Small Town Revitalization

A feature in this month’s Planning magazine highlights the efforts of nonprofit regional planning organizations to revitalize small towns in New York State. These organizations seek to bring people back to cities and walkable communities with “good, urbanistic street networks and underutilized building stock.”

Regional planning organizations provide services to municipalities, such as demographic and issues research, strategic planning, and grant writing. The priorities of the organizations described in the article are to keep and attract young people while also preserving an area’s character.

Despite the vast distance that separates them, many California towns have much in common with their New York counterparts. Many were founded early, before automobiles, which means their development patterns could be similar. Similarly, an historic, underutilized building stock presents an asset for towns on both coasts. With such shared features, successful strategies for revitalization are more similar than one may initially expect.

If your town might be interested in developing a revitalization strategy, please contact RSG to help you through the process.

Written by Dima Galkin, an Associate at RSG

The Day After Thanksgiving

 

Often referred to as Black Friday, the day after Thanksgiving used to be the busiest day of the year for shopping in retail stores. It was the launching point for the critical holiday shopping season, which accounts for 30% of annual retail sales. Recent trends show decreasing store turnout for the retail market’s biggest shopping weekend – from 133 million people shopping in stores in 2014 to 102 million in 2015

Now consumers seem to be “navigating from the physical to the digital,” according to Fortune. Online shopping grew 19% from 2014 to 2015 for the holiday weekend, reaching $6.1 billion in 2015.

While huge numbers of people still shop in stores, online shopping is a trend that continues to grow faster each year. Black Friday is still a big event, but shoppers research and buy products online in ever-increasing numbers.

Will we see another large drop-off in store shopping this year? If recent trends are an indicator, shoppers will fill their mobile shopping carts, and Black Friday will just be another option. What could this mean for local sales tax revenues and the retail real estate market?

Written by Brett Poirier, an Analyst at RSG

CEQA Litigation: Harmful for Housing?

Litigation abuse under the California Environmental Quality Act (CEQA) undermines Californiaʹs environmental, social equity, and economic priorities, according to a Holland & Knight report, the first comprehensive study of lawsuits filed under CEQA. Analyzing all CEQA lawsuits filed from 2010 to 2012, the report systematically documents widespread abuse of CEQA litigation.

 

The study says that 49% of all CEQA lawsuits targeted taxpayer-funded projects with no business or other private sector sponsors. Projects designed to advance California’s environmental policy objectives – transit, renewable energy, and housing -- are the most frequent targets of CEQA lawsuits. Infill projects are the overwhelming target of CEQA lawsuits. CEQA litigation is overwhelmingly used in cities, targeting core urban services such as parks, schools, libraries, and even senior housing. 64% of those filing CEQA lawsuits are individuals or local “associations,” primarily the domain of Not In My Backyard (NIMBY) opponents and special interests.

According to the report, ending CEQA litigation abuse is the most cost-effective way to restore the state's middle-class job base, make housing more affordable, ensure that taxpayer funds are spent on projects, and improve the future of the nearly nine million Californians living in poverty. The authors recommend three moderate reforms to curtail the abuse:

  1. Require those filing CEQA lawsuits to disclose their identity and interests.

  2. Eliminate duplicative lawsuits aimed at derailing plans and projects that have already completed the CEQA process.

  3. Preserve CEQA’s existing environmental review and public comment requirements, as well as access to litigation remedies for environmental purposes, but restrict judicial invalidation to projects that would harm public health, destroy irreplaceable tribal resources, or threaten the ecology.

Written by Dima Galkin, an Associate at RSG

Which Factors Most Affect Housing Affordability?

Photo credit: Bay Area Council Economic Institute

Photo credit: Bay Area Council Economic Institute

High housing costs have impacted the overall Bay Area economy. The Bay Area Council Economic Institute (BACEI) recently published a study on how public policies affect the number of San Francisco households burdened by housing costs.

The study lists some of the policies that could increase housing affordability. Most beneficial, the BACEI analysis shows, are expedited completion of major projects and accelerating the permitting process for all housing development. Other policies that improve housing affordability, albeit to a lesser extent, included

  • easing restrictive building codes,
  • creating a fund for below-market-rate housing,
  • a density bonus for buildings with more than 30 percent affordable units,
  • restricting ownership of second homes,
  • allowing accessory dwelling units to be constructed on all properties zoned for residential use,
  • facilitating development of more micro units,
  • providing a density bonus for buildings with 100 percent below-market-rate units, and
  • reducing parking requirements.

