Tschö, Detroit!

Today I’m headed off on a multi-modal transit odyssey that will eventually land me in the Ruhrgebiet, in Nordrhein-Westfalen, as the first stop on a mobility study trip sponsored by the German-American Chambers of Commerce (GACC South in Atlanta, or, AHK in German).

To pregame, I will be seeing how well or how badly intermodal transportation works across three international borders: Tuesday morning, I’ll take the tunnel bus or get a ride from Detroit to Windsor, where I’ll take the Via Rail to Toronto, then a train to Pearson, flight to Frankfurt, then a train to Dortmund. Then I’m headed to Wuppertal and will be hanging out in the Ruhr for a couple of days, hopefully hitting up the crazy paragons of adaptive reuse and public space in Duisburg or the Zeche Zollverein, a UNESCO World Heritage Site, before heading back to Frankfurt– then onward with the AHK crew.

Stay tuned for live updates!

Also, Happy Halloween. Also, in observance of All Souls Day, a.k.a. the benign, German corollary to our spooky holiday, kick it to these deep cuts from Franz Schubert.

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Bike The Bridge: Fleeting Dreams of International Bike Transit

On Sunday, for the first and possibly the last time, I rode my bike across the Detroit River on the Ambassador Bridge. It was a lot of fun, but also a reminder of how badly in need of a revamp our border crossing is, both regarding international transit modality and the culture and processes of border security.

The ride was fun, but brief– we were not afforded the opportunity to actually ride around Windsor at all, which was kind of lame, and instead just had to turn around at the base of the bridge. An army of well-armed CBP officers made sure we didn’t stop to take pictures, stop, or slow down too much, because terrorism.

I’ve probably crossed the Windsor-Detroit border hundreds of times. I dated a Canadian for about a year, and even though we broke up, I got to keep the trivia team, which I visit every Monday night (we pretty much always win 4th place).

Plenty of Detroiters don’t visit Windsor, complaining about how they used to go there, but then 9/11 happened, and you had to have a passport to cross (you don’t), but they do point out that it is much more of a pain in the ass, especially coming back into the United States, where I’ve been asked why on earth I would ever move to Detroit (I asked, “why would you ever move to Macomb County?”, why I feel the need to spend money at a bar in a foreign country when I could spend it in the United States, why I have a bike rack on my car, why I had a Bernie Sanders sticker on my old car.

It’s a messed up culture of fear and paranoia– Canada is our biggest trading partner and, as such, we share many common cultural and economic narratives. But I can’t fix that issue short of dismantling nearly a generation-long era of post-Cold War paranoia that has come to define the law enforcement officials who commute in from the distant suburbs every shift to interrogate American and Canadian citizens alike about what on earth they might be doing, going about their daily business.

So, getting past the problem of a perpetually inadequate number of lanes open on either side, which means wait times, we have to also think about alternatives for crossing. The only way to cross without a personal vehicle is with a taxi (expensive) or on the tunnel bus, a Windsor Transit-operated line, which has an extremely unreliable schedule and route. The tunnel bus is a good option during major sporting events, but Detroiters and Windsorites, headed, respectively, to Caesar’s Windsor or one of Detroit’s publicly-funded sportsball arenas, are still reliant on the automobile, so forget a bus– especially one jammed to capacity that runs behind schedule because the tunnel is so clogged up during these major events.

What about a bike? It takes up way less space than a car, it imposes less wear on infrastructure, and it’s affordable to operate. The Gordie Howe Bridge will supposedly include bike lanes, but that’s a solid few miles from downtown– it isn’t exactly a direct link between our two great nations. We do, however, remember that unsung hero, Windsorite Kyle Colasanti, who biked through the tunnel to get to a Steely Dan concert, much to the chagrin of Customs and Border Patrol officers, who really were pissed that he wasn’t driving an F250 Super Duty and detained him for hours for no reason (go figure).

Kyle acted on what most of us are thinking– that we need better bike transport.

Looking east from the Ambassador Bridge toward Mt. Doom and the Eye of Sauron atop it, a.k.a. the Renaissance Center, and Belle Isle.

And why we need a better border crossing– not just in terms of international transit modes but also the ownership and fees. Joann Mueller wrote an excellent article about why the Ambassador’s situation is so utterly screwed up– how the monopolistic ownership has resulted in the doubling or even quadrupling of tolls, how delays in truck traffic cost the US-Canadian trade economy hundreds of millions of dollars a year (and, frankly, result in clouds of heavy particulate diesel exhaust stinking up Southwest Detroit, which is already not exactly an atmospheric paradise owing to the heavy industry around the Rouge River and Zug Island).

It is unclear how much this will change with the Gordie Howe Bridge, either in terms of air pollution, reduction of traffic on the Ambassador Bridge, or potential future uses of the old Ambassador Bridge once Moroun finally gets his way and gets a new span built. But one thing is for certain– demand for bike infrastructure is increasing at the same time that even the auto industry is shifting away from internal combustion vehicles. Examples include GM’s shocker that it will introduce a bazillion electric cars by 2023, or diesel engine heavyweight Cummins, which announced an all-electric semi under development for sale starting in 2019.

Posted in Cycling, Detroit, Michigan, Ontario, Public transit, Transit infrastructure, Urban Planning, Walking, Windsor | Tagged , , , , , , , , , , , , , , , , , | Leave a comment

Will Jeff Bezos Be The Next Billionaire to “save” Detroit?

The water cooler topic du jour in Detroit is the grumbling about why Amazon won’t move here because the region lacks adequate public transportation infrastructure, one of the primary demands of the online retailer in its site selection criteria. For this I blame Macomb County, Heimat of the Reagan Democrats, for this, as I do for most things, following the spectacular failure of an admittedly imperfect regional transit proposal that made it to the ballot last fall. This isn’t stopping the city from cobbling something together, though, and this has demanded all hands on deck, as I was reminded in recently trying to schedule a meeting with a department head in the city administration who had to postpone for a whole month because everyone was going balls to the wall on Amazon.

The New York Times described Detroit as a “sentimental” pick and instead suggested Denver, not an unreasonable suggestion as it is growing, isn’t clogged with obscene amounts of traffic, is still reasonably affordable, and has a burgeoning tech scene with smart people and skilled workers.

Now Windsor Mayor Drew Dilkens, who cuts a somewhat tepid public persona juxtaposed against the chummy and unapologetic suit filled by Detroit Mayor Mike Duggan, is trying to get on board with the idea of an international hub. I say “tepid” because for all of our problems here in the D, Dilkens has, against all planning logic and advice, turned his efforts toward creating more parking spaces downtown, which is really going to save the that mixture of shwarma shops and strip clubs that comprise downtown Windsor.

Detroit-Windsor is a huge trade portal, with Matty Moroun’s Ambassador Bridge serving about a quarter of all US-Canada trade (!), so it makes sense to consider the international aspect of the headquarters project– especially considering the possibility of expanding the access to the Canadian consumer market. Canadians always complain to me about how their consumer choice is severely limited on products ranging from Chobani to phone chargers, and specifically frequently complain about online shopping, since shipping to Canada from the United States often involves an arcane and expensive series of fees.

