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39 Cards in this Set
- Front
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What 7 reasons does Nelson list as ideal qualities for the redevelopment of surface parking lots? |
1. Sites are flats and well drained 2. Sites are often along major highways and along multilane corridors that connect urban and suburban nodes, making them transit ready 3. Large scale utilities run along these highways 4. Prior development approvals have already been committed for uses other than low density residential development 5. Owners are motivated to maximise their return 6. As sites age, deterioration of structures affects value of nearby property 7. Residential property owners will deflect development pressure away from their neighborhoods into aging commercial sites especially if they have a constructive say in how they are developed. |
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What is the conundrum that local governments face in approving the development of green fields in regards to utility costs? |
With Greenfield developments, initial utility costs are low, but by creating more infrastructure, they are increasing their budgets in the future when those utilities need to be improved. The alternative is to invest in pre-existing utilities, reducing the cost for imrpovments in the future, and encouraging redevelopment of aging commercial sites. |
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Land Assembly Brownfield Remediation |
Fill in later |
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Examples of P3s in facilitating real estate development |
1. Rehabilitation to change original function ( warehouse into residential lofts ) 2. Removal of existing structures 3. Land assembly 4. Infrastructure upgrades |
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Why are P3s mutually beneficial? |
The public sector 1. Engages is planning and zoning activities to recast overall redevelopment vision of an area 2. Upgrades infrastructure 3. Expands mobility options (sidewalks, transit, bikeways, road improvements) 4. Acquires property and prepares for redevelopment 5. Assists with financing The private sector 1. Conducts market analysis 2. Construction financing 3. Construction management 4. Procurement of long term financing 5. Project leasing and property management |
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What is the cycle of development? |
An initial period of construction followed by a period of increasing value and function, then a period of increasing maintenance costs and deterioration, perhaps leasing to idling or abandonment and then a period of redevelopment as the old structures are replaced. Miles Colean (1953), Larry S Bourne (1967) |
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In any given year, what percentage of nonresidential space become idled or is replaced? |
2.5% annually |
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How often does non residential development need to be replaced? |
Non durable, non residential development needs to be replaced every 20 to 40 years |
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What are the four factors that determine the optimal timing of redevelopment? |
1. The discount rate applying in the real estate market 2. The property tax rate 3. Earnings in the interim use 4. Way in which the highest and best use of the land is expected to change in the future Donald Shoup, 1970 |
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What is the discount rate? |
The rate at which future revenues net of costs (profit) are discounted to the present to allow for fair comparison of alternative investment choices |
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What does a high discount rate mean for an investor? |
A high discount rate means that an investor is willing to pay less for something presumably because the risks are higher |
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What is the cap rate? |
Cap rate or capitalization rate is the ratio between the net operating income (NOI) of a real estate investment (rental income less operating expenses) and its market value. NOI / Value The cap rate is akin to the discount rate |
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What is the correlation between cap rates and redevelopment? |
The higher the cap rate, the sooner redevelopment will occur. This is because the higher the cap rate, the lower the value of the real estate, thus the more attractive it is for redevelopment. |
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What are the external factors on NOI? |
Taxes go up/down Rents go up/down |
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What is the correlation between property tax and NOI? |
Property taxes are considered an expense. The higher the taxes, the lower the NOI, and therefore the lower the value and more likely a site may be redeveloped. |
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How do inefficient property taxes defer the optimal timing of redevelopment? |
The surface parking lot example. This is an interim use. Property taxes are based on the value of property, but this "value" can be determined in different ways. An acre of vacant land is taxes based on its estimated sales price. If nearby lots sold for $1 PSF, an acre would be worth $4,356,000 and would be taxes accordingly. At a 1% tax rate, the owner would need to pay $43,560 annually in property tax. If this acre of land becomes a surface parking lot, the tax assessor values the lot based on it's current use and not the market value of the property. The assessor applies the capitalization rate to the parking lot NOI. The use value would be $278,421, which at 1%, property taxes would be $2,784. |
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Market value vs use value property tax systems |
Surface parking lot example, use value. Cities who have moves from use value to market value have seen desired effects and have more consistent patterns of development. Oates and Schwab 1996 |
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According to Nelson, which five planning goals should redevelopment meet? |
1. Maximizing environmental quality 2. Minimizing the cost of publicly provided facilities and services 3. Maximizing land use interactions 4. Fairly distributing the benefits of development 5. Elevating the quality of life |
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What are two key environmental benefits associated with redeveloping existing spaces rather than developing green fields? |
