The American Dream, Part 2

Yesterday, I participated in a program that generated some very interesting discussion. The Urban Land Institute’s event, titled “The New American Dream: The Demands of a New Generation,” brought together four of us with varied backgrounds and perspectives. A few of the ideas on which I focused:

• The American Dream isn’t specific to the postwar suburban boom – it’s a desire for choices and access to ownership (or at least investment) that Americans have long held.  

• The average annual U.S. GDP growth, when examined in constant dollars, has declined each
GDP_Trend_jdecade since the 1940s. The shorthand interpretation is that we have become less able to afford the maintenance of a system of development and financing created during times of economic plenty. Not only is the status quo growing less affordable – it is also saddling us with environmental costs we simply cannot continue to accept.

• Prices do motivate us, including the kind we recognize in full (such as taxes), in part (such as gas, which is heavily subsidized), and the kind we ignore (such as costs associated with stormwater runoff into area waters). As a society, we decide which to recognize and which to ignore, and with rapid improvements in GIS analytics, we can measure costs and benefits more than ever before.

• Younger Americans’ aesthetic is more urban than previous generations, but the extent of this is unclear. For example, even in nearly fully-developed Ramsey County, Minnesota, 70% of 20-24 year olds drive to work solo, as opposed to 75% statewide. Of family households under age 45 in the Minneapolis-St. Paul metro area, only 20% live in either of the Twin Cities. (2007 Census data).

I enjoyed the event and the opportunity to engage the prospects for the American Dream, and am enclosing my slides – presented in twenty seconds of fewer each, according to the Pecha Kucha format – here. Contact me for more discussion!

Donjek Tools: Evaluating Commercial Property with GIS

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A thread that has connected my work over the last eighteen months: An interest by placemakers in more fully understanding how and why places work in an economic sense. Doing this effectively is more important in this economic climate than at any other time in recent memory. We have varying reasons for wanting know what makes a place economically vibrant:

• Lenders want to know more about factors that influence the value of collateral, that are external to the property itself. They seek a basis to evaluate the surrounding environment.  
  
• Urban designers are assembling ideas with an eye on how physical layout can most powerfully combine with topography and geography, land use, and transportation. 

• Developers are evaluating opportunities based on the land and its relationship to nearby assets, as well as on the attractiveness of location to prospective tenants or buyers.

• Planners working with public agencies and private firms are seeking to use available data to better understand market values, the impact of foreclosure or public investments, and a range of other factors essential to planning and policy formation.

This month, Donjek has introduced tools to strengthen the ability of each of these parties to reach these objectives. These tools harness geographic information systems (“GIS”) analytics to provide a comparison of the area surrounding one property versus others, and provide additional capacity to plan, rate and prioritize projects.

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Clients need GIS, but don’t need to invest the resources to develop GIS tools in-house. Read an example of how Donjek’s GIS tools are applied (in this case, to the needs of a lender), and contact us to discuss gathering and understanding information that influence your land use decisions.

Join a broader discussion about using GIS to explore urban life by joining a LinkedIn group I just started, called Planet Mashup.

The Future, Coming Soon to a City Near You

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In 1543, Copernicus published “On the Revolutions of the Heavenly Spheres,” which sketched out a vision that the Earth, as a round and floating form, circled the Sun along with neighboring planets. History will not rank innovations in mapping technology in recent years in the Copernicus league; these tools haven’t initiated fundamental challenges to political and religious orders required to justify that comparison.  However, I have been amazed to see changes in the geographic information systems (GIS) realm, and in related map technology.

Donjek projects have used GIS analytics and images in a range of ways, and I am currently developing new applications of these tools for clients in real estate development, investment, and urban planning (more to come on this topic).  The inspiration for this post, however, is to display how mapping tools can create meaningful observations from opaque bodies of data.
The maps included here represent cell phone usage in the small town of Graz, Austria, and illustrate a novel approach to understanding places.  By identifying roads or rivers or museums or transit stations or academic buildings, maps give us a visual sense of how features and places are connected. Urban maps also depict where centers are, marked by downtowns, plazas, intersections.  Mapping cell phone data is a real-time approach to understanding where centers are, when they are, and perhaps even why certain places function as they do.
About ten years ago, I enjoyed a very rich two weeks in Rome, Florence and the Liguria region in Italy. A particular highlight, among several, was beholding the imposing globe at the Medici palace in Florence. Built in the 1560s – only twenty years after Copernicus’ famous release, and seventy years after Columbus landed in the West Indies – the globe is over six feet in diameter and represents a period of great discovery and curiosity. As I’ve thought of it in recent years, the globe is a symbol of an evolving view – of the shape of the Earth, its place in the solar system, and its far-flung features and peoples.
Could the developing tools for mapping open our eyes to the space around us in some similar fashion? I will stay tuned.

