Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Tuesday, March 20, 2018

Privatizing (Dulles and National) Airports

With the Trump Administration "focus" on infrastructure, one of the ways the Administration aims to "raise money" (although the program as proposed would actually reduce the amount of federal spending overall on infrastructure, compared to current levels) is by selling assets.

US Airways taxis in the nation's capitolAn op-ed ("Trump is right: Privatize Reagan National and Dulles International Airports") in the Washington Post over the weekend supports that idea as it relates to two of the region's airports, both located in Virginia, National Airport right outside of DC, and Dulles Airport, focused on international travel, and about 30 miles from DC in Loudoun County.

The article doesn't say much, just that it's good to privatize, with the claim that privately owned airports are better.  Note that some airports are privately managed but still publicly owned, the article doesn't discuss this as an option.

The article says very little, other than that management and operation is better, about good and bad examples.

Arguably, from an asset management standpoint ("We are all asset managers now") this makes sense to generate money as well as to put the assets in the hands of entities that can do a better job of maximizing utility and outcomes, when the federal government in this case is a somewhat distant manager.

-- Considering and Evaluating Airport Privatization, report 66, Airports Cooperative Research Program
-- Airport Improvement Magazine (yes, I subscribe)

Dulles Airport postcard, frontOTOH, practically speaking, the airports aren't really managed by the federal government, but a locally controlled entity, the Metropolitan Washington Airports Authority.

Although separate from the ultimate control being held by the Feds, this entity too can be disconnected from providing the best service.

Still, what to do?

Three questions:  It's important to separate out:
  • the management question
  • from the privatization question
  • and the revenues from asset sales question.
There are two very interesting articles that discuss serious limits to successful privatization of airports, in how privatization, at least in how it's carried out, definitely may not serve the public interest.

1.  At JFK decentralized operation doesn't work very well outside of normal circumstances.  While the airport remains owned by the public through the Port Authority of New York and New Jersey, the authority has been busy getting out of the business of running the airport, outsourcing operations on a terminal by terminal basis ("Reinventing the Port Authority," City Journal, 1996).

Passengers waded through a sea of bags from delayed flights at Terminal 4 at Kennedy International Airport on Sunday. Credit Yana Paskova for The New York Times.

Recent failures in managing storm effects at Kennedy Airport (""Cascading failures" strand thousands at flooded, frigid JFK," CBS News) were dissected by the New York Times in a comparison of JFK to Logan Airport in Boston ("How Boston's Airport Bounced Back From the Storm That Crippled JFK"). 

The latter airport is owned and managed by a state authority, with a serious focus on operational success, and daily management meetings led by the director, and a focus on building cooperation and a focus on outcomes on the part of otherwise competitive entities.

By contrast, various privatization efforts at JFK have balkanized operations between many different entities running different terminals, and the Port Authority, which still owns the airport, hasn't stepped in and executed the kind of heavy hand of coordination that is held by Massport.

So when the least bit goes wrong at JFK, operations can quickly degenerate to catastrophic levels, when faced with similar events at Logan, the airport manages reasonably fine.

Still, that came with a great deal of effort.  According to previous coverage, Massport had been a cesspool of patronage ("Change Ahead for Troubled Boston Airport Agency," 2001) but over time, the management priority for the airport shifted to a focus on high quality operations.

2.  Heathrow privatization: great economic returns for the owners at the expense of airport users. The London Times has a damning expose of Heathrow under private operation, "Heathrow: the cash machine with an airport attached." 

Because it is regulated somewhat like a utility, with a profit level based on the size of its "regulatory asset base" which is based on capital investment and expenditure, the airport is incentivized to waste money. 

Profits are made through a capitation fee on each passenger, currently about £20 per arrival and departure. The airport is lightly regulated with little substantive oversight from the UK government. Various construction projects are significantly more expensive compared to other airports. From the article:
... a report buried on the CAA’s website gives a critique of Heathrow’s efficiency versus other international airports. The comparison of a number of leading hubs by PA Consulting showed that Heathrow spends £15.78 per passenger on operations. Only Tokyo’s Narita airport spends more. Earnings per passenger are well above all its peers, too, except for Hong Kong.
While Heathrow has only paid £30 million in taxes on earnings since 2006, it has paid £3 billion in dividends over the same period.  Last year the airport paid a dividend of £325 million.

Other problems with US airports and the federal government: transit connections.  Unfortunately, current regulations do not allow passenger facility fees to be used to pay for connections to existing public transit systems.  As a result, in many communities the local transit system is not well integrated into airports, or at least, when the connections are made, the airport does not pay towards the cost.

Note that there is an interesting article from 2013 in CityLab, "Why Don't More U.S. Airports Connect to Amtrak?," about the connection between Amtrak service and airports and a GAO report on the subject, which doesn't find great demand for such connections.  I don't doubt that's true, because it misses the point: better connections to airports are required within regions, and most Amtrak service is multi-state and very long distance. From the article:

But the barriers outlined by GAO are significant. Generally speaking, U.S. metro areas are less dense and farther apart than those in Europe, making intercity rail service more difficult to manage. The combination of relatively cheap gas and a long history of highway building makes travel to and from an airport by car a very viable option. Limited federal funding — with no single source dedicated exclusively to air-rail projects — is also a significant obstacle.

But plenty of areas, including DC-Baltimore, have regional railroad and/or transit systems that provide connections to local airports, even if the connection might require some ground transportation -- National Airport, BWI, Philadelphia, Newark, Logan, O'Hare -- and with transit National Airport, Newark, JFK, Hopkins in Cleveland, Portland, SF, Seattle, Denver, O'Hare, Minneapolis, come to mind too, among others.

-- "Revisiting stories: ground transportation at airports (DCA/Logan)"
-- "Airports and public transit access: O'Hare Airport and the proposed fast connection from Downtown Chicago"
-- "Do tax incentives pay off? : Illinois; Tennessee; Rosslyn + "The Airport Access Factor""

Point on scenario planning and the possibility of selling the airports. One of the points I make about broad range planning, and note that the regional transportation planning entity here doesn't have a plan for the airports, and in the past I've suggested that the DC and Baltimore planning organizations could do some joint airport planning, is that when you have a plan in place, you can plan for contingencies, including the scenario of the selling off of the Dulles and National Airports. With a plan, you can have a course of action to react, to even be proactive.

The DC region and to some extent the State of Virginia, which does have a Department of Aviation, and where the two airports are located, is not so positioned.

Conclusion.  It's reasonable to consider the ownership structure of National and Dulles Airports.  But privatization doesn't necessary benefit the public as much as it does the private owners, who are incentivized to charge the public as much as it can.

Although in this region, the fact that BWI would remain publicly owned could be a check on untoward business acts.

The DC Metropolitan Planning Organization/Metropolitan Washington County of Governments and the Virginia Department of Aviation ought to get cracking on regional airport planning and scenario planning concerning privatization.

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Union Station master planning public meeting this Thursday (and an example of digital information kiosks delivering public meeting notices and related information)

I've seen ads in the Express for this upcoming meeting, Thursday 3/22 at 4pm.

-- Union Station Expansion Planning Project, Federal Railroad Administration

I did submit comments in the last go around. This piece referenced best practice station planning resources ("DC Union Station EIS FRA -- Comments due November 9th") and suggested leveraging  the federal ownership of Union Station and making it a North American flagship in terms of integrating sustainable modes into the station, and "undergrounding" off from the plaza in front of the station the various car pick up and drop off services, and some surface transit.

