreed to fund implementation dollars of up to five hundred million dollars half a billion
Dollars in additional investment if these communities implement these LCI studies right so the case study for us is Avondale station full disclosure I live in the City of Decatur this is actually in the City of Decatur a half mile from my house so I get to look at
It all the time right and so this is what it looks like today a parking lot and we started this in 2002 and of course the big point here is it takes a long time you have to have real patience to stay with us kind of work we funded
Some improvements they got the authorized then the City of Decatur really got interested in it and so we went out to RFP for design development and this ended up being the final design for this project right but what we’ve done and you can see those funding
Numbers is we we have put money into this redevelopment federal transportation dollars into this development this is the gap funding so I made this slide this is my favorite slide isn’t that pretty and they’re great to look at I make her staff go find the letter so
That I could take pictures on my phone of like how you write a letter to get G dot to transfer federal highway money over to fta accounts so that that can become FTA money and when it becomes FTA money then we can do different things like funding improvement in transit stations
Right so think think Ozark for a second accept all completely legal right and so this is one of the things that we we have done and so that allowed us to do bus improvement at the station itself and actually build parking spaces now we’ve talked a lot about how mobility is
Changing parking spaces is what we can fund right now I hope the funding buckets change over time but we built a lot of parking there and that has created space for the developer to do things that they otherwise wouldn’t do which has increased the share of affordable housing there’s a big senior
Housing project at this Marta station which we could not be more tickled about so this is the development inventory and funding structure associated with that and I don’t have enough time to go into this in detail but the big thing to know is that we’re we’re making the station
Better and because we’re able to build that parking it offsets costs for the developer and that’s about as high end as it gets at the groundbreaking actually the FTA administrator for this region came down and said an FTA has put this money into this project and of
Course all the staff planners we’re in the back well that was federal highway funds originally so it’s a good partnership by everybody including our state agencies that helped us figure this this type of mechanical work out to help our communities in ways that really incentivize great places right so here
It is under construction look at the size of the parking deck I know we’re all planners in here so I’m calling the MARTA people I’m like I need a picture that doesn’t show the deck because the deck looks taller than the building which I’m not sure about at this point
But if you’re down at street level I promise you it’s gonna be amazing like street level retail it’s gonna look beautiful so and you can see the crossing over to the MARTA station we couldn’t be doing Tod more perfect when this is built if you all text me or call
Me I’ll take you down there and we’ll we’ll we’ll check it out so I can’t wait for this one to finish up but it really is just to illustrate the number of partnerships it takes to do this work in reality right commitments by so many different types
Of organizations to figure it out and it really is the public sector in the private sector working together which is really at the heart of what see IDs and Tad’s and all these funding mechanisms are about they’re there to create a money framework where people can work
Together so again I know I sound Pollyannish but things are really great in Atlanta and I can’t wait for all this stuff to get built thank you all right thank you very much we’ll get this conversation started let’s get after it as Chris Cuomo might say I’m gonna ask
One question each of the panelists and then we’ll open it up really quickly but Gerry I wanted to start with you you have really educated us on your review of property rights jurisprudence one thing you that caught my attention was making reference to throwing out stuff from a slaughterhouse in front of
Your property so weak we can say with certainty that if it involves entrails it’s it’s okay in terms of government regulation is that a brighter line we can perhaps consider the one do they the last challenge or one of the last most recent challenges to inclusionary
Housing was of course the San Jose case which didn’t advance and we don’t want to make this seem like it’s hard or scary or difficult but if you had to advise planners and local officials how they what can they do proactive to anticipate a legal challenge to this
To this concept so and I’ll be brief the California Supreme Court upheld inclusionary zoning against a challenge by it was state Builders Association and so requirement that fifteen percent I think it was of the units in any new building had to be for lower income and
This was for sale the lower income they upheld it they and the US Supreme Court refused to take the case and there’s a concern that it will come back to the Supreme Court and whatever happens this Thursday in Washington and thereafter you can be confident that a new member
Of the Supreme Court will be more protective of property rights and shift that balance that way the issue is that this was a legislative requirement and up until now the court has usually deferred to legislative requirements legislative exactions essentially or a legislative impact fees they’ve only gotten upset when it’s been these