That plus the fact that the Quebec-Windsor corridor has 18 million people in it, with a third of those in the Greater Toronto area and over a million between Windsor-Essex and London.

I actually don’t have a major budget to produce a pretty video. I don’t think anyone should be home to the second Amazon HQ, unless we can all sign onto some sort of compact that says that we’re not going to give them a dime of taxpayer money. Eric Greitens, douchenozzle supreme governor of Missouri, proposed building an untested, unproven, and yet non-existent space-age transportation network between Kansas City and St. Louis via Columbia. “Why not build them a goddamn Stargate, while we’re at it?” Daniel Hill of the Riverfront Times asks.

Hell, Gary is even going for it. Similar to Detroit’s bid, Gary admitted to the far-fetched notion of their hosting HQ2, but, they say, “‘far-fetched’ is what we do in America. It was far-fetched for 13 scrawny American colonies to succeed against the might of the British Empire. Far-fetched to land a man on the moon. Far-fetched for a business selling books out of a garage to succeed in business and philanthropy.” (Realistically, Gary has a better shot than plenty of places. It offers low costs, plus its own grossly underutilized international airport that really fucking needs to start competing with too-big-to-fail O’Hare, a giant rail yard, and intermodal connections out the wazoo).

Amazon’s biodomes at the company’s multi-billion dollar downtown Seattle campus, but with a little bit less Pauly Shore and Stephen Baldwin.

There are plenty of problems with this, as Alex Baca noted in a recent article castigating the Corporate Urbanism in America’s Heartland, and it’s been well-studied (and well-examined) that these mega-deals may indeed never pan out for how much they cost in subsidy. We’ve noted in Detroit that the Pistons opener was poorly attended in a new billion dollar stadium whose construction– but not exorbitant ticket prices- was heavily subsidized by hundreds of millions of dollars in taxpayer funding, but to the Gores, the Ilitches, and the Gilberts who pushed for the “public-private” (N.B.: “taxpayer subsidy”) deal, the money was “necessary.”

So, yes– Jeff Bezos will not be the savior of Detroit, just as Dan Gilbert isn’t the savior of Detroit, just as Michael Kelly isn’t the savior of Detroit, just as Mike Ilitch isn’t the savior of Detroit, et cetera. But Detroit’s a cool town, and, if it wouldn’t actually cost an arm and a leg and would result in actual, real-life, real-city transit options and an aggressive effort to build new housing and even maybe some affordable housing, God forbid (I want four-story mixed-use, zero lot-line buildings the whole way from I-96 to downtown along Grand River, gol-darnit!), I would take it. Heck, I might even be able to get me a real job!

I did, however, dig around to see what kinds of space we could use for the project:

SITES

Amazon says they need eight million square feet. That’s pretty larger than, say the Pentagon or the Willis (née Sears) Tower. Fortunately for us, we’re Detroit, so there are plenty of abandoned warehouses, which often have adjacent vacant spaces that are prime for redevelopment.

In the neighborhood that is, pending the advent of a cold-pressed organic juice bar, eventually going to be known as SoMiJo, for South of Milwaukee Junction, the iconic, abandoned Fisher Body plant. The abandoned plant is top center and the adjacent lots are highlighted in orange.

The multi-million square foot Packard Plant is perfect, or, if that site doesn’t allow sufficient space for additional new construction, there’s always Fisher Body Plant #21, one of the most iconic abandoned factories that can easily be seen from I-75 (probably about half a million square feet plus about 70k s.f. along Piquette, an adjacent 144k s.f. block ), or the 1928 Grand Trunk Cold Storage warehouse, which offers a roughly 50,000 square foot floor plate times about ten floors, or the let’s-be-real-it’s-probably-a-brownfield vacant sites adjacent and across the street, which is just over nine acres between the mostly-defunct Roby St. and St. Aubin.

The Detroit Port building, which is really large and really, really vacant.

Highlighted major vacant space adjacent to and part of the Port of Detroit, which occupies 80 acres of riverfront. “There’s a whole harvest of vacancy under our feet! Nobody can get at it except for me!” – Daniel Day Lewis, in the film There Will Be Blight, probably

The 1925 Detroit Harbor Terminal— which offers about 750,000 square feet over ten floors plus a couple of adjacent buildings, warehouses, and well over a million square feet of immediately adjacent vacant land ranging from completely vacant to grossly underutilized. These are the largest and most iconic ones, but there are many, many more. At even weak floor area ratios (NB: Lots of Surface Parking!), these comprise tens of millions of square feet of potential.

Of MCM’s 376,000 properties surveyed, almost a full third are vacant lots. At an average of 4,000 square feet per residential lot (it’s usually just under a tenth of an acre), that’s a full 10,000 acres of space for potential development (with plenty left over for green space).

CONCLUSIONS: NO HOLDING OF BREATHS

Don’t get me wrong– Amazon is an enormously problematic company. They’ve been accused of poor labor practices at their distribution facilities in the United States and the UK, a toxic culture at their corporate headquarters, they continue to lobby for a combination of reasonable and nefarious goals ranging from FAA-deregulated delivery drones to massive government procurement contracts, and I frankly don’t believe that a billionaire who runs a company that continues to demonstrate aggressive and even potentially illegal anticompetitive practices really has anyone’s best interests in mind other than his own.

But if it has to go anywhere, and if it can be done without a broke city writing a blank check to a major corporation, there is plenty of vacant land and vacant space in this town that I think we could do with seeing redeveloped.

Of course, that last bit– writing a blank check to a major corporation- is sort of the dealbreaker for me, and I don’t mean to add it in as an aside. This is certainly more of a thought experiment in wondering whether it’s possible to have a city not subsidize a bazillion dollar company, get beyond the era of “corporate urbanism,” as Alex Baca has called it, and actually start building equitable cities based on their attractiveness for investment rather than how much public subsidy they dole out. Rather than desperately chasing billion-dollar companies around like fanatical supplicants of a cult, we need some sort of compact to sign onto that says, “pick us– but we’re not going to pay for it.”

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DX’s EDIT Festival in Toronto

On a last-minute weekend trip to Toronto with a friend, I accidentally happened upon the EDIT Festival. Billing itself as the Festival of the Future and produced by the Toronto Design Exchange museum in conjunction with the United Nations Development Programme, EDIT offered exhibits, speakers, and workshops, spread across six floors of a vacant, 150,000 square foot former soap factory east of downtown Toronto.

We toured a net-zero, modular Passive House designed by a collaborative team from Ryerson University and the Endeavour Centre, which boasted 18 pounds of construction waste– mostly, docents told us, styrofoam packing.

The high thermal mass of the reinforced concrete structure kept the inside cool even on an uncharacteristically sticky hot October day, and we were able to tour an impressive array of design projects. Bruce Mau produced the first floor exhibit, comprising an expansive series of novel infographics addressing everything from the polarization of partisan voting to visualizations of corporate carbon footprint reduction covered floor-to-ceiling displays on the first floor, with stark, black-and-white humanitarian images filling the versos (by Paolo Pellegrin). Design projects ranged from the highly practical (a giant machine designed to capture and process plastic waste in the Pacific Ocean) to the design-topheavy (a ring made of compressed air pollution particles that are collected in a novel filtration machine).

