Do Stormwater Rules Stop Affordable Housing?

Last week marked the 10^th anniversary of stormwater rules that have become a mild obsession in the development and redevelopment worlds.   That obsession really grew as California and the entire east coast came to grips with how we are treating our coastlines like toilets. 

In the past weeks, I received two reports that begin to put the stormwater/redevelopment relationship into better view.   The first is from Rebecca Winer-Skonovd, a new UC Davis graduate who wrote her thesis on whether or not increasingly complex stormwater quality regulations impact affordable housing. The second is a new report from NRDC  called Creating Clean Water Cash Flows.  Both are summarized below.

Background

Since 2003, most medium and big cities have been required to implement stormwater management rules and regulations for new development and redevelopment.  In the past, builders could dump stormwater into the curb and gutter, but no more.   Now regulations direct Best Management Practices (BMPs) for managing the quantity and (in some cases quality) of stormwater runoff that leaves their building site.

However, as implementation ensued, some of us looked on in horror as the new rules allowed sprawl development to claim green cred even as infill developers raised alarm bells.  At the Congress for the New Urbanism, we formed a group, Rainwater-in-Context, to draw attention to unintended consequences and work towards better rules (our letter on better runoff management for cities is here.)

While we feel we’ve made progress, there are still some high profile needs:

• The Clean Water Act’s Bias for individual site practice- By controlling for imperviousness on a site-by-site basis, the preventative aspects of new urbanism and smart growth – like redevelopment and compact, walkable districts are not recognized - and are often punished.  It should also be noted that the preventative aspects written into the Clean Water Act, namely anti-degradation, are weak compared to the stormwater rules.  This results in legal action that bears down on urban areas while doing little to address massive land conversion upstream.
• Current regulations hinder shared practices - Compact development relies on efficient land use, which relies on sharing facilities among sites, including stormwater. The 2003 rules included a provision for “alternative” compliance, though this came with strings and process attached.  Local regulations and zoning codes further add hurdles for shared practices. Worst of all, there has been push back in the environmental community for whatever reasons. 

For urbanists, both of these needs are important.  We don’t work with individual sites (that is how sprawl works).  We work with interconnected aspects of places and flows.

Affordable Housing

Rebecca's  thesis is clever: she looked at projects built before the requirements and compared the costs of old stormwater versus hypothetical combinations of BMPs needed to meet the new, stricter rules.  

The main takeaways are:

• The biggest hurdle is financing, followed by site constraints and neighborhood opposition that bedevil any developer undertaking urban infill. 
• Some projects could have spent LESS money with a better selection of practices.
• Several affordable housing projects exceeded regulatory requirements, in part to get financing points. Housing authorities that also manage the built project also have an incentive to consider long term savings from reduced stormwater fees (i.e. initial costs are offset by maintenance savings).
• Thoughtful selection of BMPs helps reduce costs (both installation and long term maintenance).
• Recommendations: (1) New financing mechanisms for affordable housing, (2) Credits for higher density development, and (3) Plan at the sub-watershed scale in order to identify the best candidates for off-site mitigation and shared runoff management.

Understanding the rules - Board Game style. Source: City of LA

NatLab

The Natural Resources Defense Counsel (NRDC) the Nature Conservancy, and EKO Asset Management Partners have joined forces to create the NatLab, or Natural Infrastructure Finance Laboratory.  Their new report, funded by the Rockefeller Foundation, is Creating Clean Water Cash Flows, which covers financial tools for green infrastructure, including the use of vacant properties.   The Full Report and 10-page Issue Brief are here.

There are a lot of gems in this report; here are some highlights:

• Stormwater fees on existing properties are powerful; however, fee reductions have to be less than costs incurred by property owners.
• Public policy can play a role in supporting project aggregation, offsite mitigation and credit trading programs, and subsidies for a portion of the cost.
• Downspout disconnection onto landscaped areas is the cheapest bang-for-buck measure, though is more applicable on residential sites than commercials ones. Thus, a tradable credit that allows commercial owners to pay for a homeowner’s downspout disconnection is key.
• The use of third party institutions and public-private partnerships will be needed to cost-effectively manage a system with trades, credits and shared BMPs.  

The bottom line is (1) most of this seems to be driven where a stormwater fee (and credits against that fee) exist and (2) after a bumpy start, shared BMPs are enjoying recognition as a premier practice for managing runoff, but require a new kind of management structure.

