New Haven Food Co-op - A Model for Downtowns

New Haven is the second largest city in Connecticut and the home to 5 universities and colleges, including Yale University, which is located in the heart of downtown. It is a city of 130,000 people with a very diverse population ethnically, racially and economically. Over 55,000 people live within downtown and its adjacent neighborhoods. Well-known as a “foodie” town, with more than 50% of its retail tenants being restaurants, New Haven boasts having invented the hamburger and is considered to have the best pizza in the country.

However, until recently New Haven was also a ‘food desert”, with only one large grocery store in town. New Haven has been a “food desert” for some time, so 6 years ago when the City of New Haven put out an RFP for the development of a large downtown parcel that hadn’t been developed in over 20 years; it mandated that a grocery store be located on the retail level. I applauded the city’s economic development administrator for having the forethought to make this requirement, but I was somewhat skeptical. After all, many urban downtowns much larger than New Haven had been struggling for years to interest a full scale grocery store (for example, in downtown Los Angeles it took more than 50+ years to get a supermarket to open and it’s only been open for about 4 years).

So let me tell you a little bit about the site, formerly a department store, and the development. The site was a 1.6 acre brownfield lot, located adjacent to a downtown train station, one block from the center of downtown, and three blocks from Yale University. In the 1960s, the site was razed and converted to a surface parking lot. It is also located in struggling section of downtown. The City chose developers Becker & Becker to develop a high density, mixed-use, transit-oriented project consisting of 500 market-rate and affordable residential apartments. This would be the largest private development project in the history of downtown New Haven.

The developer broke ground in late 2008 and was opened and renting to residents in late 2010. Notably, the building is LEED Platinum certified and uses 50% of the energy of a typical urban apartment building. In addition to a variety of energy efficiency features, it is one of first multi-family buildings to utilize a fuel cell CHP system to provide power, heat, and hot water to meet the building’s demand.

While Becker and Becker were building and renting (the building is currently fully occupied), they were also marketing to grocery store chains, including Whole Foods and Trader Joe’s, to no avail. Interestingly, during this time, the one supermarket in town, Shaw’s, closed its New Haven store, leaving the city without any supermarket for over a year (since then Stop & Shop has re-opened). Becker and Becker began to look at the food co-op model.

Based on City Market/Onion River Food Coop in downtown Burlington, VT, the developers worked with a dedicated community group, the Core Leadership Group, to start a co-op to locate in the 12,000 square feet ground level space. The demand for a full service grocery store became even more evident as the group worked on the project. The first month of the membership drive recruited 325 members; a good 1 ½ years before there was even a store! In addition to creating a membership based co-op, the developer and the Core Leadership Group had to raise $7,000,000 in start-up capital which came from the following sources:

- $4,000,000 from a 15 year- 5.1% loan from Webster Bank, which had an 80% USDA loan guaranty

-$1,500,000 in preferred equity (paying a 6.25% dividend) from local institutions and individual "social investors"

-about $150,000 from 750 member-owners investing $200 each

-the balance from a landlord tenant improvement (the landlord is a large pension fund) allowance and vendor credit and grocery free-fill

It took the developer and the leadership group (now the board) 1 ½ years to get the store opened, which it did in November 2011. It is a hybrid store with 15% conventional items, and 85% organic, natural, local or regional.

Anyone is able to shop at Elm City Market, but membership offers benefits such as patronage refunds, periodic discounts on select products, and year- end dividends once the store is profitable. Just a few days ago, a woman saved over $250 with her member discount! Elm City Market also accepts food stamps, gives membership discounts and offers other affordable options. It has hired 100+ employees and offers a very competitive salary and benefits package. The Elm City Market now boasts 1200 members and counting. In addition to grocery store items, the store caters to the downtown office and university population with convenience foods; pick up items, a 30 ft. hot bar, salad bar, sandwich bar and a burrito bar. It carries many of the downtown businesses’ specialties like bread from the bakery a few blocks away and homemade square donuts from a luncheonette around the corner.