I remembered ExtraSchicht in the Ruhr, which populated vacant spaces around the industrial region of western Germany for a celebration of industry and culture, and thought about the giant factory building being demolished down the street from me at Trumbull and Grand River here in Detroit, since it seems we would rather erase than reimagine. DX president and CEO, Shauna Levy, chose this location specifically as “the kind of site that wouldn’t carry any preconceived baggage about who belongs and who doesn’t,” according to the Globe and Mail.

We’ve got some abandoned factories in Detroit. Maybe we can use them for something other than black tie events for rich people?

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Expanded Affordability Ordinance Passes in Detroit

This morning I attended a public hearing for a proposed city ordinance that would require any development project receiving public subsidy to include expanded affordability requirements. The ordinance passed, and the city will also create and fund a housing trust fund to be used for the creation of affordable housing.

Multifamily developers in Detroit currently operate informally under the 80/20 rule in Councilmember Mary Sheffield‘s original incarnation of the ordinance (which provides for 80% area median income “affordability” standards for 20% of the units) and have lobbied against efforts to promote increased affordability in Detroit as values in the urban core have risen to “insane” levels in the past two years, pricing out longtime residents. Alongside the ongoing crisis of expropriation resulting from tax foreclosures, decades of bad tax assessment policy, and water bills, rising real estate prices are bringing the “G” word to the fore.

THE PROBLEM WITH HUD’S AMI STANDARDS

Proponents of expanding the 80/20 standard observe that the AMI requirements are for the entire Detroit metro area, which has a household income about three times that of the city proper– we are, outside of the People’s Republic of Gilbertistan and various and sundry neighborhoods, a poor city. So, realistically, 100% AMI for the city itself would be about 30% AMI for the metro, which sounds to a funder or developer like super low-income housing. Of course, 80% AMI still sounds pretty exorbitant in a city where wages are stagnant and car insurance costs as much as a house— Fortune highlighted Chase Bank’s ongoing investment in the Motor City and toured an “affordable” unit to be rented for $944 per month.

Proponent, community advocate Aaron Handelsman, who pushed for the ordinance with the Detroit People’s Platform, offered a critique that “developers they are speaking as though is a building issue, a profit issue, a market issue, but affordable housing is a people issue.” It is a profit issue to some degree, but it’s definitely erroneously painted as a fundamental limitation on profit. In addition to the plethora of resources out there for developers working with LIHTC or CDFI dollars, the market for affordable units is always strong. As I’m looking for an apartment, I’ve noticed that the units close to $2 per square foot remain open for weeks, while apartments at $1.25 a foot or less are leased out within days– simple supply and demand, and the market is getting saturated at the higher end.

SYNERGIES: DENSITY BONUSES

Affordability requirements may reduce margins by reducing cash flows, but it also should go without saying that this is an excellent opportunity to consider tradeoffs for increased affordability alongside increased density.

Density bonuses are a tried-and-true way to gain developer buy-in. It’s pretty simple math– you balance a less profitable unit with increasing the number of more profitable ones. I realize that I am in the minority of people in Detroit that wants to see neighborhoods that boast 15,000 or 30,000 people per square mile (like, Chicago or New York or Philly densities), but this is a great opportunity to explore that discussion.

Especially in areas where it is easy to satisfy lots and lots of demand at the crazy high price point, like Corktown, it is easy to imagine upzoning or densifying to create affordability. As I observed in my examination of the Tiger Stadium site redevelopment, a full half of the frontage along Michigan Avenue remains pretty much undeveloped– parking lots and set back buildings. I posed the question of what it would look to pack the entire area between Michigan and the freeway with apartments within the B4-zoned area at a floor-area ratio (FAR) of 2.00:

“…this would work out to about 1,607 new units. Fortunately, the byzantine B4 classification, which allows pretty much anything and covers most of the district, permits FAR of up to 2.00 (even if it has preposterous setback requirements)– so let’s go up to 2.00, which brings us to 2,570 apartments… At the conservative FAR = 1.25 and no variances required under the B4 classification […] we would increase Corktown’s population by 135%. Is Detroit ready for the resulting 20,000 people per square mile who would at that point occupy the 0.08 sq. mi. space between I-75 and Michigan Avenue?”

If the city offered a 15% density bonus to include affordable housing, that wouldn’t even require rocket science (or LIHTC, really) to squeeze some bucks out of any dense project. I’m optimistic about what has been accomplished today.

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Detroit Park City, No. 2: West Larned (2/52)

Any effort to address the Motor City’s glut of surface parking might well start, ironically, downtown.

At the risk of becoming a broken record, I’ve often tried to explore the economic and geographic realities that negate the oft-repeated tropes of “Downtown: It’s Coming Back!” or, as a young man at the Shinola store told me the other day, “Now, with the QLINE, you don’t need to own a car anymore!” Downtown’s population density is low, Midtown’s population density is low, and inner ring midcentury suburbs Eastpointe (formerly East Detroit before they rebranded in 1992), Harper Woods, Lincoln Park, and St. Clair Shores have a higher population density than both. (I know- yada, yada, yada, density something something.)

We’ve got an Apple advertisement that occupies the side of a parking garage! Quelle progrés!

Looking south from Congress, representing an uninterrupted, 270′ (82.3m) run to the next street.

In particular, the corner of Shelby and Larned stands out as a crater of parking in the center of a canyon of buildings. I thus bring you Detroit Park City No. 2.

EXPERIMENT: QUANTIFYING THE VALUE OF PARKING

In my first post, I spent some time thinking about one particular assumption of Donald Shoup about the monetary value of a parking space: While average car prices have been climbing in recent years, the actual value of the average car that is parking in the average parking space may often be, Shoup suggests, less than the cost of the parking space itself. This is going to be more financially problematic than in my previous post about the Mexican Village lots, where prices are stable and rapidly increasing, but density is still quite a bit lower. Downtown, prices are high, so there is no such thing as a free parking-lunch.

A particularly large, but nonetheless single, parking space in New York City, for example, made headlines after it was offered for sale in a new luxury condo building for– wait for it- $1 million. (If a bank would allow you to tack that onto a loan, that’d add about $4,000-4,500 a month for your mortgage P&I, so, get a second full-time professional job to pay for the parking space.)

Since New York breaks all rules, as the self-described center of the cosmos around which all of us aspirationally orbit, how to actually quantify the value of parking in, well, real places? From an appraisal standpoint, the easiest way would be to compare comparable sales or appraisals of two identical units, one with parking and one without. Outside of the frankly rare opportunity to compare two units that, aside from parking, are identical, Detroit demonstrates that the notion of appraisals, which should theoretically mirror market value because they ostensibly justify financeability, are kind of bogus because they do not at all equate to market value. But, in the rare event that you could find identical units, you could definitely answer this question (for one limited “comparable”).

PARDUCCI NATION (slash Epitome Lounge).

On the other hand, this value model doesn’t work in aggregate or for large lots serving as event parking rather than, say, apartment parking, so maybe we can look at revenue-generating potential. It’s difficult to develop something like a cash flow estimate for something with such a heavily-tiered structure whose tiering is dependent upon somewhat unpredictable demand, and whose ownership is tightly controlled (and therefore whose information is also tightly controlled). If pricing isn’t real-time, how do the owners determine demand?

