Construction | Conversion/Adaptive Reuse | Brownfield Redevelopment | Land Assembly
BUSINESS SITE LOCATIONS
While developing housing is considered an important economic development strategy, intervention in land markets is often targeted toward establishing business site locations. States and localities have invested tremendous resources in preparing land for commercial development. Commercial enterprises generate jobs and tax revenues; therefore, public investment is justified as a means to attract greater private sector investment. Construction or conversion of commercial facilities, land assembly and site preparation has become important elements of economic development strategies.
Many areas have used new construction to recruit new businesses. New facilities and infrastructure offset the costs associated with starting up or relocating.
Examples:
- Research Triangle Park, N.C.
Research Triangle Park may be one of the world's most recognized business parks. The 7,000-acre site is home to 140 private, governmental and nonprofit companies, 106 of which are involved in research and development. These companies employ over 42,000 people and have in excess of 17 million square feet of building space.
The park resulted from the efforts of individuals in both the public and private sector who sought to capitalize on the research activities of the region's three leading universities. It opened in 1959 and is owned and operated by a nonprofit organization, the Research Triangle Foundation. Research Triangle Park has been credited with much of the region's economic growth over the last few decades. Research Triangle Park [online]. For more information: www.rtp.org.
Cities and towns in many parts of the country are facing problems associated with a growing number of vacant or dilapidated commercial and industrial structures. Efforts to revitalize older segments of the community often focus on finding new uses for such facilities.
Examples:
- City of Ferndale and City of Royal Oak, Oakland County, Mich.
Two suburban communities in Oakland County have attracted national attention for their success in recycling older commercial buildings. The 1920s-era Washington Square Plaza building in Royal Oak was renovated from top to bottom and has been able to attract some high-tech businesses in addition to restaurants and other retail. It now houses a 2,000-seat music venue, 41 offices, a conference center and a rooftop garden.
Royal Oak has also saved a historic bank building to serve as the new home for a Barnes & Noble bookstore and loft apartments. Ferndale, located just south of Royal Oak, has turned a former Masonic Temple into a successful restaurant. Martindale, M. (2001, July 19). "Cities find success in restoring buildings." The Detroit News [online]. For more information: http://detnews.com/2001/oakland/0107/19/d04-249573.htm.
- The Arcade, Cleveland, Ohio
The Arcade in downtown Cleveland, which first opened in 1890, has been hailed as an architectural masterpiece. It was the first building in Cleveland to be listed on the National Register of Historic Places. Despite its prominence, it suffered the same fate as many older downtown structures. While the Arcade remained home to some offices and retail establishments throughout its history, the building was largely vacant and in need of serious renovation by the 1990s.
After several years of planning and negotiating, a deal resulted in a $60-million renovation and redevelopment project that took approximately two years to complete. The Arcade reopened in 2001 and now houses a Hyatt Hotel, stores and restaurants. The building was carefully restored to its original splendor, but with a new use in mind. The hotel does not adhere to traditional design schemes and takes advantage of the unique architectural elements by having rooms that open to walkways overlooking the beautiful glass-covered atrium.
Brownfield redevelopment refers to the reuse of abandoned, idled or underused industrial and commercial sites where expansion or redevelopment is complicated by environmental contamination. Brownfields are particularly problematic in older industrial cities.
Examples:
- Brownfield Redevelopment Initiative, Kalamazoo, Mich.
This initiative stimulates investment in distressed neighborhoods through brownfield remediation and business incentives to redevelop property. It is operated by the city's economic development and planning agency, but involves partner organizations (other redevelopment and environmental agencies).
The BRI program identifies, prioritizes and acquires brownfield sites that have reverted to public ownership because previous owners failed to pay property taxes. Resources are assembled for site preparation activities such as demolition and environmental assessment. Public input sessions with community stakeholders are part of the process to negotiate purchase and development agreements between the city and prospective developers.
This approach leads to several benefits. Among them are protection of public health and a cleaner environment; tax-base enhancement by finding productive uses for neglected sites; job creation and retention; spin-off redevelopment and stronger neighborhoods; an alternative to urban sprawl and the loss of open space.
Kalamazoo was one of the first cities in Michigan to create a brownfield authority and to implement a brownfield plan. Benefits to developers who successfully redevelop brownfields include reimbursement for eligible environmental expenses (baseline environmental assessment and other response activities); a state tax credit for up to 10 percent of investment in property improvements ($1 million upper limit on credit); and resources for enhancing private investment with public improvements.
Priority is given to sites that are publicly owned, abandoned or generate minimal property tax base (if privately owned). While the environmental hazards vary with each site, the city works cooperatively with the U.S. Environmental Protection Agency and the Michigan Department of Environmental Quality to bring expertise and resources to each brownfield redevelopment project.
To date, the Brownfield Redevelopment Initiative has completed three projects, has two projects underway, is negotiating two others and has identified 11 sites as potential projects. The three completed sites have been successfully redeveloped. One site is now home to a 10,000-square-foot manufacturing facility for a casting and mold-making company. The second site hosts a 4,000-square-foot bakery. A textile company built a 30,000-square-foot laundry facility on the third site.
