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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Infrastructure Would Be Nice

Last night, in hono(u)r of the solstice, I made a pilgrimage to the Land of the Rising Maple Leaf for a bike ride to test out my new-to-me bike. While I have been riding a bike since around 1993, I have made a slow transition to Full Bike Geek over the couple of years, living in a bikeable, walkable neighborhood and increasingly hating driving my car (also increasingly recognizing how exorbitant driving is). Over this time frame, I’ve become more attuned to the importance of cycling infrastructure at a time when fiscal austerity is pitted against the divine automotive mandate.

Detroit and Windsor, realistically twin cities, have great automotive connectivity through the Ambassador Bridge and the Tunnel, but the only way to get across the border in something other than a car or a truck is to take the Tunnel Bus, which is unreliable, infrequent, and doesn’t allow bikes. Fortunately I have a cheap bike rack.

I can’t entirely tell why, but Windsor has a lousy reputation among Canadians– it’s “dirty,” it’s “gross,” whatever. Perhaps it’s a matter of being identified with the narrative of Detroit’s decline– the cities both have an automotive legacy, they share the historically important water route of the Detroit River, and they have both (in different formats) suffered from industrial decline. My memories of Windsor, on the other hand, are largely that it is a clean, functional, extraordinarily diverse, and vibrant city. It’s got a dense downtown, amazing food, great beer, great tattoo shops, and, notably, some world class infrastructure for cycling and walking.

Cycling infrastructure continues to be debated in the city by a council and mayor who are coasting on the presence of federal funding (something we are going to run out of in our country because we’re going to spend it all on smart bombs and faith-based healing in the new administration).

From CBC Windsor, a proposed route that would bypass the major east-west mixed-use corridor of Wyandotte Street by routing east-west traffic several blocks south in what has come to be known as the Zig Zag, contrary to any transit planning logic but expedient to city officials who don’t really know what they’re doing.

Or, a notable example of the political climate, when the city voted to boot a bunch of retail tenants out of a first floor space of the Pelissier St. parking garage because they needed to spend half a million dollars to add 51 more spaces.

Sun sets behind the Detroit skyline as viewed from Windsor’s pristine riverfront, west of both downtowns.

After riding west along the riverfront, we turned south, circling Malden Park in the west end of Windsor, which is bordered by a combination of comfortably isolated light industry and light residential neighbo(u)rhoods. The major north-south route we took was along the Right Honourable Herb Gray Parkway Slash Promenade (I just greatly enjoy these Anglo-Canadian honorifics– or, really, honourifics), a monumental highway improvement that improved not only a conventional roadway but also added– wait for it- a roughly 20-km separated trail for bikes and walkers. Designed for improved connectivity to the Ambassador Bridge and, maybe one day, the Gordie Howe Bridge, the Parkway features 11 km of highway and 20km of trails, surrounded by native grasses, plantings, and stormwater features.

From the Windsor Star: Handbuilt pal Oliver Swainson of Bike Windsor Essex tours the parkway.

The cost of about $127 million CAD per kilometer (that’s about $60 million USD per mile) seems negligibly higher than the average highway cost. Highway apologists and industry insiders will often claim that the cost of a highway is, oh, well, maybe $4-10 million per mile. That assumes zero land acquisition cost and a relatively cut-and-dried design and engineering process. But we look at the $1 billion price tag of the I-75 widening, which will add a lane to each side of I-75 ($56 million per mile), or a study that showed urban highway construction to have upper limits of $220 million to $1 billion per mile, and we are reminded that, well, cost is a complicated matter.

I’m almost done with The Power Broker: Robert Moses and the Fall of New York, wherein Robert Caro observes that Moses in the 1950’s and 1960’s declined the opportunity to add at minimal cost a center lane for high-speed commuter transit or bus rapid transit to the Long Island Expressway, which resulted in an induced demand that filled up the highway to above capacity almost immediately while also 1) making addition of that transit system exorbitant within a few years, and 2) discouraging high-density transit-oriented development in largely undeveloped areas of Long Island in the 1960’s and 1970’s.