Ted Anglyn from Parking Today (yes, that’s a real thing) explains:

“For a parking structure income analysis, an appraiser has to forecast the revenue to be generated by the facility, the likely supply/demand (occupancy), the cost to operate the property, and how the market will convert that property’s income stream into a supportable value indication.”

Sounds sufficiently vague, Ted! The likely supply/demand? Anglyn continues:

“Most appraisers will request three years’ operating statements, the profit-and-loss summary for the current year, copies of lease contracts, lists of parking rates, a budget and a capital improvement summary. The appraiser also will need to survey market conditions to support revenue and expenses.”

So, essentially, someone built on someone else’s lessons as far as how much money they knew they could make, and they came up with… (drum roll)… a six-tiered pricing system. This kind of pricing scheme is rare in business. Markets for most mass-produced goods are well-defined based on labor inputs and demand, and it is generally fairly easy to approximate the market value of, say, durable goods, or everyday consumable products– whether water heaters or bags of chips. Airline price discrimination, for example, exists, but it is opaque– you never really know when or why your price went from $467 on Monday morning to $643 Monday afternoon.

(The owners of record for these lots did not respond to a request for comment.)

THE SITE

This intersection features three parking lots over five lots which are all privately owned, interestingly, by separate owners. Are the lots leased to a common parking operator? Two appear to be operated by the same owner. Based on photographic records I looked at, these sites have been without buildings since the mid-1960’s or earlier but were likely (at some point) occupied, so it stands to reason that the foundation upon which the pricing model I referred to in Anglyn’s quote above has been well-developed over decades. Parking lots designed for high-demand areas with rigid 9-5 commuters often allow for increased efficiency, because operators can park cars tighter (think– no “in-out” privileges because it’s not spatially possible). The theoretical spatial maximum of this site (square footage divided by 162 square feet) would yield 271 spots, not much more than the 239 I counted, so, nearly double the efficiency of the Mexican Village lots. I can’t really call this “optimization” so much as I can call it “smooshing cars in since the operator knows that the driver will only be coming out to claim the car at, say, 5-6pm, but it is notable.

“Yeah, so, nuts to these cool old buildings, let’s just build a bunch of parking lots.” (2 Woodward at Jefferson, looking northwest, in 1966. The edge of our site is visible at the extreme top left of the picture).

While not only betraying an understanding of these parking lots as proud monuments to strained stormwater infrastructure, the surroundings bear some glorious architectural gems. The Banker’s Trust Building at the southwest corner of Shelby and Congress, built in 1925 and designed by Wirt Rowland (with Smith, Hinchman, and Grylls, the great-grandfather firm of SmithGroupJJR), has variously hosted a bank (shocking, I know), various office tenants, and even a McDonald’s, once upon a time. The building, sold at auction in 2015, currently hosts a venue, Epitome Lounge, that could be perhaps aptly described as “da club.” A façade designed by then-25-year old Corrado Parducci, an Italian architect and Robin to Wirt Rowland’s Batman, remains largely intact. Though at that time firmly chillin’ in the Beaux-Arts style, Parducci would in the next few years go on to design the Art Deco masterpieces of the Penobscot Building (1928), the Guardian (1929), and the Theodore J. Levin U.S. Courthouse (1934), sometimes even merging the styles in a tremendous, Beaux-Arts-Deco Mashup, all within a couple of blocks of this location, west of Woodward Avenue and South of Michigan Avenue.

LESSON: GO UP, YOUNG MAN

As the average height of high-rise buildings in the surrounding block is 17-18 stories,  I proposed roughly matching these building heights if not pushing that density higher. As we’re getting fairly tall there, that allows us some more room to play around with what we need to meet some general parking requirements, whatever they are: I’ve proposed building an underground parking garage that actually goes under the street, occupying the majority of both lots. Rare is it that a development project will come along allowing full, ground-up development of two parcels of downtown real estate, so, let’s go the whole hog.

Densifying a real estate development project is, of course, a no-brainer (within reason). Your land acquisition costs are the same regardless of whether the finished product will be a strip mall or a skyscraper (illustration below). This may be a “duh” moment, but it’s not surprising that single-story homes dominate low land value areas (the distant burbs, or, much of Detroit), while the highest density areas are often the highest-priced. (Exceptions are few but notable– a handful of extremely wealthy suburbs in most major metropolitan areas, and much of the Bay Area, which, in the spirit of traditional Californian paradox, has crazily low density and crazily high demand, borne of the suburban Silicon Valley ethos.)

Residential construction techniques for a building that is one to maybe four stories will all generally be the same and, in these parts, rely on stick framing, while higher-rises will invariably switch to steel (steel, so, why Arthur Jemison claimed Dan Gilbert could readily be exempted from the 20% affordable guidelines for his Hudson’s Site redevelopment project and so it was totally cool for him to charge $3 a square foot for residential). By the time you’ve made that leap, there is some added cost, so, you know, the sky is the limit.

Taller only begins to generate problems at very large heights, when 1) structural sway begins to require large and expensive mass dampers, 2) elevators begin to take up more and more space and become more expensive, and 3) the large massing of the structure begins to create daylighting  and viewshed problems (see “New York, Back In The Day, And Why Massing Setbacks Were Invented”). Also, even though tall buildings are castigated by many urbanists (Vancouverism, or, say, Torontoism), high-rise construction is clearly viable from a market standpoint.

THE BUILDINGS

Larned East – Some sort of apartment building, employing a playful design aesthetic that combines large sections of glazing with staggered, brightly-colored panels between glazing panels.

Larned West – Another sort of apartment building. This one, per the illustration, has some ugly rainscreen or cladding going on– the high-rise equivalent of a McMansion. (I’m just being pragmatic here– ugly buildings get built!)

Congress St. – This is the smallest of the buildings, so, maybe a mixed-use building or maybe retail space. I wanted something that would fit with the massing of the bank building on the corner while not continuing to crowd what is already a very high-density street. Even though it’s north-facing, fitting with the massing of the bank building would allow for some sort

The author may have mentioned that he did not go to school to learn how to design buildings but did play a lot of SimTower and things.

PARKING

I designed (NB: “SketchUp”) a parking garage and figured that, accounting for stairwells, ramps at either end with entrances on Larned, and– the major coup- building the parking garage partially under Larned and Shelby streets, we should be able to achieve about a 60% spatial efficiency, enough, with three underground stories, to park up to 601 cars.

I’ve considered the cost of building a street on top of the finished product as negligible because the entire thing would have to have a “roof” of structural concrete built on it anyway given these cost estimates.

Current scheme: 15 spaces (street) + 224 spaces (lots) = 239 spaces

Required by zoning, and preserving existing spaces: 993 spaces

Proposed scheme: 13 spaces (Street) + 601 spaces (underground) = 614 spaces

So, while we’re gaining 375 parking spaces, we are also adding 602 apartments. The site also has a large, several-story garage directly to the east (I estimated at maybe 400-450 spaces based on the number of stories and the footprint), and numerous other parking garages within a stone’s throw, serving the Cobo Center and the Joe Louis Arena.

