Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego...
-
Upload
nickolas-jenkins -
Category
Documents
-
view
215 -
download
0
Transcript of Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego...
![Page 1: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/1.jpg)
Land Value (Re)Capture
Nico CalavitaProfessor Emeritus
Graduate Program in City PlanningSan Diego State University
April 11, 2014 -- San Diego
![Page 2: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/2.jpg)
• Mill Valley 2040 Housing Element • 9. Affordable Housing Overlay • An Affordable Housing Overlay is a zoning tool which offers a package of incentives on designated sites designed to
make the development of affordable housing more feasible. It is an “overlay” because it layers on top of base zoning regulations, leaving in place the option for property owners to develop under the base zone, or to utilize the voluntary incentives for the provision of affordable units. Overlay incentives are distinct from incentives offered through State density bonus law in that they provide more certainty by providing the full set of incentives up front and establish local commitments to encourage specific types of housing1.
• The Affordable Housing Overlay will be applied to the following development site in Mill Valley: • The Redwoods Addition: This continuing care retirement community is situated on a large ten acre lot, and is ‐
currently undergoing a comprehensive $45 million renovation. The non profit owners plan to initiate a capital ‐campaign in 2013 to raise funds to offset the costs of developing 49 additional independent living units for lower income seniors, planned for the current parking lot which fronts on Miller Avenue. The Redwoods’ goal is to increase the number of affordable units for lower income seniors beyond the current 60 Section 8 subsidized units. To help reduce development costs and enhance affordability on the new units, the Affordable Housing Overlay will provide the following incentives:
• Increased building height allowance the finished floor rather than natural grade to account for floodplain requirements
• Reduced parking requirement of one parking space per unit • Development fee waiver • By right allowance for 49 additional independent living units conditioned upon ‐• units being provided at levels affordable to lower income seniors.
![Page 3: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/3.jpg)
Land Value Capture
Government actions (value creation)
Increases in land value
Community benefits (value capture)
![Page 4: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/4.jpg)
Government actions that increase land values include (Value creation):
1) Construction of infrastructure and public facilities
Value capture: Special Assessment Districts
![Page 5: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/5.jpg)
Example: Infrastructure and Public Facilities:
• Golden Triangle
![Page 6: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/6.jpg)
Why “Golden” Triangle?
Freeways construction
• I – 5• 895• 52Tremendous increasesIn the value of the land
Who paid the hundreds of billions of dollars for the freeways?
![Page 7: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/7.jpg)
Example of Land Value Recapture through Special Assessment Districts: Mass Transit
• Los Angeles County Metropolitan Transportation Authority (LACMTA)
• Two assessment districts were created in 1985• Challenged in court, upheld by the CA Supreme Court
• Helped finance the first 4.4-mile segment of the Los Angeles Red Line for $130 million (9 percent)
![Page 8: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/8.jpg)
New book
Innovation in Public Transport Finance: Property Value Capture
Ashgate Publishing LTD
Dr. Shishir MathurAssociate ProfessorUrban and Regional Planning DepartmentSan Jose State University
![Page 9: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/9.jpg)
Building infrastructure is the first public action that increases the value of the land
The second is another public action that is related to the planning and zoning powers of local governments, including:
Plan changes or upzonings that increase densities or change land uses to more profitable uses
We are going to emphasize this form of land value increases and land value recapture
![Page 10: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/10.jpg)
Example Costa Verde
![Page 11: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/11.jpg)
So, how do we capture, at least a portion, of this increase?
At the time of a plan change (the approval of a community plan, for example) or,
upzoning, the locality negotiates/requires: public/community benefits Such as…
![Page 12: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/12.jpg)
Possible community benefits (Santa Monica)
• Affordable/workforce housing • Transportation Demand Management • Historic Preservation – TDRs • Social Services/Creative Arts • Enhanced open space and streetscape • Quality pedestrian and biking connections • Shared parking solutions
The community benefits, the land owner benefits (not as much), the developer benefits
![Page 13: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/13.jpg)
Does it work always and everywhere?