On the other hand, BACEI found that certain San Francisco policies worsened housing affordability, most significantly eliminating rent control, an indefinite moratorium on development, and a 25% inclusionary housing requirement.

RSG can help cities analyze which policies would be effective in their specific situation and implement policies that they have already enacted. Call us today to identify what your city can do to improve local housing affordability.

Written by Jim Simon, a Principal at RSG

How Federal Housing Finance Favors Single-Use Development Over Mixed-Use Development

Image courtesy of the American Planning Association

Image courtesy of the American Planning Association

Federal loan programs supporting new development favor single family-residential development over mixed-use development, according to Regional Plan Association (RPA), a metropolitan planning organization for the New York metro area. As the RPA explains, the Federal Housing Administration, Fannie Mae and Freddie Mac loans, loan guarantees, and mortgages typically cap commercial floor space or income at 15 to 25 percent of multi-family projects. Commercial rent is discounted by underwriting rules designed to reflect risk, compounding the problem.

While many Americans prefer to live in mixed-use areas where they can walk to various amenities, development is not meeting this demand. The mixed use pattern has historically been the most common and should not be placed at a disadvantage by federal housing finance programs.

Recent research on loan performance, according to the RPA, indicates that loans in walkable, mixed-use neighborhoods are less risky than those in single-use, single-family neighborhoods. Thus, updated rules could also reduce loan program costs.

The RPA recommends updating federal housing finance rules that would allow for a greater variety of new development for all types of communities. While some rules have been relaxed, the changes are too small to increase the number of qualifying projects.

Written by Dima Galkin, an Associate at RSG

League of California Cities Annual Conference Game Results

At the beginning of October, RSG hosted a booth at the League of California Cities Annual Conference in Long Beach. It was wonderful to see our friends and clients from all over California, as well as to meet new people in the business of providing better futures for our communities.

As consultants, RSG’s focus is always on providing useful answers and strategies to challenging issues in local government. Inspired by some of the projects on which we are currently working, our booth featured a game for conference attendees to identify the largest problems facing cities today. Participants were asked to place an orange chip in the bucket which best represented that issue for them. Here are the results!

  •  Prepare a long-range budget forecast for current / future public safety costs? 53 chips
  •  Increase in facilitated community engagement events / meetings? 40 chips
  •  Use social media to promote economic development in your city? 39 chips
  •  Partner with County and / or utilized Housing Authority / SB 341 money for homeless programs? 23 chips
  •  Leverage former RDA assets on tax credit projects? 20 chips
  •  Pass ordinances defining allowable areas for AIRBNB / VRBO? 14 chips

A big THANK YOU to everyone who stopped by our booth! We enjoyed connecting with you, and hope to hear from you soon.

Written by Evanne Holloway, an Analyst at RSG

Build It, and They Will Prosper?

Copyright 2016 Kelly Wilson, Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Copyright 2016 Kelly Wilson, Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Do sports stadiums generate net economic benefits for the community? 

The consensus is generally no. Economists say that sports teams spur little new spending in the community. 

While stadiums are limited in use, politicians and developers claim that a stadium is a win for local communities. Proponents say that sports facilities improve the local economy by creating construction jobs, generating new spending, attracting tourism and multiplying local income and job creation. Advocates argue that new stadiums spur so much economic growth that subsidies are offset by revenues from ticket taxes, sales taxes, and property tax increases.

These arguments may overstate the benefits of stadiums. Economic growth takes place when a community’s resources become more productive. Increased productivity can arise from economically beneficial specialization by the community or from local value added. Building a stadium is good for the local economy only if it is the most productive way to make capital investments and use its workers.

Still, there are non-economic benefits, such as community pride and cultural activity. Some projects, such as the NFL Rams’ return to Los Angeles, which occurred with limited financial obligations for Los Angeles taxpayers, provide a valuable lesson in how to attract sports teams and new stadiums based on a market’s strength rather than subsidies.