The Elm City Market has been open for almost three months now and it continues to meet its sales projections. The neighborhood is seeing some new activity. There is interest from retailers to locate in the neighborhood. Developers are encouraged to build more downtown residential housing as they’ve seen 500 units so quickly absorbed into the market. Downtown New Haven has a high quality, healthy food option for its burgeoning residential population.

http://www.elmcitymarket.coop/

California Court Decision Ominous for Colorado

Last week, while much of the nation was on holiday, the California Supreme Court issued a bombshell decision that effectively shuts down that state’s 400 local redevelopment agencies.   It was a victory for Governor Jerry Brown, seeking to redistribute redevelopment funds to schools and basic services and help close California’s yawning $26 billion budget deficit.  It was a defeat for cities, effectively terminating the use of the state’s most valuable local economic development tool.   The California case is also very relevant to Colorado, as we appear to be moving down a similar path.

At issue was the use of tax increment financing (TIF) to assist in the redevelopment of commercial areas.  In California, TIF allows proceeds from increases in property taxes to be captured for investment within designated geographic districts.  The original intent of TIF was to cure blighted conditions within city centers.  It is a common tool, used in more than 40 states throughout the nation, including Colorado.  Since legislative authority was granted in California in the 1940s, many cities have seen dramatic improvements, including the revitalized downtowns of San Diego, Pasadena and Santa Monica.  Closer to home, examples of the use of TIF include the Denver Dry and Pavilions projects in downtown Denver, improvements at Stapleton and the revitalization of many smaller communities, such as Old Town Arvada.

A sequence of California voter-initiated constitutional amendments coupled with a pattern of TIF abuses culminated with last week’s decision.  The Court’s decision describes how Proposition 13, which limited property tax increases, and the subsequent Proposition 98, which created education funding mandates, created conflicting pressures on the state’s property tax.  As a result, local governments relied on TIF for uses well beyond their original intent.  Dubious projects were financed, ranging from big box stores on farmland to golf courses in desert resorts.  Cities expanded redevelopment districts to encompass most of their commercially zoned land, regardless of condition.  In other cases, TIF funds were used to fund city staff functions that had little to do with redevelopment. 

By early last year redevelopment was a ripe target for the new Governor.  Redevelopment agencies were capturing 12% of the state’s property tax, or more than $5 billion annually.  Jerry Brown masterfully orchestrated the politics, pitting the need to fund school, fire, police and basic services against the complexities of redevelopment.  The action to dissolve redevelopment was supported in polls by the vast majority of California voters.

The similarities in the chain of events in Colorado are strikingly similar to California.  We share the same voter-initiated constitutional constraints on our budget – TABOR which restricts revenue, and Amendment 23 that provides education funding mandates.   And while Colorado has been more disciplined in its use of TIF, we have our share of questionable projects such as Wal-Marts and other greenfield abuses. 

In a stroke of particularly bad timing, our headlines are now dominated by the mother of all Colorado TIF projects – Aurora’s planned Gaylord hotel.  With debatable economic benefits, Aurora plans to lard nearly $300 million in TIF and other special district revenue on out-of-state billionaires to build an all-inclusive resort.   While Gaylord opponents have rightfully been concerned about its impact on downtown and metro hotels, the project also holds the potential to trigger a California-style backlash against redevelopment itself.

Colorado’s civic, business and economic development leaders should take a close look at California’s redevelopment saga.  With increasing pressure to fix our own structural budget problems, the political winds could easily blow from the west, and redevelopment, one of our most powerful economic development tools, could also be at risk.  Now is the time for a recommitment to the responsible use of TIF and we should avoid the reckless abuses that contributed to their demise in California.

Rena Masten Leddy Joins P.U.M.A.!

We are delighted to announce that Rena Masten Leddy has joined the P.U.M.A. team as vice president.

Rena, who most recently served as the executive director of the Town Green Special Services District in New Haven, Conn., brings more than 20 years of experience as both a practitioner and a consultant to her new position at P.U.M.A.  In addition to her work in New Haven, she has held management positions at the Portland Downtown District in Portland, Maine, and the Stamford Special Services District in Stamford, Conn.  Rena was also the vice president of Urban Place Consulting Group in Los Angeles for five years.

Rena’s specialties include business improvement district (BID) feasibility, formation and renewal, as well as day-to-day downtown operational issues such as government relations, organizational development, public space management, marketing, event planning and program development.  She will augment our firm’s core strengths in property-based BIDs, strategic planning for downtown organizations and market-based planning for communities.