A map of the Right Honourable Herb Gray Parkway, which boasts separated cycling and walking paths that even have their own overpasses and underpasses.

Until we can adopt a policy– nationally, or in car-obsessed Michigan, which is already behind the times as far as transportation and energy are concerned- that encourages diverse modes of transportation (NB: “things other than cars and trucks”), I’ll just have to keep infrastructure improvements on my wish list and keep enjoying my periodic trips to Herb Gray.

In other news, the handmade, carbon fiber Aegis bike, which cost me, including a new handlebar stem, steerer tube adapter, and bar tape, equivalent to less than two months of car insurance for a car I rarely drive, performed wondrously.

Posted in Cycling, Transit infrastructure, Urban Planning, Walking | Tagged , , , , , , , , | Leave a comment

Detroit Park City: Unlearning the Motor City’s Parking Culture

At a recent MDOT planning meeting hosted at the illustrious Shed 5 in Detroit’s Eastern Market, I again found myself thinking, while poring over drawings for proposals to essentially eliminate the spur of I-375 that extends from the I-75/I-75 junction, how much space in our city is taken up by infrastructure whose sole purpose is to move– or store- vehicles.

MDOT planning materials, indicating my favorite replacement plan, which would turn the giant highway into a surface boulevard.

Unfortunately, it is currently logistically and politically impossible to get rid of our freeways. I suspect that they will eventually be retooled in some future generation, but in the meantime, it will be a tough sell to dehighwayize even I-375, a not terribly useful spur which occupies a full 30 acres of prime real estate between Jefferson Avenue downtown and the I-75 interchange alone. The proposal to replace it with a large, surface level boulevard, reclaiming enough space to build, well, millions of square feet of cool stuff that can generate tax revenue, will probably be shot down by a Transportation Engineer Who Knew Better, but I hope I’m wrong.

Downtown parking, on the other hand, is readily addressed, because, like highways, most parking in older urban areas, especially in the cores of the industrial Midwestern cities, was developed from demolition rather than greenfield space. And parking predictably dominates most public conversations about development. The old NIMBYist adage, “But where will we park?” feels much like in the series Downton Abbey when, amid speculation that the large country manor could be partially converted into a hospital for wounded veterans in the Great War, Cora Crawley asks plaintively, “But where will we sit?” The viewer is sitting there, like, “I don’t know, your ladyship– you’ve got a giant house, maybe you could find space in one of the other 247 rooms?” Where will we park? I don’t know, there are about 135 square miles of city to choose from, maybe somewhere that will necessitate walking 45 feet?

I hypothesized that the spirit of Jane Jacobs herself began to haunt Southwest Housing Solutions’ offices at Lithuanian Hall on Vernor Highway when they won an innovation grant to renovate a parking lot, or when they demolished a salvageable vacant structure across the street because their mostly suburban workforce needed more parking (the quarter-acre of existing lots and thousand feet of street parking weren’t enough). Even The Man Himself has gotten into the parking game.

So I decided it might be fun to put together a project I call Detroit Park City (referencing, of course, the 1976 Kiss song, in which I can only assume that Paul Stanley suggests that you’ve gotta lose your mind in Detroit Rock City because of the unholy supremacy of automotive transport) to identify a long list of parking lots in our city, and target each one for a proposed redevelopment project, comparing costs, revenue figures, ownership data, and, chiefly, space– the built and the yet unbuilt. So, I’m not going to actually design a fancy rendering because I’m not that clever, but I’ll design a basic massing. I’m shooting for producing one project a week for a year.

The Detroit Riverfront, where lots used for the Chene Park concert series abut lots used for parking for the Renaissance Center.