There is still a lot of work to do.  It is still not totally clear if rules are stopping developers because we are only hearing from those who made it work.  We have no way to track developers who can't make the math work and abandon a project before they get to any permit desk.   More importantly, great urban stormwater systems will only come out of great planning.  That is the only way to forecast, design and apportion responsibility among multiple property owners and various municipal Departments.  This seems to be a message in both of these great pieces.  By the way, EPA intends to issue new draft rules in June, which may include more measures targeted to the eneds of urban patterns.

Rethinking Smart Growth - the Adoption of Innovation

In some ways, looking at smart growth as an innovation seems absurd.  After all, we are reclaiming design elements used long ago to remake cities.  Truth is, we can never go back.  Modern design must deal with new elements like parking demand, new technologies for transit, unknown energy supplies and harder questions emerging on the impacts of demographic change.  We are in fact, pushing innovation.

Fifty years ago, Everett Rogers wrote the “The Diffusion of Innovation,” mainly to describe how improved seeds were adopted by famers.  The graphic below sums up (using Legomen!) the procession of adoption (or rejection) and the adopter categories.  These frameworks have been useful in understanding the adoption of all sorts of technology like seeds, cell phones and solar. 

 

How things hit a tipping point or go viral has been the subject of much fascination.  Some of the more important factors include:

• The mass media’s most powerful effect on diffusion is that it spreads knowledge of innovations to a large audience rapidly
• However, strong interpersonal ties are usually more effective in the formation and change of strongly held attitudes
• In the process of going viral, opinion leaders hold a special role.  They validate and communicate what innovators are working on.  However opinion leaders will differ based on whether the social system is as heterophilous or homophilous.  Heterophilous systems tend to seek out change and new ideas, while homophilous like to stick to social norms and tend to communicate with people of similar backgrounds.   Thus, there are two types of opinion leaders.  For heterophilous systems, innovative and elite adopters can rapidly influence people around them.  For homophilous systems, it gets tricky.   Spreading innovation will rely on multiple leaders who see an innovation that is compatible with conventional norms. 

In 2007, the Solar Electric Power Association (SEPA) designed an online survey to better understand what was motivating solar buyers.   Specifically, the Association wanted to see how and why one part of the public sees a good thing and adopts/purchases new tech, while others turn away and/or waits.

The entire report is worth the read.  The results showed that solar was breaking out from the innovators and early adopters in the next category: the early majority.  In a nutshell, the early adopters were

• higher income brackets,
• Held a post-graduate degree,
• Lived in smaller households,
• Are aware of and concerned about the environment and solutions.
• More open to experts and vendor opinion

 The top three concerns of the Early Adopter solar purchasers prior to installation were the quality of the equipment (17%), the initial cost (14%) and finding a qualified installer (14%).

ON the other hand, the Early Majority had the following qualities:

• A more median income, education level , and household size
• more wary of new technologies and risk averse
• more worried about system maintenance or in search of low maintenance systems
• question whether the system will perform as marketed
• more open to reviews by peers than vendors and installers
• in need of information that is clear, straightforward and free of any hidden costs

Another factor in moving from early adopters to the early majority is a new concept called “crossing the chasm.”  This theory, posited by Geoffrey A. Moore argues there is a chasm between the early adopters of the product (the enthusiasts and visionaries) and the early majority (the pragmatists).  According to Moore, promoters should focus on one group of customers at a time, using each group as a base for marketing to the next group.  The chasm is regarded as descriptive mainly with disruptive – or discontinuous – products.

Source: Geoffrey Moore

So what does this mean for smart growth, new urbanism and related community design activities?

1)  It seems like the late 1980s and 1990s were the innovative phase that resulted in the Smart Growth Network and Congress for the New Urbanism.  During this time, innovators began to take on the DNA of development patterns and offer new ideas on infrastructure, open space and building design.   It feels like we are now in the early adopter phase, with more states, cities and counties replacing old codes with new.  Success stories result in new applicants for technical assistance.

2)  It also feels like leaders are tackling the “chasm” and the characteristics of new adopter groups.  Focus groups, leadership counsels, and communications strategies are now as prominent as policy guides.  Certainly Gelnn Beck and foes of Agenda 21 are driving a lot of communications need, not so much because they are a large threat, but because small scattered groups can completely disrupt a planning process.

3)  The attributes of solar purchasers seems to be a good mirror for looking across the chasm at the next adopters for sustainable development and smart growth.  These folks are cautious, conservative and satisfied with the norms of the suburbs (or at least not open to questioning the system).  Instead of experts, they will be more open to large networks of peers and opinion leaders.  This is the genius of Angie’s List, which puts recommendations and ratings in the hands of people like them.  In fact, Angie's List has featured articles on topics like stormwater management and "granny flats."

