Donjek :: The Cents of Place Blog

Donjek Project: Site Evaluation and Selection

Over the last few months, I've been partnering with a client to examine potential redevelopment sites along a planned rail transit corridor. As I described in this previous post, some property owners and users are in search of sites that are not only near station areas and other nearby assets, but clearly and conveniently connected.

In my home market in the Minneapolis Saint Paul region, the same impulse can be observed. Take, for example, the 34-story residential redevelopment recently approved by the Minneapolis Planning Commission, which is adjacent to a light rail transit platform at the Nicollet Mall station, next to the prospective Gateway Park, and reachable (both by pedestrian and transit mall and skyway) from all work, civic and entertainment locations in the central business district.

The Minneapolis example, however, made for easy site selection - its value is obvious. As customer preferences shift and transportation (both in mode and in cost) evolves, new opportunities will arise to identify and redevelop less evident, but very high-potential sites. Welcome to the future.

Related Articles:

• The Business Case: Connect to Your Surroundings
• Urban Economies: Going With the Flow
• Charles Landry: City Making in Minneapolis Saint Paul

The Business Case: Connect to Your Surroundings

"We're at a very interesting inflection point in real estate history. The next 10 years will be very different than the last 30." – Peter Miscovich, Jones Lang LaSalle, 2010

Connections bring foot traffic, and foot traffic underlies prosperous places. We depend on and value connections in different ways than in the past. Census data released this year confirms falling commuting by car and rising use of transit, bike commuting, and walking. America’s two largest demographic groups – Baby Boomers and the “Millennials” – are aligned in driving this trend.

Stronger links between buildings and their surroundings have long been values of urban designers. Increasingly, because these links present a business case by reducing vacancy and increasing lease rates, commercial tenants, property managers and owners are focusing on connections to neighboring property.

Connections nearly always involve interaction with both private and public sectors. Consider these examples:

• Average space per employee has fallen from 500-700 square feet to 200 today, and is still dropping. Accommodating the needs of more employees, and maximizing spillover benefits, involves the public and private sectors, and can distinguish property owners and increase demand and values.
• In 2011, transit in the region will move over 80 million passengers, including 69% who choose transit instead of their cars. In Minneapolis, the number of bicycle commuters increased by 27% from 2007-10. Property owners and managers prepared to engage these audiences will link to a growing base of consumers arriving by bicycle and foot. 

Donjek has demonstrated expertise in real estate finance, public/private sector negotiations, and planning to help owners, managers and other users of urban real estate increase the function and desirability of property. More specifically – I can work with you to:

• Enhance visibility, increase safety, and boost foot traffic
• Create value by taking advantage of proximity to nearby large employers or institutions
• Produce real-time analysis of TIF cash flow of any district that may contain your property
• Monitor the development process of nearby parcels in transition, for impacts on your transportation, zoning, or other assets
• Create communication about these initiatives in a way that sets you apart.

The preferences of businesses and their customers are evolving. Tenants and their customers are leading the way, and you have an opportunity to attract and retain them with innovative strategies.

Related Articles:

• Mobility Understood Best at Metro Scale
• Donjek Project: Picturing Value in Walkable Neighborhoods
• The Big Sort: A Small Summary

Donjek Tools: Advocating for Local Stimulus

Federal and state efforts to spur creation of jobs and economic activity have dominated news in the last year. The American Recovery and Reinvestment Act of 2009 (“ARRA”) constitutes stimulus funding to states and local governments. Funding resources are made available in some cases by formula, and in others, by competitive process.

Donjek is working with school districts and cities to:

• Identify stimulus-related funding sources that address their needs. As part of this evaluation, we also identify long-term operating costs;
• Partner with school district and city staff to apply for those funds to be awarded on a competitive basis, and to ensure that funds awarded on a formula basis are effectively distributed;
• Advocate for appropriations for school districts and cities at the state and federal levels. 

As described in further detail below, execution of the ARRA provisions will be large scale and necessarily complicated; as program details emerge, this expectation has been confirmed. Large municipalities are effectively pursuing these resources, and Donjek is proposing to create additional capacity in stimulus funds procurement for municipalities large and small.

Stimulus funds are, generally, to be appropriated in two ways:

• From federal agencies to states, either for state-level investments or state distribution to local governments;
• Directly from federal agencies to local governments or other end users.

The first tranche of stimulus funding for Minnesota school districts took the form of stabilization funds. The State of Minnesota is exchanging these dollars ($500 million) with state funds, meaning that Minnesota districts will not receive new money through this program.