It will be interesting to see whether or not these ideas made it into the next stage of the planning process.

Public notice of Union Station Master Planning meeting, on ad kiosk at Union Station
I was surprised yesterday to see a public notice for the meeting displayed on the advertising-directory kiosks in Union Station.

It's a perfect example of what I argue for in the creation of a "public events and programs" advertising stream to be embedded within public kiosk systems. 

Below is a reprint of the section from the Silver Spring pieces ("PL #5: Creating a Silver Spring "Sustainable Mobility District" | Part 3: Program items 10-18," where I outline how such a system could work.

Create a digital community and transit information network [for Silver Spring,] employing kiosks and mobile applications.  For at least 15 years, I've been thinking about how to create and deliver a city- (county-) wide digital nonprofit and cultural communications feed, with sub-feeds for neighborhoods/districts.

Now, with real-time transit information feeds like TransitScreen, you can use them as the engine but add other feeds to the engine.  That's how the digital information kiosks work (called CityPost, produced by Smart City Media) alongside the Kansas City Streetcar.

From the Digital Signage Today article "Meridian deploys outdoor interactive kiosks in Kansas City" :
The interactive kiosks, located at Kansas City Streetcar platforms and throughout downtown, enable travelers to check the arrival time of the next streetcar, offer Kansas City locals and tourists access to city services, and display information about local restaurants, activities and events...

Kiosk users can sync their smartphones to the kiosk with a mobile app to save and share information. For example, Kansas City Streetcar travelers might see an ad for dinner at a local restaurant. They are then able to pull that information onto their mobile device to access again at their convenience.
There is also the LinkNYC program, delivered by Civiq Smartscapes, but these systems tend to be more focused on delivering advertising rather than useful community-specific information.  I have similar concerns about a program done separately by the New York MTA transit agencies, with placement of kiosks on station platforms.

The feed would be multi-stream instead of a single advertising feed or a single transit information feed. 

Take (1) the digital ad feed presented in bus shelters and transit stations; (2) add transit and mobility information like the TransitScreen application; and (3) create and deliver a separate "community information feed" promoting  nonprofit and public sector organization, events, public meeting notices, etc.  (Note that Outfront Media is doing (1) and (2) on screens in Metrorail stations.)

There is great need for systematically delivering community information in public and visible ways in many places, because community media outlets are going out of business because of how the Internet has changed the business of media and advertising.

In fact, Montgomery County does a form of delivering community information digitally at the Silver Spring Civic Center, where they have two digital screens side-by-side behind the information desk.  One presents the TransitScreen info, and the other cycles through "ads" for Montgomery County Government agencies and services, and community events.   

The idea is to create content in a way that works at two scales: (1) a city or county; and (2) at the sub-city/county scale, by neighborhood/ transit district.

The stream would be device independent, so that it could be displayed on screens and kiosks as well as received on a digital feed.  Besides delivering this digital network in kiosks at transit stations and key "crossroads," in bus shelters, and civic buildings and sites, ideally, places like coffee shops, office and apartment buildings, etc., would put up screens and "subscribe" to the feed as a service to their customers/tenants--many do this with transit information already.

As another example, recently I came across the Pitt Smart Living Project, but it seems to focus only on delivering area-specific transit information.

-- Pitt Smart Living Project TransitScreen for Sennott Square

To create and deliver the community ads and event content, I'd set up an "advertising and design curriculum" as part of the School of Art and Design at Montgomery College, perhaps with the involvement of the journalism program of Montgomery-Blair High School, which very actively markets its Silver Chips student newspaper to the community beyond the school. 

A way to extend the community and educational value of the program would be to create an equivalent of the teen graphic design program of Boston's Artists for HumanityArts on the Block, based in Kensington, could participate too.    The firm handling advertising in Montgomery County's bus shelters would be another partner.

Currently the MC Media Arts & Technology program is located at the Rockville campus, but in keeping with the presence of Discovery Channel in Silver Spring, perhaps this academic program could shift to the Silver Spring campus.

-- Smart City Media video showing the program in Kansas City

An issue is whether or not to include "for profit" ads.  I would in part to defray costs, but outside of bus shelters, perhaps ads should be limited to businesses based in Silver Spring, potentially the Silver Spring retail trade area (which includes parts of DC and arguably, part of Prince George's County), and Montgomery County outside of Silver Spring.

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21st century underhousing, 20th century zoning, and the controversy over changing the DC Comprehensive Land Use Plan

The Toronto Globe and Mail article, "Toronto’s low-rise neighbourhoods losing density as ‘overhousing’ spreads," mentions a report, published last year by the Ryerson University City Building Institute, called "Protecting Vibrancy of Residential Neighbourhoods," although it doesn't seem to be publicly available.  Cheryl Case, co-author of the report, was quoted in the TGM article too:
She argues the city has not adopted zoning that reflects the smaller family sizes prevalent in the city today, but acknowledges the solution is tougher and more political: "The city needs to develop policies that would develop more housing in neighbourhoods."

The existing zoning rules make that difficult, she says. About two-thirds of the city's residential land permits only one household per structure, and the city's official plan specifies that it hopes to maintain "stable" neighbourhoods by paying attention to "character."
DC: if you're not a high earner, but you bought more than 10 years ago, you're "okay."  DC is similarly divided between property owners and renters, and between higher income and lower income households, and between people who bought their houses sometime, often decades, before 2008.

This date is somewhat arbitrary and was the date of the most recent housing crash, different neighborhoods are/were at different points in terms of attractiveness vis a vis housing choice and the regional residential property landscape. 

I wrote about this a few years ago ("Exogenous market forces impact DC's housing market"), but I could have done a better job.  I accorded some of the rise to the presence of nonresident buyers.  But the reality is that doesn't make that much difference.

More importantly, more people want to live in the city.  And as they are priced out of the most attractive neighborhoods, they choose other neighborhoods.  In any case, this ends up raising prices more broadly.

"One-over neighborhood" is a concept put forth by the Live Baltimore residential recruitment initiative, where people who can't afford to live in the neighborhood they really want to, say Federal Hill, Canton, or Bolton Hill, choose other neighborhoods nearby, that have similar housing stock, but limited commercial and other amenities, and therefore, much lower housing prices, with the aim that the neighborhood will improve and they can still "consume" the amenities already present in the neighborhood next door.

The real estate market in most DC neighborhoods have long since recovered, and because demand for urban living has increased while housing supply has not increased fast enough, more DC neighborhoods are going through price escalation (for example, on my block, high quality renovated houses are selling for more than double what we paid 10 years ago--although our house wasn't renovated).

Revising the DC Comprehensive Land Use Plan.  It's a great lead in to the discussion now about proposed changes in the DC Comprehensive Plan, which activists deride as pro-development ("D.C. mayor seeks to stop costly legal delays to development projects," Washington Post; "Dozens of developers will testify next week before the D.C. Council. Here's why they are upset," Washington Business Journal), while other pro-urban advocates like myself argue a more nuanced position.

Still, because the impetus of the changes is to reduce the success of legal challenges to development projects, activists have the upper hand in their argument.  From the Post article:
District officials say that the changes would end nuisance legal challenges, reduce the cost of doing business in Washington, and expedite the construction of housing units that the city needs. ...

But activists counter that the city is making it more difficult to stave off gentrification. They say their ability to turn to the D.C. Court of Appeals is necessary to prevent District officials from violating their own policies to accommodate luxury projects that drive up housing prices in exchange for minimal benefits for neighborhoods.