1. Preserving open space, continue ecosystem service benefits 2. Reducing carbon emissions to improve air quality |
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If all new development occurs on existing developed land, what two things happen to the consumption of fossil fuels? |
1. Miles traveled per vehicle may go down because the outward spread of urbanization is halted 2. New development on existing developed parcels can reduce the distances between origin and destination. Vehicle miles traveled is reduced. |
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Full cost utility charges vs average cost charges |
Subsidizes urban / suburban sprawl. Expansion of utilities are covered by everyone, even when cost to serve over ten miles from center is more expensive than serving over a mile. Cities often have more high cost development rather than maintenance costs or low cost development |
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What is a key purpose of redevelopment in regard to land use and transportation? |
A key purpose of redevelopment is to increase density and to broaden the land use mix, ideally taking advantage of existing, new, or planned transit systems. |
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What is the Compactness Index? |
Created by Reid Ewing and colleagues, the Compactness Index measures land-use interactions. |
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What are the four factors of the Ewing Compactness Index? |
Density Mixed-Use Centering Street Accessibility |
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What are the six measures of density used for the Ewing Compactness Index? |
1. Gross density of urban and suburban census tracts 2. Percentage of the population living at low suburban densities (fewer than 1,500 persons per square mile) 3. Percentage of the population living at medium to high urban densities (greater than 12,500 persons per square mile) 4. Urban density based on the National Land Cover Database 5. Density of the densest population center to which county block groups relate 6. Gross employment density of urban and suburban tracts |
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What are the three measures of mixed-use in Ewing's Compactness Index? |
1. Job- population balance (tract) 2. Service-job population balance (tract) 3. Degree of job mixing as the countywide average degree of job mixing |
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What are the three measures of Centering used in Ewing's Compactness Index? |
1. Coefficient of variation in census block group population densities 2. Coefficient of variation in census block group employment densities 3. Percentage of the county population relating to at least one population center |
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What are the two measures of street Accessibility in Ewing's Compactness Index |
1. Intersection density for urban and suburban census tracts within the county 2. Percentage of four or more way intersections for urban and suburban census tracts |
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How are redevelopment outcomes measured in facilitating benefits for lower income households? |
1. Providing opportunities for lower income households 2. Improving accessibility to jobs 3. Reducing housing + transportation costs |
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How can you measure quality of life? |
Winnipeg, Canada has developed a comprehensive list of indicators www.iisd.org |
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What are three quality of life purposes of redevelopment? |
1. Enhancing local economy 2. Stabilizing neighborhoods 3. Improving public safety and health |
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What is a major barrier to optimal redevelopment? |
The gap between the rate of return developers need to justify investments and what the market will generate |
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What is the average annual "unleveraged" rare of return that developers need to justify a redevelopment? |
15% through the range can be 10%-20% |
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What is an "unleveraged" rate of return? |
Unleveraged means total project cost including debt financing and equity contributions |
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Why is oversupply of a single use a barrier to redevelopment and a signal of antiquated planning and land use controls? |
Many local governments overzone commercial corridors for office, retails and other nonresidential land uses. Because the market can accommodate only so much supply, too much supply can depress land values. If other land uses, such as apartments or senior living facilities are feasible but not allowed, the local market is made less efficient. |
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Why is infeasible maximum density / intensity a barrier to redevelopment? |
Market moves ahead of zoning and land use controls. If a light rail station is built in an area but zoning hasn't been updated to reflect TOD, current densities to not reflect what the market demands. |
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Why is infeasible minimum density/intensity a barrier to redevelopment? |
Situation where land-use zoning around new light rail stations required minimum floor area ratios (FARs) that required ten or more floor structures. Local market wouldn't have supported such intensity for a few decades. In meantime, land vacant or underused. Solution is to allow interim, lower-FAR development using wood frame construction that may be relatively inexpensive to replace a few decades later. This may accelerate conversion. |
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Why is excessive parking a barrier to redevelopment? |
Many local land-use codes require more parking than is needed. Result is lower private investment in economic development, lower property values, fewer jobs and economic transactions, and inefficient interaction between land uses |
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What four goals does tax allocation financing advance for development? |
1. Transportation improvements 2. Community Development (public parks, plazas, increasing public safety, completing tourist related facilities) 3. Economic growth 4. Land-use interactions (public, private, market rate, affordable, and senior housing, commercial, residential, retail, and entertainment mixed uses) |
