Agenda - Planning Commission - 07/09/2015

Home

Value Capture and Community Benefits By Nico Calavita Market-based regulatory strategies have become relatively common, though far from universal, in communities across the country. It has been almost a quarter of a century since Jerold Kayden alerted planners to the momen- tous change occurring in land -use planning— "the movement from command -and -control to market-based regulatory strategies"—when public and private interests would "join forces for the common good" by harnessing mecha- nisms such as transfer of develop- ment rights and incentive zoning (1992, 565). As planners seek to promote higher -density compact devel- opment in a climate of declining public revenues, it imperative for them to help cities and coun- ties capture a portion of the increases in land and • The main tool to capture those increases is a special assessment district, and in some con- texts, tax -increment financing (TIF) is also seen as a value capture mechanism (Huxley 2009). It should be noted, however, that with TIF the value captured is from in- creases in real estate taxes Virginia, on the other hand, density bonus systems were introduced to circumvent court decisions that prohibited inclusionary zoning. Concerns about IZ are many, including the charge that it undermines planning. After all, if planning rationale has established a maximum density, what makes certain com- munity benefits worthy enough to trump the benefits gained from plan -established densities? Similarly, if amenities are so impor- tant that plans can be undermined for them, why should not they be required without incen- tives? Studies that compared the benefits and costs of IZ found that developers benefited development value resulting from granting additional develop- ment rights to provide public amenities. To that end, this article highlights a number of promising approaches for captur- ing value created from land -use and other regulatory changes. Specifically, it focuses on the new ways in which incentive zoning is being shaped and implemented in California. Throughout, I will use the term "value capture" to encapsulate mechanisms like public benefit zoning, floor area ratio (FAR) acquisition pro- grams, amenity bonus programs and commu- nity benefits programs. All of these techniques seek to capture some of the value increases— both land and development value—resulting from entitlements. While beyond the scope of this article, it should be noted, however, that the value of real estate also increases as a result of the building of infrastructure and public facilities. resulting, at least in part, from public invest- ments in redevelopment area's, and not from landown- ers and developers. ORIGINS AND PROBLEMS Incentive zoning (IZ) encourages devel- opers, usually through additional densi- ties, to provide community benefits or amenities. (In this article I will use the two terms interchangeably). It has a dual origin: disproportionally. A case study that analyzed pub lic plazas and arcades provided under the IZ program in New York City found that developers 0- enjoyed huge windfalls while providing, in many cases, poorly designed public spaces at a relative low cost (Kayden 1978). As experiences with IZ grew, changes and im- provements were made. For example, in a few cities—such as San Francisco and Santa Monica, Cali- fornia—the amenities were obtained through mandatory incentives; the cities are now utiliz- ing IZ to obtain additional benefits. It should ast Image courtesy PYATOK In cities like New York and Chicago, where IZ was initially attempted in the 1960s, the benefits sought from developers tended to emphasize ways in which to improve the pub- lic realm, such as encouraging the creation of public plazas or theaters. In Fairfax County, ZONINGPRACTICE 6.15 AMERICAN PLANNING ASSOCIATION I page 2