Archive for December 14th, 2008

14th December
2008
written by Arizona Kid

Perhaps the single biggest frustration to most business people in Tucson is the Land Use Code (LUC). It has been explained to me like barnacles on a ship. It is estimated that over 50% of local businesses are operating without a Certificate of Occupancy (CofO) due to the difficult process and LUC requirements.

If you’ve never had the pleasure to work with the LUC, in a nut shell it determines almost all aspects of how  things get built in the city. The LUC determines parking requirements, landscape requirements, ADA requirements, building set backs, fire supression decisions and much more.  Building owners and tentants must navigate through zoning, LUC, building codes, fire codes, ADA regulations, historic restrictions and if your a restaurant the Pima County Board of Health in order to recieve a CofO to open their doors.

A municipalities LUC attempts to bring everything up to a current standard. The problem is that the city’s desire for high density, infill runs into conflict with current LUC requirements. Without flexibility in the LUC older buildings in the Tucson core are made so restrictive that few if any businesses can even occupy the space. Is the goal of the City to render building obsolete?   

 It used to be that if a building changed use from, say an office to a restaurant a new CofO would be required and the building would have to go through the LUC/CofO process.  Now that process is triggered much quicker, even from a change of owners within the same use catagory.

 The biggest issue with the LUC usually cames down to parking requirements. Buildings built 15+ years ago were built with much lower parking requirements. Subsequent LUC revisions required substantially more parking spaces and the building owners are forced to keep the tenant mix as is.  There are examples all over town of half empty buildings that are only allowed to bring in a very narrow type of business based on the parking calculations. The Starbucks/La Salsa building was an example of just such a situation. It sat with vacant spots for over a year waiting for just the right tenant use.   

The biggest challenge with the LUC is that it doesn’t take into effect that different parts of the city require a different set of rules.  New buildings on the outskirts of town are starting with a fresh canvas. Although the LUC can be cumbersome the building can be built to code. In older buildings it’s almost impossible  to comply.  I can only hope that one of the changes of the LUC is that their are zones of the community that have a different set of requirements based on their unique character. Downtown for example, should have different parking load requirements than Houghton and Broadway. 

 As a work around to the antiquated LUC, the city has implemented a Planned Area Development (PAD) process which basically creates a zone that has a completely unique set of rules for building. . The scary part of the PAD is that it bypass ALL the current City of Tucson rules and processes and puts tremendous decision powers in the city council.  The pleasure of the council at the time determines everything. What typically happens is a developer that is seeking a PAD must negotiate with the council to get the PAD approved. The council can require yellow buildings with pink signs and the developer is stuck between the existing LUC and the PAD and all the concessions in order to get the project built. . The initial LUC code was adopted as the road-map for the city over time with a new addition here and a pet project there, what has ensued is a cumbersome, often contradictory set of rules that creates a maze of regulations.  What the business community needs to thrive is a level playing field with the rules clearly spelled out and limited government uncertainty. 

 The LUC revisions will boil down to; does the City of Tucson want to maintain a sense of it’s culture and work to maintain older builders in the city core?  The LUC must ensure public safety issues but be flexible enough to allow the business community to easily navigate the process.

My argument has always been that as a small business owner it is critical especially in the start up phase that there are affordable rents and low cost options to get your door open. An infill retail location on Grant road can run as little at $16 per square foot. Compare that to a new retail development on Oracle and Magee at $42 per square foot and you can see how hard it is to get started. Typically the national chains and major franchises jump in to the high end locations because they have the staying power.  Cheap rents allow a business to start, get some momentum then make a calculated leap when they are ready. Small business owners need a clear process and a buracracy that approaches the system with a ‘how do we solve this’ attitude not a ‘this is how we’ve always done it’ view that has cost our community dearly over the years. 

 Read the Rob O’Dell story HERE.  

 

The Tucson City Council said Tuesday that it is pushing forward with a comprehensive overhaul of the city land-use code. The code, which was last revamped in 1995, is seen by council members and other city officials as a suburban code that doesn’t reflect today’s realities, especially for Downtown and the area around the University of Arizona. The land-use code regulates zoning and the development of land and buildings inside the city. Councilwoman Karin Uhlich said there is a “real sense of urgency to fix this” among different parties. Planning Director Albert Elías told the council the city has hired Clarion Associates, consultants who will take two years to reform and reformat the code. Elías also said the city is finalizing an ad-hoc committee of between 20 and 22 interested parties, which will include developers, land-use attorneys, neighborhood interests and consultants. He told the council, in addition to the comprehensive reforms to the land-use code the consultant will also focus on changing code requirements for the reuse of existing buildings, to cut down on red tape that often holds up or prevents redevelopment. Principally, that involves reducing the amounts of parking required so it is not a determent to reusing existing buildings. Elías said codes also need to be tweaked for the Downtown and for infill incentive districts along major roads. Councilwoman Shirley Scott asked Elías to be careful to track redundant sections that are being deleted from the code. Elías said the group will keep a master list of all the changes as a log in case it needs to go back and re-examine changes it has already made. Critics have said the city’s land-use code promotes only low-density growth and has little or no flexibility for infill, which doesn’t mesh with the city’s goals of revitalizing Downtown, luring business and residential complexes to transit corridors or creating mixed-use communities and transit hubs on the city’s suburban edges. Uhlich asked about going to a form-based code, where the city would approve plans based only on their use and not their look or other restrictions such as parking and height. Albuquerque has used a form-based code to help revitalize its Downtown. Elías said a form-based code probably wouldn’t be used city-wide but could be used Downtown and for infill incentive districts. “Form-based takes it away from standards and instead focuses on the use,” Elías said. “As long as it’s commercial, we don’t really care what it looks like. The challenge with a form-based code is you have to have agreement with what you want.” ● Contact reporter Rob O’Dell at 573-4346 or rodell@azstarnet.com.