Of course innovation adoption in the vein of iPhones and laptops is not completely the same as community development.  The main difference is that we are not selling a product to an individual, but rather to a group.  There is an added layer that comes into play with compromise and consensus building.  

Nonetheless, looking at community design as an innovation reveals that we could do a better job moving to new audiences not just through communications strategies, but with “products” that are practical, visual and peer-recommended.

Unplanned - A Walmart Wake-up Call

Walmart's hand at an in-town store First, Walmart showed how unprepared communities were for handling sprawl.  Now, the company is doing the same, but for infill.  On February 21, the Sarasota Herald Tribune ran an article on how Walmart is moving to in-town locations for the next wave of growth.   This is unfolding in Sarasota, where the retail giant has proposed a 24 hour supercenter on one of the last best parcels where the urban bone structure is intact.  The sub-text is really interesting, and serves as a good case study for revealing a crisis in planning.

A global shift in the economy and the nature of work - This may not seem like news, but how this translates to community design is still daunting.  Nobody describes the shift better than Michael Freedman of the California-based firm Freedman, Tung and Sasaki.   Fair warning: approaching Freedman’s work is a commitment of at least 90 minutes.  But he strings the narrative together in a way that not only explains, but also says “and here is what we do next.”   This video is great; if you don’t’ have time, there are jump-in points at minutes 23, 45 and 1:06 (or thereabouts).

In Sarasota, the job base has always been a feast/famine affair driven by retirees and the service industry.  The County is now rethinking jobs both within its strong sectors (housing, tourism) and outside the box (design and niche manufacturing).  All of these require exquisite settings – natural, built and creative.  The fact that the County approved only one of two enclosed malls last year and the city is mulling over a Walmart speaks to the utter disconnect on designing for the future of the work they want.  

Plans, codes and skill sets are stuck in time –The hyper-growth of the 1980s, 90’s and early 00’s, coupled with the massive recession that began in 2006, have left a trail of unattended needs (I am writing this after consulting with other friends who also worked in medium sized towns):

• The Sequence - It is becoming apparent that good planning is like developing a financial portfolio with four questions (planning lingo in parentheses): What do you have (asset mapping)?  What do you want (visioning)?  How do you get there (comprehensive planning)? How are you doing (implementation and feedback)?  Communities tend to jump immediately to the end of the process, which is the biggest gap in planning, in my opinion.
• The Scale - There are a lot of comprehensive plans and zoning codes, but not enough of the middle small area plans that link how the big picture and site level details work together.  This vacuum is made worse by funding cuts.  The anemic role of area planning, in my opinion, is the second biggest gap in planning, particularly for infill and sprawl repair.
• Stale Language - There are a lot of codes and plans out there splashed with 1990’s era smart growth language, but not necessarily enough to guide decisions or counteract older language that makes conventional zoning so detrimental.
• Skill Sets - A lot of skill sets out there were developed in the go-go years of master planned communities, conservation development and complete street definitions that made roads wider (ever seen new bike lanes in Florida?).  Cities are facing square peg/round hole frustration as large lot practices for things like stormwater, parking and loading docks are forced onto in-town locations.
• The Punt  - Sprawl has delayed hard discussions on where to redevelop. Determining the attributes of areas ripe for successful redevelopment and then communicating those results requires amazing skill.

The Crisis in Citizen Planning– This is where Walmart is getting really clever. Zoning codes tend to treat the residential interface with other development projects as a protection zone.  Codes describing neighborhood retail centers are replete with words such as “less intense,” compatible, and “aesthetics.”    Walmart has found an ally in outdated code language:

• Less intense – a sea of parking lot drives down the Floor Area Ratio (or FAR).  Walmart can argue they are less intense than a mixed use center.  Intensity has been defined so narrowly (a measure of density for retail) that 24 hour operations, auto orientation and lack of connections don’t register.
• Compatible – Walmart looks for neighbors who support the store, because once one household declares they can live next to a Walmart – the word compatible is drained of meaning.  
• Aesthetics – In Sarasota, Walmart is promising to paint the store beige.  Aesthetics has morphed into comparative aesthetics (it could be worse) instead of a measure of livability.

In Sarasota, an overarching plan for the neighborhood was rejected after a nasty fight over condos.   Foregoing a plan was seen as a protective move, though it only made the neighborhood more vulnerable because intent and aspirations have now been left open to interpretation by Walmart’s lawyers.  Citizen planning, like a lot of environmental planning, is stuck in a bygone, just-say-no era.  Roger Lewis wrote a timely article on zoning which is a great complement to what is happening in Sarasota.