Since 2016, 25 appeals have been filed against projects approved by the District, three times the number lodged between 2013 and 2015, according to the District’s Zoning Commission. Members of one community group, Union Market Neighbors, have filed appeals against eight projects in the blocks adjoining Gallaudet University in Northeast, including one that was recently dismissed after the group reached a settlement with a developer.
In short, there need to be changes to the comprehensive plan, that by definition all development isn't "bad," but the Office of Planning has truncated the  process to revise the plan--calling it a new round for approving and extending the plan for 20 more years, without having gone through a set of public processes and hearings before moving the changes forward for City Council approval.

It definitely sets up the Office of Planning and the process for criticism and charges that they are tools of the developers.

Hearings are today ("Expect Crowds at Tuesday's Hearing on Proposed Amendments to DC's Comprehensive Plan," Washington City Paper).

Note that for years I've argued that there needed to be a "campaign" after the approval of the Comp Plan in 2006, a road show, to build a common understanding and consensus for what the plan means.

Plus a lot of the reason for the court cases--besides the anti-development fervor--is because of sloppiness and under-definition in the plan language, which I argue was deliberate from the standpoint of "having and eating cake," and facilitating pro-density changes without being direct.

The Right to the City: is it only for legacy residents?  I discussed this a couple weeks ago in terms of the context of the city's population increase ("Mayor Bowser celebrates 700,000 residents") and seven years ago ("Low income, high income, the market [economy], and the right to the city").

It's complicated.  But I will repeat what I wrote a couple weeks ago.
Today, interestingly, the DC Grassroots Coalition for Planning sees adding population as a zero sum game, with the presumption that adding population by definition comes at the expense of those of lesser means, diminishes neighborhoods, etc.

One of their complaints is the planning for achieving a greater population, of one million being touted in the current comprehensive planning process.  (Note that this number was expected to be achieved in 1980, according to the city's 1950 comprehensive plan.)

-- "Who Owns the 'Right to the City'? Moving Towards Urban Inclusivity," Yale F&ES Blog>
-- "David Harvey: The Right to the City," New Left Review 53, September-October 2008
-- "Do We Have a Right to the City?," Jacobin Magazine

Is the right to the city only possessed by those who already live in it?

Is only capital afforded the right to shape the city? Obviously not, as pointed out by Foglesong in Planning the Capitalist City (Prezi precis; intro).

But as discussed in Growth Machine (sociology) and Urban Regime (political science) theories about city politics and governance ("A superb lesson in DC "growth machine" politics from Loose Lips (Washington City Paper)," 2006), capital is the most motivated of actors.

I think back to what the city was like in September 1987 when I first moved here, and I prefer to live in a community that is growing.  Even if I believe that the planning and governance functions could be a lot better, there is no question that the added population supports a better and wider range of amenities, public safety, etc., which contribute to improved communities.
Right to the City discussion.   While those who laid out the tenets of this argument, including LeFebreve and Harvey likely would be surprised to have to consider the rights of the better off to be part of the discussion about who can live in the city, I don't think they would entertain the idea that cities only belong to the people who already live there, that new entrants not only have no rights but are banned

The solution to housing price escalation and gentrification is more housing, not less.  The one thing we can be assured of is that if more housing isn't built, people of lesser means will be displaced, as people with more income and wealth have greater ability to buy housing, especially as prices escalate.

That's something that most of DC's activists refuse to acknowledge. Not adding to housing supply doesn't change the reality of market economics and that people with more money will continue to bid up prices and capture assets.  That they'll be more advantaged, not less, if housing supply stagnates in the face of increased demand.

And despite the fact that the DC Court of Appeals agreed with the argument as discussed in the Post article:
But activists counter that the city is making it more difficult to stave off gentrification. They say their ability to turn to the D.C. Court of Appeals is necessary to prevent District officials from violating their own policies to accommodate luxury projects that drive up housing prices in exchange for minimal benefits for neighborhoods. ...

The number of legal challenges in the District surged after the appeals court in 2016 overturned the Zoning Commission’s approval of a project to redevelop McMillan Park in Northwest into a complex of residential units, offices, a new park and a supermarket.

The development’s opponents successfully argued that zoning officials failed to consider the project’s potential to intensify gentrification. The opponents also contended that the officials had violated the city’s own regulations by permitting buildings denser than allowed under the D.C. Comprehensive Plan. The plan is the District’s compendium of policies that guide its evolution in housing, transportation, economic development and the environment.
the reality is that you can't forbid development merely because it attracts higher income residents.

At the same time, how do we deal with the changes that come with new residents who are wealthier and attracted to urban living for reasons different than what attracted those of us "who are already here"?

While I am not sure what the answer is to that question, it definitely isn't "don't build more housing."

Housing and generational inequity.  The TGM also has an article ("Even house-rich homeowners agree: Vancouver has an affordability problem") about the Vancouver housing market and how some residential property owners who have benefited from the pricing escalation acknowledge that it works for them but not others.

From the article:
Vancouver homeowners, after years of focusing on their growing equity and ignoring the housing inequality around them – have come to a new awareness: high home prices are crippling the region. The city is now divided according to those who got into the housing market early enough that they could afford to buy and those who feel as if they've been shut out.
Inter-generational coalition in DC joins in opposition to new residents. But a goodly number of long time residents also see any type of new development as anathema by definition, even when most such housing is not constructed in the place of existing housing, but as an addition to housing supply.

In Canada an organization called Generation Squeeze has been created to address the issue of wealth disparity between generations, and acknowledges class differences.

OTOH, the people leading the fight against changes to the DC Comp Plan -- and I am first to state that the process by which the proposed changes are moving forward is seriously flawed -- seem to believe they have common economic interests, although one group is younger and tends to not own property, while the older residents do own property.

Here the inter-generational coalition has been created not out of a desire to address how wealth and income disparities shape the local housing market and unfair outcomes, but to create a common front against new residents and new housing, even though the older resident property owners benefit from price escalation and may share household wealth characteristics with some of the "new residents" or potential new residents.

The group seems to see new development as only benefiting the well off and "new" residents, although I would argue that older residents already owning property advocate this position merely to ward off potential changes to their neighborhoods, mouthing concern for "affordable housing."

Both generations fail to acknowledge the realities of the DC housing market or public finance, in that if you want the local government to intervene in the housing market and pay towards construction of lower cost housing, it needs money to be able to do so, and city revenue streams are almost wholly dependent on property, income, and sales tax revenues.

Effect on PUDs.  Many of the changes have to do with what are called "planned unit developments," which in return for "community benefits," provide a density bonus.  Because of the threat of challenge, many developers are choosing to forego the PUD process.

This facilitates their project, but has catastrophic opportunity costs because projects are smaller with fewer units, thereby not making a meaningful difference in additions to housing supply and helping to slacken price escalation.

From the WBJ article:
David Alpert, founder and president of Greater Greater Washington and an organizer of the D.C. Housing Priorities Coalition, said his group is pushing the city to change language in the comprehensive plan that will allow the "PUD process be able function well."

Alpert's coalition includes the support of organizations that, on occasion, do not see eye to eye — multiple developers like Menkiti, MRP Realty and Ditto Residential, numerous advisory neighborhood commissions, the Coalition for Smarter Growth, D.C. Fiscal Policy Institute and SEIU 32BJ.

