PLANNED DENSIFICATION – SELECTED BENEFITS
By Errol Cowan, PhD
Planned densification (PD) was conceived of by Mark Smith in the 1990s and outlined in the June 2009 issue of Urban Land. The concept is simple and makes intuitive sense. As communities grow, their need and demand for accommodating density increases as does market support for it. Integrative long-term public and private planning for intensified future density and infrastructure is prescribed by Smith to capitalize upon this dynamic, yielding benefits on the front and back ends of development.
In the absence of long term planning for densification, adapting previously developed sites to evolutionary density feasibility can be difficult and expensive. The cost and slowly depreciating value of previously erected structures typically inhibits density increases for 18 to 35 or more years until they near the end of their economic life. Thereafter, some of the obstacles to redevelopment include rights of way that often need to be expanded or reconfigured, zoning must be overhauled, parcel assembly is usually required and politics, windfall profiteering and user displacement becomes an issue. During the last half of the 20th century, re-densification was a typical by-product of public redevelopment or renewal activity. In many cases, municipalities up-zoned neighborhoods for increased density to increase financial feasibility, in an attempt to promote private sector redevelopment.
During prior decades, public sector urban planning and design adopted the convention of generating 20 year master or general plans. This type of planning had tendency to treat development as static and geographically progressive. Ignored was the dynamic change of economic activity, community demographics and real estate markets over time along with the organically occurring demand for and feasibility of density. Also untreated was the question of what happens to a community after the 20 year window comes to a close. What Smith proposed as PD is to optimize the beneficial aspects of possible or probable long term community densification trends for 50 or more years in the future. A key feature of planned densification is to recognize that demand and supply changes over time along with consumer trends and technology. PD makes provision for these changes in advance, thereby minimizing the traumas and expense associated with public or private renewal or redevelopment. This is accomplished by integrating “front end” financial, real estate, planning, design, title, development and infrastructure planning that anticipates increasing density on parcels and in the surrounding community.
During the previous century, the potential of aging inner cities to be realized by rejuvenation was largely ignored in favor of suburban expansion into previously rural lands. Now that North American metro regions have expanded and developed to a scale that promotes severe environmental degradation, transportation and other infrastructure inadequacy or inefficiency, deteriorating and depreciating building stock, and diminishing economic returns, attention to “retrofit” or “repair” has come into vogue. To a degree, these terms are a re-labeling of urban renewal or redevelopment, and proponents are focusing on the magnitude of the challenges of sprawl and crafting a broad toolkit of solutions. These initiatives are important and assembling impressive communities of practice around their goals.
PD can play an enabling role for suburban retrofit and sprawl repair, particularly in accomplishing increased density over time. Designers and planners should recognize that PD is not a mono-dimensional design tool that simply addresses design or calls for attenuated project phasing. Its finest expression is an interdisciplinary collaboration to integrate market analysis, marketing, business processes, finance, coding, entitlement, development feasibility, title, and infrastructure into a seamless relatively trauma- and barrier-free formula for civic evolution. The potency of PD lies in its ability not only to identify, empower, rationalize and facilitate future increases in density, but also to capture and allocate the benefits accruing from this practice.
The mechanics and economics of PD have potential to lend a new dimension of development-derived benefits and distribute them to stakeholders. The practice of PD can result in vested entitlements for future increased density beyond initially developed levels for neighborhoods and individual sites. This can enable the following outcomes:
- Depending upon the magnitude of increasing future density thus enabled, site values might be increased by PD entitlements.
- Any given parcel has a possibility of future increased intensive use, including increased density. Because the potential has no certain entitlement attached thereto, future intensive use is deeply discounted into present value. Whether or not the value of its increments are recognized by appraisers, it is likely that unused entitlements resulting from PD have a determinable increase in future utility. They can thereby add to present value of similar un-entitled properties .
- The future PD increased density development rights can be separated from the remaining bundle of property rights, recorded and titled.
- Possessing the ability to meet the criteria of discrete value and title partition, PD entitlements can be monetized.
- The prospect of PD rights monetization promises to yield positive implications for project investment and financing.
- The prospect of the application of PD rights monetization has the potential for benefits allocated to the public sector as developer exactions.
- Valued PD rights for parcels can be aggregated into a marketplace for PD entitlements.
- Monetized PD rights can be used to support transit finance and infrastructure development.
PD possesses considerable potential as an application to support or enable urban repair or retrofit. In many cases, increasing density over time can be a feasible formula to lend financial feasibility or increment to such projects. This potential can be realized by careful structuring to entitle, partition and monetize density increments. The multidisciplinary process to achieve this must be synchronized with or precedent to the project design process. Specialists with Planned Densification, LLC are prepared to work with public- and private-sector entities and multi-skilled teams to bring about these new capacities.
©Errol Cowan, PhD
June 1, 2011
Licensed to Planned Densification, LLC