In summary, the planning crisis is a play in (at least) three parts

• Funding for area plans linking multiple landowners, as well as public and private realms.
• Sequence and scale of planning and updates
• Citizen planning for a future by design.

Walmart tends to be the subject of a lot of exposé.  In a twist, Walmart has imposed an exposé on us: communities are unprepared to carry out better infill as part of a community portfolio.

How to Unravel Long Range Planning - A Case Study

On January 30^th, the Sarasota County Board held a hearing to basically loosen up it’s award-winning land use plan called 2050 (Chapter Nine of the Comp Plan).  Now seen as an “unworkable” new urbanist plan, the County interviewed developers to get ideas on how to make it “workable.”

The image show the dividing line with redevelopment and infill to the west and farms to the east

The 2050 plan was adopted in 2004 with six different sections on how to handle redevelopment, greenways and greenfield development.  Any casual observer, though, would swear there was only one: what to do with development outside the Urban Service Boundary (USB).

On paper, the goal was (and still is) laudable. Currently, land use east of the line (roughly Interstate 75) is centered on agricultural and ranch uses, with allowances for ranchettes on 5-10 acre plots served by well and septic. By now, it’s become clear that this is mostly worst-case density:  too small to farm but too big to mow. What matters more, however, are ranchette residents’ urban preferences that bubble up: fast emergency response times, easy access to the city and airport, and a low tolerance for things like the smells and “devil-may-care” porch and yard décor prevalent in the country.

2050 is not that different from how Arlington VA incentivizes preferred growth, though at the opposite end of the urban transect.  Landowners and developers are free to develop under their zoning.  But, if they want to pursue more lucrative land uses, then there are strings.  For 2050, the plan requires New Urbanist plans featuring interconnected, walkable neighborhoods with a variety of housing types, parks and other gathering spots. 

Alas, say the developers, this does not work.  Since 2050’s passage, only two projects have been built, and Lakewood Ranch(which was the model) is only successful in the arena of drive-to development.  Instead, developers would rather build something dependent on golf carts due to the “population age group in Sarasota.”  The land plans would also let them classify lakes as mandated open space and rework developer payments (aka “fiscal neutrality”).   The County Commission agreed to a 90-day window for broader public input.

Joe Barbetta, the most knowledgable Commissioner on urban design, noted “You can’t airlift an urban community and put it eight or nine miles out east” (as covered in the February 1 edition of the Sarasota News Herald).  Bingo – but….

• The County blundered when it requested interviews with developersto point out flaws in 2050. Of course you need insight from developers, but the list includes mostly greenfield developers (or more to the point developers with mostly single use greenfield skills).  Sarasota County's big problem is that there are so few locals with the skills needed to carry out the type of redevelopment that delivers less traffic, more economic development, and great urban design. Part of that lies in 2050’s biggest flaw: developers shot down the middle stage of planning saying that it was too much unpredictability and process.  But it is this scale of planning that delivers.
• In 2011, the County Board dismantled the land use planfor the nearby Benderson project and eliminated 437 units of affordable housing "because the market had changed."  Fast forward 18 months and now housing costs are escalating even as more retail and service economy jobs are added.  One might argue the need for affordable housing never actually went away.  This should be a big lesson: sometimes the short term "no" is for a bigger long term "yes."
• On December 12, the County actually made big changesto the landscape east of I-75, notably moving an interchange.  Given sprawl’s reliance on interchanges and interstates, changing 2050 can’t just be tweaks to select policies.   
• The whole conversation on fiscal neutrality is painful.  Sprawl is rarely fiscally neutral (see this rant on impact fees here). 
• Those funny kids who follow Glenn Beck’s quest to dismantle United Nations voluntary sustainability initiative called Agenda 21are also all over this (at least in Facebook comments).  They want to get rid of 2050’s communistic, United Nations/Al Gore-sponsored central plan to cram people into apartments.  But funny thing happened last week: Beck himself launched his new town, Independence, which will feature sustainable energy, local food, support for local business and attractive gathering places.   Watch his video here – a must see.

Then there’s the design of Lakewood Ranch, which is also known about town as “Fakewood Ranch.”   It is a sprawling landscape that was to have a Main Street as its centerpiece.  Instead, the boutique shops, separated from almost everything, struggle while residents drive to the University Parkway/I-75 interchange strip malls for everyday needs.  Lakewood Ranch is not failing because new urbanism is a failure; it’s failing because it is not new urbanism.  It’s sprawl.