No, it needs places and times with a healthy market
• But how do cities, land owners and developers know what level of community benefits is feasible?
• “Community benefits cannot be calculated or negotiated without using development economics and real estate analysis, and the question is not whether but how” (Cameron Gray, former Director of Vancouver Housing Center)
![Page 14: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/14.jpg)
How would Land Value Recapture work?
There are two basic types:
1) Negotiation based (development agreements) Disadvantages-- • Possible lack of expertise of planners• Transparency & accountability problems with
locality/developers negotiations
Advantages-- • Flexibility – You can get more• Palmer (Costa-Hawkins does not apply)
![Page 15: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/15.jpg)
Example: Vancouver (negotiation)• Site specific rezoning• The land “lift” is largely recaptured (rule of
thumb is 80%)• Community Amenity Contribution or CAC is
determined by negotiation based on project pro-forma
• Responsive and flexible system that ensures …• Maximizes potential extraction• Expert staff
![Page 16: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/16.jpg)
Santa Monica Land Use and Circulation Element (LUCE) - Adopted in 2010
Fundamental goal: Additional development and increased densities must contribute to, not detract, from the community
• Focus development on the boulevards to maximize high frequency transit and proximity of residents and workers to daily needs
• In exchange for allowing incremental increases (two tiers above a base height of 32 feet) the developer must provide community benefits
![Page 17: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/17.jpg)
How “much” ($) community benefits?
• Every project is required to produce an economic analysis of the “enhanced value” the project is creating as a result of greater height and FAR
• The developer prepares the economic analysis. Peer reviewed by city’s consultants
![Page 18: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/18.jpg)
23 development agreements – Most projects located downtown and the Bergamotte (former industrial) area
• The “enhanced value” analyses become the basis for the determination of the appropriate level of community benefits
• Largely based on five priority areas and extensive community participation process
![Page 19: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/19.jpg)
2) Plan based – Specific Plans/Community Plans, etc.
Advantages – • Transparency & accountability• Faster processing of projects• Areawide EIRs?Disadvantages—• Minimizes potential extraction• Palmer applies
![Page 20: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/20.jpg)
Plan-based Land Value Recapture
The Eastern Neighborhoods Plan in San Francisco
![Page 21: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/21.jpg)
![Page 22: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/22.jpg)
San Francisco
The Eastern Neighborhood Plan ties increased allowable intensities of development to higher fees:
• Tier 1: Increase in height of eight feet or less • Tier 2: Increase in height of nine to 28 feet• Tier 3: Increase in height of 29 feet or more Tier Residential Non-residential• 1 $8/gsf $6/gsf• 2 $12/gsf $10/gsf• 3 $16/gsf $14/gsf
In formerly industrial zones the use change to different types of mixed use requires higher IH requirements
![Page 23: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/23.jpg)
San FranciscoA culture of planning exactions/linkages (based on a
very strong market):
• Commercial Linkage Fee ($20 Office, $18 Entertainment, $15 Hotel, $18 Retail, etc.)
• Transit Impact Fee (non residential, $10)• Child Care Fees ($1)• Open Space Fees• Arts fees (1 percent of construction costs)• Inclusionary requirements (15 to 20 percent;
$380,000 in-lieu-fee)
![Page 24: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/24.jpg)
• IH is often justified by compensating developers for the additional costs of providing IH
• Incentives = Public costs– Is there a better way?
Land Value Recapture and Inclusionary Housing
![Page 25: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/25.jpg)
Are incentives necessary?
![Page 26: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/26.jpg)
Incentives and cost-offsets displace costs onto the public, either directly or indirectly
• Financial incentives• Fee waivers, reductions or
deferrals• Fast-tract permit approvals• Density bonuses
![Page 27: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/27.jpg)
Density bonuses
When superimposed on existing planning framework, they raise three major areas of concern:
1) They undermine the planning process and existing regulations
2) They may lower the level of service of public facilities and infrastructure
3) They frustrate citizen participation in the planning process
![Page 28: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/28.jpg)
• Alternative: IH as a land value recapture mechanism through rezonings or land use changes, taking into account that planning is a dynamic process
• Possible two-tier IH system
• Now IH is superimposed on an existing framework – Cost-offsets and incentives implicitly assume a
static view of urban planning
![Page 29: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/29.jpg)
IH land value recapture in the US: A beginning at the state level
State of Washington
• HB 2984 of 2006• It specifically authorizes IH where it is linked to
upzonings
• In a commentary, the Housing Partnership stated that the justification for the IH requirement “is that the property owner has been given increased land value by virtue of the upzone, and that increased value is the equivalent of an incentive under a voluntary program.”