ASSUMPTION: PARKING DOES NOT GROW ON TREES

I am basing my foundations here on research I started for a January 2017 memo I presented to Southwest Solutions’ management outlining the high cost of free parking and why the company should implement commuter incentives for cyclists and pedestrians. In it, I reviewed research from planning organizations and experts who argued in favor of a comprehensive reëvaluation of the notion of “free” parking– namely, how free parking causes a lot of problems and costs a lot of money. This has been explored at length by planners Jeff SpeckDonald Shoup, and others, and it has also been written about extensively in urban planning media and transportation advocacy by the likes of Streetsblog, CityLab, and others.

The major cultural assumption, anathema to the Michigan F250 Super Duty State of Mind, is that cities might be better served by buildings than by parking. My evidence for this is that Detroit’s real estate prices have gone through the roof following a general recognition that Detroit Doesn’t Suck, and that there is a tight relationship between density and amenities– density allows amenities and thrives with amenities (see Rappaport, 2008, in Regional Science and Urban Economics, and others). There are more parking spaces than there are human beings in this great nation, and that’s pretty weird.

For the purposes of this study, the major political assumption is that we will be able to negotiate around parking minimums or avoid them altogether. Detroit’s parking minimum of 1.25 spaces per unit puts the city basically at the highest end of any major American city, although the city’s rockstar planning leadership of Steve Lewis and Maurice Cox suggests that there might be room to negotiate based on the drive toward innovation.

Every city’s approach to parking minimums is completely different, and many are changing; restrictive, convoluted zoning codes are usually designed to make sure spatially bountiful districts have more parking requirements, as in Toronto or San Francisco, while some approaches encourage high density through things like micro-apartments (Chicago). Manhattan’s parking situation, where the city has since 1982 imposed maximums rather than minimums, is a mess for developers to navigate, but the result, CityLab’s Eric Jaffe reports, is an average of five spaces per 100 units (realistically with the maximums versus minimums it’s about 20, but Manhattan is singular– as they are well aware).

Parking minimums also just don’t seem to work well in practice, so they are being reduced (as in the case of outlier Miami’s 1.5 spaces per unit) or sometimes completely abolished in high-density districts, including St. Louis and many other cities.

I am not a data wonk, so I wouldn’t know how to get at the data behind the number of off-street surface parking or parking spaces in structures in the city of Detroit, but one thing I do know is that the city’s extremely low density, well under 5,000 people per square mile, doesn’t really increase appreciably downtown, and that’s evidenced by the sea of parking that surrounds chiefly the Grand River and East Jefferson corridors.

What would be interesting and would deliver, I imagine, some completely unsurprising results, is to overlay an analysis of the parking minimums in these cities with an analysis of density of these cities and per capita income or some other measure of economic prosperity. Donald Shoup’s most salient criticism is, I think, that we are spending sometimes up to several times more on a parking space than a car is actually worth. The economic drain is pronounced and is an excellent case for building stuff that serves people, not cars, especially in a city as impoverished as Detroit where one might spend 75% of their housing payment on utility bills and might spend that same 75% on car insurance.

MEASURING THE EFFICIENCY– OR LACK THEREOF- OF OFF-STREET PARKING

Exploring the efficiency of parking structures versus parking lots, the former is clearly less efficient from a ratio of “square feet of parking spaces” to “square feet of other stuff.” Experts suggest that as much as 59% of the space in an above-ground parking structure or up to 68% of the space in underground garages is dedicated to space other than parking spaces, i.e. driving lanes, ramps, pedestrian paths, or office or other retail space (I actually go to yoga in a parking garage, which is probably figuring into the construction costs), making both of these far more expensive and far less efficient per space. So, they make sense for (literally) sky-high demand, which I will illustrate, even when a space in a multiple-story underground garage can be as high as $36,000 (extreme end, but worth noting). We have generally come down on the side of angle parking being more efficient than 90° parking— it saves space, for the most part, even though it requires some sacrifices.

