Agenda - Planning Commission - 07/09/2015

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standing shapes planning approaches in many European and South American countries, as well as in a few American and Canadian cities. Who pays and who benefits from value capture? In order to determine the effect of value capture on land values, we need to con- sider two scenarios: "base density plus" and "rezonings." Base Density Plus Under this scenario developers have the choice of building at an established base density for which they pay prescribed exactions (or not, depending on the locality), or of trading ad- ditional densities (or other incentives such as greater height or reduced parking require- ments) for amenities. Under the scenario ofa fair economic trade-off between incentives and amenities, land prices should be unaffected. If—as was the case in New York in the 19805— the value of the incentives is much higher than the cost of the amenities, the value of the land is likely to rise. In the opposite case, the developer will not choose to use the incentive KEY QUESTIONS 1. 1s the additional density based on good planning principles? 2. In the trade-off between the public costs of additional density and the ben- efits of public amenities, is the public interest clearly the winner? 3. Was the trade-off system openly based on economic analysis and extensive public participation? 4. Were accountability and transparency an integral part of the process? under appropriate market conditions, will lead to higher land prices. Under the "rezon- ing" scenario, for example, developers might acquire land zoned industrial—a use for which there is no demand—and initiate the process of rezoning the land to medium -density resi- dential. Presumably developers will pay less for industrially zoned land than residentially market, the levy should not cause land prices to rise significantly. In conclusion, both developers (who get the rezoning) and the community win. Land- owners will win because they will be able to sell their land, but not at a price that reflects the higher-level use. Could "density plus" and "rezonings" be likened to selling zoning? That depends on whether the value capture scheme is based on a plan and how good the plan is. Key questions: Is the additional density based on good planning principles? In the trade-off between the public costs of additional density and the benefits of public amenities, is the public interest clearly the winner? Was the trade-off system openly based on economic analysis and extensive pub- lic participation? Were accountability and trans- parency an integral part of the process? PUBLIC PARTICIPATION AND COMMUNITY BENEFITS In changing from a top-down, command -and - control approach to a market-based approach, �. _,� An April 1.5, 2015, public meeting on community benefits to California's Downtown Area Plan. zoning option, and the city will have to reduce the level of amenities. To summarize, the consumer benefits because of the increase in market choices and the amenities provided, while the developer also benefits from the amenities as well as from higher profits. The landowner still profits from selling the land, but at a price that reflects the base density only or slightly more. Rezonings Localities have the discretionary power to rezone properties to allow higher densities or change land -use designations. These changes, be generated from five skyscrapers proposed by Berkeley, zoned property, allowing them to provide com- munity benefits, cover the cost of the rezoning, and gain a portion of the "enhanced value" resulting from the rezoning as additional profit. How this scenario plays in real life will depend on the market and circumstances in a given locale. It could be argued, for example, that landowners, anticipating the likelihood ofa rezoning to a more valuable use, will seek a higher return over industrial land value, in effect withdrawing their property from the mar- ket. But if the rezoning is part of an overall plan to change land uses or increase densities, thus increasing the supply of land available on the planning has also embraced a more participa- tory, community -empowering planning pro- cess. The fact that value capture is wedded to an engaged citizenry is in large part due to this shift. However, when public benefits that are part of the status quo are exchanged for other public benefits in a value capture context that enhances developers' profits, it behooves planners to provide ample opportu- nities for -transparency and accountability and for citizens to demand the same. As we shall see from the Santa Monica and San Francisco, California, case studies, value capture origi- nated from citizen demands and was enacted ZONINGPRACTICE 6.15 AMERICAN PLANNING ASSOCIATION Ipage 4