Category Archives: Downtown Redevelopment

An Ethnic Downtown With Many Retail and Fast Food Chains

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For many years downtown revitalization experts lamented that large, ethnic downtowns — those with lots of African American and Hispanic shoppers — were being avoided by major retail chains.

That is certainly no longer the case. Here, in New York City, one of the hottest retail locations is along 125th Street in Harlem. Many retail and fast food chains are also occupying important storefronts in the outer borough downtowns such as Jamaica Center in Queens, Downtown Brooklyn and Fordham Road in the Bronx. They are also opening in strong neighborhood shopping districts such as Jerome Avenue in the Bronx and and Corona Plaza in Queens.

Below is a list of the national and regional retail and fast food chains that I found on a visit yesterday to Jamaica Center.

I first went to this commercial district with my mother to buy shoes back in 1949, which was toward the end of its “Golden Age.” I continued to shop there occasionally for sports equipment and sneakers until I went away to college in 1958. It was not until the early 1980s that I returned to carry out consulting assignments for Regional Plan Association and the Greater Jamaica Development Corporation (GJDC). Though my involvement in the revitalization of this district ended in the early 1990s, I have continued to visit every few years to take photos and gauge its progress. It’s just two miles from my home office.

The revitalization of Jamaica Center has been a long process, starting back around 1968 with the creation of the GJDC. Over a billion dollars have since gone into the revitalization of this commercial center, paying for such things as the re-routing of a subway line (E train), tearing down an elevated line, building York College, the construction of a one million SF Social Security Building, new court buildings, building a terminus for a monorail link to JFK, etc.

By the early 19980s the quality of the retailers was ebbing and this trend culminated with the closing of two major department stores, Macy’s and Gertz. White shoppers from the northern and western parts of Jamaica Center’s trade area stopped visiting, choosing instead to drive east to the shopping malls in Nassau County.

Many of the other neighborhoods in the trade area had African American households with relatively high annual incomes for Queens. Cambria Heights, for example, recently had a median household income of $69,030, while the median income for Queens was $49,780. Many of the residents in these neighborhoods were civil service workers and teachers, often in dual income households. Though large numbers of these residents passed through Jamaica Center each weekday to use the subway on their trips to and from work, they, too, avoided shopping there because the retailing had come to focus on low income and teenage markets and the area had developed a reputation for street crime and drug use and sale. Nevertheless, the pedestrian traffic along Jamaica Avenue continued to be a “beehive of activity” and some of the merchants were doing $s/SF that rivaled those of retailers in some of Manhattan’s best locations.

I was greatly encouraged by my recent visit and feel that the end game, the “take off” phase of Jamaica Center’s revitalization is in sight. The primary reason for my optimism is the recent announcement of a major project that will bring over 300 market rate housing units into the downtown, with a number of similar projects on the drawing boards. Another reason is that the retailing’s strength now seems to be more than shops featuring “urban wear,” with chains having a strong middle class appeal opening, e.g., Home Depot, Marshall’s, Zale’s, Nine West, Old Navy. The teens will still shop in Jamaica, but now their parents might as well.

The changing nature of the district’s retailing is also, in my opinion, reflected in the new store facades that have been built in recent years. They are much more attractive, with smaller signage, a better sense of proportion and though the colors used might offend some with Main Street design sensibilities, they are often still very pleasing.

Another indicator of this district’s strength is that commercial rents along Jamaica Avenue recently have reached as high as $150/SF for choice locations.

In the list below I have noted some of the chains that were open in Jamaica Center and have since closed. It should be noted that all of these closures involved chains that were having overall problems.

At the end of the list I have provided a link to a web-based photo album that contains photos of Jamaica Center’s retail chains.