Redevelopment plans are being implemented for the two projects in progress. Kalamazoo Brownfield Redevelopment Initiative [online]. For more information: http://www.theforum.org/cur/kzooinfo/briinfo.htm and Innovative Local Economic Development Programs (1999). Georgia Institute of Technology. For more information: www.osec.doc.gov/eda/pdf/1G3_1_InnovLDEP.pdf
- Portland Brownfield Initiative, Portland, Ore.
Portland has been working since 1996 to devise government, business and
community-supported processes that foster restoration and reuse of contaminated
land and promote revitalization of specific city neighborhoods. Public
and private partnerships have cleaned up and recycled hundreds of acres
of contaminated property and created jobs while promoting brownfields
redevelopment, pollution prevention and greenspace protection.
The initiative addressed the issue of environmental justice and equity
in communities that, historically, may have suffered the loss of commerce
and vitality due, at least in part, from environmental concerns. In December
1996, the Portland Brownfields Initiative hosted a series of brownfield
roundtables to develop community-based brownfield action plans (BAPs).
This process was central to providing direction and guidance to the Portland
Initiative. Portland Brownfield Showcase Program [online]. For more information:
www.brownfield.org
The time and cost associated with land acquisition, assembly and site preparation can be the largest barriers to redevelopment. To offset this problem, many cities devise means to accomplish these tasks themselves. The effort serves to attract developers who might be deterred were they required to do this work themselves.
Examples:
- Urban Redevelopment Authority of Pittsburgh, Pittsburgh, Pa.
The Urban Redevelopment Authority (URA) of Pittsburgh was created in 1946 to fight blight through urban renewal. The URA now carries out the city's major development projects, programs and activities to help generate, stimulate and manage growth and development in Pittsburgh.
The URA also provides administrative, financial, accounting, economic, legal and secretarial services for The Pittsburgh Economic & Industrial Development Corporation (PEIDC), which acts as Pittsburgh's industrial development corporation for real estate development.
With this designation, the PEIDC is able to purchase real estate, obtain private and public financing (including low-interest loans from the state), and sell or lease property. The PEIDC becomes involved in commercial or industrial development projects when private real estate developers are unwilling. As a certified industrial development corporation, the PEIDC can obtain, on behalf of a company, low-interest financing for industrial real estate renovation and construction.
The URA has repeatedly demonstrated the value of land preparation as an economic development tool. The authority has been able to use its ability to secure low-cost financing to prepare land for development when private sector developers are deterred by the financial risks. This has been particularly useful in redeveloping sites that were plagued by environmental hazards.
Redevelopment of a former steel mill site on the city's south side is one of the most visible examples of the URA's work. Soon after LTV closed the steel mill, the URA acquired the 123-acre property. While private developers may not have been willing or able to finance the cleanup and redevelopment of such a large site, the URA capitalized on its ability to secure public and private funding. It completed most environmental testing and remediation within a relatively short time.
The site is now home to several new developments, including a distribution facility and sports medicine complex for the University of Pittsburgh Medical Center, practice facilities for the Pittsburgh Steelers and University of Pittsburgh football teams, an FBI office building and the University of Pittsburgh's McGowan Center for Artificial Organ Development.
Another prominent example of the URA's work is the Washington's Landing/Herr's Landing project. This project involved redevelopment of a 42-acre island parcel that once was the site of a stockyard, rendering plant and other industrial operations. The island was mostly blighted by 1960 and the soil was contaminated. URA began acquiring property in 1978 and by 1989 owned the entire 42 acres. The land was cleared and remedied.
Improvements made including public parks, tennis courts and a hiking/biking trail around the perimeter of the island. Redevelopment is nearly complete with housing, offices, light industrial use and a marina. The project is estimated to generate almost $1 million in new annual taxes. Urban Redevelopment Authority of Pittsburgh [online]. For more information: www.ura.org.
- City of Cleveland Land Bank, Cleveland OH
In an effort to find desirable uses for vacant and derelict property, Cleveland has established a land bank to assemble and market such parcels. Properties become part of the land bank when the city forecloses on tax delinquent properties and assumes ownership. They are then made available to eligible buyers for a minimal fee.
There are three types of land bank lots: non-buildable, which are offered to adjacent landowners for $1 (these are lots with less than 40-ft. frontages); buildable lots available for $100 for new home construction; and lots that are being held for future development opportunities (when a number of city-owned lots and tax-delinquent properties in the foreclosure process is located in close proximity, the city will bank them until foreclosure is complete and the lots can be consolidated).
Persons interested in buying property held in the land bank must submit
a written proposal to the city. The city council representative will be
notified about the proposal, the potential buyer must be able to prove
he or she can afford the development and must not be delinquent in property
tax payments or have any outstanding housing code violations. The proposal
will be evaluated to determine if the development is suitable for the
neighborhood. A neighborhood advisory committee composed of local residents
must review a proposal submitted by an adjacent owner. City Council approval
is the final step in acquiring property, after which a purchase agreement
and deed will be drawn up and signed. City of Cleveland Department of
Community Development [online]. For more information: www.city.cleveland.oh.us/government/departments/commdev/cdneigdev/cdndlandbank.html
see corresponding section in What Works