Later this year, Rena will be moving back to Southern California where she will direct a new P.U.M.A. office.  Over the past 18 years, California has been a particularly important market for our firm.  We look forward to fortifying our capacity for clients in California and the southwest.

Please join us in welcoming Rena via email at rena@pumaworldhq.com and/or visit our website to view Rena’s resume. 

Worst Possible Outcome for California Redevelopment

With timing that would make Ebenezer Scrooge smile, the California Supreme Court today issued a decision that takes the last gasp out of 50+ years of tax increment financing.  In an all or nothing decision that leaves nothing for redevelopment proponents, the Court upheld the constitutionality of eliminating all of California’s redevelopment agencies, while finding a compromise measure that would have left redevelopment on life support unconstitutional. 

For those of us monitoring the California redevelopment drama, change was expected; however, the  Court’s decision was striking and creates an ominous precedent for the remainder of the country.    At issue was the constitutionality of two pieces of legislation approved by the California legislature earlier this summer.   The legislature was reacting to Governor Jerry Brown’s intention to eliminate tax increment financing (TIF), California’s most useful urban redevelopment tool, to free up billions in revenue that could be rechanneled to schools and other basic services.  Two bills were passed -- AB 26 that dissolves redevelopment agencies, and AB 27 that created a “compromise” allowing redevelopment agencies to continue to function, but share much of their TIF revenues with other jurisdictions (popularly characterized as a “ransom”).  Redevelopment proponents throughout the state viewed the two bills as a package, and the vast majority of California’s redevelopment agencies were lined up to pay the “ransom” and live to develop another day.

The Supreme Court’s shocker is that it evaluated the two bills separately – AB 26 which ends redevelopment was upheld, while AB 27’s compromise was found to be unconstitutional.  In effect, the Supreme Court supported the Governor’s original intent and directed that all California redevelopment agencies be dissolved by this coming spring.   At the same time, the Court unexpectedly eliminated the Plan B approach to keep redevelopment in business.

The Court’s 53-page opinion is a useful read for community and downtown development practitioners nationwide.  In a methodical and easy-to-digest sequence, the Court explains the evolution of public policies that brought California to this point – including voter-initiated constitutional conflicts between property tax limitations, public school funding mandates and the tendency for local governments to increasingly rely on tax increment financing for economic development.  It’s a formula experienced by many states, including Colorado.

Ultimately, the Court’s rationale for dissolving redevelopment was simple – What the legislature giveth, the legislature can taketh away.   Redevelopment agencies were originally a creature of the state.  Their existence was not envisioned to be perpetual.  And now the State can decide that they have outlived their use.  It’s a concise argument that can be replicated by other states that face desperate budget shortfalls and are looking to liberate TIF obligated revenue.

Meanwhile, TIF proponents appear to be behind the curve once again in responding to this latest and perhaps final chapter in California’s Redevelopment Under Siege.  In a news release issued after the Court’s decision, the California Redevelopment Association announced that it would immediately work with the state legislature on a new reform measure.    That’s the same legislature that has already aligned itself with the Governor and approved redevelopment’s death knell. 

Mobilizing Community Capital

In our recent Global Trends REVISITED publication, one of our recommendations for downtowns involves mobilizing “community capital”.  With conventional lending anything but conventional, and other traditional forms of financing in flux, we see the potential for communities to invest in themselves through a variety of locally funded mechanisms including cooperatives and community-owned corporations.  The concept hit center stage this weekend as the feature story in the business section of the Sunday New York Times.

The Times story focused on a community supported retail store opening on the main street of Saranac Lake in upstate New York.  The town’s only department store closed nearly ten years ago, leaving a void for apparel and day-to-day necessities.  To replace the store, $500,000 was raised by selling shares to residents in $100 increments.  The new store, which opened last week, is structured as a for-profit enterprise, and its local shareholder base will ensure that it remains connected first and foremost to the residents of Saranac Lake.

While new to the east, community-supported stores have emerged throughout remote areas of the American West.  Perhaps the most famous prototype is The Merc in downtown Powell, Wyoming.  The Merc, a “mercantile” that replaced the town’s department store, opened in 2002 funded by $400,000 raised in $500 increments.  Today the community-owned and managed store occupies 14,000 square feet of space and is viewed as a catalyst for the revitalization of downtown.

