Friday, March 03, 2006

Downtown Density "Bonus"

A note from a regular reader of this blog:
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They've had several good editorials lately. Referring to the "density bonus" discussion, I am really interested in the "in lieu" of option. At CRA Advisory Board meeting David Smith explained, in response to questions from the committee about "in lieu of" options, that the consultants (ERA) are against them. They do not like having affordable units built in other places in the city and think they are best if successfully integrated into a larger project.

However, Smith said, the planning department wanted the "in lieu of" option and had consultants prepare one as an addendum. At that point there was discussion of "in lieu" and it was nothing like what was in the newspaper. There was no reference to the cost of building downtown being too much for a developer. One developer and two realtors talked about it being too hard to sell a project with affordable units in it.

I was really offended that I might live in a city where there are people who would refuse to live in the same building as the people who vacuum their carpets, wait on them at restaurants, play beautiful music for them at orchestra concerts, dance for them as part of the ballet, choose to be social workers, etc. for idealistic reasons rather than choosing a more lucrative profession. I can handle high buildings and loss of greenspace more easily that the sentiments I heard expressed at that meeting. Say it isn't so!

And, again, am really interested in hearing from those who have thought a lot about this. Another question: If you choose the "in lieu" option...should you really be allowed the huge density bonus?
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Today's SHT editorial is about the affordable housing density bonus idea for downtown Sarasota.

The editorial says "take off the rose colored glasses." Some excerpts:

The city is clearly trying to do the right thing by encouraging the construction of lower-cost housing. But the consultants' report suggests that even if the city were to double or quadruple allowable density in downtown zoning districts -- a big boon to developers -- little affordable housing would result unless additional incentives were provided. In essence the report concludes that, because of high costs and other construction hurdles downtown, density bonuses aren't enough to persuade most developers to build affordable units within their projects.

With astronomical real estate prices, the downtown is becoming an enclave for the rich. Mixing in some units that working people can afford has appeal because it would preserve demographic diversity. But in the downtown, "affordable" units would likely be small ones -- which would leave out many families.

An "in lieu of" option, where developers pay for the privilege of the density bonus but don't build the affordable units within their own project, might prove more effective at broadening the supply of work-force housing. As the consultants noted, the in-lieu-of fee would have to be carefully calibrated (in their example it exceeded $330,000). But its use would be flexible, funding anything from nonprofit housing construction to down-payment assistance and rental subsidies on homes outside the downtown.

The editorial points out that this is a complex issue and needs to have public understanding, public input. We would add that a good measure of listening and questioning by the commissioners will be greatly appreciated. This should not be a rushed process.

3 comments:

Anonymous said...

Please wake up and smell the coffee. Condominiums downtown, on the beaches and on the bay are listed for $500-$1,000/square foot. Inland, they go for $200/square foot. Furthermore, like it or not, people who pay $500 or more/square foot are not used to living next door to the help. Realtors and developers know this. "Affordable housing" downtown, on the beach or on the bay ain't gonna happen folks. I don't care what kind of incentive you offer the developer.

Dale Parks said...

I was encouraged to hear at the CRA Advisory Board meeting that the ERA consultant was trying to discourage the use of an in lieu of option in regard to the work force housing issue. I do not believe the provision for an in lieu of payment for increased density does anything to reinforce the concept of diversity in the downtown- something Andres Duany spoke of many times.

Having watched the concept of the Downtown Residential Overlay District or DROD be quickly taken advantage of by the developers- all it produced was more high end residential units. While the purpose of the DROD was not to necessarily solve for the issue of affordable housing, its inception was discussed in the spirit that increased density in and of itself could bring diversity to the downtown.

I believe allowing increased density- that was intended to be for attainable housing- and then allowing an in lieu of fee will accomplish very little in the way of keeping the downtown a healthy and vibrant mix of people that are able to live side by side.

The City currently has the ability to introduce attainable housing into the property Sarasota owns on Palm Avenue- the sight of several failed development attempts in the quest for public parking. City staff elicited input on the idea in our CRA Advisory Board meeting spoken of earlier by a previous blogger, and I was encouraged to hear several members support the concept of its inclusion. I think if the City Commission wants to create a difference and begin to address this social issue it can begin right now.

In lieu of payments may generate large amounts of money to create projects farther out of the city center as some have pointed out, but the only thing it really accomplishes in my opinion is a further erosion of the concept of what living in a cosmoploitan area is all about. Sarasota's downtown should not be turned into a gated community.

Laura Sperling said...

Hope you don't mind me putting in my 2 cents worth, and I'm speaking for myself, not the editorial board here...
I'd encourage anyone interested in this subject to read the ERA report, which is on the city's web site (sarasotagov.com).
Downtown construction imposes formidable expense issues. For example, it costs $25,000 just to provide a structured parking space to serve an attainable unit.
As i understand the report, it says developers will generally not take on the risk of a project unless they can get at least a 20% profit -- and even big density bonuses won't provide that profit level unless developers get free land or various other breaks. Here are a couple of excerpts from the ERA report:
from exec summary:
"This analysis leads to the conclusion that under current and foreseeable market conditions, even a significant density bonus is unlikely to result in new development of attainable units downtown.
The primary factors behind this situation are the high land and construction costs in downtown compared to other areas of Sarasota...which has had a strong negative impact on development profit."
The next excerpt explores the problem further (from p. 38):
"This analysis leads to the conclusion that under current and foreseeable market conditions, even a significant density bonus is unlikely to result in new development of attainable units downtown. Furthermore, as attainable housing requirements are imposed and increased, the development profit decreases and new development becomes less and less probable.
"However, if developers have some sort of advantage versus current market conditions in the downtown, then a density bonus program could be effective in creating attainable housing. Such an advantage could be due to a range of factors, such as reduced development costs (such as reduced land or construction costs, or even as a function of city financial support or actions), increased sales revenues, or a lower minimum development profit level. In addition, non-profit housing developers may be in a better position to take
advantage of a downtown housing density bonus, articularly when combined with other development tools, such as below market interest rates or low-income housing tax credits."