If we take an operational efficiency approach, we are left with the tragic reality that there is no real frontier of efficiency in a model that necessitates wasted space. I hope to collect data that demonstrates what the effective frontier of efficiency actually is, and I am going to hypothesize that it is pretty bad for surface lots.

TOWARD BETTER ALTERNATIVES

Since I’m marginally– but comfortably- more of a business mind set than an academic one, I’m looking at this topic of land use planning from the standpoint of asking, “what could we build here?” as opposed to abstractly analyzing land use in the aggregate. I want to explore the horizon of tradeoffs between building one thing versus another, and graphically illustrate what this looks like for the purpose of site redevelopment. I currently have 26 data points and variables for each site, ranging from the State Equalized Value (property tax assessment), to the observed, theoretical minimum, and theoretical maximum number of parking spaces, to hypothetical numbers of units that could be built on a space, and I will update this as the list changes based on my observations.

I am going to select sites relatively randomly but take into account sites with common ownership in locations where new construction could bring substantial value to the surrounding area. My only specific selection criterion is that the sites be in the city of Detroit, although that may change if I get stuck in Windsor for a lazy afternoon. 🙂

My first post, a review of the lots surrounding the ancient and honorable Mexican Village restaurant in Corktown/Southwest, is coming, so stay tuned.

Further reading:

Chrest, Anthony, et al. “Parking Structures: Planning, Design, Construction, Maintenance, and Repair.” 2001.

Shoup, Donald. “The High Cost of Free Parking.” APA Planners Press, 2005.

Speck, Jeff. “Walkable City: How Downtown Can Save America, One Step at a Time.” North Point Press, 2012.

Posted in Cities & Urban Planning, Density | Tagged , , , , , , , | Leave a comment

Detroit: Proposed Crackdown on Slumlords

The Duggan Administration just announced a proposed ordinance that would crack down on slumlords by forcing their properties into compliance with city rental registration (“certificate of compliance”) and, probably, building code. BSEED has supposedly increased its inspection staff to about three dozen, meaning they might actually have a sufficient staff to not only inspect buildings but also encourage better stewardship of inner city properties by largely suburban slumlords.

The city needs a standardized system of identifying or registering properties based on either a set of simple metrics or perhaps a set of simple binaries (e.g. Owner-Occupied vs. Rental and then In Compliance vs. Not In Compliance), similar to how LOVELAND’s Motor City Mapping identifies a property as Occupied, Maybe Occupied, or Vacant. I’ve run into a lot of problems with the city’s classification system for their blight ticket system (and I’m apparently not the only one) based on how they arbitrarily will label a property as “rental property” if it appears to be vacant, making going after delinquent and absentee slumlords easier.

Encouraging property owners to register rental property seems on its own a merely bureaucratic requirement with dubious or debatable benefit– but it does allow tracking to enforce code compliance. Code compliance means the city might be able to actually make sure renters have homes that are comfortable, safe, and energy efficient. The last one is critical in the conversation about keeping people in their homes, since, as I’ve explored before, many low-income tenants pay a huge percentage of their monthly housing payment to energy.

Of course, it’s always a question of how far the city wants to go with that enforcement, and I certainly have a question as to the balance between the noble goal of “making people’s lives better” and a more disingenuous goal of “creating a regulatory avenue for revenue generation.” but if the supply of housing keeps increasing, it seems possible to keep people in their homes while increasing the quality of the existing housing stock.

Posted in Affordable housing, Cities & Urban Planning, Construction, Housing, Urban energy | Tagged , , , , , , , , , | Leave a comment

Richard Florida on Optimistic Urbanism versus Pessimistic Urbanism

Richard Florida had a recent interview in the Chronicle of Higher Education where he continued to unpack the fraught complexities behind his Creative Class theory. We all know the theory, which observed the processes through which creative young people can and do move (back) to cities to revitalize them, and which come under attack in recent years as a product of the stark and skyrocketing wealth inequality that has accompanied Cities As The New Black, Detroit as the New Brooklyn, or The Fact That The Rent Is Too Damn High.