"We want it to be able to function where the Zoning Commission can hear from the community, they can hear from the neighborhood advisory commission, it can determine what community benefits are possible in a project and then it can make a decision saying that the community benefits are sufficient to approve that project and have every project move forward," Alpert said.

Alpert said the legal challenges have become so pervasive that many developers are no longer pursuing PUDs.

"They are building smaller projects. There are no community benefits," he said. "There is less housing being created. There's less affordable housing being created."

He also said there needs to be clearer language in the comp plan about preserving and creating affordable housing.

"It's possible to avoid displacement in a way that is in partnership with the development community," he said.
The crazy thing about this is for the most part, PUDs are being employed in places that weren't housing to begin with. So they aren't reducing the amount of existing housing--with a couple of high profile exceptions.

Although previously discussed, the best way to deal with affordable housing production will be discussed in another entry.

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A Lime dockless electric scooter on 6th Street NW, Washington, DC

Rather than update the entry on e-scooters again, here is a photo of one ready for use in Downtown DC.  I don't think I made it very clear in the previous post that the investors in Bird ought to claw back their investments while they still can, because the firm will be outspanned by the dockless bike share companies adding e-scooters to their mix/platform.

A Lime dockless electric scooter on 6th Street NW, Washington, DC

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The concept of overhousing explains the stagnation of neighborhoods and neighborhood commercial districts as they age

As neighborhoods age and housing turnover declines, neighborhoods tend to stagnate.  A few years ago, I was against the idea of giving DC seniors a bye from property taxes ("Councilmember Anita Bonds Proposes No Property Taxes for Senior Citizens," Washington Afro-American)) because of my observation that a lot of a neighborhood's lagging properties are owned by families that have paid off the property and are likely waiting for the property to move into an estate situation before doing anything.  Eliminating property taxes merely extends the period for which houses can moulder.

(That being said, the fact that property taxes are based on current values, which is divorced from the ability to pay, is a problem for senior households and needs to addressed, as needed.)

And it's obvious why many commercial areas in the city stagnated in the 1980s and 1990s, it was because there was little housing turnover and as households age they buy and "go out" less, providing an ever smaller customer base.

Housing turnover and additions to housing supply energize neighborhoods.  A neighborhood and neighborhood commercial districts need to draw on a mix of demographic segments to remain economically healthy and resilient. 

This has been confirmed by how the increase in population in many neighborhoods--from both housing turnover and the addition of housing--in the 2000s was followed by a revival of local commercial districts in places like Capitol Hill, H Street, Petworth, Columbia Heights, and others, although granted the mix tends to favor restaurants over retail ("Obsolete and underperforming buildings: is it the building or the micro-economy of the retail trade area?").

Because many of the low-density neighbourhoods losing population are predominantly single-family dwellings, an urban planner says the City of Toronto’s official plan’s definition is essentially a one-way ratchet that will rule out new multiunit dwellings in any area where they don’t already ‘prevail.’ Photo: Deborah Baic/The Globe and Mail.

Overhousing as an element of stagnation.  The Toronto Globe and Mail has an article which discusses this phenomenon, "Toronto’s low-rise neighbourhoods losing density as ‘overhousing’ spreads," about "overhousing" in some neighborhoods in Toronto. From the article:
The extra bedrooms Mr. Smetanin has identified aren't about to be rented out. Most are owned by seniors living in empty-nest neighbourhoods (70 per cent of the overhoused population is 65 years old and up). But they illustrate the strange predicament of a city booming in population but where many neighbourhoods are actually losing density. "If you could return those areas back to 2001 density levels, you'd create about 80,000 homes straight-away," he says.

The rate of depopulation that created the spare bedrooms in Toronto's low-rise neighbourhoods is stark: "Since 2001, about 52 per cent of the land mass of Toronto has reduced in density of population by about 201,000 people," Mr. Smetanin says. "Other parts of Toronto have grown by 492,000."
This is a description of what happens as "neighborhoods age out" and before housing starts to turn over.

But it's also complicated by a mismatch in the size of properties constructed back when households were much larger, and the average size of households today.

Declining household size.  For example, in DC today, the average household size is 2.24. While I don't have access at the moment to the exact data for 1930, nationally, average household size was 4.11.

Of course, looking at old Census enumeration sheets finds that even small rowhouses had triple the number of residents compared to today's average.
1920 Census data, H and 9th Streets NE, Washington, DC
1920 Census data, H and 9th Streets NE, Washington, DC.

How to address the mismatch between house size and household size: smaller housing units.  With new construction, a greater variety of unit sizes allows a wider range of household sizes to be accommodated.

One way to address the mismatch between the size of properties built early in the 20th century to the household sizes of today is to break up larger houses into smaller units.  From the TGM article:
... [Cheryl Case] argues the city has not adopted zoning that reflects the smaller family sizes prevelant in the city today, but acknowledges the solution is tougher and more political: "The city needs to develop policies that would develop more housing in neighbourhoods."

The existing zoning rules make that difficult, she says. About two-thirds of the city's residential land permits only one household per structure, and the city's official plan specifies that it hopes to maintain "stable" neighbourhoods by paying attention to "character."
This rowhouse on I Street NE is being converted into two units, a ground floor single story apartment, and a two story upper apartment. The asking price for the two units is about $1.2 million. 
Three story rowhouse broken up into two condominiums, I Street NE
While it might not be happening in Toronto, and not in traditional single family neighborhoods in DC, it is happening in DC's rowhouse neighborhoods, where larger rowhouses are being converted from single family houses to multiple, smaller units, and medium sized rowhouses are being expanded somewhat to yield two units instead of one.

Note too that in those rare instances where new rowhouses are being constructed on an infill basis, almost as a matter of course each building is two to three units, including a separate basement apartment.

Making over houses as smaller units isn't driven not so much by a conscious application of 21st century housing policy but more as an expression of 21st century real estate economics, demand, and demographics.

It's the result of a kind of real estate arbitrage of building and lot sizes that enables property redevelopers maximize income while responding to a significantly increased demand for urban living and a relative inability to produce more single family type housing, because most of those sites have already been developed.

Weird pop up rowhouse, 13th Street NW, Columbia HeightsThis house is on 13th Street in Columbia Heights.  Note that the electric box indicates the building will have two households.  (One meter for each household, plus a separate meter for common areas.)

A great many neighborhood activists protest these changes as an unreasonable change in neighborhood character.

There is some truth to their claims, because often the additions and popups are aesthetically challenged.

Also see the Toronto Star article, "Toronto has too much housing despite overall population growth: report."  Note that a report referenced in both articles, "Promoting Vibrancy in Residential Neighbourhoods," from the Ryerson University City Building Institute, does not appear to be online.

Does the creation of more units on the same number of lots challenge infrastructure?  Some people raise a concern that making houses over into smaller units increases demand for utilities and other infrastructure beyod what we might call neighborhood carrying capacity.

The reality is that given the typically much larger household sizes back when these houses were originally constructed, with one exception, likely the present infrastructure is capacious enough.

The exception is parking capacity and road capacity.  For the most part, DC's street network and street parking capacity is fixed.  So as more households are added, if the new households maintain more suburban-oriented automobile dominated mobility behaviors, this creates problems in terms of demand for parking and more road congestion.

The proper response is to significantly increase the cost to register cars, the cost of residential parking permits (now$35/year), to encourage wider use of car sharing, to invest in transit quality and frequency and a broader array of transit options, and in transportation demand management programming to assist people in transitioning to other modes.

