1. Establish a vision and clearly articulate community goals.
Embrace collaborative approaches to solve problems, identify and pursue partnerships, manage development risks, improve decision making skills, and develop clear expectations.
Increase community and policy leaders’ understanding of the benefits of (re)development and private sector investment.
Typical low-density land use patterns may lead to sprawling development that isolates residential neighborhoods from shopping districts, schools, job centers and other amenities and increases the costs of serving the residents with basic infrastructure. Well designed compact development can spur economic growth by accommodating the population density needed to make public transit and street level retail economically viable. Mixed use, compact development can also contribute to improvements in environmental quality through land use patterns that enable residents to access stores and other amenities on foot or bike (or shorter car trips), easing congestion and reducing associated greenhouse gas emissions.With or without transit connections, cities of all types benefit from a mix of housing types (including compact housing) to satisfy demand for various housing products. Additionally, mixed use zones can encourage active living, such as walking or biking, within the district and increase a sense of community among residents.
Best Practice Example: Chaska
The City of Chaska created Clover Ridge as a planned development within their zoning code. The goal of the project was to provide a mix of housing types within a new traditional neighborhood framework. Clover Ridge is comprised of four different neighborhoods with varying levels of density, price and housing styles.
In one section, sidewalks and street trees are abundant but a more suburban pattern dominates with larger lots, conventional suburban house “styles,” and front-loaded
garages. However, within another section there are much higher densities and choices including some modular built homes and rental housing built next to an elementary school and a centralized park.
These different housing types support the community goal of housing for single individuals, couples and families with children at several price points for area residents and newcomers. In addition, the city deliberately attempts to place some of the more affordable housing closest to the community’s shared amenities. This can help to preserve housing value and enhance the integration of affordable housing into the neighborhood. The plan also places high density lots on the best parcels and a variety of housing types in proximity, but not on the same blocks.
For more information on diverse housing types, visit the Housing Policy Toolbox.
Understand market realities.
Market study and demographic trends reports can help formulate a development strategy. Real estate consultants, researchers, and economists can assist cities in understanding market realities and making realistic (re)development plans based on demographic realities and market projections. As an example, the Metropolitan Council commissioned economist Arthur Nelson to analyze demographic trends in the Twin Cities for their Housing Policy Plan. He finds that shifting demographics will alter housing demand. Specifically, a reduction in family sizes and anticipated downsizing among baby boomers will reduce the demand for large single family homes. A tightening of home financing options, a post recession trepidation towards home ownership, falling real incomes, and rising energy costs will likely increase the demand for rental apartments and smaller homes.
Private market information influences development decisions insofar as it helps developers decide where and how to invest limited resources and capital at a time when construction costs have reached new heights. Without public subsidy, developers must charge about $1.85 to $2 per square foot for apartment rental projects to be financially viable. Overall, multifamily housing units/apartments cost around $115,000-$300,000 to construct in the Twin Cities (although this can be significantly higher for more challenging properties such as historic renovations and redevelopments that require contamination clean up and demolition). In addition, structured parking spaces are an expensive addition to developments and cost about $20,000-$40,000 per parking space.
To start the conversation, and help policy leaders understand market forces impacting planning and development, consider scheduling a free, two-hour Navigating Your Competitive Future workshop.
Develop a clear vision and reach consensus on the goals for community-wide and site-specific (re)development goals.
A study conducted by ULI MN and the Family Housing Fund on Redevelopment in the Twin Cities: A Developers View indicated that one of the biggest risks for developers is political uncertainty. As one developer stated, “I can deal with known risks, but I have a hard time with the political risks.” The report concluded that developers simply want clarity and efficiency within any given city.
In addition, according to the Michigan Redevelopment Ready Communities Best Practices tool, a community that integrates “transparency, predictability, and efficiency” into their practices is most appealing to developers. Developers have limited time and financial resources to expend while pursuing a project and they look to invest in communities that have a vision for the community and priority sites. By actively packaging and marketing (re)development priority sites, communities indicate that they are (re)development ready. Communities that have engaged the public and determined desired outcomes for priority sites create a predictable environment for (re)development projects and reduce the risk of rejected development proposals.
Community visioning requires a master plan and capital improvement plan, and may include a downtown plan and corridor plan. A site-specific (re)development vision should include desired development outcomes and specific development criteria. The project’s alignment with the community’s vision and desired development outcome should determine the level of support that a community gives the project.
For more information on visioning, read the full Michigan Redevelopment Ready Communities Best Practices tool and the Metropolitan Council Local Planning Handbook on key components in building a housing strategy.
Identify the level of financial and regulatory participation your city is willing to provide that supports future opportunity sites in the city. Strive for proactive response.