Calculating the economic and fiscal impacts of a development is crucial when deciding on whether or not a project should break ground. RSG has extensive experience in projecting tax revenue from projects and can help determine if a sports stadium or other large municipal investment would be a good idea in your community!

Written by Jeff Khau, a Senior Analyst at RSG

In Uncertain Future for Cap-and-Trade, Revenues are Allocated for Greenhouse Gas Reducing Programs

Image courtesy of the American Planning Association.

Image courtesy of the American Planning Association.

The California Air Resources Board, a department within the California Environmental Protection Agency (CA EPA) focusing on reducing air pollution, has conducted 15 cap-and-trade auctions since November 2012, generating over $4 billion to the State. State law requires auction revenues to be used to facilitate the reduction of greenhouse gas emissions and outlines various categories of allowable expenditures. Cap-and-trade auction revenues will fund programs such as clean vehicle rebates, enhanced fleet modernization, heavy-duty and off-road vehicle investments, transit-oriented development and intercity rail, urban greening, methane emission reduction from dairy and livestock operations, urban forestry, and assistance to disadvantaged communities.

While the longevity of the program is in doubt due to legal challenges and a claim that the law only allows the cap and trade system to operate through 2020, newly signed legislation has stimulated interest in how auction revenues are distributed. Assembly Bill (AB) 1613 and Senate Bill 859 direct $900 million of cap-and-trade revenues for fiscal year 2016-17 and reserve $462 million for appropriation in future years, thus providing a defined future allocation amount as auction revenues fluctuate.

In addition, AB 1550 modifies cap-and-trade laws to require that at least 25 percent of auction proceeds funds projects benefitting disadvantaged communities, as defined by the CA EPA, and at least an additional 10 percent funds projects for low-income households and communities specifically. Further, the law makes it easier for communities with major transportation hubs to compete for and receive cap-and-trade monies.

While the long-term future of cap-and-trade auctions is uncertain, the state legislature has taken immediate action to ensure that current auction revenues are directed to the appropriate state agencies.

Written by Tara Matthews, a Principal at RSG

Legislation Sets Deadline for Cities to Create Procedures for Processing Density Bonus Applications

 

Many around the state reacted strongly to the Governor’s May 2016 proposal for a by-right affordable housing production program, which was ultimately abandoned following pressure from special interests. Affordable housing advocates may find some solace during this legislative session in the form of three bills related to density bonus projects, as well as an added incentive to pursue infill development on City-owned property.

Assembly Bill (“AB”) 2501: Action Required by Cities to Create Procedures and Streamline Process

The most extensive of the three density bonus bills is AB 2501 (Bloom) which, among other things, eliminates requirements for developers to perform supplemental feasibility studies when requesting “off-menu” incentives for density bonus projects. Density bonus law previously provided up to three “by-right” or “on-menu” incentives, depending on the extent of affordability. Local agencies often allowed for additional incentives provided these could be justified, commonly in the form of feasibility studies prepared by the applicant. AB 2501 cuts out all of this, and instead compels the public agency to grant the concessions unless the agency itself can demonstrate that they are not required to make the project feasible.

While not all agencies are currently out of compliance with this provision, all will need to adopt procedures and timelines to process density bonus applications to comply with AB 2501’s provisions. RSG is assisting our clients in implementing these changes by drafting these procedures. Other changes under AB 2501 include the rounding up of any “fractional unit” computed from the density bonus calculation – effectively increasing affordable units by a nominal number.

AB 2442 and AB 2556: Additional Broadening of Density Bonus Law

AB 2442 (Holden) provides developers a 20% density bonus if the project includes at least 10% of units affordable at very low income levels to transitional foster youth, disabled veterans, and homeless persons. The affordability of the units must be maintained for 55 years.

AB 2556 (Nazarian) addresses how density bonus projects can be used to replace existing affordable units on the site, even if the income category of the households occupying the property is unknown.

AB 2208: More Future Housing Sites Designated in Housing Element

Current law provides that fulfillment of a community’s regional housing needs can be met through the production of residential property designated in the Housing Element Update. AB 2208 (Santiago) expands this by including airspace above sites owned or leased by a city or county. This nicely aligns with the increased desire of cities to leverage publicly held property to stimulate investment, and it provides more motivation to redevelop these sites with parking and residential uses.

Written by Jim Simon, a Principal at RSG