A crossroad

Last week I read the development proposal from McKee, and as said in the previous post I was very skeptical of his plan. During my Friday meeting with Mark (thesis advisor) the problems I had with his proposal (and I would imagine the problems he will face) all center on population, or a lack of it.

The development proposal estimates the area will generate the following:

10,000 Residential units,

-7,200 multi family units
-1,800 single family homes

This equates to roughly 29,500 people based on Census data for persons per dwelling unit.

St. Louis is poised to increase in population for the first time in 60 years based off of the current census estimates. That increase from 2000-2008 was less than 6500 people. Of those 6500 people a majority are the result of Balkan conflict and most, if not all are locating themselves in South City.

What leads McKee to believe his development will spur an influx of people that has not been seen in St. Louis since the 1920's? Where are these people coming from? Why does he think they will locate in the Northside?



Other Estimates they offer the development will yield:

4,500,000 sq ft of Commercial Space

1,000,000 sq ft. of Retail Space

Question: Where are the jobs coming from?




These issues have forced me to think about my project in a much different way than I had before. The sheer volume of population and jobs make McKee's proposal essentially a house of cards. Assuming he does get the TIF, the only real benefit the neighborhood might experience is new infrastructure- the ability to grow in the future.
Now this is no small matter, this is a great opportunity, but it is important I think to take a step back for a second. Why aren't people racing to get into this area? Land is cheap, redevelopment loans are fairly easy to come by, close to downtown, this area should be hopping. But its not. Its because of the stigma of the northside neighborhood that the vacancy still exists. Crime is high, likely because of the haven abandoned structures and large spanses of open land offer to criminals.

It is extremely difficult to change people's perceptions of a place, especially a place that has seen disinvestment and abandonment for the past 80+ years. My new focus will be just that. How do you design for safety in order to take advantage of all of the other good things about the site area? How can this design be flexible enough to allow for connectivity if/when surrounding areas of the site are deemed safe enough to develop? This is my new focus.

Deliverables for Friday

-A density map that will allow me to visually quantify the housing stock quality and area

-Several maps that start to look at securing the neighborhood

-Research on securing residential areas and designing for high crime areas.

Funding A Project & Northside Development Plan Critique

There were several things on my plate this week.

1) I needed to investigate the TIF proposal from McKee to develop the Northside area. I feel like this investigation is worthwhile in that I can pull out what I think is successful and what I believe will fail, or has little basis for success.

2) I want to start to look at the TIF process in general, some cities have been extremely successful with it, (Chicago, Baltimore), while St. Louis from my first glance seems to use it as the only means of getting development done.

3) A presentation by an alumnus of NDSU, Nick Bigelow, made me start to think about the funding of large scale projects like mine. What is stopping the city from just incrementally funding the project? It seems as though civic bodies would be in a much better state if they either incrementally funded based on performance of the development rather than put all of the money up front and say 'well you have reached the requirement for TIF funding, Good luck with our money'.

4) What funding mechanisms exist beyond the TIF that allow for more civic control, and less risk to the taxpayer? Is there a European, slightly more social model for this type and scale of development.


So as you can tell I have spent most of my week dealing with an underlying issue-

How does a project like this get funded?

The TIF district is obviously the favored public private partnership funding mechanism in the US. It allows municipalities to forward fund projects using the assumed increase in property values after development.

It is important to know, and this I found out in my early research this week, that not all TIF's are created equal.

There are basically three ways that municipalities can fund TIF's

1) By bonds

Municipalities issue bonds to cover the costs of the improvements with the hope that as the project starts to succeed they can pay off these bonds and be clear of any debt. The risk here being that if the project doesnt make the expected amount of money, the bondholders won't get paid and the TIF will default. This is rare but does happen, and there are several cases of TIF's coming close to default. The chances of defaulting are much greater in difficult economies.

2) Pay as you go

Municipalities make the developers fund initial development costs, and as the project starts to show at least signs of viability the developer is reimbursed. Developers HATE this because the risk lies with the developer rather than the municipality.

3) Municipalities provide short term notes

In this method the municipality issues bonds to the developer to sell to the highest bidder. This displaces the risk for both the developer and the municipality. This is the method the city of Chicago uses in many of its projects. it is important to note that Chicago has used TIF very effectively, while retaining a lot of power as to how things are built- i.e. green roofs, etc. which I think is an important aspect of how that city runs TIFs.


European Models-

I researched a few funding mechanisms from the British Property Federation:

There are a few funding mechanisms that they use, explained below, I am skeptical as to their application in the US. Oddly in looking for a more progressive model to follow in Europe I found that many municipalities are looking to use a mechanism that is similar to the TIF called ADZ or an Accelerated Development Zones.

CIL- Community Infrastructure Levy- Basically taxes areas of affluence to fund areas that need redevelopment.

RIF- Regional Infrastructure Fund- Allows regions to forward fund projects through special tax districts as well as private funding.