All communities could benefit from a development approval process that is efficient and predictable, especially in a time of budget constraints. Such a process creates cost savings for the community by reducing redundant review and staff time while improving the morale and retention of public employees by eliminating confusing and stressful procedures.
Developers often must revise approved development plans to reflect new market realities, such as changing a condo development to an apartment development. Such revisions often require rapid approval due to increasingly stringent financing requirements. An expedited review process can make the difference between these projects surviving or being shut down.
Permitting and review policies ensure necessary health, safety, and environmental standards but can lead to delays and cost increases. Expedited permitting and review policies address these obstacles by restructuring regulatory processes to emphasize efficiency, predictability, and cost savings for both the public and private sectors while still protecting the health, safety, and welfare of the general public. Policies that expedite the permitting and review process reduce the time, cost, and risk of development.
For more information on expedited permitting, visit the Housing Policy Toolbox.
- Proactive – aggressive: purchase property, conduct site cleanup
- Proactive- act using regulatory authority: rezoning to achieve vision, complete environmental review
- Supportive – site/area identified, no formal regulatory action adopted
- Reactive – respond as proposals are submitted
Approve (re)development master plan for specific opportunity sites. Prioritize!
According to the Michigan Redevelopment Ready Communities Best Practices tool, the master plan should reflect the community’s goals and path for the future. Making the plans publicly available increases access and transparency. The (re)development strategy should identify priority (re)development sites, neighborhoods, or districts and include a timeline that identifies roles, responsibilities, and benchmarks.
A site-specific (re)development vision should include desired development outcomes and specific development criteria. The community should determine the level of support that it will give the project, based on the project meeting the community’s vision and desired development outcomes. To assist in helping to move your vision to reality, consider a Technical Assistance Panel with ULI Minnesota.
For communities with planned or existing transit service, the Corridors of Opportunity Transit Oriented Development (TOD) Classification Tool, developed by Reconnecting America in partnership with the Metropolitan Council, designates transit station areas in five types based on market readiness and urban form. Each station area type has its own set of investment and implementation activities that are recommended to improve the market or increase development readiness. The tool recommends incremental strategies to maximize development benefits.
Update comprehensive plan to be consistent with vision.
The Michigan Redevelopment Ready Communities Best Practices tool states that comprehensive planning documents are a community’s guiding framework for investment and development. The information and strategies outlined in comprehensive plans are meant to serve as policy guidelines for local decisions about growth and development (physical, social, economic, and environmental) of the community. Plans should “set expectations for those involved in development, giving the public some degree of certainty about their vision for the future, while assisting the community achieving its stated goals. An updated master plan is essential to articulating the types of development the community desires and the specific areas where the community will concentrate resources.”
In addition, a City’s required comprehensive plan should be consistent with the City vision for future development which is submitted and review to the Metrpolitan Council to achieve the goals of the Metropolitan Land Planning Act under Minnesotat State law.
For more information on comprehensive planning, visit Metropolitan Council and the full Michigan Redevelopment Ready Communities Best Practices tool.
Rezone property to be consistent with comprehensive plan and vision.
Zoning ordinances should regulate the goals of the master plan and are a key tool to implement plans in a community. Inflexible or obsolete zoning regulations can discourage (re)development and investment while outdated regulations force developers to pursue rezoning or variances. This can disturb project timelines, increase costs, and create uncertainty for the project. Communities should look to streamline ordinances and regulate for the kind of development that is truly desired.
Building proposals that fit within the specifications of local zoning policies may proceed as-of-right. Developers still need to secure a building permit and fulfill customary regulatory requirements, but the approvals process is generally less contentious and/or time consuming than the process for proposals that require an exception from current zoning regulations. Through the revision of zoning policies, jurisdictions can significantly broaden the mix of land uses and types of housing that are allowed as-of-right, reducing the cost of development.
For more information on policies that ensure housing diversity, visit the Housing Policy Toolbox.
Determine level of risk tolerance and a policy for using public financial tools.
Difficulties with accessing private capital have increased the complexity of development deals. Equity requirements for developers associated with existing projects sap capital resources for new deals causing a mismatch between capital availability and risk for the development community. There has and continues to be a “reset” in the financial marketplace for developers. Cities should view developers more as venture capitalists rather than as traditional entrepreneurs. It is important that cities craft a response to developers that is collaborative while developing reasonable risks that they are willing to consider achieving community goals. A risk position on the part of the city is not necessarily a bad strategy as long as the city evaluates its risk tolerance and plans accordingly. Establishing policies with regards to the financial role a city would consider for future (re)development opportunities is critically important. Quality, experienced and respected developers will seek out communities that have crafted a well reasoned and predictable partnership model with respect to public/private ventures – especially those cities which are viewed by private lenders as being committed to the ultimate success of a project.
