Monthly Archives: September 2008

The $$$ Value of Place … A 12-burner Viking range and closets you can park a Hummer in aren’t the only amenities that add value to a home…

The new economics of place: sustainability = $$$


The economics of real estate have fundamentally changed.  So says Scott Polikov, writing  Gateway Planning Group)In a very well-written column, Polikov lays out the underpinnings of what he believes to be a new real estate paradigm:

“We all knew the pattern, popularized after World War II and mostly triumphant since. A smart builder discovers and buys an inexpensive piece of cornfield or pasture. Up go single-family houses, or, more recently, many townhomes. Proximity to stores, offices, other conveniences (except perhaps schools) is irrelevant: everyone will be driving anyway. The successful sales prove it.

“No longer. Almost overnight, the ground rules for development have been eviscerated. Sure, real estate calculations of cash flow and value are still being made . . .

“But, have you recently heard of a developer securing a construction loan for virtually any kind of standard real estate residential development? His or her banker likely told them that ‘we aren’t originating construction loans at this time.’

“Why? The fundamentals of the ‘bedroom community’ economy have collapsed. Banks have not figured out at what point they will hit the bottom of their financing crisis. The need for radically improved, sustainability-focused strategies has never been more compelling than in this time of looming home foreclosures, $4 a gallon gas, an economy in decline, and broad agreement that the earth’s fragility is not longer just the cry of the fringe.

Gateway Planning Group)“The new development ‘secret’ is simple but critical: not just to reject our old way of building housing units any place, but to focus early and hard on creating and strengthening whole communities . . .

“Economic development worth its salt has become firmly connected to place, and to the environment. The quality of life of our neighborhoods, our cities and our regions has now become a bottom-line factor for many business decisions.”

Polikov points out that much of the “new” sustainable design is, in fact, based on time-honored principles practiced by  early planning and development leaders like J.C. Nichols, who developed Kansas City’s1920s  model of walkable urbanism, Country Club Plaza, still one of that city’s best neighborhoods.

Gateway Planning Group) Gateway Planning Group) 

Polikov also writes about a 2000-acre transit-oriented development that his own firm, Gateway Planning Group, has planned for Leander, Texas, along a rail-oriented growth corridor north of Austin.  (The images in this post are of the firm’s plans for the development.)  Gateway’s economic analysts project that the award-winning development will have a built-out value of almost $2 billion, twice what would be expected of conventional suburban development on the same site.  The project’s investors can expect to do very well indeed, compared to the old sprawl paradigm.

As Polikov writes, “[w]e fully expect to sustain the region’s economy, reduce its ever-expanding carbon footprint, and achieve sustainability on a site otherwise destined for classic sprawl.”  I think they are on their way to help do just that.  Read the full commentary here.

Regionalization – The Future of Urban Areas?

Pennsylvania has a rather dubious distinction: it has the third most governments in the entire United States. When you factor in governments at every level (state, county, municipality & school district), Pennsylvania has 3,135 governments. That is the 2nd highest rate of governments per capita in the entire United States, behind only Illinois. Wow.

So why is this a bad thing? Don’t small governments ensure that elected officials are close to their citizens and government is responsive? Of course. That is absolutely an outstanding benefit of living in Pennsylvania. By living in this Commonwealth, you are virtually guaranteed that an elected official lives somewhere nearby. This gives the average resident access to their governments at all time.

The problem, unfortunately, is that this massive level of governments creates an environment whereby tax payer money is often wasted. This occurs in many ways. Separate municipalities make separate purchases, thereby denying them the opportunity to make larger purchases together at lower prices. Staff in separate municipalities could easily be merged at a savings to tax payers. A lack of regionalization at a zoning and planning level often leads to inefficient use of land, damaging the wallets of residents, the urban areas that we many call home and the environment that we all share. A lack of regionalization also prevents government from acting in regards to areas of vital importance, including public safety and health.

Why is regionalization such a good thing for urban areas? Urban areas (cities and boroughs alike) often have very similar functions – police, fire, community & economic development, maintenance, etc. – that townships and rural areas don’t have. Given their comparatively condensed nature, urban areas can have a much easier time meshing departments (like police and fire) together. State policy specifically encourages this type of regionalization through grants, like with the Regional Police Assistance Grant Program and Shared Municipal Services Program. Furthermore, urban areas are often in tougher financial positions than their rural/suburban counterparts. Accordingly, the need to save money is particularly important.

One important caveat: no one is talking about merging two municipalities together. Such a proposal is usually overly ambitious and will go against the will of the people that elected officials have to represent. What is talked about more often is a regionalization of services, like police and fire. Doing so will likely save taxpayers money, while still allowing each municipality to maintain a joint identity.