National and Regional Chains in Jamaica Center January 25, 2008

Payless (2 stores)
Gothic Furniture
Quiznos Sub
UPS Store
Java’s Brewin
Game Stop
Burger King
Taco Bell
Pizza Hut
Dunkin Donuts
Subway
McDonald’s (2)
Duane Reade
Walgreens
Sleepy’s
Footlocker Kids (converted to Kids)
Zale’s
Nine West
Radio Shack
Marshall’s
Conway (2)
Home Depot
Fabco Shoes (2)
Footco USA
Jimmy Jazz
Toys ‘R Us (closed, chain in trouble)
Kids ‘R Us (closed, chain in trouble)
Wertheimers (closed, chain in trouble)
Jennifer Convertibles
Rainbow
Ashley Stewart
Tick Tock
Dr Jay’s
Vim
Modells
Cookie’s Department Store
Porta Bella
Strawberry
Parade of Shoes (closed, chain in trouble)
Youngworld
Athlete’s Foot
Shoppers World
Old Navy
The Children’s Place
Gap (closed, chain in trouble)

THE DOWNTOWN CRIME PROBLEM REDUX?

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Is crime again becoming a crippling problem for our nation’s downtowns?

For decades after WW II, crime and the fear of crime first fostered downtown decline and then impeded their revitalization. Happily, since the early 1990s, the crime problem seemed to be abating as violent crime statistics nationally dropped steadily and significantly. This drop in crime was accompanied by reduced fear, increased pedestrian traffic and nighttime activities in downtowns revitalized by:

  • Residential and commercial growth
  • A population trend that reduced the size of the crime-prone age cohort
  • And police departments adopting new and far more effective strategies.

However, the FBI just announced an increase in violent crimes for the second straight year, an occurrence that signals the first continued spike in homicides, robberies and other serious offenses since the early 1990s. This spike is especially noticeable in medium-sized cities and cities located in the Midwest. In large cities such as New York, the crime rate continues to decline.

What is unknown at this time is how this recent uptick in crime has impacted on downtown districts.

The Down Side.

As the introduction of crack cocaine led to a major surge in violent crimes between 1985 and 1992, so the growing use of Methamphetamine — a..k.a. Crystal Meth – appears to be associated with higher crime rates. The Crack Meth problem also appears to have taken particularly strong roots in the Midwest and in small and medium-sized municipalities — localities that trended toward not having major crack cocaine problems.

Many of these same municipalities are reporting the growth of street gangs, especially those having national organizations, such as the Crips, Bloods, MS-13, etc. There is a strong correlation between the growth of Crack Meth use in a locality and the growth of street gangs, since the gangs often are heavily involved in the sale of this drug. There have been some reports of these gangs being active in poor or marginal commercial districts, where they intimidate shoppers and scare and extort local merchants.

There also has been a rise in retail crimes by well-organized rings of professional thieves. While most of the crimes in the larceny/theft statistical category have declined since 2000, shoplifting has increased 11.7 percent.[1]

The Bush Administration’s reduced funding for police departments has had a big negative impact on the police departments in small and medium-sized cities, where, according to the legislative counsel for the International Association of Chiefs of Police, the loss of “one or two or five police officers can make a real difference.”[2]

Nationally, there has been an increase in the teenager/young adult population, the age group most prone to committing crimes and acts of violence, especially in low-income disadvantaged areas.

Also nationally, there are growing numbers of released prison inmates and their recidivism is likely to result in many crimes.

Newspaper articles on the recent crime surge have focused on criminal events in poor and often “ethnic” neighborhoods, which often are located near downtown areas and sometimes in them. As a recent major study found, “Downtowns are home to some of the most and least affluent households of their cities and regions.”[3]

While some of the newspaper articles mention the meth drug connection, others focus on a new and extremely disturbing aspect of this heightened violence – it’s seemingly arbitrary causation. For example:

“And while such crime in the 1990’s was characterized by battles over gangs and drug turf, the police say the current rise in homicides has been set off by something more bewildering: petty disputes that hardly seem the stuff of fistfights, much less gunfire or stabbings.

Suspects tell police they killed someone who ‘disrespected’ them or a family member, or someone who was “mean mugging” them, which police loosely translate as giving a dirty look. And more weapons are on the streets, giving people a way to act on their anger.

Police Chief Nannette H. Hegerty of Milwaukee calls it ‘the rage thing.’”[4]

Arbitrary violence is almost impossible to predict and consequently almost impossible to avoid. It is very fear inducing.

On The Upside.