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Revisitng stories: the L Subway Shutdown in NYC and what to do

Capacity of different transit modes
In the 2016 post, "RPA/Transit Riders Alliance proposal to respond to the L Subway shutdown includes a dedicated transitway on 14th Street in Manhattan" I recommended, based on the recommendations of the Regional Plan Association that to deal with commuters not able to use the L Subway during its maintenance shutdown to:

1.  Make 14th Street in Manhattan a bus priority transitway, removing most automobile traffic, which is what RPA recommended

2. Using bi-articulated buses on a "temporary basis," because these large buses have capacity for up to 180 passengers. Although the RPA did not make this recommendation.  Note that in the US such buses aren't allowed on public streets, although they seem to do just fine in other countries.

Based on this report from the Village Voice, "Are There Better L-Train Shutdown Solutions? City Didn’t Study Them," I would argue that NYC's failure to go to that length:

-- dedicated transit 24/7 instead of only some of time
-- and the use of the largest capacity buses possible

will come back to haunt them.

There are four major high profile sustainable mobility "experiments" potentially underway in the US, Canada, and London, which have the ability to shape the willingness and risk-taking abilities of other transit and transportation agencies to be innovative and daring in other settings:

1. The King Street streetcar prioritization in Toronto, Ontario ("King Street streetcar, Toronto (and Seattle's urban mobility planning)."  Ridership has increased by 25%, on an investment of less than $2 million ("King St. pilot boosting streetcar ridership: TTC," Toronto Star)

2. The pedestrianization of Oxford Street in London, simultaneous with the addition of Crossrail service to the area and expected major increases in the number of daily visitors ("Oxford Street transformation to get underway by December 2018 as TfL and Westminster City Council launch consultation" and "Four changes that need to happen before Oxford Street can be pedestrianised," City A.M.; "London's Oxford Street bus routes cut by 40%," BBC; "Oxford Street stores call on Mayor Sadiq Khan to tone down traffic ban," Evening Standard)

3. Serious consideration of creating a congestion charge in New York City ("How much does it cost to unclog NYC's streets," Wired Magazine; "Congestion pricing plan for cabs, Uber, Lyft, outlined in NY Assembly budget proposal," <AM NY)

4. Dealing with the maintenance shutdown of the L Subway Line in NYC.

I am reasonably confident of the efforts in Toronto and London, but not New York City, especially because Mayor DeBlasio doesn't seem particularly motivated when it comes to transit or sustainable mobility matters, because the NY State Legislature isn't likely to support a congestion charge based on past actions and new reports say the legislature is still unfavorable ("Prospects dim for congestion tolls in New York City," AP), and Governor Cuomo is more interested in pushing a possible presidential candidacy and spiting Mayor DeBlasio.

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Sunday, March 18, 2018

Brief update on dockless scooters (and bike sharing)

Earlier in the week I wrote about dockless scooters in Santa Monica, "Dockless scooters as an example of a lot of money sloshing around in venture capital."

Somehow I missed the roughly simultaneous news that LimeBike is adding e-scooters and electric bikes to its mix. 

It's likely doing this across their entire portfolio, although there are reports about this in Dallas ("LimeBike Plans To Add Electric Scooters And Bikes This Spring," KERA/Public Media) and DC ("First the dockless bikes, now scooters," Washington Post).

As far as e-scooters go, it means that an exclusively e-scooter operation like Bird is likely to be "lapped" by multi-mode sharing operations.

OTOH, Bird can, too, expand into bike sharing. But that requires a lot more capital than $100 million, especially as dockless bike sharing is in its "wild wild west" mode of expansion disconnected from business considerations.

I didn't write about it, but I was thinking about dockless bike share's business story as being comparable to the start of the railroad or interurban electric railway sectors, with various attempts at creating competing services, many of which either never really got off the ground, or ended up merging into other firms.

Apparently, in business schools this is called the "Consolidation Curve" (Harvard Business Review). From the article:
Everyone knows that most new industries are fragmented and consolidate as they mature. But how does that work exactly? Our long-term analysis of mergers around the globe has found that most industries progress predictably through a clear consolidation life cycle—and that companies can plot with some precision where they fall in the cycle.
Although the article's research is on larger companies and tends to occur over a much longer period of time than is likely for dockless bike sharing.

Similarly, with e-bikes, this development by LimeBike and Spin ("Bike-sharing startup Spin is getting into scooter-sharing," TechCrunch), which likely will be copied by other market participants, especially the better capitalized firms like Mobikes and Ofo, makes the e-bike exclusive dock sharing firm, Jump, similarly vulnerable to the firms with multi-pronged sharing platform.

The big question is how many users, who they are, and whether or not they switch from automobiles.  The Wall Street Journal ran a positive article about dockless bike sharing ("Bike share brings promise, and pitfalls"). 

I am still generally leery because the issue isn't access as much as it is willingness to use.  Lack of access to bikes or transit or shoes isn't why most people don't walk, bike, or use transit.  Although with the WSJ writer, he switched to the bikes instead of using ride hailing cars.

These systems tend to appeal to occasional users, rather than regular adherents to sustainable means.  Whether or not the widespread availability of dockless bikes shifts people from primarily using the automobile to sustainable modes is the key question.

And in terms of dockless systems adding functionality to the "sustainable mobility platform," it comes down to whether or not you want to use public funds to do so.  One can argue that the participation by for profit firms means public monies aren't required. 

But because there doesn't seem to be a good economic model for the business, especially with multiple firms participating in the market, it's hard to see a long term future for this element of the sector.

Switching from "all you can eat" pricing to paying by the ride raises the cost.  Note too that by switching from bike sharing membership systems to payment on a per ride basis, users of dockless systems pay 10x more, were they to ride at least twice daily, compared to membership in a traditional bike sharing system.

The Spin program has a monthly membership fee comparable to traditional bike share, but it's almost 4x the price of an annual membership in most places, and still more than double the highest priced system, Citibikes.

Paying more for electric propulsion. With e-scooters, the pricing is by the minute, plus a per use fee of $1.  By an e-scooter then, the cost for a 30 minute trip would be $7, while on a regular dockless bike the cost would be $1 and on a Jump e-bike, $2 for the same length of time.

Conclusion. It still makes more sense to own your own bike, as it's a lot cheaper and provides far more trip flexibility. However, in a place like NYC with high rates of bike theft and difficult storage conditions, alongside relatively short distances between activity centers, bike sharing can be a smart alternative.

I haven't used a dockless bike.  I don't see a need, since I use an owned bike.  But I "found" a LimeBike discarded in a neighborhood alley and so I rolled it out to a location on a nearby street, by picking it up and rolling it on the front wheel.

It started chirping at me to rent the bike or it would notify the police...

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Saturday, March 17, 2018

Aldi to go into a multi-story mixed use development in Fairfax County

Somehow I missed this when it was first reported in the Washington Business Journal ("Aldi will anchor South Alex development in Fairfax County").

That's a big deal because up until this announcement, I believe all of their stores in the DC market have been traditional one story parking fronted stores, either as part of shopping centers or company-owned exclusive sites.

Although in the Minneapolis market, Aldi has already developed similar mixed use site stores in the city and the suburbs.

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Friday, March 16, 2018

BTMFBA: The Old Town Theatre in Alexandria, Virginia

-- "BTMFBA: the best way to ward off artist or retail displacement is to buy the building," 2016

Not much to say here.  If you want a theater/cinema to continue to function, because of the way the regional and national real estate industry is organized and because of the way that the movie distribution is organized, small independent theaters can't compete "in the market."