Value Capture Finance: Seeing is Believing

One of the trends I've observed here over the last year, is that multiple factors are prompting more consideration of value capture finance – the mechanics of "capturing" development values and benefits to pay for elements of the development itself.  Among the drivers are:
  • Diminishing public willingness to support funding for services traditionally considered to be core public functions; 
  • Increasing gathering of data and readiness of access to this data; and
  • Improving ability to use this data to measure property value, patterns of how people use places, and the economic health of small or large areas (just to cite a few examples) using geographic information systems (GIS).
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Value capture finance, in summary, is a method of using future financial or economic benefits precipitated by a development, to repay part or all of the debt incurred to create the development in the first place.  A typical example is tax increment finance (TIF), authorized in forty-eight U.S. states, which allows increased tax revenues (property and/or sales) generated by redevelopment to be channeled to the project’s debt service or other uses.  A less typical example, not currently contemplated in Minnesota law, is the financing of public fixed-rail infrastructure through commercial districts, using neighboring properties’ increased tax revenues caused by enhanced access to LRT or streetcar service. 

I’ve just completed some analysis for the Midtown Community Works partnership pursuing this line of inquiry:  If state law could be amended to allow for a "transit TIF" district, for example, what kind of value could be captured in future years?  How much capital could be raised by borrowing against these future tax receipts?  What planning and equity issues demand consideration in exploring such an approach?  

This concept may strike some readers as marginal to the planning and public finance worlds.  I don’t agree.  The three forces described above are at the root of analysis commissioned by the Minnesota Legislature earlier this year, and continuing economic impact analysis of the state’s first LRT line, the Hiawatha.  Identifying what value is created by transit infrastructure is a critical step in leveraging this value for investment in a regional system, and made more feasible by improvements in GIS technology. 

And regardless of whether the infrastructure is constructed by a private, public or public/private entity, the end outcome – investment in places that work for people – represents an increasingly important competitive advantage for regions in the U.S. and abroad.

Looking Back at Yesterday’s Property Tax

It’s 1896.  The Presidential campaign involving William Jennings Bryan and William McKinley is heavily colored by the Panic of 1893 – the worst economic depression yet experienced in the U.S. Susan B. Anthony and Elizabeth Cady Stanton are championing the right of American women to vote, a campaign separated from success by twenty more years of hard organizing.  In St. Paul, “empire builder” James Hill is at the peak of his influence as a railroad monopolist.  Near the Cathedral in September, future literary master F. Scott Fitzgerald is born.

And finally (lest I neglect the dictum that only two things resist change), the St. Paul City Council in 1896 passed a measure establishing what became known as the “St. Paul method” of assessing property taxes. 

The method streamlined the process of assessing property in the city for tax purposes, by establishing values per foot of frontage on various types of streets.  In other words, with certain exceptions, the core assumption was the wider a lot on a given street, the higher the assessed value of its property.  In the modern discussion around property tax, this comes close to what is now characterized as a land tax.  In theory, builders and property owners of the time would have been encouraged by this tax system to plat narrower lots and build higher, longer structures, rather than lower, wider structures.  Over the last year, my efforts to engage a full GIS analysis of this dynamic have been stymied for lack of records indicating when the St. Paul method was forced out of use by the state, which at some point likely mandated a more uniform statewide assessment system.  View an 1896 article describing the system by clicking here.

Still, I have run some initial analysis.  Below is a graph (click on it for a larger version) showing citywide property data, and plotting the year each parcel was built versus its floor-area ratio (“FAR”).  FAR represents the total square footage of a building divided by the total land area, and serves as a measure of the density of building on the property.  The blue dots represent buildings constructed in a given year, and the red line represents the annual average FAR for the year.  Unfortunately, it’s difficult to draw conclusions around the impact of the St. Paul method without an end date, but the trend of density in the city is certainly of interest. 

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1896 is, in fact, a high point, and the years that follow suggest a significant drop in the density of buildings constructed, which lasted until the end of World War I.  However, a range of issues may explain these dynamics beyond the impact of a property tax regime:

• The cost of labor and/or materials related to buildings more than one story;

• Availability of desirable land as the city became more continuously developed;

• Changes in the streetcar and auto transportation system.

Also notably, the current year’s property data have a significant inherent bias, in that many buildings of low and high density have been demolished over time, and so the available data by no means represents a full accounting of when and how construction occurred in St. Paul. But while imperfect, this exercise does suggest how powerful contemporary analysis may be in tracing success and failure in past development and policy.