The compendium includes 20 papers on a range of topics important to the health and success of our communities, including:

From the Smart Growth Network website:

“We hoped with this project to start a conversation on thorny issues the smart growth movement has yet to resolve, issues that have received too little attention, and issues that have escaped us altogether. We believe we have achieved that goal, and we thank the many authors who took the time to draft and submit papers and work with us. We invite you to read them, share them with others, and use them as a springboard to continue the conversation in your community.

Regards,
John W. Frece
Director, Office of Sustainable Communities
U.S. Environmental Protection Agency

The Journal of Sustainable Real Estate has published Sustainability for Suburbs by Errol Cowan, PhD. He highlights the need to address unsustainable and declining suburbs. Dr. Cowan  suggests public and private programs to compensate for the diminishing ability of government funded redevelopment.

Mark Smith recently spoke at the University of San Diego about Planned Densification. In this clip from that talk (5:28), Smith explains asynchrony as an economic cause of sprawl, and as a barrier to coevolution.

The Wedge

We are sometimes asked to explain ‘what is density?’ and ‘what is our position on density?’ In our view, the appropriate type and degree of density is locally and regionally determined, through community engagement and feasibility analysis. Planning may include a situational assessment of the economic and design influences on density, market and financial feasibility, and public and entitlement processes. See a summary of these influences and processes in Exhibit I and more detail in Exhibit II at the end of this post. Density is best viewed in relation to the marketplace over time, instilling mechanisms for density to coevolve with marketplace demand in selected locations.

Summary Influences & Processes for Density Decisions

Our mission includes helping clients optimize and implement their desired level of density, with particular focus on planning methods for implementing density over time, corresponding with evolution of marketplace demand. When uninhibited, market demand increases in most locations, which provides opportunity to increase density over time with a mix of residential and commercial uses.

But in real estate there are obstacles to the natural evolution of a community:

• Zoning that only allows low density and does so without mechanisms for an evolution of community and density where it would be market supported and financially beneficial, including for municipalities.

• Euclidian type zoning approaches wherein uses are separated, which can use land inefficiently and causes need for more travel in daily life.

• The presumed fixed nature of real estate assets.

• Community resistance to density by residential and commercial owners and tenants that do not want to be in dense urban development or poorly planned density.

Our adopted mission and assembled skills allow us to help clients optimize and implement their density decisions.

We are also asked ‘are we density advocates?’ The answer is yes, in appropriate locations, because we believe that there are economic, social, and environmental benefits that result from density being an appropriate portion of city and regional urban development. Many of these benefits are still too-little understood both in terms of their magnitude as well as how to accomplish density in ways that maximize benefits and minimize costs. Thus, we see there is a community need and related business opportunity to optimize density decisions, and implement them. Specifically, we aim to help public and private sector clients:

• Identify market-based demand for density, including evolution of demand as communities mature.

• Create locations for density that support a higher return on initial infrastructure investment for cities and other government bodies.

• Reduce ongoing cost of municipal operations.

• Provide motivation and profit for developers to accomplish well-planned density.

• Support economic development by helping create more vital, attractive places, and add to the building area within a municipality.

GOING FORWARD

Prior to the Great Recession, cities had typically become conditioned by growth and related fees. Municipal revenues from property taxes, retail sales, and business taxes were high whereas they are now considerably reduced, bringing new economic realities to municipalities.

Because of the new level of financial stress, and the prospect of it being prolonged, we foresee a movement toward the adoption of what businesses call ‘full cost accounting’ for urban development and management on behalf of both public and private sector participants. This will include better incorporation of marketplace trends over time and more accurate accounting costs and revenues. The goal is to reduce costs and to increase the ROI on investments needed.

Our advocacy is economic, not political. As market economists, we acknowledge the variety of market segments and people’s right to choose community type. Currently, higher densities represent a very small percent of urban development, particularly in the sprawling suburbs built in the past 50 years across America, which are almost entirely low density. Incomplete accounting of the cost of building and servicing low-density infrastructure has sustained a costly and inefficient chapter in urban management.