BRS- Businesss Rate Supplements are essentially a tax on businesses and their revenues to fund redevelopment areas.


Notice they don't ever call it a tax...





I set out on my research of funding mechanisms to find other ways to fund projects, in particular residential projects, which cannot be funded directly through a TIF. I had a negative view of TIFs when I first started looking at them, but then realized that the area is practically a poster child for what a TIF district is supposed to be. It is already blighted, needs regeneration, and has failing infrastructure. But my problem with the development proposal set forth by the Northside Regeneration company is that the city would have little control as to what the design properties of the neighborhood would be, and even beyond that- it doesn't matter what the design looks like if the underlying social issues that are present aren't at least considered.

Northside TIF District Development Critique-

I have huge fundamental issues with this proposal. The part that I take most issue with is the phasing of the project. As it stands the first two phases of development, which the plan calls "employment centers" are the only phases with actual financial backing beyond the TIF district, which is to say they are the only areas that have been financially backed by a lending institution. The last two phases which are largely residential have no financial guarantee and the plan seems to have been formulated in the area to appease the TIF committee.

I have a few questions regarding the first two phases:

1) What makes the development of these new job centers viable? There is a wealth of commercial and retail space that remains vacant, even a large amount in the CBD which is not very far away.

2) Even if this space is viable due to tax incentives, is it actually a good thing for the city of St. Louis at this time? The way I see it is if I am an existing business and I move my business from the CBD to the new "employment hubs" the city is actually losing out.

I would be taking a business that is already paying property taxes in the city at the actual value of the land and instead allowing the business to go to these new areas and pay less property tax, all while adding vacancy in the CBD or wherever that business came from. It is essentially robbing peter to pay paul, only it is actually much worse for the city.

The only way i see this model working is if the business moving into the "employment hubs" is new to the area or is a startup business.

Which leads to the chicken and egg scenario of how development occurs- is it the jobs and retail commercial that comes first or the availability of a safe residential area that can provide those employment hubs and commercial retail developments with the rooftops they need for viability?

I would argue that the phasing of the project should not be focused on putting commercial development next to the freeways, but rather creating the infrastructure to support that commercial development, namely residential development. I am not advocating that the developer only focus on residential development, because that would breed the exact opposite of what he is proposing, a too much housing stock nothing to do scenario.


While I find issue with the phasing and the macro scale reasoning of this proposal, the individual details of the site development plan are very interesting. The transportation development section particularly intrigued me, but yet again there would need to be a population to support such a transportation system investment.

I also admire the developers desire to implement green streets and a smart grid into the new infrastructure. But I cant help but thinking when it comes to residential development, what could the community groups, churches, and other people that are already trying to improve the Northside do with the amount of money that is being put towards this project? Or even half of those funds?

What would happen some funds were used to train unemployed persons in the neighborhood to rehabilitate, or at least gut the houses so rehabbers could come in? This would provide a win win situation for the area, curbing unemployment as well as laying the groundwork for future population.

My thoughts, as Promised

Forgive me for the following post, but it is just me putting my current thoughts on paper and attempting to organize my thoughts on the project:

Political/Civic Structure

One thing that really is intriguing to me right now is how the structure of city government and to a point the state government has a direct impact on my site and other areas of disinvestment throughout the city.

Paul McKee Jr. (Previously Mentioned in this blog) essentially influenced a bill in the legislature called the “Distressed Areas Land Assemblage Tax Credits”, which “pays for the purchase, maintenance and demolition of properties in large tracts of poor urban areas in Missouri.”

The interesting thing is that the Northside development area (my site area for the most part) is the only site in the state that currently qualifies for it due to the amount of land that is needed to be owned by a single entity to qualify.
This reeks of corruption if you ask me.

Site Boundaries

The sites boundaries are currently left undefined, and to be honest will probably remain so due to the nature of the thesis investigation on disinvestment and abandonment and how one would go about starting to solve those problems.
Instead, I think I want to examine the existing housing stock and determine whether or not structures in the outlying areas of the ‘epicenter’ of the site will be in a state where they are either in good condition, or in a condition where they could still be repaired should the process of neighborhood revival take upwards of 20 years.

This is important because theoretically as the extremely poor areas start to develop and the residential areas expand, the outlying area’s land value would increase, but not to a point of inaffordability, making it a viable option for renovation and other improvements to a housing stock that while currently structurally fit and aesthetically superior to other areas of the neighborhood, could still use improvement.

The underlying point of that is this: If a structure is still standing on the outskirts of the area, and can still stand in say 20 years, it shouldn’t be what this thesis should actually focus on, rather these structures would see the beneficial effects from the transformation of any design intervention deemed to be fit.


Development

One thing I find fascinating in my brief overview of the McKee plan is that he expects to have this area for the most part revitalized in 15 yrs. I find this difficult to believe that such a large area with over 100 years of disinvestment can be rehabbed into a viable urban neighborhood and not a hodgepodge of suburban type homes, strip malls, and corporate campuses.