Let’s just imagine that not everyone in that building is going to own a car, but I have to keep These People placated, given the divine mandate of plentiful parking in Southeast Michigan. I would argue that the sportsball fans who want to come downtown and demand plentiful surface parking will probably be outvoted by the folks who will pay for the market rate rentals in these buildings.

Orange (sites slated for redevelopment) and green (parking garage underneath the streets). Note how the cars are so tightly smooshed– without which they wouldn’t have been able to achieve a circa 88% spatial efficiency.

PRICE POINTS

The assessment data suggest that the five lots are taxed steeply at a rate of over $200,000 per year, which either works out to a data inaccuracy, a special tax exemption, or a highly profitable parking operator. I’ve landed on the last one: Each parking space would have to make $900.58 per year to break even with the cost of taxes and drainage, so, $3.46 in profit per workday. Assuming the $12-per-day “rate in effect,” that’s totally doable. If they consistently maintain 50% occupancy for exclusively weekdays, that’s three times the tax bill and then some. If visitor parkers paid $12 a day, special events parkers paid as much as a few times that rate, and subscription parkers got a discount, even at a 50% occupancy for 250 days, you’re bringing in some serious cash money.

A 601-space, secure parking garage wouldn’t need to necessarily compete with those price points, whether for tenants or commuters– but it might even be able to. Interest and principal on an underground parking space ($25,000) would cost $224.71 a month at a 7.00% rate at 15 years– $12 per weekday for a month would yield $259.99 a month. It’s still profitable, and now we have a pair of giant buildings atop it.

Sticking with my original pricing methodologies, the three buildings would be estimated to cost the following:

Larned East – $46.047m; 302 residential units and 15,500 square feet of commercial.

Larned West – $42.411m; 278 units, 14,280 square feet of commercial.

Congress St. – $4.384m; 22 residential units, 7,500 square feet of commercial .

Parking garage: $15.025m; 601 spaces.

Assuming the new (=landvalue) tax assessment comes in exactly at project cost, this would add $2.309m new tax revenue to the city coffers per annum, enough to hire:

-62 new cops

-41 new schoolteachers, or

-17 “Innovation Specialists,” highly-trained technocrats with masters degrees from the University of Michigan.

If we assume that the old parking operators would want to operate this garage, we’d work with an easy number of $25,000 to add to the cost of each housing unit if that housing unit wanted a parking space. To compare the cost of financing parking as part of housing, my previous figure of $224.71 per month for a parking space would actually be reduced to $119.35 a month at 4% interest on a 30-year mortgage.

CONCLUSION

Operations of paid lots might actually be really profitable. But what’s far more profitable is developing those parking lots into potentially very profitable parking garages underground and building tall buildings over them. Or, you know, skip the parking and just keep the tall buildings.

Stay tuned for more!

Posted in Cities & Urban Planning, Density, Housing, Mixed-use, Parking, Real Estate, Residential, Urban development, Urban Planning | Tagged , , , , , , , , , | Leave a comment

RAGBRAI 2017!

This week, I am riding RAGBRAI, Register’s Annual Great Bike Ride Across Iowa, after talking about doing it for the better part of a decade. The 430 mile adventure travels from Orange City in the far northwest of the state to Lansing on the Mississippi River, with 20,000 riders and innumerable alcoholic beverages.

I’m traveling with an architect co-conspirator from Detroit along with Team Pilderwasser, founded by fellow Grinnell College alumnus Mark Pilder.

I will thus be a bit behind in posting for Detroit Park City, but I promise to resume these when I return!

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The Wealth Gap, Scarcity Thinking, and the Coming Robots

President Donald Trump announced this week as Made in America week, showcasing and promoting domestic manufacturing. He played in a fire truck and ranted about the need to bring manufacturing back from foreign countries.

Much of the criticism I’ve heard of Trump’s crusade is that it is disingenuous, given the man’s affinity for Chinese structural steel and overseas sweatshop manufacturing for Trump-branded products. So much is apparent. A more thoughtful, yet nonetheless pessimistic contingent, suggests that American manufacturing is dead forever and we just need to get over it, because robots.

Who is right here? The President is clearly talking out of both sides of his mouth on this issue, so we can’t take his word for it. Can manufacturing come back? Or is it dead forever, relegated to cheap overseas labor and automation? If we can’t bring back manufacturing, or, if those jobs are lost forever to our robot overlords, what the heck are we supposed to do to ensure any semblance of a future where the poor can survive without being simply told to pull themselves up by their automated bootstraps?

I’m thinking about this particularly following reading two books in the past week, Richard Florida’s New Urban Crisis, and Manu Saadia’s Treknomics, a playful but quite thoughtful, comprehensive examination of the economics behind the society of Star Trek, both of which have as central themes the fact that poverty and wealth inequality are enormously expensive and unproductive things. Both books mention these two growing topics of universal basic income and automation (as a subset of innovation) in the context of a fact that is increasingly recognized by common discourse: Poverty and wealth inequality are ridiculously expensive for the economy and ridiculously unproductive.

Florida’s book frankly isn’t going to be an interesting read unless you have been living under a rock without access to news or internet for the past ten years. The distilled, underlying politics says, “my bad, guys, my praise for young white people flocking to the urban core resulted in more wealth inequality than in the magical, rising-tide-plus-Reagaonomic-trickle-down effect that I had predicted!” (Also, cities still subsidize massively wasteful infrastructure projects and stadia instead of small-scale entrepreneurship that might be considered even vaguely “creative.”) He inundates the reader with #data and figures on the densification of Creative Class workers, whoever they are, and how that forever changed #cities.

In one classically Floridian passage, he laments the untreated sewage in a Chinese slum, but praises the innovation of the workers, who can even produce 3D printed motorcycle parts (!). In conclusion, cities with filth and disease are better than no cities at all, because These People can 3D print their way out of poverty. Colo(u)r me unimpressed– you can learn more about cities through a critique of liberal urbanism from the man’s parody twitter account:

Saadia’s book, on the other hand, is playful and to-the-point, examining, in a balance of humorous, play-by-play commentaries on Star Trek episodes, science fiction literary comparison, and surface-level economic analysis, questions of automation and innovation, using as the focal point the replicator, a wondrous machine that reorganizes matter to produce, well, whatever.

THE AUTOMATED, POST-SCARCITY ECONOMY

Saadia’s Trek universe is a post-scarcity economy that still has as much conflict as our current universe, but wherein citizens of the Federation don’t have to suffer from poverty. With no poverty or disease, one is incentivized– but not required– to engage in pursuits that better one’s self or one’s society. In other words, the Star Trek universe is one where it is still possible to suck, but not possible to suck and lack access to healthcare or food.

He describes the Trekonomy as a “reputational economy,” where, instead of questing after wealth, workers quest after achievement, reputation, and explores numerous conflicts that illustrate how the notions of classical business concepts like value creation, risk assessment, and game theory have changed in the centuries between the modern day and the hypothetical 24th century future. Star Trek has long been considered a fanciful utopian universe, but Saadia’s point is that many of the ideas it is portraying exist today– just in a horribly unequal distribution.