![Page 30: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/30.jpg)
Where does the idea of Land Value Recapture come from?
• 19th Century ideas from the US and England
![Page 31: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/31.jpg)
Henry George 1839-1897
Most famous work: Progress and Poverty
Cause of poverty: Land Rent
Proponent of Land Value Taxation (Single tax)John Stuart Mill (Unearned increments in land value)
World wide success
![Page 32: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/32.jpg)
Difficult to implement in this country
We don’t use terms such as: “Value Recapture” Or “Betterment”? Or “Planning Gain”
(In Spanish: “Plusvalias”, in Italian “Plusvalore”)
Moral aspects of “Unearned Increments”
• But, we do have an American version of LVR
![Page 33: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/33.jpg)
Incentive Zoning or Density Bonus
Is an example of what was defined by Jerold S. Kayden in 1992 “Market-based Regulatory Approaches,” defined as:“the movement from command-and-control to market-
based regulatory strategies”
![Page 34: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/34.jpg)
• It happens when more density (and possibly other incentives) is exchanged for community benefits– It has to work for both the city and the developer
• For the city the challenge is to establish the right “price” for the benefits– As Kayden (1992 :570) points out: “The ‘price’ is too low when
the city could have obtained more amenity for the same incentive or dispensed less incentive for the same amenity”
– Need for independent financial analysis
![Page 35: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/35.jpg)
So….Plan changes and upzonings increase land values
• With LVR, localities can recapture some of those increases for community benefits
• With incentive zoning, if preceded by downzoning, or the existing zoning is low, there is also the possibility of land value recapture
• BUT, for both incentive zoning and LVR what is essential is NOT to change plans/upzone WITHOUT benefits
![Page 36: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/36.jpg)
Case Study Downtown San Diego Community Plan
• 2005 Draft plan is released• Increases of 2 FARs over the earlier (1992) were
proposed in the majority of downtown, also;• Proposed system of FAR incentives and TDR to
provide parks, inclusionary units on site, and preserve historic sites
Remember previous slide??
![Page 37: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/37.jpg)
Enter C-3
• 1992 Plan Base Maximum Density maintained when the 2006 Downtown Plan was approved
• Density Bonus Program established:Increase in FAR possible if developers provides
benefits that include: Urban Open Space, Affordable Housing, Three bedroom Units, Eco-Roofs and Employment Uses
![Page 38: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/38.jpg)
FARs for saleIn 2007 the city adopted a:FAR Payment Bonus Program
In certain areas of downtown, developers could choose to purchase between 1 or 2 FARs, depending on location. For how much?
From economically justifiable $30 to $ 15 a square foot
![Page 39: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/39.jpg)
2011 End of Redevelopment
• In 2012 the FAR for sale is expanded (where, and by 50 percent) to help implement the open space and park system downtown
• All the Maximum FARs in the center City PDOs can be exceeded through the use of the state affordable housing density bonus.
![Page 40: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/40.jpg)
State Density Bonus Program
All the Maximum FARs in downtown can be exceeded through the use of the state affordable housing density bonus
Possible highest FAR in downtown is 26.1;With 10 as a base density, 14 through the
payment and community benefits bonus program, and 2.1 through the density bonus law
![Page 41: Land Value (Re)Capture Nico Calavita Professor Emeritus Graduate Program in City Planning San Diego State University April 11, 2014 -- San Diego.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d9f5503460f94a896fe/html5/thumbnails/41.jpg)
And to finish, the Housing Element
Conundrum