This area I am finding has a lot of potential if you look close enough and examine the neighborhood for what is HAS and not what it lacks. The neighborhoods highest density is along the southern portion of the site. It offers affordable housing to the area, while still looking OK in an urban setting. Also, rehabilitation efforts are already underway in area on the eastern edge of the site area.

One area of the site where I was blown away with potential was the area of Madison Street and 20th St. An old brewery has been rehabilitated into apartments, and row houses are still intact. While walking on this street you don’t feel like you are in a dangerous neighborhood, in fact it reminded me of Boston and the beacon hill area, only that its only a block or so long, and a half block off of the street has buildings that are crumbling.

I feel like this is a really good area to start my project, there is a nearby linear park with high density around it, and literally acres of open land to the west, and rehabilitation opportunities to the east and north.

My track of thought to this point is that if one area starts to rehabilitate perhaps a snowball effect could start to occur. In this case at 20th and Madison, I need to find the point at which density would start to breed a small commercial area, at what point would two warehouses located on the next block would become good opportunities for loft apartments, etc. I feel like this area is on the cusp of that first success in a long time for this neighborhood.

Perhaps it is a little premature for me to evaluate yet, but I am already getting a feeling of how I am going to phase this project. The area south of St. Louis Ave. has both the density and proximity to the downtown area that I believe can start such a rehabilitation.

Impediments to Development

I will confess I need to do a lot more research on this subject, but my hunch is that the demographic that would be interested in this neighborhood are young couples without kids that want to take on the challenge of rehabilitating a historic building. Many of these structures can be bought for less than $20,000, probably why McKee was attracted to the investment opportunity. McKee bought several of these properties, kicked out the tenants, and is letting them decay.

The potential problem that I see is that if I am a young couple looking to invest in the area, McKee will not sell these properties for rehabilitation. So at some point we have a man that swears he wants to help out the northside and St. Louis, and on the other he may actually be hindering the very development that may have occurred naturally had he not own all of the properties. Vacant properties generate minimal tax revenue and economic activity, while rehabbed buildings create immediate economic impact.

Economic Impact

I think a huge part of my thesis will be based on the very concept mentioned above: that vacant properties generate minimal tax revenue. In a book called Mapping Decline the author brought up the point that areas like the northside use a disproportionate amount of tax revenues earned by other areas of the city. The goal of this redevelopment would to be at minimum make this area economically self sufficient.

Schools

One of the reasons that I have targeted the demographic of young couples without kids is that with the lack of property taxes earned on vacant lots or lots with substantial disinvestment has a significant impact on the funding of public schools within the area. In fact, at one point in 2007 the district was unaccredited due to poor testing performance.

Check out this website for more information on the area, including a map of McKee's properties:

http://www.eco-absence.org/blairmont

St. Louis Visit #2

Over the Christmas break I made another site visit to St. Louis. My first trip down there I was so overwhelmed with what I saw regarding the state of the neighborhood that I had neglected to look at the enormous potential that the area holds. This itself is a problem for the neighborhood.

This visit was much different, I was able to look at the crumbling buildings and open land and see possibilities for redevelopment, and even ideas on how that redevelopment could start to occur. This will be shown in a diagram to be created by Friday.

One important thing that may be a barrier for the current residents of the neighborhoods have seen revitalization efforts come and go, they have experienced large social programs attempt to “solve” their problems and they have seen designers try to combat social problems with solutions like Pruitt- Igoe, which was located in the site area.





One could not really blame the residents for being skeptical of large scale development. I think the challenge in this neighborhood is to build upon the small successes they have already had, try to just have that one shining example of what the neighborhood could become and try to create a snowball effect in an effort to affect change.

Below is my January thesis schedule:

Jan
9-15
• Make further contact with a not for profit development organization called Urban Strategies, as well as other city planners.
• Make a preliminary inventory/analysis map, identify graphically what I already know as far as opportunities for development success.
• Write down EVERYTHING that I am thinking on the project after my two visits, organize.

16-22
• Read the entire development proposal from Paul McKee, a large scale developer in the area. Pay close attention into the way his proposal is phased, analyze.
• Look into attempts to revitalize in other parts of the city. (soulard, laffayette)
• Make contact with a City Alderman, or other high level civic leader in an attempt to make the city aware of my project.
23-29
• Articulate vison(s) for area based on analysis of local revitalizatiton efforts, the success and failure of McKee’s proposal, and current analysis of site. Run several models, with written analyzation of all.
February
30-5
• Try to make contact with McKee or his people AGAIN. In the past these people have been very difficult to get a hold of due to public sentiment on their proposal.


I would appreciate any comments that you might have on the schedule put forth or any ideas on affecting urban change in neighborhoods like the Northside.