- Land assembly
Public land assembly is a proactive redevelopment strategy that allows public control of a property to achieve the community goals for future land use. Land banking is an important tool to allow efficient disposal or acquisition of properties for a broader public purpose. A land bank is a governmental or quasi-governmental entity dedicated to converting vacant, abandoned, and tax delinquent properties to productive use. Regional organizations such the Twin Cities Community Land Bank amass and strategically hold titles for properties for either short or long periods of time. Typically, sites that further community assets or benefits are held. Without a land bank, the process of restoring, redeveloping, or demolishing abandoned or dilapidated properties may require the coordination of several government agencies and involve lengthy approval processes. Delays in reusing properties can lead to a ripple effect of blight and increase the costs for (re)development to communities and future private developers. Land bank authorities address this problem by facilitating the acquisition of properties, holding and managing properties as needed, and disposing of properties in coordination with city planners and in accordance with local priorities for land use. For more information on land banking, visit the Housing Policy Toolbox.
- Tax increment financing—upfront bonds/pay-as-you-go”
Tax increment financing (TIF) is a tool used by municipal governments in nearly all states to stimulate economic development in a targeted geographical area. When a TIF district is established, the “base” amount of property tax revenue is recorded based on the status quo before improvements. To stimulate (re)development within a designated tax increment district, the municipality then makes or funds a developer to make capital improvements, such as new roads, water, sewers, and other public amenities. To the extent such efforts are successful, property values rise, leading to an increase in actual property tax receipts above the base. The “base” amount of property tax revenue continues to be used to fund city services but, over a set period of time, the increase in tax revenue above the base (i.e., the increment) is captured by the tax increment district as revenue, which is used to reimburse the community (or a partner developer) for the cost of the initial and subsequent improvements that spurred the rise in property values and tax revenue. Alternatively, municipalities can issue bonds, backed by the expected TIF revenue, in which case the TIF proceeds are used to pay back the bonds. The incremental increase in sales taxes in the district can also be either captured by the district as revenue or used to pay back the bonds. For more information on TIF, visit the Housing Policy Toolbox.
- Tax abatement
Communities that offer tax abatements or exemptions agree to eliminate tax increases or otherwise reduce property taxes for specific properties for a designated period of time in order to stimulate a specified public benefit. In the housing sector, real estate tax abatements or exemptions are most commonly used to provide a financial incentive for the construction or rehabilitation of rental homes. Some communities also
offer some form of tax abatement or exemption to developers and buyers of homes in designated revitalization zones and/or rental property owners who participate in housing subsidy programs. Abatements or exemptions can be structured in a variety of ways including freezing or reducing the property’s taxable assessed value, reducing the rate at which a property is assessed, or reducing overall property taxes owed. Communities with budgetary constraints should properly structure any tax abatement program to leverage and maximize the desired public benefit in order to minimize the overall fiscal impact. Tax abatements can incentivize new development to spur additional revenue producing market rate development, countering any loss in tax revenues and meeting the broader revitalization goals of a community.
For more information on tax abatement, visit the Housing Policy Toolbox.
- Special assessment bonding
The League of Minnesota Cities defines special assessment bonding as “a charge imposed on properties for a particular improvement that benefits the owners of those selected properties.” The state constitution gives cities and other governmental agencies the authority to use this mechanism for local improvements. Special assessments are a levy for a particular public improvement that is charged exclusively to the parcels that receive those benefits; the levy is proportionate to the value of the benefits received. For more information on special assessment bonding in Minnesota, visit the League of Minnesota Cities fact sheet.
- Infrastructure investment
Local funding toward public infrastructure such as roads, bridges, sidewalks, parks, water treatment facilities, etc. is an important economic development strategy to spur private investment. The Minnesota Public Facilities Authority provides municipal financing programs and expertise to help communities build public infrastructure that preserves the environment, protects public health, and promotes economic growth. Commonly known as the PFA, the authority administers and manages three revolving loan funds and other programs that help local units of government construct facilities for clean water and other kinds of essential public infrastructure that is critical to attract private investment in (re)development.
- Joint venture investment
The International Monetary Fund defines public private partnership as a combination of “the deployment of private sector capital and, sometimes, public sector capital to improve public services or the management of public sector assets. By focusing on public service outputs, they offer a more sophisticated and cost effective approach to the management of risk by the public sector than is generally achieved by traditional input based public sector procurement.” Public-private partnerships require the public sector to determine and communicate long term needs (such as public services) which must be approved by the private sector. Approval from the private sector hinges upon satisfactory and sustainable long term performance, encouraging a long-term outlook for both sides of the partnership.