In the 1980s I directed a major study for Regional Plan Association on how the fear of crime is generated and how it strangled the outer borough downtowns in New York City. A major finding was that the fear of crime did not so much thwart visitation rates – people still had to use the subway connections, courts and hospitals — as it induced a huge amount of pedestrian avoidance behavior and that significantly reduced the number and strength of the multi-purpose trips that are the sine qua non of healthy downtowns.[5]

More recently, as my wife and I have traveled across the nation over the last 10 years, visiting such places as Boston, Chicago, Charlotte, Miami, Midtown Manhattan, Pasadena, Philadelphia, Portland (OR), San Diego, Santa Monica and Seattle, we have been struck by significant evening downtown pedestrian flows, where people seemed to be walking free of fear and not feeling the need to take precautionary measures. Unfortunately, I could not find any statistical evidence to support our “field observations.”

I could offer numerous anecdotal reports of our experiences, but here are just two:

  • Since returning to NYC in 1980, I have often walked, after dark, from Times Square down 7th Avenue to Penn Station to catch a LIRR train home. During the 1980’s and much of the 1990’s, Times Square was a physically frayed, fear inducing area, but walking down 7th Avenue, desolate but for the drunks, drug users and homeless was even worse. Street savvy pedestrians were ever vigilant, watching darkened spaces and scanning who was behind them. Today, Times Square is awash in new development and again the entertainment capital of the world, jammed with pedestrians day and night, and a favorite of tourists. Now, after dark, there is a steady pedestrian flow on 7th Avenue, overwhelmingly comprised of Average Joes and Average Janes, with the quality of life issues greatly abated. Pedestrians are no longer constantly looking over their shoulders. Some even window shop.
  • We love to visit Center City Philadelphia at least once a year because of its superb restaurants, cultural amenities and “walkability.” On our first visit, in 1985, we drove one Saturday evening down Walnut Street to Rittenhouse Square. The street was devoid of pedestrians as was the rest of the downtown we drove through. On recent visits we’ve walked to several restaurants on Walnut from our hotels on Logan Square or East Market Street. On these visits, with its numerous restaurants and bars and nearby hotels and cultural facilities, Walnut always had a significant amount of nighttime pedestrian activity, overwhelmingly by “respectable people”

Back in 1987 I argued that downtowns could reduce the fear of crime if they were designed and developed to make visitors feel that they are interesting and attractive places where “’respectable people’ like themselves tend to frequent.” The key to the emergence of such downtowns was the development of a dense, compact multi-functional core area that would combine residential, office, retail and entertainment functions. Such core areas would be conducive to significant flows of law abiding pedestrians during both day and evening hours.

Today, most of the successful downtowns I visit have such multi-functional cores, These downtowns are often referred to — with some hyperbole — as “24 hour” activity centers, because commercial and cultural activities as well as pedestrian traffic are present during daylight and evening hours.

Entertainment Niches. Vibrant entertainment niches containing restaurants, watering holes, movie theaters, concert halls and/or legitimate theaters have enabled many downtowns to attract substantial numbers of evening visitors, who are not afraid of strolling and window shopping after dark. This is true for large downtowns such as Midtown Manhattan , Center City Philadelphia, downtown Chicago and the Gaslamp District in San Diego as well for smaller downtowns such as New Brunswick, NJ, Englewood, NJ, Old Pasadena, CA, Manayunk, PA

Residential Growth. Also contributing to this “after dark” resurgence has been the growth of downtown residential populations. In her recent study, Eugenie Birch also found that:

““During the 1990s, downtown population grew by 10 percent, a marked resurgence following 20 years of overall decline. Forty percent of the sample cities began to see growth before the 1990s. While only New York’s two downtown areas and Seattle, Los Angeles, and San Diego saw steady increases from 1970 to 2000, another 13 downtowns have experienced sustained growth since the 1980s.”

This influx of downtown residents is important for several reasons:

  • Downtown residents, in Jane Jacobs’ terms, take “possession” of the area they live in; they help make sure it is properly maintained and kept safe
  • More residents help create a built-in demand for many retailers and entertainment functions. They can be especially important for the attraction and development of good restaurants
  • More downtown residents help create a more interesting and safer environment after dark. Directly and indirectly they increase the flow of law-abiding citizens, which in turn serves to reduce the fear of crime

While Birch’s study focused on the nation’s major downtowns, the NY-NJ-CT metropolitan area offers numerous examples of significant growth in residential units in smaller downtowns such as White Plains, Hoboken, Morristown, Cranford, Englewood, South Orange, New Brunswick, Rahway, Livingston, Garden City, etc.