School districts do have an opportunity to access a range of additional stimulus programs, including those in the following general funding categories:

• ARRA Title I;
• ARRA Title II;
• Individuals with Disabilities Act (“IDEA”);
• McKinney-Vento Act;
• Expansion of qualified bonding authorizations;
• Rural Community Facilities program.

Cities may also have access to stimulus funds designated for various uses, and associated with different allocation processes and mandates:

• Broadband Access;
• Brownfield Remediation;
• Energy Efficiency in Public- and Private-Sector Buildings;
• Fire and Emergency Response Staffing;
• Highway Infrastructure;
• Housing Finance and Retrofitting;
• Public Building Renovation;
• Rural Business Development;
• Rural Community Facilities Investments;
• Solar Cities Program.

School districts and cities are financially pressed currently. Evaluating which stimulus sources are worth pursuing in a competitive process will reduce the potential waste of chasing programs as their resources and provisions are unveiled. 

Donjek Tools: Evaluating Commercial Property with GIS

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

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

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

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

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

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

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

Coming Down with Cartographia

It's a tradition:  In December, we share gifts. In January, we share illnesses. 

This year, in addition to a winter cold, I have taken on a new level of interest in the ever-expanding field of mapping or cartography. In some measure, this is because in the coming weeks I will be releasing mapping services that will interest placemakers - property investors, land use advocates, bankers, transit supporters - seeking to understand why some urban areas thrive and others stagnate. I've posted here before about GIS applications in Donjek projects, but my next steps will extend beyond my prior application of these tools.

For now, I am attaching two maps that I hope will interest you as they have me.  The first is a map I created online at Wordle, a free online tool to convert text to a graphic - the more oft-cited a word in the text, the larger its profile in the map. The map shown here is based on a Donjek report I drafted in recent weeks, and which will be available in final form shortly. You can guess its subject. See the collection of inaugural speeches in this "word cloud" form, provided by the New York Times.

The second is a map representing seven years of over 2,000 iterative changes made to the Wikipedia article on evolution, by 68 editors. The width of the graph bands indicates the number of words in the evolution article, and the colors indicate the identity of the author. The source of this map is Urban Cartography, a quirky and interesting collection.

Colorful pictures are all I can offer today - but I and my health will be back by the end of the week.

The Future, Coming Soon to a City Near You

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

Donjek projects have used GIS analytics and images in a range of ways, and I am currently developing new applications of these tools for clients in real estate development, investment, and urban planning (more to come on this topic).  The inspiration for this post, however, is to display how mapping tools can create meaningful observations from opaque bodies of data.

The maps included here represent cell phone usage in the small town of Graz, Austria, and illustrate a novel approach to understanding places.  By identifying roads or rivers or museums or transit stations or academic buildings, maps give us a visual sense of how features and places are connected. Urban maps also depict where centers are, marked by downtowns, plazas, intersections.  Mapping cell phone data is a real-time approach to understanding where centers are, when they are, and perhaps even why certain places function as they do.

About ten years ago, I enjoyed a very rich two weeks in Rome, Florence and the Liguria region in Italy. A particular highlight, among several, was beholding the imposing globe at the Medici palace in Florence. Built in the 1560s - only twenty years after Copernicus' famous release, and seventy years after Columbus landed in the West Indies - the globe is over six feet in diameter and represents a period of great discovery and curiosity. As I've thought of it in recent years, the globe is a symbol of an evolving view - of the shape of the Earth, its place in the solar system, and its far-flung features and peoples.

Could the developing tools for mapping open our eyes to the space around us in some similar fashion? I will stay tuned.

Donjek Tools: Transportation Consulting for Public and Private Clients

Donjek Transportation Consulting

Donjek is rolling out with transportation planning and policy service, so to speak.  Look to us to conduct travel demand projections and management analysis, evaluate streetcar finance, negotiate shared parking agreements, and determine whether to use tax increment financing for streets and structured parking.  We identify and present solutions in these areas on behalf of our public- and private-sector clients.  We are able to:

• Work with mid-size and large employers to reduce payroll taxes and parking lease charges.  We are able to analyze employee travel and parking requirements, to help employers identify and manage these costs, using travel demand management plans and other measures.
• Form urban and suburban transportation site plans to cultivate the vital places in your city.
• Develop shared parking arrangements and parking management plans that ensure efficient access and circulation.
• Prepare traffic impact studies to determine the effect of development on congestion, safety, and parking supply. 
• Analyze transportation markets to estimate demand and identify innovative, multi-modal solutions to transportation challenges.