Florida sets up a dichotomy that I don’t agree with but that I find interesting to bring up, splitting urbanists into either optimists or pessimists. Optimists, including the likes of Ed Glaeser, Nathaniel Baum-Snow, Bruce Katz, and Benjamin Barber, want to observe and analyze the things that happen to reshape cities. Pessimists, he argues, like Mike Davis or David Harvey, think that everything is bad. While I learned from the observations of the former group, I understand less about cities from their books than I do, say, from Mike Davis’ legendary and controversial City of Quartz (1990), which challenges the discursive underpinnings of Los Angeles’ cultural supremacy and its legacies of privatization and power.

I also didn’t need to be convinced that cities were okay, because I grew up in one, so I don’t want to be too judgy of the overviews of metropolitan revolutions or what have you. At some level, this bears similarity to the national debate that pitted Bernie Sanders against Hillary Clinton in the 2016 presidential primary election– the neoliberal, barely left-of-center if not slightly right-of-center candidate was deemed more palatable by the entrenched power elite than the termed “radical” guy who preached about taking down the “billionaih class.” The mainstream generally deems as “unpalatable” or “too radical” Marxist critiques and especially any critique that challenges the liberal or neoliberal paradigms of the new urbanization (framed, let’s say, for the sake of discussion, by the proto creative class that followed on the heels of the fallen New York of the late 1970’s) that favour unchecked accumulation of wealth.

That guy in the fancy bistro charging $19 for a rectangular, bone china plate of fried chicken and collard greens, catering to visiting suburban diners who would move to the neighbourhood If It Weren’t For The Schools? “He’s to be lauded since he transformed an abandoned building into an urban oasis of possibility where once stood only decay and drug dealers.” “And why do you have to judge rich people, anyway? They made it in America, without help!” This has been my beef with Creative Class, way before we were talking about gentrification in Detroit and back when we all wanted A Startup Incubator On Every Corner And A Vegan Cupcake On Every Plate, because the argument in favour of this rising tide seems tone-deaf in its dismissal of class, and if you bring up class and power, you’re deemed a Marxist– or a pessimist.

Florida muses in a similar Vox interview that maybe the Sunbelt is a bit of a new frontier, but that the current “frontiers” do not involve the same opportunities for affordability that those of yesteryear did. I maintain that the final frontier of urbanization is equitable urbanization, and for me, that involves two principal things: 1) equitable, sustainable development in high-density urban centres, and 2) equitable, sustainable development in rural areas that are, as of yet, completely ignored by people like Florida who pigeonhole the idea of “cosmopolitan urban centre” into “big cities doing flashy things.” John Conyers, III says that I need to keep my blog posts short or no one will read them, so I’m cutting it off here, but there is, of course, plenty more to be said about all of this. One point on which I definitely agree with Florida and I’m glad he brings up: densifying sky-high in the name of the Market is not going to “save cities” or save our affordability crisis, and this problem transcends one single issue.

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High-Speed Rail Coming to Ontario by 2031

Today, Ontario Premier Kathleen Wynne announced in London a new project to bring high-speed rail to the province. Canada is notably the only G7 nation that does not have high-speed rail (although the United States basically lacks high-speed rail outside Amtrak’s northeast corridor). The death and life of great Canadian passenger rail is roughly mirrored in the United States– VIA started services in the late 70’s compared to Amtrak in the early 70’s, and Amtrak’s freight analogue Conrail was dissolved, or re-privatized, in 1999, four years after Canadian National was privatized and all of its trackage was thereby taken out of public control.

Diesel VIA Rail locomotive pulling into the Win City (Windsor, Ontario). Some day to be replaced by high-speed rail.