Police Strategies. Downtown security also has been greatly improved by police departments deploying one of more of the following strategies:

1. Community Policing. This usually involves more foot patrol officers who build relationships with the people on their beats, garner better information about criminal activities and problem-solve specific community crime issues

2. Broken Windows. Based on the famous 1982 “Broken Windows” article by James Q. Wilson and George Kelling in the Atlantic Monthly that argued:

‘If disorder goes unchecked, a vicious cycle begins. First, it kindles a fear of crime among residents, who respond by staying behind locked doors. Their involvement in the neighborhood declines; people begin to ignore rowdy and threatening behavior in public. They cease to exercise social regulation over little things like litter on the street, loitering strangers, or truant schoolchildren. When law-abiding eyes stop watching the streets, the social order breaks down and criminals move in.”

A broken windows strategy tries to remove the “signs of disorder” such as broken windows, dirty sidewalks, loitering, public use of drugs and alcohol, prostitution, etc.

3. Comstat. Uses computerized mapping of crime reports to identify “hot spots” of criminal activity. These hot spots are then analyzed and the local police units are tasked to deal with them and evaluated on their ability to succeed.

The 24 Hour Downtown and New Policing Vs The New Crime Wave

How are the 24 hour downtowns coping with the new crime wave? Are the new residents and greater evening pedestrian flows helping to deter criminal activities and/or keeping the fear levels low? How effective are the new police strategies against the new crime wave? Are downtowns experiencing a recent surge in crime and fear doing so because they have not used the above mentioned revitalization and policing strategies or because these strategies have failed? These questions need to be addressed and answered – and quickly – so the downtown revitalization community can take appropriate remedial actions. Perhaps the International Downtown Association can work with the National Institute of Justice and academic experts such as George Kelling to create, fund and execute the necessary research project.

[1] Joel Groover, “ORGANIZED CRIME Retailers combat growing number of professional shoplifters,” Shopping Centers Today ,October 2006

[2] Dan Eggen, “Violent Crime Up For Second Year: Some Point to Cuts in Federal Funding,” Washington Post, Saturday, June 2, 2007; A01

[3] Eugenie L. Birch, “Who Lives Downtown,” The Brookings Institution, November 2006

[4] Kate Zernike, “Violent Crime Rising Sharply in Some Cities,” New York Times, Feb.11, 2006

[5] N. David Milder, “Crime and Downtown Revitalization” Urban Land , September 1987, pp. 16-19

BEING A DOWNTOWN CHANGE AGENT: Facilitating Change for Downtown Business Operators

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Small Business Operators Are Slow To Adopt Changes

At conferences and other events where downtown managers congregate, the conversation at some time usually turns into a group therapy session focusing on the seemingly intractable, but certainly dysfunctional attitudes and behaviors of downtown business operators and landlords. Some of the dysfunctional behaviors raised might include deteriorating facades and signs, poor market research, lousy merchandising, “wrong” business hours, inadequate customer service, high rents, poor building conditions, harmful tenant selection, etc. Many readers, I am sure, know the rest of the litany.

Many downtown managers also consider it almost impossible to “re-educate” most downtown business operators and landlords or to otherwise induce them to improve their business behaviors. Years ago, based on my own management experiences and field observations as well as reports from friends managing downtown districts across the country, I came to a kind of Bayesian subjective probability estimate that only about five to seven percent of downtown business operators and landlords can be retrained or otherwise induced to innovate.

However, more recently, based on my program development experiences in the Bayonne Town Center (NJ), I have come to believe that significantly more downtown business operators can be induced to change, if, and this is a critical if, downtown leaders, acting as change agents, can help make it easy for them to change.

How To Get Existing Merchants To Renovate Their Facades?