What happens when you hide retail in the center?

The battle has been set: keep 2050 as is, or loosen it.  But that’s a false choice.  The question is:  If not 2050, then what will work to advance the timeless goals of the community: environmental protection, affordable housing, a diversified economy, limits on sprawl for water resources and habitat, and good transportation?  Given the new interchange location, the need to develop the County’s assets at the landfill, the region’s fantastic agricultural sector and tight budgets for years to come, this is not a text amendment.  It’s a whole new plan for east of I-75.  It’s the  sector plan that was missing from 2050 all along.

This saga is likely unwinding around the country as desperate localities are willing to forgo long term plans to get something - anything.  It's how I got started at the tail end of the last recession in the mid-1990's when Home Depot wanted a store at an Arlington Metro station and neighbors galvanized around good urban planning.  Imagine what a short term "yes" would have done.

Examining the Wreckage – The Siren’s Song of Impact Fees

Last week, a former colleague resigned after improperly calculating traffic impact fees.  He is a great guy and always wanted to do better transportation in a county stubbornly hard-wired for road expansion.

I have never really liked impact fees, but that unease was confirmed when I asked a local civic activist last year whether she was concerned about the costs of sprawl.  Her forehead wrinkled and she replied: “No, they [developers] pay impact fees.” 

Impact fees are charged for new construction to pay for off-site capital improvements that are needed by the new development.  Fees are painstakingly calculated to meet several legal tests: (1) a reasonable connection between the "need" for additional facilities and new development, (2) the fee payer must "benefit" in some way from the fee, and (3) the fee must be based on a proportionate "fair share" formula.  The website www.impactfees.com has more detailed information on the world of impact fees.

While it all sounds logical, the way we have developed SW Florida suburbs is anything but.  It does not feel like sprawl is “paying its own way,” but it’s hard to put a finger on why.  

Luckily, Nick Rosenberg wrote an amazing law review article in 2003 titled “Development Impact Fees: Is Limited Cost Internalization Actually Smart Growth?   The article in the Boston College Environmental Affairs delves into the legal requirements a bit more, and explains how fees are marketed as a tool to cover costs and impacts, when in fact they do not.  The 47-page article is worth the read; to me the most thought provoking points are:

1)  "Specific and Uniquely Attributable" Test –   By and large, impact fees cannot fund investments that will be enjoyed by the general public, but rather be specific and attributable to those paying the fees.  For example, a court lifted school impact fees for a 55-and over trailer park because school age children will not live there.  However, if fees are limited to the entity paying the fee (and not general public), no wonder we get these unconnected pods of development designed for denizens of impact fee districts.  As the smart growth world tries to get better connected development with shared amenities, "urban design by impact fee" is working against us.

2) Particularized Benefits & Secondary Costs – Over time, courts have whittled down the scope of costs that can be covered by fees, as explained by these particularly good sentences:

“By taking a strict approach to the particularized benefit question, some courts have precluded fees that address anything more than the most immediate and direct infrastructure needed to facilitate development. Courts and municipalities have been slow to recognize that more indirect services and costs incurred by the community as a result of sprawl development are necessary and, in fact beneficial, to new development.”

The costs to natural resources and other social and health costs are often ignored, under-valued, or camouflaged.  For example, as watersheds are converted, costs such as source water, aquifer recharge, sinkholes, water quality and sediment deposition hardly get noticed in formulae.  In the past there has been little incentive to quantify costs, though the outcome of a recent Supreme Court case out of southern California might change that.  If the Los Angeles Flood Control District is responsible for pollutants dumped by upstream communities, we will likely see a new era in environmental accounting.

3) Induced Sprawl - By allowing developers to pay a fraction for total impacts, the author argues that development that otherwise would not make sense under more rigorous scrutiny, gets approved.  

Peter Katz has been developing a policy initiative (covered in Sustainable Communities Magazine) to put fiscal performance (by way of projected property tax revenue) at the front end of the development approval process by calculating infrastructure "payback" times.  While this is a leap in policy for many cities, comparative scenarios of infrastructure payback mean little where officials and civic activists believe impact fees cover costs. Until secondary and long term costs are better quantified, the true costs of inefficient development patterns to taxpayers will go unaddressed. Exurban developers will point to legally-sanctioned impact fee spreadsheets as the basis for approval.  And they will prevail.

This blog post is not an argument to eliminate impact fees.  At a minimum though, we should rename them for what they are: fees that partially cover impacts.