Community capital has applications in urban areas, as well as small towns.  We have seen the potential for community capital concepts in our recent work in Denver, particularly in neighborhoods and corridors that have experienced demographic and income shifts.  For example, East Colfax now has adjacent neighborhoods with relatively high incomes while the corridor has continued to largely stagnate.  These neighborhoods are a logical area for mobilizing capital that could be invested in businesses that match their needs, ranging from coffee shops to family-oriented retail.  Other examples include the Five Points commercial district, where the adjacent Curtis Park neighborhood now has robust incomes and diversified demographics, and the Leetsdale/Parker Road corridor that divides the posh Hilltop neighborhood and surprisingly diverse Glendale.

We look forward to exploring the community capital concept in a variety of rural, suburban and urban development contexts for years to come.

Shaping Colorado’s Congressional Districts

Earlier today, Colorado’s new proposed congressional map was released by Denver District Judge Robert Hyatt.   For the first time in the history of the state, the map reveals that community planning and development rationale contributed to shaping congressional districts.

Every ten years, states scramble to redraw congressional districts based upon changes in population.  If a state grows significantly, it may add a seat, or if it loses ground, it needs to eliminate one.  The process tends to produce plenty of political drama, as Republicans and Democrats maneuver to gain advantage in the redrawing of congressional maps.   Especially in our era of deepening partisan divides and close elections, the mapping exercise has become more critical to both parties.

In Colorado, we grew by about 700,000 persons over the past ten years.  Not enough to add a congressional seat, but a significant change that requires the redrawing of boundaries in order to redistribute our population into equivalent districts.  The process aims to develop districts based upon “communities of interest” demonstrating shared needs and priorities that can help us be best represented in Washington. 

As in most states, the Colorado legislature was charged with developing a new redistricting map, and as in the majority of states, they were unable to come up with a consensus solution.  In Colorado the task is directed to the courts, where a judge develops a new map based upon boundaries and testimony submitted by the political parties and other interest groups.  More than a half dozen redistricting ideas were submitted for consideration.

On October 13, I had the opportunity to serve as an “expert witness” for one of the map advocates.  I was charged with creating community development and planning rationale to justify new Colorado congressional districts.  This might sound like a reasonable approach, but viewing this process through a community development lens was unprecedented in Colorado, and perhaps nationally.  The usual expert witnesses in this type of thing tend to be sitting politicians and technocrats in areas such as agriculture or water rights.

Some of the themes that were advanced on the community development approach included:

• Larimer and Boulder counties, which are currently in separate districts, should now be joined since their economic foundations of education, health care and high technology are similar.  Plus, both counties house major universities that will power economic expansion into the future.
• Suburban Denver congressional districts can be drawn by their similarities in urban development.  First ring suburbs, found on the west and north, have similarities in infrastructure, dated shopping centers and corridors, and diversifying demographics.  Exurbs, found to the east and largely shaped by the E-470 beltway, have lower densities, newer infrastructure and retail concepts.
• Land use and planning responses to the Niobrara oil play are creating common interests between once disparate counties such as agricultural Weld and suburban Douglas.  All of these areas now share the challenge of accommodating the economic growth of oil and gas exploration with quality of life issues as the phenomenon collides with urbanized areas along the Front Range.

All are embodied within the map released today.

Taming Manhattan

Ruth and I just returned from a long weekend in New York City. It was the first time we’ve been able to explore some of the Bloomberg administration’s dramatic efforts to recapture the public realm for pedestrians and bikes.   In our meanderings, two major improvements stood out.

First, the remarkable High Line.  The city and civic boosters have transformed more than 30 blocks of an antiquated railway overpass into a truly unique linear gathering place.    Built in the 1930s, the High Line was a railroad overpass and spur that serviced waterfront warehouses in New York’s Meatpacking District.  The trains stopped running in 1980, but the rusting structure remained.  Meanwhile, the area started a slow transformation with a sprinkling of pioneering lofts.  By the late 1990s, the overpass was slated for demolition, but visionary residents joined with the city to develop the High Line park vision. 

The first segment was completed in 2009 and offers a variety of sensations.  Connected by a pedestrian walkway, the overpass surface offers many treatments, ranging from native grasses to groomed lawns.  Social areas are carved out with a mix of benches, wooden lawn chairs and movable tables and chairs.  On a brisk fall Monday morning, the entire pathway was full of pedestrians, most just enjoying the views and unique experience.