About four years ago I took on the management of the Bayonne Town Center Special Improvement District. The previous executive director had done a great job of getting a highly respected architect, Walter Chatham, to write design guidelines, which were then adopted by the city as an ordinance. The city was offering then, as it still offers today, strong financial incentives to stimulate façade and storefront renovations in the district: a shop with a frontage of 25 feet can get a grant for as much as $10,000; a corner shop can get up to $15,000. However, while new businesses in the district were improving their facades, none of the existing street-level business operations were doing so, though many storefronts badly needed renovation. Officials in city hall as well as the Town Center board of directors could not understand why the city’s generous financial incentive package was not stimulating more façade improvements in the district.

While I quickly ascribed this situation to the typical change -adverse way I believed small downtown business operators behaved, my intellectual curiosity and feeling of management responsibility led me over the next year to talk informally to many merchants about why they were not improving their facades. Here are the surprising conclusions I reached as a result of those discussions:

  • A lot more merchants than I expected were interested in improving their facades. My rough estimate would be somewhere between 20% to 25%, not my expected 5% to 7%.
  • Merchants who owned their buildings were more apt to be interested in renovation than those who leased their spaces. This was understandable since they had more to gain and one less decision-making gatekeeper to deal with
  • Almost no one had any idea of what kind of new façade they might want!
  • No one felt they had a good idea of how much a façade renovation might cost!
  • Few knew an architect or contractor who might help them! Most small business people will not have architects or contractors in their social networks. They often work long hours and lack the opportunities to establish such contacts on their own
  • There was wide spread concern about getting city approvals for their projects!
  • Almost everyone knew about the city’s façade improvement financial incentives.
  • A minority of those interested in doing a facade improvement felt that even with the city’s financial incentives, they still could not afford to renovate
  • Most of those interested in improving their facades felt that, with the city’s financial assistance, they probably could afford to renovate. They were not moving forward because they did not know how to proceed and lacked the time and energy to remedy this situation!

Facilitating Change

As I mulled about these findings some research I had done in 1989 came to mind. Back then I was trying to find out why manufacturing firms were moving out-of-state from the Bronx, a borough of New York City. My research indicated that:

  • These firms were successful, expanding and needed more space
  • They were too small to have a real estate specialist on staff
  • Management was too busy with their growing business to look for a new location
  • They often need specialized training for their blue collar workforce
  • They had concerns about high crime
  • Recruiters from out-of-state economic development organizations had come in and offered turn-key solutions that included low-cost new space, manpower training, low crime, etc. The recruiters made it very easy for the Bronx firms to move to their states. In other words, the recruiters had facilitated change.

A program that could facilitate change seemed precisely what was needed to unleash façade improvements in the Bayonne Town Center.

The Jump Start Façade Improvement Program

Consequently, I designed the Town Center’s Jump Start Façade Improvement Program sm.

This program provides each participating business operator with the following products and services:

  • A well-known architect in the field, Margaret Westfield of Westfield Architects visits with them to listen to any ideas they might have about their new façades
  • She comes back several weeks later with a rendering of their new façade, cost estimates for the improvement project and samples of the materials that should be used
  • The façade design, because it is done by one of the Town Center’s architect’s in conformance with its design guidelines, has assured acceptance by the city
  • The Town Center’s staff, if necessary, helps participants with the paper work for the city’s incentive program and provides them with contact information about contractors who have done successful façade projects in the district.

Of the five storefronts in the initial round of the program, two renovations have been completed and three are in process, with completions expected by August 2007. The second round of Jump Start has been completed recently. One entire building façade has been renovated; action on six other storefronts is awaited.

The slide show below shows three of the improved building facades, before and after their renovations.


The Kick Start Building Renovation Program

Based on the success of the Jump Start program, the management of the Bayonne Town Center leaped at the opportunity to obtain a technical assistance grant from the Community Preservation Corporation (CPC) to create the Kick Start Building Renovation Program sm. Kick Start is aimed at stimulating district landlords to renovate the upper stories of their buildings and create market-rate residential units.

The CPC is a very large and successful nonprofit that uses CRA funds from over 80 banks and insurance companies to fund housing projects in NY, NJ and CT.

The Kick Start “treatment strategy” is again to facilitate change, this time by having the CPC’s architect-engineer provide each participating Town Center landlord with a feasibility study that describes how many residential units might be built on their property, the types of units that should be created and cost estimates for the project. The CPC also will be ready to finance feasible projects. Furthermore, because of the CPC’s reputation, it is anticipated that the feasibility studies will help ease their associated renovation projects through the city’s permissions and approvals process.