Florida, on the other hand, ever walking that line between liberal urbanist and straight up filthy neoliberal, doesn’t want to offend urban elitists by suggesting that we could tax the shit out of the ultra-wealthy to pay for things that might help the poor. While musing on universal basic income (UBI) and inclusionary zoning (I appreciate his frustration with market urbanists, who believe that the Gordian Knot of urban un-affordability can simply be solved by eviscerating any and all zoning regulation), he maintains an arms length, attemptedly apolitical approach to the “crisis.” This is liberal urbanism 101: Rattle off enough data from graphs and provide enough artful infographics designed by members of the Creative Class, you don’t need to embrace political solutions.

Florida has both feet firmly planted in scarcity thinking. Saadia, on the other hand, points out that such a wealthy society could easily provide for its poor if only we were prepared to levy an appropriate tax rate on the wealthy. Saadia would thereby likely dismantle Florida’s dichotomy between “optimistic urbanists” (“let’s observe things and point out good things and cities are great! Yes in my back yard! Build The Luxury Condo Tower! Now!”) and “pessimistic urbanists”  (“everything is a catastrophe and terrible, urbanization has all kinds of problems and nothing is ever good”) by pointing out that, in such a wealthy society, we can have our cake and eat it, too. It just necessitates, you know, some critical examination of, well, the entire underpinnings of a capitalist society.

UNIVERSAL BASIC INCOME AND AUTOMATION

Let’s return to the topic of manufacturing by way of automation. Automation, the experts tell us, could replace maybe two fifths of all jobs in the next 15 years. Maybe more like half in the next couple of decades. Robots, they say, will manufacture pretty much all things that humans now manufacture. This is especially notable in the heavily cyclical automotive industry, which still dominates the Southeast Michigan economy, demonstrates a historically horrible relationship between management and workers, and remains substantially less automated in the United States than it is in, say, Japan.

Saadia frames the concept of “automation as job destroyer” in terms of two kinds of value– the first is the value that is created by automation, something toward the very bottom of Maslow’s hierarchy. He talks about how agricultural efficiency increased a bazillion percent over a half century and allowed for unforeseen population growth combined with unforeseen growth in innovation and science, and how manufacturing is essentially going to go the same way, hopefully allowing for the same. The economy, Saadia argued, retooled from agrarian to manufacturing and knowledge-based in a matter of generations, and it weren’t no thang, so we’ll do it again.

The second type of value is somewhat more abstract, higher up Maslow’s pyramid, and it involves betterment of society and self– increasing the depth of collective human knowledge and understanding. He provides examples from the Star Trek universe about Federation citizens who engage in a nominally obsolete practices like viticulture or cooking– and are nonetheless highly respected for their original contribution to society.

If Florida’s approach to the agrarian-manufacturing transformation involves the promise and perils of urbanization, Saadia is proposing that the agrarian-manufacturing shift was a shift, not an elimination of jobs– but now many of those jobs are going to be outright eliminated through manufacturing, and people will have to do something else with their time. Florida suggests that bolstering service sector wages would ameliorate poverty in that sector, but that’s a “would-be-nice” strategy until he gets into discussion of UBI.

However, while automation will put many people out of work, it will also create a lot of wealth that can be redistributed. In other words, the fruits of the robot’s labor can be redistributed to the rest of society rather than allowed to accumulate in the hands of the ultra-wealthy. This isn’t a new idea, proposed by the likes of Lady Juliet Rhys-Williams in the 1940’s or Milton Friedman as a negative income tax, but it’s gaining a lot of traction as we discuss the loss of jobs to automation.

In 2016, Switzerland voted against UBI in a crushing landslide vote. In North America, the flailing, Liberal provincial government in Ontario, beleaguered by budget deficits, economic woes, and its mismanagement of the provincial utility, is deploying a UBI pilot project in Hamilton, so, we’ll see how that goes. Kenya piloted a UBI program, which was successful and, to the lack of surprise of experts, did not create a disincentive toward work for recipients. The $55 billion Alaska Permanent Fund, which distributes a modest but nonetheless considerable dividend to every state resident from oil revenues, has been likened to a UBI, and has been proven to have had broad economic benefits.

CONFLICT VERSUS CATASTROPHE

The impending catastrophe of automation is bandied about in the same way that the impending catastrophe of whatever else is bandied about. You cannot bring up the news on any day without reading about how there won’t be any fish in the seas by 2020, or how the US Senate is going to actually murder all poor people and make it illegal to be a woman, or whatever, or how the carbon dioxide concentration in the atmosphere is so bad that we might as well just kill ourselves now.

It isn’t a catastrophe– it’s a conflict, or a problem that must be solved. If we want to ameliorate problems of job loss and resultant poverty, we might want to consider some of these ideas that basically every credible scholar seems to think might be a good idea.

Saadia warns against this kind of doomsday thinking. He traces this back to 1798 when Thomas Robert Malthus warned that we’re all fucked, basically, because population growth will outpace growth of food production. Saadia points out that in the 20th century, as population increased, competition for scarce resources promoted innovation that in turn promoted tremendous value creation. He concludes that, if we were able to appropriately distribute the gains from that value, we would already be living in the Trekonomy, and just need to start promoting that kind of thinking.

Donald Trump’s tie manufacturing enterprise isn’t going to be replaced by tie-making sewbots in the next couple of years– the garment industry has been fiercely resistant to automation for a variety of reasons- but I also don’t see it coming back to the United States for the same reasons that the rest of the jobs he promised his red state voters won’t come back.

The raw figures agree with Saadia’s point that we can still, and will likely always, have a craft economy, as defined by the massive influx of private equity dollars into highly profitable American manufacturing economy, which I explored in my now vintage piece on Shinola. People still value handmade products over robot-made products or imported sweatshop goods.

I am always wary of things like automation as the trendiest new thing. The robots aren’t going to start blogging any time soon, nor are they going to start renovating houses in Detroit (hell, I will pledge my first-born to the inventor of a robot who can manage tradesmen on some broke-ass inner city housing rehabs), but we need to start having conversations about things like UBI or negative income tax in order to establish a baseline for what we want a pluralistic, profitable, and productive future to look like. In the mean time, transitioning toward the kind of post-scarcity thinking Saadia argues in favor of would help us think more effectively about the kind of wealth distribution required to build a functional society that is still competitive and oriented toward growth.

Posted in Affordable housing, Cities & Urban Planning, Craft, Creative class, Density | Tagged , , , , , , , , , , , , , , | Leave a comment

Detroit Park City, No. 1: Mexican Village (1/52)

In my last post I introduced Detroit Park City, a planning research project focusing on the positive potential of converting parking lots to buildings. I’m hoping you have by the time of this post drunk the Kool-Aid and agree that excessive parking isn’t a good thing. If you haven’t, the post and the project summary page refer to some good reads on the subject.

This inaugural entry focuses on the parking lots that I used to walk by every morning on my way to work, namely those that flank the maybe-beloved Mexican Village restaurant, in that neighborhood sometimes called Mexicantown, sometimes called Corktown, and sometimes called, maybe, Corktown Shores. To those familiar with the area, it is bounded by that up-and-comingest neighborhood of Corktown and it is where one goes to get what could loosely be called Tex Mex.

