You Say Quid Pro Quo, I Say Coasian Bargaining

Today's Boorklyn Paper has uncovered that the Domino Sugar factory developer, who plans on turning the complex into 2,200 residential units though the project is currently suffering some setbacks, has paid local community groups about $100,000 over the past few years. Then, ESCONDALO!, these groups have supported the project. From the article:

Community Preservation Corporation Resources — which isfighting to avoid foreclosing on the massive waterfront plot where it hopes to build 2,200 apartments and retail space — doled out donations of between $9,000 and $30,000 to organizations that subsequently backed the Domino project from February 2008 to December 2009, months before its campaign to rezone the site, court filings reveal.

The currently cash-strapped developer says the donations, which it calls “public reputation” money, simply prove that it is invested in the neighborhood. But attorney and civic watchdog Norman Siegel said the donations suggest an instance of quid pro quo. 

“If the developer was giving community groups money five or 10 years before their mission, that would be one thing, but if the developer is giving money for the first and perhaps the last time, it raises the question whether the donor is buying recipients support and it raises questions about the community groups themselves,” said Siegel. 

...

After the organizations received the checks, members of Southside United, Catholic Charities, El Puente, and Churches United attended several contentious public hearings on the Domino plan, showing their support for a project that would rezone the 11-acre Kent Avenue site and bring 660 units of below-market-rate housing to the closed plant.

So the attorney says this is bad because of the timing, where the developer was clearly trying to buy support. To which I ask, who cares? The community groups value cash (and relatively small amounts of it) more than they value preventing the development. This is an example of how flexible the zoning code actually is. Perhaps the payments are increasing the overall cost of development, but in this case not by much since it is a $1.2 billion project. I understand that quid pro quo looks shady, but this can also be seen as compensation for any harm caused by the development (which can be loosely interpreted as Coasian bargaining). These weren't hidden transactions, so I'm not sure where the outrage is supposed to come in.

What NIMBYism Looks Like: It's Not the Parking This Time

For many urban development projects NIMBYism is a problem, though I am not convinced that NIMBYism prevents regional development as much as for local development (meaning that if a specific project is blocked in a particular location that development will likely occur elsewhere in the region, thus the region is just as well off as had the development occurred in the original location). That said, the other day I highlighted the problem of parking requirements as a tool for NIMBYism, and here is another example from the Twin Cities where a project in south Minneapolis has been blocked by community opposition. Here is a link to the project website, and here is a link to the opposition website. This is a story from the StarTribune about the fate of the project. From the post:

A controversial mixed-use development project in the Linden Hills neighborhood likely won't move forward after an extended and emotional hearing at City Hall Thursday.

The city's Zoning and Planning committee granted an appeal filed by neighbors who are concerned with the project's impact on the area. In particular, neighbors took issue with the development's five-story height -- two stories more than normally allowed in the area.

Residents were appealing a City Planning Commission decision last month to allow the project to move foward. The full City Council still needs to approve the appeal.

Details about the project can be found on lindencorner.com. The building would include 40 condominiums and eight business on the first floor. For a taste of the opposition, take a look atnolindencorner.com.

Spectators packed into the Council chambers Thursday, many donning buttons with a cross through a photo of the development.

"There has now been a rent in the fabric of Linden Hills," said council member Betsy Hodges, who represents the area. "It will take a long time to heal that."

When people talk about NIMBYism, this is a classic example of what they mean. A five story building is too much for the neighbors, and the zoning code says three is the maximum allowed. Some will decry that this project won't move forward, but these units will likely be built elsewhere in the city so the net effect will be about the same. However, a larger point I want to highlight is that many of the NIMBY problems that planning faces today are due in part to the false precision that is prevalent in the zoning codes. Parking requirements are extremely precise, though meaningless, and prevent all kinds of development. Yet planners have insisted that parking requirements are scientific and accurate for decades! Of course the neighbors will argue that parking requirements are important because the city has been telling them so for years. So it goes with height restrictions. Why limit to three stories in this part of south Minneapolis? I bet no one really knows. Yet it is in the code, so it must be right. Except it's not.

This project will not move forward, but it doesn't seem to be because the parking requirements are a constraint if they built a smaller building.  As designed, there were 135 parking spaces included (1.5 spaces per residential unit and 75 for commercial use). This is in excess of the minimum parking spaces required under Minneapolis' recently revised zoning code:

Will there be enough Parking?  Yes.  There will be 135 total parking stalls on site -- 123 parking stalls below grade  and 12 stalls on grade.  This exceeds City requirements of 81 stalls.  Of the excess (81) stalls, 20 will be allocated for extra condo parking, and 25 will support parking needed for neighboring businesses.  Therefore, Of the total (135) stalls, 60 will be dedicated to private condo parking and most of the remaining 72 stalls will be free of charge and for public use.    

However, the parking does have to be underground to fit the site and that may be a concern.

Another complicating factor about NIMBYism preventing density is that the area allows far more units than proposed:

 Is Linden Corner within the zoning standard?