- Brownfield remediation
Brownfields, as defined by the EPA, are real property, the expansion, (re)development, or reuse of which may be complicated by the presence or potential presen9ce of a hazardous substance, pollutant, or contaminant. A brownfield can range in size from small sites such as a corner gas station or neighborhood auto shop to larger sites or structures including factories, train stations, and hospitals.Communities throughout the country are successfully redeveloping brownfield sites into housing, commercial, and public spaces. Locally and nationally cleaning up and reinvesting in these properties increases local tax bases, facilitates job growth, provides housing opportunities, utilizes existing infrastructure, takes development pressures off of undeveloped land, and both improves and protects the environment. Reusing buildings also helps preserve historic structures with unique architectural style and local character. According to a Minnesota Brownfields report on the Benefits of Brownfield Redevelopment in Minnesota, there are significant economic benefits of redevelopment brownfield land. Most (re)development sites need to conduct due diligence to understand the historic use of the site which may lead to site Phase I and Phase II investigation and subsequent cleanup in order to safely accommodate the desired end-use. (Re)development activities provide numerous advantages for housing opportunities, but the presence of contamination can cause unexpected and unplanned burdens to the site and project timing. These unplanned burdens can significantly increase costs for developers and be the difference between a profitable and unprofitable project. Federal, state, regional, and county level resources are available to assist with remediation of brownfield sites in order to reduce these risks. This is critical to increasing the supply of housing because any increase in costs either makes the housing less affordable or less attractive for developers.For more information on brownfield sites, visit the Housing Policy Toolbox.
Prepare a strategy for collaboration with partners—Metropolitan Council, county, state, schools, watershed districts, key employers, nonprofit community organizations, foundations.
(Re)development is complex and costly in its simplest form. When a project requires approvals from multiple layers of government, the complexity and cost may deter private investment or reduce public goals such as added open space, various level of affordability, and/or mixes of land uses. Preparing a strategy to work in collaboration with partners can help to streamline the approval process and reduce development costs. Before building can proceed in many areas, developers must receive approvals from multiple agencies, each of which regulates a different facet of development, including land use (i.e., zoning), water and sewer systems, and compliance with building codes, among others. Each department often has its own application requirements and administrative processes which occasionally may even be contradictory.
Developers may spend a great deal of time and money fulfilling these requirements before all necessary approvals are granted. If the building process is too lengthy and costly, some developments that are needed to meet the community’s demand may not be built.
Rather than requiring visits to multiple offices, some communities bring together two or more of the agencies that have compatible regulatory functions in one department. Co-locating permitting, licensing, plan checking, and other development related services in one central office simplifies the development process and enables improved coordination and communication among agency staff. For more information on collaboration and streamlining the development process, visit the Housing Policy Toolbox.
Determine policies for land use mix, e.g., affordable housing, ownership/rental mix, mix of uses.
Comfortable, walkable neighborhoods arise from a mix of density and uses. While density looks different depending on street layout, design, and many other contextual elements, increasing density can enable small businesses (such as convenience stores) to operate within communities. While every neighborhood is unique, researchers suggest thresholds for community amenities. For example, Julie Campoli recommends that at least 10,000 households are needed to support a supermarket. Incremental steps, such as legalizing accessory dwelling units (ADUs), can be taken to increase the allowable households per lot without changing neighborhoods aesthetics or scale. For more information on neighborhood density and a neighborhood visualization tool, visit the Lincoln Land Institute.
Promote and Plan for Building Healthy Places
Early and intentional planning incorporated into local strategies and policies regarding healthy living at both the building and project scale will contribute to healthier people and communities and enhance and preserve value by meeting growing desires for health-promoting places. A City can take steps to change how every building and rebuilding, every subdivision and retrofit, will be carried out to promote health.
According to ULI, healthy places are designed, built, and programmed to support the physical, mental, and social well-being of the people who live, work, learn, and visit there. The Building Healthy Places Toolkit provides 21 recommendations for enhancing health in the built environment through evidenced-supported opportunities for enhancing health outcomes in real estate developments.
For more information on the toolkit and 21 recommendations for enhancing health and healthy places, visit ULI’s Building Healthy Places Initiative.
Complete design standards and requirements.
Clearly communicated design standards and requirements help to achieve community goals for land use diversity, neighborhood compatibility, street and sidewalk design, building placement, building height, standards for quality materials, parking, etc. The Urban Street Design Guide describes design strategies for creating healthy urban streets which allow alternative transportation modes such as walking, cycling, and transit. According to findings in the report “Redevelopment in the Twin Cities A Developers View” prepared for the Family Housing Fund and ULI MN, developers are looking for clarity and commitment in approaching a (re)development project.
Make redevelopment opportunity areas and redevelopment-ready site lists available.
(Re)development ready priority sites and opportunities should be hosted on the web and/or provided to developers when inquiring about development. This indicates that cities are serious about attracting investment and committed to improving their communities. The lower the risk of rejected (or delayed) proposals, the more likely a developer will invest in a community.