Click here for a brief summary of Donjek transportation services and related background.

Getting Less Mileage Out of the Gas Tax

Last week, Congress recapitalized the Highway Trust Fund, a gas-tax funded resource available in the past for construction of roads and bridges as well as transit infrastructure.  If unaddressed, the U.S. Department of Transportation indicated the fund would empty as of October 1.  This article provides a sound recent overview of the move.  It also explores the increasing folly of levying gas tax as a dollar value per gallon, while inflation mixed with reduced fuel consumption by consumers is leading to deterioration of revenues and resources available for investment in transportation infrastructure.  Talk about a volatile mixture!

Learn more about the State of Oregon’s experimentation will replacing gas tax with a mileage fee in an article from Governing magazine available here.  If you have an afternoon to spend on it, see this document.

An Interactive Calculator for Business Improvement Districts

One of the reasons that the business improvement district is an increasingly popular mechanism to finance essentially public activity is its flexibility, which I discussed in late August here.  In Minnesota, State statute allows a district to assess charges to finance capital or operating activities on the basis of “a reasonable classification of the types of premises to which service is furnished, or on any other equitable basis” [emphasis added].  For business and property owners, and for local stakeholders generally, language this broad provides the material to create a structure that serves an area’s unique needs.

Minnesota Statutes, Chapter 428A spells out the terms for establishment and operation of a special service district (this state’s incarnation of the business improvement district).  Regardless of whether the most vocal advocates of a special services district are business owners, elected officials or other community leaders, they are ordinarily asked right away what will be the basis for assessing fees. 

The Donjek worksheet available here gives a user the ability to “rough out” your own special services district.  The tool allows you to choose an annual budget, select a basis for assigning fees (remember that these four alternatives are just a sample), and add information for up to twenty parcels if you choose.  Or use the data and assumptions already on the worksheet, and note how changing the basis affects the level of fees assessed.

If your community or business association is interested in exploring how a business improvement district could enhance your efforts to support retail and office activity, contact me about how this type of tool can be expanded and made even more dynamic for your key audiences.

Donjek Tools: Tax Increment Financing Made Visual

Planners, architects and developers have long been masters of the visual.  It’s difficult to deny the power of a colorful drawing to communicate design, use and how changes to the landscape can improve the spirit of a place; projecting the image on a large scale can further amplify this kind of communication.

The financial mechanics that underlie any plan are not only more difficult to convey in a physical sense – they also place a presenter in jeopardy of alienating and boring an audience.  Still, an understanding of how master plans and site plans will be financed, and how their development will affect the larger financial health of a community, are critical issues that require public discussion before moving ahead.  Full understanding of these issues by key members of your audience will streamline your process and align expectations with reality. 

Tax increment financing (“TIF”) districts are a redevelopment tool employed in every U.S. state except Arizona.  While publicized abuses have tarnished the political image of this tool, it remains a critical mechanism, trapping incremental property tax revenue from redevelopment for repayment of the debt used to finance the improvements in the first place.  Structuring a TIF district requires a discussion of variables ranging from the state’s tax treatment of different types of property to the post-redevelopment value of parcels, projected appreciation rates, absorption of redeveloped space into the market, and the cost of capital.  See the eyes of the audience glazing over?

The Donjek InstanTIF decision tool allows audiences to engage TIF in an interactive way thanks to a number of attributes.  The tool:

• Allows a presenter to show the various parcels in a proposed TIF district as a map on a screen, with colors to reflect assumptions about appreciation in the future.

• Illustrates the essential items for calculations, allowing a presenter to convey more detail if desired.

• Gives members of an audience real-time feedback about how changes to one or more variables would change TIF cash flows and consequently the amount of borrowing the district can sustain.

• Can be presented in tandem with graphic data layered through GIS software, to illustrate demographic and market trends of significance.

The InstanTIF tool is custom tailored for each proposed TIF district.  Moving forward, consider this decision tool for future discussions with investors, public officials or community members, and extend the communicative power of pictures to project finance.

InstanTIF software design, text, graphics, and mechanics are Copyright 2007 by Jon Commers. ALL RIGHTS RESERVED. Any use of this software, including reproduction, modification, distribution or republication, without the prior written consent of Jon Commers, is strictly prohibited.