Density:  We are proposing 40 units, however the site's zoning provides for up to 74 units without a variance.Volume:  Proposed building volume (gross square footage) is less than 90,000 gsf -- within the zoning standard.  Height:  The site zoning provides 42’ for building height.  The zoning also provides for the possible granting of a “conditional use permit” or C.U.P. for added height.  We are requesting 17' of added height, for a total building height of 59'.  A C.U.P. is an integral part of the zoning code itself.  Contrary to common belief, not all zoning requirements are necessarily fixed.  A C.U.P. is a mechanism of zoning law which provides flexibility in determining reasonable height limitations, etc.
Does the project also meet the standards imposed by the overlay district?     The project meets the requirements of the Linden Hills overlay district with one exception, the overlay limits the setback of the building to not more than 8' from the front property lines.  As part of Linden Corner's architectural interest, and to facilitate an outdoor sidewalk patio for the restaurant, there are segments of the building that set back more than 8' from the front lines.   

So it's not that NIMBYism is preventing density exactly. The developers don't want to build as densely as allowed and are proposing more parking that required. They could redesign the site, but don't want to do that. It's complicated.

 

 *Special game since it is National Grammar Day. Find where the Oxford Comma should go in the StarTribune text!

What NIMBYism Looks Like: It's All About the Parking Requirements (and Lenny Russo is a Wise Man)

This post by Lenny Russo in the Twin Cities StarTribune is a great, if depressing, explanation of how NIMBYism actually occurs.  Read the whole thing, but this is a key story and it involves parking:

Most recently, Kevin VanDeraa, owner of Cupcake on University Avenue in Minneapolis, attempted to open a second location on St. Paul's Grand Avenue.  The plan for the new location included a wine bar.  According to the code, VanDeraa would be required to have ten off street parking spaces in order to receive his licenses to operate.  The previous tenant, a toy store, was only required to have three such spaces.  Consequently, VanDeraa applied for a seven space variance which was reduced to six spaces with the condition that he install a bike rack.  The six space variance was granted on December 27, 2011.  At that time, VanDeraa agreed to lease parking from a nearby dry cleaner to satisfy the St. Paul Board of Zoning Appeals.

When a variance is granted in St. Paul, there is a ten day waiting period to allow for appeals from those who might be opposed to the variance.  VanDeraa waited ten days, and then he began work on his new location.  Unfortunately, he was unaware that the variance wasn't actually finalized until January 9.  That effectively pushed the appeal deadline to January 19.  In the meantime, two appeals came in just under the deadline.  One was made by the Summit Hill Association, and the other by a neighboring law firm.  Consequently, city officials pulled a previously granted building permit.  Why there was a delay in finalizing the variance and why he was granted a building permit before the deadline expired is not clear to me, but the result was a new hearing on the variance.

At the new hearing, a thorough review of Cupcake's parking proposal showed that VanDeraa could guarantee at least eight parking spaces, but he would only be able to temporarily guarantee two additional spaces.  Under the leased parking agreement, the dry cleaner would have had the option of reclaiming those spaces if it needed them in the future.  On a vote of 5-2, the City Council upheld the appeals and denied Cupcake its previously granted variance.

The Pioneer Press quoted City Council President Kathy Lantry as saying that, "We've got to stop voting for the applicant...The code is very clear. You cannot, for economic reasons alone, grant a variance."  I admire and respect Kathy Lantry, but those seem to me like pretty good reasons to grant a variance, especially at a time when LGA money has been withdrawn and property taxes have skyrocketed as a result.  For perspective, the property tax assessment on the commercial property owned by Heartland in Lowertown increased by nearly $17,000 this year.  Also for perspective, Mark Prokop, who owns the building that Cupcake planned to lease, was quoted in thePioneer Press as saying that due to increased property taxes he could not charge a tenant less than $5,500 per month.  One would have to sell a lot of cupcakes to make that rent payment.  VanDeraa needed the additional wine and beer sales to help Cupcake make rent.

I am not sure what the reasoning is behind requiring a business that is selling wine and beer to have seven additional parking spaces when the previous business only required three.  I can only wonder if there is any empirical evidence that a place selling cupcakes and wine would generate any more traffic than one selling cupcakes and coffee.  Nonetheless, 15 to 20 jobs were lost; a $300,000 investment in a commercial property was discontinued; and a landlord is left with an unleased space with a mortgage that needs to be serviced.  This is because the business owner fell short by two parking spaces.  I wonder how anyone can justify that such a variance would have contributed immensely to congestion on Grand Avenue or to the long term detriment of the community.  Bad precedent was cited as a reason to deny the variance, but variances are reviewed and approved on an individual basis.  There is no reason why a similar request could not be denied in the future if circumstances justified that.

I know the restaurant business well as I spent nearly a decade owning and operating a place in downtown Minneapolis (where there were not minimum parking requirements). This story is all too common. If parking requirements were based on science that was any better than voodoo I would support the community concern. However, planners have argued for decades that they know exactly how many parking spaces are required for specific land uses. So forgive communities for thinking tht planners knew what they were talking about. But this, and many other, cases,  show how nonsensical minimum parking requirements are.

Consider that the city is specifically telling this restaurant that they city knows something about the restaurant's customers that the restauranteur does not. The city is saying, through their minimum parking requirements, that the cupcake buyers will all drive. I know this area quite well (and used to go to the toy store), and this is exactly how minimum parking requirements destroy a vibrant commercial area by forcing too much parking and preventing adaptive reuse of existing structures. But importantly, why not let the restaurant succeed or fail on its own? The city won't require a certain number of cupcake flavors, so why a certain number of parking spaces?

Listin to Lenny Russo. And if in the Twin Cities, eat at his restaurant Heartland. Both will improve your life.