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

Quantifying Open Space Benefits: Donjek Presentation at MRPA Conference

Today, I am presenting to the annual conference of the Minnesota Recreation and Park Association on the costs and benefits of open space, with Jenna Fletcher, project coordinator of Embrace Open Space. View my part of the presentation here, and see Jenna's presentation here.

Intuitively, we all agree that parks, open spaces, greenways and natural areas have economic value. The real estate marketplace recognizes this: Studies consistently indicate that residential property owners pay up to a 30% premium to live within walking distance of a park. Similarly, access to bike and pedestrian infrastructure such as greenways also boosts property values.

Despite a surge in academic and practitioner analysis of open space premiums, many policy makers continue to view parks as cost centers, as opposed to stable assets that consistently support social and economic activity, as well as tax base, located nearby.

The case for identifying the benefits of open space more effectively is important. In addition to its relationship to residential and commercial property values, local policy stands to be improved by better information about the economic value of the physical activity, non-motor transportation, stormwater management and other benefits.

We have the tools in the form of property data sets and GIS analytics. We have the need to respond to overwhelming budget pressure. And we need urban design that helps rather than hinders our efforts to reduce greenhouse gas emissions. Each of these factors call for a change in the way we understand, talk and make decisions about the role of open space in our cities and towns.

Talking Open Space

On May 28, I presented to the quarterly meeting of a land conservation  collaborative that has brought together groups including the Metropolitan Council, the Minnesota Department of Natural Resources, the McKnight Foundation, Trust for Public Land, and 1000 Friends of Minnesota. Embrace Open Space has released an analysis of five years of Hennepin County housing sale data, which illustrates the influence of nearby open space on home values. The analysis has identified that a typical Hennepin County home located near open space is roughly $15,000 more valuable than a comparable property located elsewhere. The study follows a related analysis of Washington County sale data, released in 2007, which reached similar findings.

As part of the program, I will present context for the study, describing the range of economic, fiscal, and ecological benefits that flow from parks and other conserved lands, in cities, suburbs and in rural places. I also expect to discuss how open space produces benefits that cross sectors - for example, open space has been shown to produce improvements to health and serve as transportation infrastructure (as with greenways), as well as meeting recreation needs. 

View the Donjek five-page summary here.

Photo: Post Office Square in Boston; courtesy of Flickr.

The American Dream, Part 2

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

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

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

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

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

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

Donjek Tools: Evaluating Commercial Property with GIS

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.

Velcro, Thorny Devils, and Placemaking

Last April, en route to a conference of the International Economic Development Council in Washington, D.C., I encountered a feature story in National Geographic and became lost in the journey.  The topic? The history of Velcro.

Among other things.

Velcro (photographed up close, at right) was invented in 1948 by Swiss chemist George de Mestral who, according to the article, was inspired by the effectiveness with which burrs would become entangled in his dog's coat.  De Mestral could be counted as a pioneer among modern biomimeticists, who seek to create innovation based on the aerodynamic design of a fish's body, the ability of a thorny devil to "drink" by wicking water up its legs from the ground, or the way a desert beetle collects fog for needed moisture.

The thorny devil, and biomimetics generally, is important to urban planning and development, too. Ecology and the benefits of biological diversity are reflected in modern portfolio theory, which suggests the importance of holding multiple assets whose values fluctuate independently of each other.  Some of the neighborhoods hit hardest by the current wave of foreclosures are those communities with monolithic development patterns - very similar single-family homes with limited or no proximity to commercial or retail services or other assets.  Builders and homeowners alike witnessed the positive side of life without diversification during the real estate boom, with values marching upward.  Today, the same parties are experiencing the negative side of the same approach, because a decline in prices for one type of land use is not mitigated by a diverse mix.

The capabilities of today's biomimeticists to understand the functions of plants and animals inspired a response of marvel from me. Human understanding of the complexity of the relationships among the flora and fauna around us is similarly advancing.  Placemakers shaping our cities and metro areas have much to gain from imitating nature, extending from building healthy human habitat to applying the lessons of diversity to our urban economic thinking. 

Photo courtesy of American Museum of Natural History. Map courtesy of Donjek.

Value Capture Finance: Seeing is Believing

One of the trends I've observed here over the last year, is that multiple factors are prompting more consideration of value capture finance - the mechanics of "capturing" development values and benefits to pay for elements of the development itself.  Among the drivers are:

• Diminishing public willingness to support funding for services traditionally considered to be core public functions; 
• Increasing gathering of data and readiness of access to this data; and
• Improving ability to use this data to measure property value, patterns of how people use places, and the economic health of small or large areas (just to cite a few examples) using geographic information systems (GIS).

Value capture finance, in summary, is a method of using future financial or economic benefits precipitated by a development, to repay part or all of the debt incurred to create the development in the first place.  A typical example is tax increment finance (TIF), authorized in forty-eight U.S. states, which allows increased tax revenues (property and/or sales) generated by redevelopment to be channeled to the project’s debt service or other uses.  A less typical example, not currently contemplated in Minnesota law, is the financing of public fixed-rail infrastructure through commercial districts, using neighboring properties’ increased tax revenues caused by enhanced access to LRT or streetcar service. 

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

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

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

Private Sector: Repay Energy Improvements with Consequent Savings

Around the New Year, I received an ambitious invitation to provide research and policy analysis to University UNITED, as they pursue a stated goal to “make University Avenue the greatest street in America.”  UNITED is a coalition of regional boosters and community organizations currently working to maximize the impact of the coming light rail investment along the most prominent street connecting St. Paul and Minneapolis, Minnesota. I have since that time been coordinating research on business improvement districts and other policy measures for UNITED.

In addition to its advocacy of transit-oriented development and concentration of urban tax base generally, UNITED has of late become more involved in efforts to evaluate carbon emissions for University Avenue and the region, and facilitating efforts to engage private partners in reducing the local carbon footprint. 

UNITED is working with partners to fill a key role in the process of managing emissions:  With HK Climate Solutions, UNITED is aggregating warehouse and office space along University Avenue into packages exceeding one million square feet.  Together, these buildings are then inspected for energy-conserving capital improvements, which are installed by third partner Johnson Controls.  Broadly speaking, the cost of the improvements is financed by Johnson Controls and repaid from the energy savings generated.  Once the equipment is paid for – and it’s typically amortized over ten years – all of the energy savings (which range around 20-50%) flow to the building owners.

Eddie Krakhmalnikov and Executive Director Brian McMahon are running the program, dubbed the University Avenue Green Street Initiative.  Krakhmalnikov says the real estate investors involved in the retrofits know the energy improvements “have huge effects, and are good not only for their image but their bottom line as well.”

Yesterday’s Star Tribune article on municipal efforts to manage carbon emissions noted that in St. Paul’s case, only 2% of emissions are from public sources.  Anne Hunt, aide to St. Paul mayor Chris Coleman, suggested that “trying to engage the private sector is going to be a big challenge.”  The promise of the UNITED/Johnson Controls/HK Climate Solutions initiative may well prove it surmountable.