At the time of this blog posting, Kick Start is underway, but none of the three initial feasibility studies have been completed.

Facilitating One Change Can Help Facilitate Other Changes

As consultants have long known, developing a client’s trust and confidence in you and your firm is essential for having your recommendations implemented. Downtown managers, when acting as change agents, face a similar challenge with the business operators and landlords in their district. The Jump Start Program has helped to significantly increase the trust and confidence that district business operators and landlords have in the Town Center’s management team. This is true even among those who have not participated in Jump Start, but knew what happened in it. This has stimulated not only interest in participating in Jump Start and Kick Start, but it has also made some landlords more willing to work with us on business recruitment and redevelopment projects.

Some Additional Observations

My experiences with Jump Start strongly suggest that money, while not a negligible factor, is certainly often not the prime factor that impedes change and innovation among small downtown business operators. Knowing what can be done and easy access to needed professional assistance are also very strong factors.

The city’s permissions and approvals process also can have an enormous impact on downtown change and innovation. The Town Center has city legitimated design guidelines and its architect determines whether or not submitted designs are in accordance with them. The Town Center is thus able to provide designs for renovated facades that are guaranteed to be accepted by the city. This factor alone reduced anxieties about delays and escalating costs among the participating business operators.

Paying “Premiums” For Downtown Redevelopment Projects

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A wave of public indignation and anger against the use of eminent domain for economic development purposes now threatens the renewal of our nation’s downtowns, Main Streets and neighborhood shopping areas. However, evidence suggests that the use of eminent domain for economic development purposes can be salvaged if universally acknowledged abuses are avoided AND the property owners and tenants dislocated through the use or invocation of eminent domain are paid a meaningful “premium.” The characteristics of the premium may differ case by case, with resulting variation in cost. However, it can be anticipated that the cost often will be significant, with considerable consequences on the financial feasibility of downtown redevelopment projects. Savvy downtown organizations will be finding ways to finance these new redevelopment project premiums.

Kelo’s impact. The reaction to the June 2005 decision of the U.S. Supreme Court in the Kelo v. New London case has put the use of eminent domain in jeopardy in a growing number of states across the nation. Though the court, in a close 5 to 4 decision, affirmed the use of eminent domain, legislation has been introduced or passed to reduce its use in Alabama, Delaware, Texas, Ohio, Minnesota, Colorado, Michigan, Pennsylvania, Florida and New Jersey. California also will hold a referendum on eminent domain in November 2006.

Though these legislative initiatives fall into a number of descriptive categories, their underlying objective — except possibly for clearly blighted situations– is usually to make it difficult or impossible for eminent domain to be used to increase tax revenues or for economic development purposes such as to enable real estate projects that putatively will significantly improve an area’s economic well-being.

Downtowns obviously cannot wait until blighted conditions appear before undertaking serious redevelopment projects. Doing so just makes redevelopment riskier, more costly and burdensomely complex. A way to make the use of eminent domain again palatable must be found. The future of America’s cities and towns is at stake.

Fair market value and the case for premiums. While the Kelo decision focused on the issue of public purpose, in my view the real challenge with eminent domain projects is political rather than legal and centers around the issue of fair market value. As things now stand, an eminent domain project will usually have potential victims from the getgo — the people who must give up the properties they own and who have not asked for the project to be initiated. While the project may indeed have results that will enhance the general good, the best that the property owners can do is get “fair market value.” Such victims can politically nullify a project’s public benefits and become the rallying point for political opposition.

HUD standards are often cited as exemplary when it comes to the use of eminent domain. They are based on an appraiser determining a property’s fair market value, which according to one of HUD’s publications can be understood in the following manner:

“Fair market value is sometimes defined as that amount of money which would probably be paid for a property in a sale between a willing seller, who does not have to sell, and a willing buyer, who does not have to buy. In some areas a different term or definition may be used….The fair market value of a property is generally considered to be ‘just compensation.’ Fair market value does not take into account intangible elements such as sentimental value, good will, business profits, or any special value that your property may have for you or for the Agency.”