Freight rail historically hasn’t played nicely with passenger rail because it typically operates in duopolistic markets, for example, BNSF versus Union Pacific, Canadian National versus Canadian Pacific, or Norfolk Southern versus CSX, and because private, for-profit freight rail is driven by shareholder value while nationalized passenger rail service is driven by, well, however little funding its government wants to give it. VIA Rail in Canada is conceiving of the Quebec City to Windsor corridor as a lower-density version of Boston to DC in the United States and is investing a lot of money to improve that route and take over trackage, similar to what Amtrak did in the NEC for Acela service.

The Ontario Liberals have struggled to honour their commitments to high-speed rail, so this announcement of an invariably lengthy, expensive environmental study is a step forward. So, in 14 years, we’ll have nice things, maybe a complete route from Chicago to Montreal, even. Or Boston to Montreal. The various high-speed rail discussions around North America are at this point basically just discussions, in the austerity era when no one wants to pony up the dollars to build the infrastructure (high-speed rail requires dedicated, separated grade trackage, and, invariably, replacement of ties and tracks).

High-speed rail might get us there faster, but couldn’t we figure out a way to get it here faster? I need more opportunities to take advantage of the Torontonian economy while the US Dollar is still strong!

Posted in Ontario, Public transit, Rail, Transit infrastructure, Urban Planning | Leave a comment

Energy And The Onus of Design Standards For Publicly Funded Projects

As the Michigan legislature debates– and will invariably pass- a bill that will open the floodgates for massive public expenditure on private development in downtown Detroit, it is time we start demanding increased accountability in the sustainable execution of these projects. My proposal? Energy benchmarking for every commercial, industrial, or mixed-use development that receives public subsidy or tax abatement, say, with a total development cost of over $250,000. In my ideal world, we would be requiring benchmarking of everything, forever and always, but I’ll take what I can get. The failure of the more aggressive Community Benefits Ordinance last November– but the passage of the other- indicates that this is feasible in the current market.

Super-TIF

SB 111-115 is essentially a kind of super-TIF, and it was cleverly crafted exclusively to fund a three quarters of a billion dollar development of the Hudson’s site (but could easily be used for future projects as well, and only in Michigan cities over 600,000 population). TIF, or Tax Increment Financing, is a tax capture method used to offset the high cost of new development. Simply put, it is a way to incentivize private development in a specific area by providing a subsidy, grant, or other cash payment to cover a portion of the development costs, and that payment comes from projected future returns. Borrowing on the future sounds risky, but that’s essentially what a bank loan is. The different is that this is public money.

At its best, it can be used to transform neighbourhoods, remediate blight, improve commercial corridors, and develop disinvested districts by helping finance new development, thereby reducing risk. TIF’s are often applied to districts (theoretically), which means that they can, again, theoretically, be used to improve entire areas as opposed to subsidizing a single developer. But at its worst, TIF is essentially applied by cherrypicking development projects and giving monolithic handouts of taxpayer money to mega developers. For projects that, you know, might not ever happen (remember Paul McKee’s Northside Regeneration in North St. Louis? Now he wants in on that damn soccer stadium).

There are, depending on how you count, ten pieces of legislation governing TIF in Michigan, dating back to 1975, a full six of which have been created in the past thirteen years. A small minority of the 600-some TIF plans in the state actually report to the state, a perfunctory point of non-compliance that Chicago’s Civic Lab has also pointed out as a problem.

Do we even need Super-TIF?

It is debatable that we even need this kind of massive public subsidy when the residential real estate market can support rents at $2.00 per square foot, as apartments are now renting for in neighbourhoods like Corktown and Woodbridge, where supply is severely limited, as well as downtown Detroit, where plentiful supply is quickly being absorbed– even at $2 a foot (as of mid-May 2017, they weren’t biting as far as the $2.25 a foot at Briggs Houze). $2.00 a square foot isn’t much less than some of the hottest markets in the United States (I pay about $1 a foot in Corktown).