Speaking of "the market", I was struck by this description of it in a recent entry, "No spring in the UK air," in the Mainly Macro blog:
The political economy of modern Conservatism is extreme laissez faire in the following sense. The belief is that if you let businessmen (they are usually men) get on with things, and take away red tape, regulations, and reduce taxes, all will be well. There is no need to help with public sector investment and R&D initiatives, or worry about rent extraction: the private sector can always do things better itself. The public sector does not support the private sector, but just gets in the way.
Once the ownership of a theater-cinema building shifts to a real estate development firm it's about 100% likely that the building will no longer be used as a theater-cinema.

Asana Partners purchased the Old Town Theater, located at 815 1/2 King St., for $4.4 million in January. WBJ photo by DREW HANSEN.

The Alexandria Gazette-Packet ("Marquee Property in Alexandria: Asana seeks tenants for Old Town Theater") and the Washington Business Journal ("New owner of long-shuttered Old Town Theater is searching for a tenant. Will it remain a theater?") are reporting on how Asana Partners, the North Carolina-based real estate firm that now owns the building, is marketing the property.

Obviously, a NC-based firm isn't likely to prioritize "cultural" and community goals.  Furthermore, the firm's purchase of multiple buildings is evidence that the company is active in the Alexandria property market because it is a regionally/nationally important submarket ("Charlotte retail investor buys six more Old Town Alexandria buildings," WBJ).

Just as Rock Creek Property Group didn't as it related to the Takoma Theatre, which will soon become a clinic for Children's Hospital.

These firms aim to maximize the economic returns of its property portfolio.

In "Art, culture districts, and revitalization," I made the point that artistic disciplines need their own plans, including elements on facility ownership, management and access, and that they can't expect real estate developers to do this for them, putting cultural goals ahead of private benefit.

Relatedly, as discussed in the recent entry, "Mount Rainier aims to recapture the Kaywood Theater as a cultural anchor," if you want the building to remain a theater, you need to extract the building from the market.

There are hundreds of examples across the country, and even here and there in the DC and Baltimore market, most notably with the Avalon Theatre in the Chevy Chase neighborhood of DC, and small for profit businesses may own small theaters too, but usually it's their only business, like the people who own the Charles Theatre in Baltimore ("A Fan Saves an Art-Movie House in Baltimore," New York Times)..

However, having such a theater would be a natural complement to the Torpedo Factory art center (The Impact of the Torpedo Factory Art Center on the City of Alexandria, GMU) and would be important to the continued viability and competitiveness of Alexandria as a regionally significant retail and entertainment destination, which justifies the involvement of government and other stakeholders.

It's also an indicator of the need to have a business improvement district to better plan, manage, and advocate for the business district.  Although this course of action was recently rejected ("Alexandria abandons its Old Town BID quest," Washington Business Journal; "City manager advises against Business Improvement District in Alexandria," WTOP-radio).

Note that wrt "cultural plans" and "facilities elements" therein, privately owned cultural-entertainment assets need to be inventoried and listed, as well as monitored, to ensure their continued use as cultural and civic assets, even though they are part of the private sector but functioning more broadly.

Then with scenario planning, the local government has the plans in place to be able to act, if extraordinary involvement is required. In this particular case, I'd argue there is extranormal value in maintaining the use of this property as a cultural asset, because of its ability to draw patronage to the entire district.

The Grand Illusion cinema in Seattle's University District is one example ("Saving the Last Picture Shows," Seattle Times, 2003).

Laurelhurst cinema in Portland, Oregon.

Neighborhood-based cinemas still function in various Portland neighborhood commercial districts ("We Visited Every Neighborhood Movie Theater in Portland—Here's a rundown of the best cheap seats," Wilamette Week).

I think the New Hope Cinema Grill in Suburban Minneapolis is a great example too ("Outtakes Bar & Grill opening in New Hope," Sun-Post).

It would be useful to have a master list of such facilities, both public and private, across Virginia, to aid in developing such a proposal for Alexandria. I know of at least two, the Byrd Theatre in Carytown, Richmond and the soon to reopen Ashland Theatre in Ashland.


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Thursday, March 15, 2018

For the first time, Skyland Town Center's revitalization might have a chance: creating a community focused retail destination

Although looking at the renderings, I would say the development ought to be denser as it needs more higher income residents to help support the retail.

I've written about this subject a fair amount, the more than 20 year process to revitalize the Skyland Town Center, the displacement of locally owned businesses in the process, and the likely problem that there probably isn't enough demand to support it, given existing retail options, which of course is why the project is taking so long.

-- "Blaming Walmart for Skyland's failure is misdirected: the culprits are DC's economic development and elected officials," 2016
-- "Maybe the last word on Skyland Center and redevelopment," 2006

But yesterday's reports ("Andy Shallal eyeing Skyland for new restaurant," Washington Business Journal) that Andy Shallal, proprietor of the successful Busboys and Poets chainlet of restaurant, bookstore and event spaces, is going to put an anchor restaurant there, Eatonville.   From the article:
“I have been talking to them, and I’m hoping it will happen, but it depends on the deal, and depends on the timing,” he said, adding that the lease is not yet finalized. If the deal were to close, the opening would likely be in 2020.

Skyland, which was supposed to be home to one of several locations of Wal-Mart in the District, has struggled to get off the ground since the national retailer pulled out of the project in January 2016. That’s about to change, though, as developers WC Smith and Rappaport secured financing for the project in late February.
Now, unlike the success Shallal has experienced with Busboys and Poets, which now has four locations, four in DC and one in Hyattsville, Maryland and one in the Shirlington section of Arlington County, Virginia, and one coming to Anacostia, he hasn't been successful with Eatonville or its successors, and that might be a mark against putting that establishment at Skyland.

But it will provide a destination anchor, which is key.  The problem with little outposts, such as the failed Ray's The Steaks or a Yes Market, was probably three-fold.

-- "In lower income neighborhoods, are businesses supposed to be "community organizations" first?," 2012
-- "Revitalization in impoverished neighborhoods can be very difficult because different "stakeholders" have different understandings of what's at stake," 2014
-- "Real estate financing is the crucial element in enabling difficult projects," 2014

First, they were misconceived.  Second, they weren't well located.  Third, they were all alone, outposts, with little in the way of supportive complementary retail alongside, and not big enough in themselves to change the trajectory of retail success more generally.

But with judicious choice of tenants and the creation of active places, Skyland does have a chance and can remake the retail landscape East of the River.

The low scale Arts District Hyattsville retail node.  Google Street View image.

Lifestyling 2.0.  The model may be the little Arts District Hyattsville retail center on Route 1, anchored by Busboys and Poets and Yes Market, and other retail and restaurants. It became a destination for the area in terms of there being a paucity of experience retail.

Not that the particular part of Prince George's County doesn't have retail or restaurants. It does. It mostly chain retail. It's experience retail. The little district there, especially with Busboys and Poets, added a new wrinkle, and for the most part is successful (the pet store Big Bad Woof closed its location there).

Note that landing Eatonville as an anchor is more in keeping with what I recommended in 2016, "Ground up commercial revitalization and the Skyland Town Center project," in terms of developing a workable revitalization plan, and how it could have been done differently, to show results much earlier.

HOWEVER, I am not thinking so much about Eatonville, but Busboys and Poets, because those locations come with an event space, often a coffeehouse section, and a small bookstore.