To the unfamiliar non-Detroiter, it is, like much of the rest of the city, a low-density residential neighborhood sandwiched between a high-traffic freeway to the west, a low-density, residential and industrial area to the north, and the same to the east, crisscrossed by train tracks including the freight rail tunnel to Windsor, Matty Moroun’s Michigan Central Station, and Matty Moroun’s Ambassador Bridge. As major rites of passage for a Detroit visit necessarily demand a selfie in front of Moroun’s Folly, or an international visit may demand a trip across the Ambassador Bridge, the geography of the neighborhood is significant for existing traffic and potential new development. (It’s also very close to downtown, about 1.75mi, as the crow flies, from Campus Martius, the Red Square of the People’s Republic of Gilbertistan).

As the neighborhood is neither Corktown nor Shores, so, too, is Mexican Village neither Mexican nor a Village, really. It’s not Mexican because the staff glowers at you if you ask for the cebolla y cilantro with your tacos, and you can’t even get al pastor, but rather, and exclusively, any medley of shredded chicken, ground beef, refried beans, yellow cheese, brown, tan, brown, yellow, and, if you want something non-animal and non-grain, maybe some shredded iceberg lettuce. But I digress, as this is not the Foodbuilt City (one day).

It’s not a Village because it’s a restaurant surrounded by parking lots, more akin, therefore, to an Applebee’s than to anything resembling something “urban.” Some people refer to this area as “Mexicantown,” though “Mexicantown” would appear to be a largely fluid term.

Getting past MCM’s neighborhood boundaries, which puzzlingly split this neighborhood into “West Side Industrial” and “Corktown Shores,” we can see that about a full 2/3 of the space in the neighbourhood is vacant, and, of the occupied sites, there is a lot of parking. Truck parking, car parking, parking for warehouses, parking for enchiladagoers who drove all the way from Downriver. Toward the river and along the rail corridor, about a hundred acres of land are owned by CSX, Norfolk Southern, Canadian Pacific, and friends.

THE SITE

Parking Lot East (the bigger one on the right) and Parking Lot South (the smaller one on the bottom) pictured here.

Prices in what JC Reindl has inelegantly termed the” fast-revitalizing” Corktown have gone through the roof in recent years, so it seems kind of significant to build stuff that can decrease the pressure on stable renters and potentially even provide (gasp) affordable units based on the city’s affordable housing strategy, incomplete but under ongoing development. Far from $600k but far higher than the average $40k Detroit home price, I did a house in this neighborhood that sold for $115,000, down the street from one that sold for $165,000 (cash), respectively about three and four times the average market price for the city. The Grinnell Lofts on Brooklyn Street are offering one unit for sale for $338 a foot while the larger two-family buildings are selling in the low $100’s, which is still expensive when it brings the prices above the $300,000 mark, seven or more times the city average home price. This kind of extreme disparity in valuation really highlights a citywide problem.

Parking Lot East measures 225 feet (m) by 150 feet (m). Parking Lot South measures 100 feet (m) of frontage on Bagley St. by 140 feet (m) along 18th St. and the alley. So, the two lots work out to 47,750 square feet, six times the size of the footprint of the building itself, which also has a parking lot in back that, as far as I could tell, was part of the same parcel. That’s an additional 8,000 square feet, so let’s call it an even 50 on the three lots. The East lot has about 94 spaces, the south lot about 52, and the lot behind the building about 14.

LESSON ONE: Non-Revenue Generating Parking Is Difficult To Assess As An Asset

It is difficult to quantify monetary value (“convenience value”) of what is currently free parking, except in terms of the tradeoff of what the space could be used for instead of parking. There is no telling how much business Mexican Village would lose if it eliminated all of its non-street parking– very little, I suspect, because the Joint Is Jumpin’- but, the idea of eliminating all of the parking is both potentially feasible (owing to the surfeit of free street parking between the Bagley railroad bridge to the East and I-75 to the West) and certain to elicit the ire of residents who live nearby.

Alan Durning has cleverly likened parking to Netflix— a weird sort of long tail model where the variety and multiplicity are the selling points that individually generate no appreciable revenue and where it is therefore difficult to differentiate pricing from one product to another. There isn’t a great conclusion from this likeness, since, as I’ll indicate in future posts, there is a huge disparity of pricing– why some downtowns offer free or super cheap parking and have none of it is not surprising (inner ring suburb Ferndale has this problem).

The pastoral becomes even more interesting when we realize that there are even adjacent lots, some paved and some not, that are also owned by Mexican Village. How much is that worth? Would customers in the market for a $12 meal balk at 25 cent-an-hour pricing for parking? Would they balk at parking that wasn’t available, in excess, for free? If you’re going to spend $12 for an hour of food and socializing, is a 2% increase to pay for parking too much on top of that?

Bagley, highlighted, runs a block south of the faster, though zig-zaggy, Vernor Highway. Largely straight for the entirety of its route from Trumbull Avenue to I-75, it is then connected to a further westbound stretch with a major commercial and retail corridor, by an easily-recognizable pedestrian bridge located near a major exit of the Ambassador Bridge customs plaza. (Google Maps.)

THE PROJECT

Bagley is an important thoroughfare for foot, bike, and car traffic, since it is the straightest route between Trumbull Avenue to the East and the Ambassador Bridge Import-Export-Customs Unicomplex on the west (Vernor Highway curves and has a messy intersection at Michigan near the train station).

Imagery from Google Street View facing roughly due west along Bagley, with the slanted spire of the pedestrian bridge in the distance and Michigan Central Station at the far right.

Puzzlingly, the assessed values are extremely low for these sites.

The measurements are tricky to understand even for urban planners and especially for mere mortals: State Equalized Value, or SEV, is defined as the building assessed value (also known as the “improvements” or “improved value”) plus the land assessed value, while the total market land value, a separate variable, is generally 2x the land assessed value, as a colleague from the City of Detroit explained. The average of the land value and SEV suggest that the sum total of this site is worth $100,000, including the restaurant, so, $1.30 a square foot. Subtract the restaurant and you’re well under a dollar a foot. The degree of variance is also high, with the land value sometimes as low as 17% of SEV, and sometimes as high as 227% of SEV. At an estimated $7,179 in annual taxes for the lots, that’s not much money in an area where homes sell for $150,000 cash.

The conclusion is that an outrageously low assessed value will of course serve as a disincentive to development, and parking shall remain parking forever and ever amen. I say “outrageous” because new area rentals are filling up at well over a dollar a foot, and this would mean that development could easily be done more profitably than allowing parking to remain parking. I have estimated the monthly stormwater drainage charge at a considerable $1,209.69, considerable in terms of the marginal profit of medicore tacos sold, but ultimately minimal in the context of a $13-15m project.

LESSON TWO: UNREALISTICALLY LOW TAX RATES ARE A DISINCENTIVE TO DEVELOPMENT

Oh, you also noticed I’m not an architect?

My proposal includes three distinct structures, or sets of structures, including seven multi-unit townhouse buildings fronting on Bagley, a corner building with first floor retail (and/or room for offices), and a corner building on the southwest lot.