Administrative bodies on the one offs for your permit you have to give us this but if it’s been a legislative scheme that sets it out they’ve generally deferred to its separation of powers etc some concern that they might not be so deferential anymore and then there’s the
Question of Nexus does the building of a market building really cause relate to a lack of affordability the lack of affordable housing we know is not just a societal problem it’s a societal disgrace I mentioned I’m from New York it’s not an abstract issue
In New York it’s one that we see on our streets literally daily it is a a I think a threat soar to the fabric of our society and it’s an economic threat I think as well not just to those least able to pay in our society but to those
People who are coming into our marketplace young college grads it’s not affordable for them but I think for people can only proceed as they’ve done before this is one where we’re at the wait to see what the court finds it is possible that they will get involved and
Not defer and it is possible the California courts position was this is not a taking of property this just makes their property less valuable that is not particularly compelling I think ultimately the challenge for affordable housing is do we believe that’s a problem then all of us ought to pay for
It but that’s a policy decision and an electoral decision that hopefully happens in my lifetime thank you Julie my next question is for you the the the word is in Sao Paulo that land owners and developers actually greeted this new regime with C packs with the they were they responded well they liked
The consistency of the the permitting process and the development process so at first glance you might look at it and say with their starting with an F a are one a must have driven everyone crazy but the response by the development community was was more positive I guess my
Question is do you have a sense for how the development community might respond to some of these land value capture mechanisms so as I mentioned in general the benefits of seed packs are that as you said it provides transparency it also provides market-based approach in determining the the value of incremental
Density and more importantly you can also provide the improvements early on regardless but you know one of the key question if we were to apply here is the regulatory takings issue as Jerry mentioned so if the and the key question is who actually owns the air right above
The as rezoning it’s if it’s owned by private owner and so so so if you if the private owners are the ones who actually buy C packs then the regulatory takings issue is no different than impact fees so it’s essentially the same so they found that in subpar law the private
Property owners actually benefited from C packs whether they participated in cpa program or not because the land value appreciation was much higher for those areas that actually implements e packs as opposed to that did not in part because that because the public improvements were made early on to
Really treat land and appreciation but they also chose to issue air in those areas where there was high demand so we didn’t have the issues of the issue that you talked about from a developer standpoint if we were to actually implement it here in the US it actually
Provides more options for them over and beyond exactions and development agreement so for example c packs will provide access to additional investment capital investment pool so that they can actually without their financial burden especially in the early phases when their risk is very very high in addition sip have also provided
Vested right in the sense that when you buy it essentially it guarantees that that there’s no change in land use and zoning so it really for them was a very valuable instrument plus it also allowed them to kind of wait out down cycles if the real estate market was really bad so
There was another benefit but but overall I believe that the most useful area where CPA could be applied is publicly owned land where you don’t have them they’re bigger for a takings issue so right now you know you kind of provide land use entitlements in a very
Ad hoc basis but this could provide probably provide a a more market-based transparent way of monetizing land land land entitlements which is actually a very very valuable asset that’s under the control of the local governments so a little bit of that win/win dynamic in place and and and also more more
Predictable it sounds like Michael finally to you and then we’re going to open things up and and not invade the reception time very important not to do that thinking about Atlanta red hot Atlanta in some of the equivalent of community investment districts or Community Improvement Districts there’s been some concern about whether
Government is unwittingly or otherwise spurring gentrification that issues of race and equity are not being considered sufficiently key can you elaborate on some of the ways that planners there are making sure that these financing mecca’s mechanisms are can to bring about more equity yeah I think most directly in our work we’ve worked
With Marta which is obviously the transit agency for metro Atlanta it is absolutely a an imperative for us to get that right I think that fear is very real in high opportunity areas as we see this transition I mean we we have been working on this very hard and the west
Side with the new football stadium in particular and just being honest you know that community has had so many plans done so many people have gone in to the west side of Atlanta and told them what they need to do instead of really listening to them and figuring it