Taking the discussion yesterday about "lifestyling" centers as exemplied by the development of the Bryn Mawr Village center in Greater Philadelphia ("How Bryn Mawr Village found its Main Line shopping niche," Philadelphia Inquirer), how would you go about creating a tenant mix at Skyland that would increase the likelihood of success while simultaneously achieving other objectives?

Positioning Skyland as a hub for community-focused/social enterprise retail. I'd say, be very specific and focused about creating community focused retail that also helps to support community economic development. E.g., I'd aim for a local coffee shop combined with a "we work" space modeled after and/or run by The Hive, which is run by the ARCH community development corporation.  Alternatively, it could be a combo of a "Made in DC" coffee shop and retail operation ("This Cafe and Boutique Is The Most DC Thing To Happen To DC," Washingtonian) + The Hive.

Create a Portland Mercado type space to incubate retail, a fashion/design cooperative retail/incubator space, etc. 

And a small bookstore operation, either as part of Eatonville like how B&P have bookstores (although except at the 14th and U location, they aren't always that great) or separately, like Upshur Street Books in Petworth.

An event underway at Red Emma's

Another alternative, if Eatonville is to stay strictly a restaurant, would be a space like the Red Emma's business cooperative progressive bookstore, meeting space, and coffee shop, in Baltimore's Station North Arts District.

Definitely a community kitchen and food service incubator ought to be part of the mix. I discussed related ideas here, "Building a local economy vs. "economic development" in planning: Wizards practice facility," concerning the creation of a Wizards basketball practice center in Congress Heights and how to leverage concessions and retail for business development.

Later, I learned how in the Mercedes Benz football stadium in Atlanta, the West Nest food concession is in fact a social enterprise run by the culinary program of a local community economic development organization, Westside Works ("In The New Atlanta Falcons Stadium, One Restaurant Has A Mission," Fast Company).


Another model would be the creation of the Midtown Global Exchange food market as part of a complex redevelopment in Minneapolis. The social enterprise oriented retail element was done by the St. Paul-based Neighborhood Development Corporation, which is led by Mihalio Temali, author of the Community Economic Development Handbook.

It will still be hard.  That being said, the relative failure of the Boulevard at Cap Centre development as a comparable example is something to be worried about ("Residents Say Boulevard is 'Failing'," Washington Afro-American).

That's why other consideration of models, like Leimert Village in Los Angeles ("Los Angeles's Black Pride: Taking In the Retro Vibe of Leimert Park," Washington Post), ArtsDistrict Hyattsville, and Bryn Mawr Village, with a social enterprise orientation, are in order.

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Revisiting stories: executive vs. legislative and the four vacant houses in Anacostia

Curbed DC reports ("Four vacant, government-owned Anacostia homes transfer to historic preservation group: The L’Enfant Trust has completed the transfer of four properties in the Southeast neighborhood") that DC has transferred four dilapidated but historic properties to the L'Enfant Trust for subsequent rehabilitation.

This was discussed in the past, because it was subject of a "battle" between the Legislative Branch and the Executive Branch.  The Executive Branch which controlled the houses wasn't doing much, and aggrieved citizens got the Legislative Branch to pass a law giving control of the properties to a local nonprofit that has been rehabilitating houses.

I wrote about it in this 2017 entry, "Three examples of L'etat c'est moi/Not invented here/Executive authority (in DC local government)."

What's more interesting than what I wrote is the comment thread. 

First, an anonymous commenter made the very good point that generally getting the Council involved in such matters can lead to serious corruption and had in the past (although that's true of the Executive Branch as well).

My point was that the Executive Branch needed to act.  That there was no reason to let the houses moulder and that if they couldn't act, then the Legislative Branch was right to step in and move things along.

That being said the process is an example of the failures in how the city does capital budgeting planning and management.

Second, was the other discussion in the thread about technocracy, execution, democracy, vision, etc. in local government. It's no less relevant one year later.

For example, David Brooks, columnist for the New York Times, has a piece about successful school reform, "Good Leaders Make Good Schools."

He blows it by mentioning DC as a positive example, in the face of local reporting on systematic failures in terms of test cheating, passing and graduating students who don't attend school, claiming 100% of graduating classes will be going to college when about 17% actually did, failure to respond to non-DC residents enrolling in DC public schools, etc.

The reality is that making successful change for hard to help populations is very hard.

Rather than acknowledge that from the outset and put the right resources in place to aim to accomplish it, instead the focus was on test scores and even graduation rates, which are easier to game.

It's another failure to execute that seemingly has little consequence.

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BMW Reach Now car sharing Pi Day promotion: a model for bike sharing promotion

This was sent along within a private email discussion that's been going on for a few months about car sharing.

Yesterday, "Pi Day," BMW Reach Now, the car sharing service, did a promotion on "Pi Day"--March 14th--charging only $3.14 per hour to use a car.

Except for the fact that Pi Day is in March, which isn't the most temperate of months, a special rate on Pi Day would be a great promotion for an all day bike share pass too, as a way to get people to try it out.

It should be positioned as a membership development promotion, and only open to people living in resident zip codes (the idea being, through taxes they pay they are paying towards the city/county expenditures on bike share anyway).

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Wednesday, March 14, 2018

Another aspect of revitalization planning: it takes a long time

I mentioned the other day ("Revitalization planning vs. positive thinking as planning") that one of the things that defines revitalization planning is a focus on facts, current conditions and that life isn't rosy and that changing things in the face of unfavorable market conditions can be very hard.

I laugh to myself a lot at community meetings when people complain about a project not being underway after only a few months.  I finally figured out patience some when I was 47, and I realized that "fast tracked" transportation projects like a street reconstruction, can take 10 years.

Similarly, there were some construction projects that I was involved with that have taken 12-15 years to come to fruition, that's a long time.

I connected with people from the Strip District in Pittsburgh around 2005, because the International Public Markets and Public Spaces conference was in DC, and I led a tour. 

The Pennsylvania Railroad Fruit Auction & Sales Building is located between the 1600 and 2100 blocks of Smallman Street in the Strip District in an area that’s ripe for expanded downtown development. FILE PHOTO BY JOE WOJCIK: Pittsburgh Business Times, "Report: City in deal to redevelop produce terminal."

In 2008, I attended the National Trust for Historic Preservation national conference in Pittsburgh, and I did went on some tours of the Strip District and reconnected with the group Neighbors in the Strip (now called Strip District Neighbors, and sadly, the people I knew are no longer involved, "Staff of Strip District group resigns," Pittsburgh Post-Gazette).

One of their white elephant projects is trying to adaptively reuse the old Pennsylvania Railroad Produce Terminal.  Various proposals had been made in the years before 2008.  And for a time they ran a small market in part of the building.

But instead of signing an agreement with NIST, the city signed a contract with a major real estate development firm, McCaffrey Interests.  NIST felt dissed. 

OTOH, you can concede that a well financed real estate firm is more likely to be able to pull off such a difficult project.

That doesn't mean it's necessarily any faster.

They are still working out details of the contract ("Pittsburgh URA approves deal on Produce Terminal redevelopment," Pittsburgh Tribune-Review).

That's a project that's been underway for 20 years or more and likely many years to come.

And as the resignation of my colleagues shows, it's often contentious and community organizers may run into the buzzsaw of local government, the Growth Machine, and politics.