Associate Justice Samuel Alito of the US Supreme Court went through his confirmation process around the time that the Kelo case was before the court. In a TV interview Alito was asked about the case and he uncharacteristically expressed a fairly clear view on the issue at hand — the use of eminent domain would be OK, if owners were paid a premium over fair market value for their properties, with the clear implication that such a premium is to compensate for the sort of “intangible elements” that are denied in HUD’s definition of fair market value and/or a share in the economic wealth generated by the project.

Such a legal position appears consistent with the claims of many redevelopment advocates who, in the vortex of debate that built up around the Kelo case, argued that the vast majority of property owners receive more than fair market value when their properties are sold under the threat of eminent domain. Redevelopment advocates also argued that commercial and residential tenants who are forced to relocate by eminent domain related redevelopment projects usually receive very favorable financial considerations. Unfortunately, there is no rigorous research to substantiate these claims, only a thin array of verbal anecdotes.

My own family’s experience indicates that property owners do not always feel that they have received a munificent amount of money from the governmental entity taking their property — or threatening to do so.. Furthermore, the whole experience can be quite complex and its true impacts may take years to emerge.

Back in the early 1950’s, the New York City Housing Authority used the threat of eminent domain to purchase a brownstone and tenement owned by my maternal grandmother in order to build a high rise “housing project.” My grandmother, four of her children and their spouses and children occupied apartments in these two buildings. We all lived in a warm and closely knit family environment. While the neighborhood was changing and family members had considered moving, there was a lot of inertia caused by the fear of the family being dispersed. When the city invoked eminent domain the family could not really judge whether the financial offer was fair or not. Most importantly, the family felt that it did not have the power to fight the city. Family members felt they had no choice but to make the moves to other neighborhoods that they had long contemplated. The money might have made things a little easier, but it was not viewed as a bonanza. The fact that we were forced to move left a somewhat bitter taste. I wonder how we would have reacted if the city had showed that it was paying us 25% above fair market value and explained “We are forcing you to move and the extra money is our way of trying to make up for it.”

Ironically, the diverse manifestations of redevelopment premiums are amply demonstrated by the types of final settlements made by the families involved in the Kelo litigation.

A state official involved in the negotiations claims that giving the property owners more money was a key to the settlements. Also, according to an article in the New York Times, one of the settling owners said “When you look at my property, put these on,” as he fiddled with a pair of sunglasses with dollar-sign holograms on the lenses. Susette Kelo, a lead plaintiff, agreed to have her house moved to a new lot. Another homeowner said the difference was a number of small concessions the city made:

  • While his house will be torn down, his family has an option to buy property in the new development at an agreed price.
  • The city also agreed to move the rhododendrons, yews and other plants his father planted 30 years ago and to install a plaque in the development to honor his mother, who fought the condemnation of her home until she died in 2003.

Successful redevelopment premiums will stimulate property owners and tenants to settle with the developer or development agency and avoid legal actions. Redevelopment premiums are more likely to succeed if they:

  • Provide the property owner or tenant with some of the increased wealth that the new redevelopment project will generate. This will require the involvement of a shrewd financial deal-maker

  • Compensate, financially or otherwise, for “intangible elements” lost by the relocation (e.g., the rhododendrons, yews and plaque mentioned above). This will benefit from a negotiator with superior inter-personal skills.

Where is the money going to come from? The relatively high costs of downtown land already require that financial incentives such as tax increment financing, payments in lieu of taxes, land write-downs, etc., be made available if many redevelopment projects are to be financially viable. The costs of redevelopment premiums — especially in small and medium-sized projects having limited density and hence limited income potential — may require the use of new financial tools.

One of these may be giving current property owners equity stakes in the redevelopment projects that will be built on their properties. The ability to reach a timely agreement on the current values of their properties will likely be critical to the success of such ventures.

Many downtown districts have the capacity to issue bonds through their municipality which are paid off from the districts’ assessments. For example, a district paying about $45,000/yr for 20 years might bond for about $500,000 at a 6.5% interest rate. While $500,000 is not a princely sum, it often can be leveraged and might help make three or four redevelopment projects viable.