14th December
2008
written by Arizona Kid

Oro Valley is looking to increase impact fees considerably. An impact fee levied on new construction is a tool that governments use to allow ‘growth to pay for itself’. An impact fee assessment is politically popular with current residents (voters) but always lobbied against by the growth industry.  Most regions have found a healthy balance between the two. Oro Valley’s impending increase more than triples current jurisdictions fees.  Below is a discussion about impact fees and housing affordability.  Long story short, the current residents of northern Pima County and Oro Valley are going to get a HUGE bump in their home values.

 

From AntiPlanner.com

Impact Fees Are the Wrong Tool for Any Job

posted in Regional planning |

In The Vanishing Automobile and Other Urban Myths, I suggested that impact fees might sometimes be a good way for cities to pay for the costs of growth. I have since changed my mind. Impact fees are bad under any circumstances.

I was persuaded of this when I reviewed housing affordability in urban areas across the country. I realized that the cost of existing homes closely tracks the cost of new homes. So when government regulations or fees increase the cost of new homes, the price of existing homes also rises.

 

 

Will the taxes paid on this new home pay for the services its residents consume?

Impact fees may add to municipal revenues. But they also create windfall profits for sellers of existing homes. Since existing homeowners tend to be wealthier than first-time homebuyers, these windfall profits turn out to steal from the poor and give to the rich.

Studies show that the demand for new housing is inelastic, an economic term meaning that a small change in the supply leads to a large change in the price. One way of looking at this is that people need a place to live and will pay what it takes to get one.

Let’s say a city imposes a $25,000 impact fee on the cost of new homes. The price of housing may not immediately grow by $25,000. Instead, builders may slow the rate of construction a bit because they fear some homes won’t sell at a $25,000 higher price. This contraction in supply leads to a large increase in price. Pretty soon, home buyers are paying pretty close to $25,000 more for all homes in the market.

Of course, if people have an alternative, such as buying homes in an adjacent city that hasn’t imposed an impact fee, they may do so. But as one city in a region imposes impact fees, others see the revenue possibilities and soon follow suit. Pretty soon all housing in the region is less affordable.

Impact fees are often based on claims that growth, particularly low-density development, doesn’t pay for itself. But the studies that reach this conclusion are faulty. They typically find that the cost of providing schools and other services to a new residential area is greater than the taxes those residents can be expected to pay.

If this same method were applied to existing neighborhoods, however, it would produce the same result. What they miss is that retail, commercial, and industrial areas also pay taxes, and those taxes are generally much greater than the services they consume. Why? Because all of them pay taxes for schools, yet only residential areas “consume” school services.

Even if it were true in some area that growth does not pay for itself, impact fees are the wrong solution because there is no guarantee that the buyers of new homes are newcomers or that newcomers will buy new homes. Thus, the impact fees fail to target growth.

The other problem with impact fees is that there is no guarantee that the collected fees will actually be used to provide transportation facilities for the people paying the fees. A true user fee gives both the users and the producers signals about where new facilities are needed and how much they cost. Impact fees do not provide such signals.

For example, many cities use impact fees for transportation. But there is no assurance that the people who use the facilities built with those fees will be the ones who paid the fees.

User fees — fees for actually using a good or service — are the best way to pay for things. This means water fees for water actually consumed, road tolls for actual driving on the roads, and so forth. Impact fees are not really a fee; they are a tax because the people paying the fee are not necessarily getting something in return.

If true user fees cannot be used to pay for something, the next-best choice is a property tax or some other tax that pays for things over time. Say a city needs to install new sewage facilities to handle new residences recently built in the city. There is no particular reason why those facilities will cost any more than the facilities serving existing residences, and the same sorts of taxes that existing residents pay can be used to pay for the new facilities. Paying for them over time will not inflate the cost of the new homes and thus will have no impact on the general affordability of the region.

In general, growth does pay for itself. In particular, impact fees do far more harm to a community or region than good. Cities should replace such fees with other forms of revenue or, better yet, cut the fat out of their budgets so that they can live on existing revenues.

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