We support the pedestrian shed as an appropriate organizing principal for urban planning and development. The pedestrian shed—which advocates providing a majority of daily needs of people within walking distance of residences—can be an effective neighborhood planning model with which density relationships can be created.

A mix of higher and lower density is often the right balance. We are not suggesting that in every location density must evolve. Indeed, part of the systemic benefit of density is its relationship to and support of lower density development, such as single family housing, and undeveloped land, such as agriculture, recreation, and ecologically preserving open space. In most cases, a well-balanced community or city will contain a range of household and business types suggesting that a range of land development patterns may be optimal.

ANOTHER LAYER OF DENSITY POLITICS

Finally, we wish to acknowledge the heightened debate about the appropriateness of density, and about motivations for density. Critics of density often imply that density advocates propose ‘wall-to-wall’ density. Actually, while we at PDscs advocate density, we do so where we believe it is beneficial economically, socially, and environmentally—and supported by the marketplace. Exhibit II presents details about influences and processes that affect density decisions.

Influences & Processes for Density Decisions

Balancing these influences and the required processes of real estate development results in–let us say it again–a full range of densities in a community, with higher density often representing a small amount of total development. And although the amount of density we might advocate in a city may be small compared with the city’s total land area, the increases in density in locations that correspond with considerable municipal investment in infrastructure, transportation, and other assets can make important positive impact toward lower costs and higher return on city investments—meaning a city can accomplish more with its increasingly limited income, and reduce needs for addition taxation and revenue generation techniques. Each dollar of municipal funding needs to service more of our urban land and infrastructure.

It’s About Time

By Mark Smith

Planned Densification LLC releases a video outlining some of our key considerations with Suburban Retrofit and Sprawl Repair–namely ridiculously mismatched timescales in real estate development and how so many things are ‘out of control’ in real estate development, because of the lack of functional control of the development process by developers.  Planned Densification predicts and prepares solutions for these problems to help add improvements over time in selected locations, so that private sector and municipal investments can coevolve with the marketplace. View the video on the Time Value of Community YouTube channel.

Some key topics include:

• Timescales
• Functional Span of Control
• Synchronous Timescales
• Feasibilities
• Coevolution

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 20^th 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

Andres Duany writes in the Forward: “Urbanism is not about simplicity or isolation. The question each true urbanist must ask is not, “How do I make my peace work.” It is, “How can my piece help the community work.” After all, walkability, mixed use, diversity, and density have their discontents. All sorts of things can go wrong. A good nighttime bar can annoy the neighbors; a narrow, pedestrian-friendly street can worry the fire chief. The urbanist must be skilled at knowing what can go wrong no less than knowing what is to be done. This book’s authors are at the heart of this recovering skill set – they are the pioneers in the design of the operating system of community. By operating system I mean the system that integrates that raw stuff of humans, buildings, commerce, thoroughfares, and landscape with money provided by designers and developers so that it comes to life as smoothly as possible…The authors have a reverse engineered success.”

Click on the link above for the table of contents and more information from the publisher, John Wiley & Sons, Inc., or here for Dan’s book on Amazon.com.

Legal Guide to Urban and Sustainable Development for Planners, Developers, and Architects

Dan Slone Presents at Greenprints Conference and Trade Show

For several decades, Dan has been a leader in formulating ways to improve buildings, community and municipal plans, building products, and organizations.  At Greenprints, Dan discussed ‘seven steps for suburban upgrades,’ which include:

• Develop vision–engage leaders
• Engage public
• Remove impediments
• Build-up development mechanisms
• Build supporting codes
• Invest in infrastructure
• Execute relentlessly through all available mechanisms

Along with DPZ’s Director of Town Planning Galina Techieva and Professor Ellen Dunham Jones of Georgia Tech, Dan talked about ways to reconfigure existing and underperforming sprawl into more sustainable, energy-efficient, healthy places. In addition to discussing the problems presented by sprawl, Dan talked about some built examples of upgraded projects as well as future tools for improving the effectiveness and profitability of suburban redevelopment. Dan’s presentation can be viewed here, and conference biography here. Planned Densification is outlined in slides 29 – 33.