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Retail property demand decline: softening of the retail side of the commercial property market.  Outside of mall type properties, for which the sector has experienced big problems for the past 10 years, we've been waiting to see a decline in retail property prices in those places where rents had been stratospheric. 

In the US market, that's mostly NYC and submarkets like Fifth Avenue, where rents can exceed$1,000/s.f., a price that can only be justified if the site is treated in part as a marketing expense.

The Wall Street Journal reports ("In New York, Retail Storm Arrives") on the price decline--retail rents dropped 18% in 2017.

Over time, this will also impact local government budgets, as property demand declines will decrease the value of properties, their tax assessments, and tax revenues.

Good malls, bad malls.  Somewhere I saw an article that made the point that malls are doing fine in many places, it's the malls in middling submarkets that aren't doing well.  Yep, that's been obvious for a long time.

There's been a fair amount of coverage of malls adding other functions to the pads where department stores had been, from offices to fitness centers. 

But people miss the point of what this does.  It helps to maintain the relevance of the location as a commercial property, but this comes at the expense of the retail character and vibrance of the shopping mall, because the new tenants aren't "anchors" in the same way as the retail destinations they replaced ("Sticking gyms in ailing malls won't work, and here's why" CNBC-TV).

The point of "anchors" is that they draw customers who are in turn shared with other retailers ("TIF incentives for a department store in Georgetown," 2012 and "Why it's okay to give tax increment financing to department stores but you still need to think long and hard about where you put your money," 2007).

But workers in office buildings and fitness center users aren't likely to do "shopping" at other places as part of their visit.

"Lifestyle centers" were a response starting in the late 1990s to a decline in the power of the shopping mall because of a decline in interest in shopping at traditional department stores.

Lifestyle centers were more oriented to shops and restaurants and outside spaces ("Lifestyle Centers vs. Traditional Commercial Districts," 2006), although here and there, department stores were an element of the mix.

But the anchor wasn't a store per se but the "experience" in terms of the quality of the space and the focus on being outside rather than ensconced within an enclosed mall (cf. "Reeves Center and Georgetown Park are two sides of the same coin," 2007).

Photo: Charles Fox, Philadelphia Inquirer.  Bryn Mawr Village was constructed in part from an old bus transit garage.

Lifestyling as the next generation of small shopping center development.  An article in the Philadelphia Inquirer ("How Bryn Mawr Village found its Main Line shopping niche") discusses the evolution of this type of center, calling it "lifestyling," with a mix of fitness centers and other services complementing retail.

The article is interesting in terms of the recognition that retail developers will continue to respond to changes in the market in order to remain successful. 

It keys on a developing change, that the property owners are less focused on attracting chain tenants that are ubiquitous, instead aiming for stores and services that aren't widely available elsewhere.  I was surprised to see that the development has a number of independent apparel shops.

But too, this particular center has the ability to be successful because it's in a high income area, and complements other destination retail centers like the King of Prussia Mall, one of the most successful in the US.

It also has small scale office, which is increasing demand in an economy shifting from long term employment to "gigs," consulting, and independent contracting.  That is an element that will be increasingly important to independent commercial districts.

TOYS R US ERIE, PAAnother example that piling on debt or separating real estate from operations puts businesses at risk.  Toys R Us looks to be liquidating, not because they don't have the ability to reformulate their business through downsizing, but because when the company was converted to private ownership a few years back, it was saddled with huge debt (over $5 billion) and ongoing "management fees" to the private equity owners. 

The business isn't generating enough revenue from operations to pay off the debt.

Concern in San Francisco about empty retail storefronts. The San Francisco Chronicle editorializes, in "Empty storefronts cast pall over city street life," about the decline of retail there, and offers some suggestions, which don't seem particularly powerful.
Other ideas are surfacing. Some merchants favor commercial rent control to hang on to leases. Policymakers are studying higher fees if a property owner does nothing with an empty space. Both ideas need careful study in a tax-happy city that sees exactions and complicated rules as go-to solutions.
The vision for Sainte Catherine Street, although proposals such as heated sidewalks (to keep snow accumulation down) have since been dropped. 

Concerns in Montreal. A column in the Toronto Globe and Mail ("Montreal rapidly killing legendary Sainte-Catherine Street for retailers") expresses concerns about the impact of a multi-year construction program on Sainte-Catherine Street, one of the city's retail spines, because similar projects elsewhere have resulted in retail decline that has persisted beyond the completion of the reconstruction projects. From the article:
Similar projects completed along Saint-Laurent Boulevard and Saint-Denis Street in recent years saw dozens of stores and restaurants close. Neither street has recovered. While the sidewalks are wider and the risk of broken water mains has diminished, the lesson seems to be that it is very hard to revive a street once you've alienated shoppers. Especially if you make it impossible to park. ...

Access to dozens of stores along the eastern stretch of Sainte Catherine that is now dug up has been cut off by construction barricades that limit pedestrian traffic – in some places to a single-file line. You'd have to be desperate for a Five Guys burger to navigate the construction barricades and holes outside the fast-food chain's main Sainte Catherine Street outlet.
Also see "Montreal's Ste-Catherine Street about to undergo massive overhaul," Canadian Press).

Historic Downtown LA Retail Project ~ Training.gifRecommendations for dealing with storefront vacancies and the desire for quality retail.   WRT sparking retail renaissance in traditional commercial districts, key is to create the right kind of organizations necessary to facilitate it.  While generally, government isn't the best place to foster retail innovation, there are best practice examples.

Charge a CDC to deal with retail.  First, is to create a community development corporation charged with buying and holding retail space, offering it at a discount from "market rates," while encouraging creative retail. The model is the SEMAEST Vital Quartier program in Paris.

The program operates on a break even basis, and in some of the targeted neighborhoods, vacancies have declined by up to 40% ("Paris City Hall wants to revive Semaest," Les Echos). The program has assisted more than 650 individual businesses and controls 730,000 s.f. of retail space.

-- presentation

Create a best practice retail development and assistance program.  Second, to encourage and develop creative retail, create a companion program based on the now defunct "Historic Downtown Los Angeles Retail Project," to work with people interested in developing and launching creative retail and service businesses.

Note though that it is often hard as hell to help existing businesses because often they think they know everything already.  By default, it becomes easier to help new entrants, because they are looking for help and know they need it.  This can cause resentments on the part of existing business proprietors, especially as they don't recognize their role in creating the problem.

Recommendations concerning mitigating construction impacts on retail businesses.  While it isn't uncommon for marketing assistance to be provided to retail businesses impacted by such projects, that tends to be the extent of the response.

There is a lot of opportunity to be more thorough and innovative, to ensure that at the end of the construction, the corridor is in fact better performing not just infrastructure-wise but as a place, retail destination, and as a location to own and operate businesses.

Lately too I have been thinking about how typically cities tend to not communicate very well about such projects, what they will accomplish and why the investment is important.

(1) The TGM article mentions a number of retail developments that have been put on hold because of the construction on Ste. Catherine, including a new Saks Fifth Avenue store.

The city should work with all those merchants to ensure that these projects remain in the pipeline and create a "master program" with the aim of "delivering" these projects as the construction project winds down, with promotion of the program ("The New Sainte Catherine Street!") throughout.

(2) Provide a program of complementary investments in the existing businesses.

(3) Along with ongoing marketing assistance and special events throughout the project.

(4) And parking facilitation, such as integrated valet parking services for the corridor, subsidized by the city.

(5) Try to negotiate rent relief for the businesses in association with the property owners and the city.

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