Out this time I think they’ve done real work as one of the best examples in fact they have funded a program that basically pays for all the existing owners over I think the age of 60s property taxes because I realized there really weren’t that many people left who
Were owner-occupied living in their home and it was just easier to literally pay their property taxes so that they would be under no pressure to move out that’s just one example of a pretty unique way that we’re trying to address this it’s a relatively small solution the other
Thing that we’ve done that I’m really excited about is we started an equitable transit oriented development program with our core partners now that’s a terrible planner name like the LCI program Louisville center that used to be called act tips so we had eto D now that’s called the transformation
Alliance and the whole point of this program is to get everybody in the room to work on making sure no one is displaced as these transit oriented districts really do start to develop and there’s been a great partnership because of that partnership we were selected as a spark community and that’s what makes
Us that it allows us to have access to ninety million dollars in additional capital to try to make sure that we’re building programs to help people stay in their communities so on the transformation Alliance which we backbone at the a see is our critical program that we’re
Using right now to bring everyone in the room to work on this to make sure that everybody is really heard and thought about before this happens very real concern all right terrific so now let’s open it up it’s going to have to be kind of lightning round style so I leave it to
All of you to come up with crisp targeted questions on the subject of value captured so who wants to go first a little lightning round just to bring things to a close any questions lingering thoughts yes all right so idea that value capture works
Better in a hot market if we look at a regenerating post-industrial legacy city is there some way to sort of wade into the water and maybe I can answer that to start I mean typically you know the public improvements are market driven as well so on the down market when they are
Not of new developments you really don’t need public improvements right so so these random value capture methods are used when there is a lot of improvement as needed with new development and expansions and things like that but in general you know I mean essentially under down market you want to have at
Least in position on property owners and tax payers so you know text property tax and tax increment financing there’s no new tax rate involved so essentially you pay the same tax amount but you essentially leverage in the future tax revenue up front so there have been maybe most least imposing
Would be my thought and Hawk Atlantic Station is a good example of a property that was vacant for a very period of time a hot market Atlanta is but there are big areas of metro Atlanta that are still under water I mean we have basically big areas of the southern
Part of our region where the housing markets still aren’t functioning ten years after the start of the recession so and it’s very much a struggle in those communities in the city of Atlanta one of the properties that’s in the news right now is the gulch and there’s a lot
Of political energy around a potential tad financing scheme for that property and that property’s been vacant for 50 years it’s the most intractable planning problem and now there’s a real developer there but we’re hearing the classic stuff that that area as far as our first office market goes you would think it’s
Been booming but it’s been one of our our least attractive places for new development so that a developer wants to come into that area if you would think would be heat well-received there are a lot of questions about that development and the classic stuff about developers
Making money are being said a lot which is challenging for someone who’s watched that property for my whole career to know but that the only financing mechanism that seems to make the toughest property in the core likely for development is you know at if a tad financing scheme all right yes please
Well and certainly in terms of those aging graying boomers and I’m accepting all of us from that category of course the good news is is that the that is one part of the market that the real estate development community is recognized as you know it’s a it’s a wellspring so
These mixed mixed use and residential areas like Hudson Yards I think is probably they have that kind of demographic very much in mind but you the question I think is important because the need for municipal resources it’s not just to prepare existing roads and bridges etc but it’s to build the
Infrastructure that’s needed going forward and that might be for the aging community it also is to bring in the fiber optic systems to make the cities competitive to draw people and to make them competitive within the country but also globally so the needs are changing and the infrastructure needs are
Changing and you highlight one which I don’t know that a lot of people are focusing on when they’re talking about infrastructure but it is indeed an important one in a new one not just fixing the bridges that were seen falling apart and that takes us back to infrastructure where where we started
And new new ways of financing infrastructure and supporting our cities so we’ve got to get to that reception please join me in thanking our distinguished panel and I know I’ll be around for the reception please come up and talk to us one on one and good luck to you with the
Rest of your gathering
ID: ZDwN4UDVgEo
Time: 1537787963
Date: 2018-09-24 14:49:23
Duration: 01:32:45