Low-density development is often a result of the match between local market conditions and the financial feasibility determination for a building or project. Most instances of new construction occur in what Pario calls low activity, low value markets. Low value markets produce low revenue to developers, and low revenue does not support sufficient density, in key locations, to yield productive urban neighborhoods.

This is a primary cause of sprawl and it is too little understood.

If a one or two story building is constructed, its economic and environmental characteristics and performance are relatively fixed. See the green area in Exhibit 1.

Asynchrony Losses & Gains

Problem is that losses from asynchrony can begin shortly thereafter as the market begins to evolve but the building and site can’t adjust. Losses grow over time. See the orange area in Exhibit 1.

More to follow on the problem of asynchrony, and solutions for it.

The Wedge

The Problem: In-Place Construction Being Out-of-Sync with Surrounding Markets

“Markets Change, Buildings Don’t”

Especially in key locations, there is an entire layer economic and environmental value that is now lost because of the value and timing relationship between in-place construction and its surrounding market. (Please see a blog post about Asynchrony for a graphic description.) Most new construction takes place in low-value markets, and the associated low revenue streams to the development proforma preclude high-density development. The problem is that once low density construction occurs, the assets have long functional lives (commonly 40 to 80 or more years), with contractual and other commitments that are barriers to change. Loss occurs because the additional density is not built even though market growth would eventually support it. Loss accrues with each day of suboptimal density. Loss is realized by owners/developers in terms of value not captured, municipalities in the forms of reduced infrastructure ROA/ROI and lost vitality, transit agencies because of lower density around stations, environmental advocates because of lost opportunity to put in place more effective dense urban form, as well as several other process participants.

Every square foot of space built by densification over time decreases the amount of space needed in the form of sprawl, because densification was not planned and enabled.

The Solution: Systematic Pre-Planning of Density in Key Locations

Planned Densification provides four methods to pre-plan density increases for buildings, sites, blocks, and regions. The technique includes both physical design as well as process change to allow density evolution in the short term, commensurate with market changes. Transaction costs are predicted and reduced or eliminated. To the premise “markets change, buildings don’t” we now add “they could, and some should.”

Thus…“Markets Change, Buildings Don’t — They Could, and Some Should.”

Planned Densification is a market-based initiative that supports policy objectives. It also provides developers and investors financial motivation to build higher density projects. Accomplishing density is of particular importance to government in order for government to recapture some of the value that its infrastructure and other investments make possible, but that are not yet realized. Indeed, government’s need for higher ROA/ROI and greater productivity of existing and future assets gets more acute each day with the financial crisis that we are entering.

Importantly, Planned Densification views densification of buildings, sites, blocks, and regions through the processes and functions of real estate development. Real estate development is the process wherein all urban design, planning, governance, infrastructure, engineering, finance, and marketing disciplines not only converge but must correspond ‘feasibly.’ Thus, this view from the real estate development process provides a required systemic view of required densification. Increasingly, urban betterment programs suggest that accomplishing greater density is an important way to solve multiple problems. But wanting density doesn’t make it happen—systemic process change in the real estate development processes and infrastructure delivery is needed.

The environmental and economic losses of inefficient urban systems are un-affordably large, and they are accruing daily.America’s deepening commitment to repairing the economy through infrastructure and green economic program investments make Planned Densification urgent. If we commit more infrastructure and regulation to density-constrained development paradigms, we only contribute to our problems.

Planned Densification has global applications.

*           *           *

Planned Densification was created in the mid and late 1990s corresponding with Pario’s many years of work analyzing the progression of real estate markets, and combined with work in the field of eco industrial development. A future post will describe the confluence of disciplines and market forces leading to Planned Densification, and current applications.