Also, there are what some call “exactions.” A community might find that hefty redevelopment projects capable of generating large revenues and big increases in municipal tax revenues are occurring along the municipality’s periphery or in very solid sections of the downtown. The local government might negotiate for such a project to donate $50,000/yr for 20 years — which adds up to $1,000,000. For a shopping center with annual revenues over $100,000,000 a $50,000 exaction should be more than affordable.

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Political Leadership and Downtown Redevelopment

The Clear and Eminent Danger.As we all know, the Kelo vs New London decision by the US Supreme Court, although narrowly affirming the use of eminent domain, has thrown a wet blanket over downtown redevelopment projects. Many downtown activists are wondering about how they can proceed and if significant urban renewals will still be viable?

Kelo has certainly made downtown revitalization much more difficult, but significant improvements are still possible. I would argue that there are four keys to future success: 1) Developing and cultivating the needed political leadership; 2) Providing a significant and publicized payment “premium” to displaced commercial and residential tenants; 3) Strenthening a project’s public purpose arguments, and 4) Doing more small and medium-sized projects that do not require the use of eminent domain. In today’s posting I want to focus on the leadership issue.

Representing Is Not Leading. Downtown revitalization by definition means change. Change threatens most people and they usually resist it. Leadership is usually required to help people negotiate the risks of change.

Most elected officials, despite their campaign rhetoric and public statements to the contrary, are risk-adverse: their fundamental drive is to be elected or re-elected. They are more interested in winning office and enjoying its benefits than in winning office in order to implement a particular program, plan or strategy. Most elected officials consequently feel at home playing the role of the representative, which means that they make public policy decisions based upon what they believe their key supporters want. The representative role fits in well with our notions of democracy because the representative is in a sense voicing the will of the people.

But, this is not leadership. Leaders lead. They are in the vanguard and they bring their followers with them.Leaders lead by providing their followers with inspiration, guidance and direction. Leaders are change agents. They have a vision or strategy . They are also able communicators and teachers — that is how they get their vision understood and accepted. They transmute public opinion instead of echoing it.

If the need for political leadership and “political will” has increased substantially because of the Kelo decision, then downtown organizations have to become much more involved in facilitating their emergence on relevant issues, while not becoming too political through overt involvment in electoral campaigns.

Action Steps. At this time I do not pretend to have a definitive action program that I can recommend to downtown officials. Below are some of my current thoughts, which I present to stimulate discussion among my downtown brethren:

  • Some elected officials want to be leaders, but they do not know how. Downtown organizations need to identify and cultivate such potential leaders. This means that most of the downtown organizations I know, especially those in small and medium-sized communities, will have to increase their contacts with elected officials
  • Let’s face it, many elected officials come up with rather thin and often ridiculous suggestions for new policies and programs. Some, however, are really hungry for solid program recommendations that they can make their own. There are obvious advantages in this, but also inherent dangers if they try to alter the programs in ways that make them ineffective or unacceptable to the downtown organization
  • Present elected officials with a very clear, strong and articulate argument about the strong benefits of your redevelopment project. I can not tell you how many times I have seen projects going to council asking for the use of eminent domain with superficial and perfunctory arguments about resulting benefits
  • There are many anecdotal statements by developers and public officials that the commercial and residential tenants displaced through eminent domain usually receive great financial deals and are better off than they were before. But we lack a collection of testimonials or a rigorous survey of those displaced to support such statements. The ULI or ICSC should sponsor such research
  • Have a plan to organize public support for your redevelopment project to provide elected officials with some political cover. Project opposition organizes almost naturally. Project supporters among the public must be intentionally mobilized and organized. Leadership is more likely to emerge if there is a modicum of public support
  • Many elected officials will feel that they know better than the downtown organization what should be done. Effective downtown organizations are less likely to be in such a position. Downtown organizations should not try to prove their effectiveness on a redevelopment project
  • Elected officials need to be convinced that taking an unpopular position does not always mean incurring voter defections. As Bruce Bartlett has noted, in his blog on the New York Times website, American voters are amazingly tolerant of elected officials who take up policy positions different from their own — if the position is based on a clear ethical, moral, religious or political principle. Most political scientists would agree with Bartlett.