Napkin math: $2 per square foot gross, $24 per square foot per year gross, and you mean to tell me you can’t afford to build a building that costs even a couple hundred dollars a square foot without up to $40 million a year in subsidy?

Chicago’s Civic Lab has explored the use of TIF’s extensively and concluded that, while plenty of TIF money goes to public infrastructure and development, a lot of it goes straight into the pockets of corporations. Michigan’s Super-TIF bill would not only fund the development out of sales taxes but also income taxes. And, here in Detroit, we are less abashed about the whole corporate subsidy, since Dan Gilbert is, after all, the Great Saviour Of Our City. Or Mike Ilitch, I can’t remember anymore.

But whether or not it’s a good idea to give hundreds of millions of dollars in handouts to billionaires like we did to Mike Ilitch (it isn’t, by the way), it’s important for us to ask questions about how to make that public investment a lasting one. Because it is going to happen.

Demanding Resiliency and Fiscal Sustainability

Publicly funded projects should be held to high standards of quality and design. What is good design? Frankly, I don’t care how it looks, though Bedrock’s proposed flashy envelope, more glazed than a Krispy Kreme, is attractively shiny in the renderings. And invariably, anything that is proposed for the Hudson’s Site will elicit screeches that we aren’t providing enough parking, that we need more parking, more parking is needed. But I’m thinking beyond parking and more in the realm of energy usage.

Just as energy is a critical concern, as I’ve explored before, for tenants and homeowners, so, too, is it a critical concern for property managers and commercial building owners. DTE should be invested in this since they’ve had to eliminate a quarter of their generating capacity and are just slowly catching up to the novel notion of energy conservation as virtual generation.

Benchmarking– And Onward

Energy benchmarking is a process that involves tracking a building’s energy and water usage over time to encourage conservation among occupants and tenants and to reduce operating costs for building owners. EnergyStar Portfolio Manager, offered through the Department of Energy, is more or less the industry standard for how these things get done.

Mandated benchmarking for large commercial buildings has been explored in a number of jurisdictions including Chicago and, starting in 2018, New York. Chicago even has an extensive system of incentives and bonuses for sustainable development.

The Institute for Market Transformation has noted in a number of case studies that benchmarking can reduce energy consumption by 20, 30, or 40%, in many cases, simply by identifying energy usage in a more visible format. Even at two dollars a square foot, energy bills are a substantial portion of the annual cost structure, and are a huge portion of the physical operating costs of the building.

Markets are often transformed disruptively, a.k.a. “lower-cost product changes the game,” and are sometimes transformed by regulatory nudging, which, depending on how strongly it is done, may elicit kicking and screaming, as it did in Michigan’s adoption of modern energy codes. in Detroit, anecdotal evidence I’ve heard from folks who have worked with Dan Gilbert’s Bedrock and Fams (the FoC or “family of companies,” as they lovingly call it) suggests that Bedrock is more interested in technological glamour than the nitty-gritty, under-the-hood details. So, it wouldn’t be a stretch to suggest that they wouldn’t like benchmarking, but if they were required to comply with it, it’s also not a stretch to suggest– based on hard data- that it would have a positive impact on their bottom line.

Regulatory incentives toward LEED development arose in the 2000’s, and LEED v4 even has some parameters that might actually make buildings more sustainable. I make no secret of my skepticism of LEED, but it is a universally recognized standard– and it’s important for us to think about how when we are investing public money, we should be demanding some kind of independently verifiable standards. But energy benchmarking is easy.

Bottom line: If you’re trying to demand 50% of the income taxes of anyone who lives or works within this district for the next 20 years, shouldn’t we think about stepping up our demands as well?

Posted in Construction, Detroit, Energy Efficiency, Mixed-use, Real Estate, Regulation, Urban development | Tagged , , , , , , , , , , , , | Leave a comment