The corner building has a footprint of about 6,700 s.f. and four floors for a gross floor area of 21,440 s.f., the townhouses are a total of 35,700 s.f., and the southwest lot building is 33,600 s.f. including first floor retail and underground parking. Density works out to something in the realm of 50-80 dwelling units per acre (a range because I ignored the balance of the vacant space to the north of the parking lot site, which overlays a total of about a dozen lots).

Development financing could either rely on the use of tax credits to create and maintain affordability based on AMI-specified ranges (Detroit Metro’s 80% AMI is, say, double the cost of what it would have to be to serve the city), or, barring tax credits, could rely on a model subsidizing lower-cost affordable rentals with higher-cost ones. The napkin math here is sensible: If one needs $1 per square foot for residential rentals, a high-end rental of $2.25 could subsidize rental rates under $1. Same is true with retail and maintaining affordability as opposed to ensuring that the space isn’t dominated by craft cocktail bars that are unaffordable to the neighborhood. It’s conceivable that the first-floor retail spaces, comprising $3.63m of the total budget, could be finished out more cheaply if the tenants were to finish the spaces themselves.

This proposal would see all four corners developed, adding 100-150 residents and bringing up to 22,000 square feet of retail and office space to the corner.

PARKING

Here’s where it gets a little more tricky. The City of Detroit would require 98 spaces for this new development plus additional for retail, and, if the restaurant needs all 156 spaces, we would come up with the need for 254 spaces. But there are already up to 60 spaces on the street, the townhouses can readily fit 40 surface spaces behind them, and I would submit that the 156 spaces that the Village has, it doesn’t need.

Current scheme: 60 spaces (Street) + 156 spaces (Lot) = 216 spaces

Proposed scheme: 60 spaces (Street) + 44 spaces (Off-street surface) = 104 spaces

Proposed with added parking: 60 street + 44 off-surface + 84 underground = 188 spaces

$144,000 per residential unit constructed fits into a reasonable price point for sale (or rental), and the project would cost an estimated $15.08 million. As I also wanted to understand the idea– and efficiency frontier- of the point at which density allows underground parking to profitably be factored in, I considered that, too.

Adding 84 underground spaces at an estimated $2.1 million would bring our total to 188 spaces, but where it becomes untenable is if the restaurant is asked to now pay for those spaces– no revenue model in a world of Forever Free Parking makes that work if they are only currently paying $93 per year per parking space in drainage costs and $46 per year per space in taxes. Amortize that over a 15-year financing term, you can afford to build two new apartment units plus interest based on this same costing model, or 10-13 underground parking spaces.

Still, if we add the underground spaces, we have only effectively decreased the number of spaces available from 216 in the original model to 188. As the street spaces are rarely occupied, it stands to reason that this may be entirely suitable for the project requirements, eliciting only minimal kicking and screaming.

Some cursory numbers, in conclusion:

Current site Proposed development project
Current spaces (observed) Efficiency (Spaces / Area) Spaces required by code New spaces proposed Spaces present (incl. street) New units proposed Construction costs (excl. parking) Construction costs (+ extra parking) Estimated new tax base
156.00 39.00% 98.00 128.00 188.00 78.00 $14,972,100 $17,179,020 $ 1,513,385

I will likely come back to this as I’ve refined what has become a giant and complicated spreadsheet to look at all of these numbers in aggregate, but in the mean time, onward!

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Policy Point: Limiting Rent Increases

I’ve heard plenty of horror stories recently of rental increases resulting in people getting kicked out of apartments and having to move. In Royal Oak, Michigan, for example, when a long-term tenant paying $1,025 a month was asked to start paying $1,300 a month (and bought a house in Detroit instead), a 27% increase. In Detroit, where a long-term tenant paying $900 was asked to start paying $1,200 a month (and instead moved into a four bedroom house), a 33% increase. My old place was $1,000 a month, and the landlord wanted to increase our rent to $2,700 a month.

Rental increases are, in our free market economy, quite legal, except where prohibited by rent controls, which only exist in a few select cities in North America but are being discussed across the continent as cities become crazily unaffordable a decade after the 2008 market crash. I’ve found that rental advocacy is focused, effectively but in a limited scope, on preventing homelessness, illegal evictions, and unsavory landlordly practices, and the discourse around rental advocacy usually pushes vaguely toward rent controls, because apparently no one knows how to build permanent affordable units or encourage large-scale development that could maybe decrease upward pressures of rental rates.

Realtor.com’s Senior Editor Rachel Stults mulled this over in what sounds like a somewhat desperate concession in a 2015 article:

Community members pushed recently for rent control in my city, but local officials seem to favor increasing housing stock over enacting laws.I know it’s the price I have to pay for living in a tech bubble hot spot. The market can bear that 25% rent increase, and so it will. In the end, I chose to ride out one more year in my apartment and save like crazy.Maybe this time next year, I can say hello to homeownership and goodbye to my landlord—for good.

Next year, in the holy land, the yeoman homeowner is coming back, and all will be well! Next year, we’ll stop having to bear these crazy rent increases. In Detroit, I’ve covered this topic ad nauseam and came down pretty clearly on the fact that even gentrifying the hell out of the 7.2 would result in less expropriation than the city’s tax foreclosure epidemic, but it’s still a problem because gentrification plus expropriation sets precedents– and creates a concurrent opportunity for regulatory reform (NB: not rent control).

Let’s look at some policy examples: Ontario law sets guidelines for rental increases through the Residential Tenancies Act (S.O. 2006 c. 17), first passed in 1991, but these are not binding guidelines. The province’s Rental Fairness Act, passed this May, attaches a few strings to increases beyond the guideline levels of increases, which roughly track inflation. It’s somewhat unclear what this will mean for the Ontario market, since new housing units, as I’ve also explored, are by and large way more expensive than depreciated units, but developers claim it is limiting new development because they can’t increase the rent however much they want in new buildings.

Market urbanists believe that we can solve this entire problem by building more, more, more, something Stults referred to as well. The problem is that this is easier said than done in geographies that have messed up capital markets where math doesn’t work (like, oh, I don’t know, the Rust Belt). And we in North America love the free market, and we view things like price controls as a threat to a free state.

There’s plenty of evidence that rent control doesn’t really work to make markets more affordable because it restricts access to the market. But why the hell does everyone have to live in New York City or San Francisco? In Detroit, why must everyone live within the 7.2? Restricting rent increases to a modest, say, 5-10% per year could imaginably result in pushing development outward from the urban core and encouraging development of new housing, either single family or small multifamily within neighborhoods, or higher-density development along corridors. There’s enough land, which is the key thing that drives up prices in markets where demand pushes prices above the cost of construction.

Lin Ye (in Invisible City, 2008) cites the importance of grassroots tenant organization in producing a robust housing policy around rent control. Maybe it’s time we started this in Detroit– the city’s legacy of grassroots organizing around community development could pair with a comprehensive strategy that would limit rent increases, guarding the urban core from crazy rent increases (which would offer a normalized upward trajectory in rents over time), thereby encouraging more development to radiate out from the core. Certainly the Duggan administration will not in an election year want to float any policy that is not deemed as being completely servile to the interests of bazillionaires and developers. But it’s worth a shot.

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