I was most impressed by the recent development that is evidenced along the High Line.  New buildings with diverse architecture, mostly residential, are found along its entire length.  The park is an amenity that has become the defining feature of a neighborhood and a magnet for new investment.   Meatpacking chic.  Also noteworthy is the public/partnership that manages and maintains the new space – 70% of the structure’s upkeep is financed by the non-profit Friends of the High Line.

The second eye-opener for me was the transformation of Broadway from Times Square to Columbus Circle.  The conversion of Times Square to mostly pedestrian space has been well documented, but I was surprised to see the treatment continue for nearly 20 blocks to the north.  Traffic along Broadway has been narrowed to three southbound lanes, while the other half of the street offers parallel parking, a dedicated bikeway and a new pedestrian zone.  Once out of the busy theater district, the pedestrian zone seemed a bit gratuitous and underused, but I envision this can be used for street dining and other uses when the weather cooperates.

My own memory of living in Manhattan in the 1980s recalls that this is probably the most aggressive vehicular environment in the nation.  The sheer audacity of recapturing giant swaths of asphalt for dedicated bike and pedestrian zones should be inspirational for all American downtowns. 

Like maybe Broadway in downtown Denver?

Urbanized

What to do on a cold wet day while visiting New York City?  We dashed into the IFC movie theater to catch a new film about the evolution of cities entitled “Urbanized”.  Showing on its second day, the movie mostly visits familiar territory, but also offer a few interesting pearls.

Urbanized is a documentary directed by Gary Hustwit, the third film in a trilogy about the role of design in the modern world.  In this installment, the emphasis is on urban design shaping place, and the best and worst from throughout the globe is featured.  The movie also offers a history lesson on modern city planning, going back to the City Beautiful movement at the beginning of the 20^th century, to the rise of automobile dominated forms and then finally landing on the new urbanist themes that dominate today.  There is an intriguing mix of voices, mostly urban planners and activists sprinkled from New York to Mumbai and plenty of places in between.

To me, some of the more interesting segments focused on innovation in the developing world.  As people continue to flood into cities, the challenge is creating cost-effective urban living options that can replace the world’s slums.  Examples included:

• Affordable housing in Santiago, Chile, that creates a partially built home for low income households.  The occupant works with the designer to make a number of choices (i.e. bathtub vs. hot water heater) resulting in a home that offers  shelter for today and the opportunity to complete the home over time as household income increases.
• A new pathway system that creates a central identity and sense of security through a former apartheid ghetto outside of Capetown, South Africa.  The pathway is based upon actual use patterns, and then enhanced by a series of multi-story landmark sentry buildings.  Playgrounds and other community amenities are situated near these structures.
• The “living streets” improvements of Bogota, Columbia, including a tour of the city’s bus rapid transit systems and extensive bikeways by the always charming former mayor Enrique Penalosa.

Of course, for those not involved in urban development, watching a two hour documentary about city planning could be akin to watching paint dry.  And the focus on design does make the real estate economist a bit uneasy (Where is the economic argument for all of this?  It does exist and is powerful!).  But the film keeps up a reasonable pace and the photography is compelling.

Urbanized might be a bit cliché for those of us living and breathing this stuff daily, but the film could be particularly useful for educating boards of directors and other downtown constituents on global trends and innovations in cities.

A Tale of Two Deals

Rarely does Page 1 of The Denver Post provide such a stark and illuminating contrast.  But yesterday’s cover page offered two stories that showcase the best and worst in Colorado’s economic development practices.

The good news is the announcement that Fortune 500 Arrow Electronics is moving its corporate headquarters from New York to Denver.   Buoyed by growth in the global smartphone and consumer computer markets, Arrow is a rapidly growing company that supplies electronic components and services.  The reported motivation for moving to Colorado was the CEO’s impression of a diverse, skilled and motivated workforce.  Talk about convergence of trends from our recent Global Trends report – growing technology sector meets the top relocation factor of the near future, moving to a concentration of young skilled workers.  Helping as a “sweetener” in the Arrow deal was an $11.4 million state tax credit aimed at the 1,250 new jobs the company will create.   A classic economic development deal – based on sound fundamentals, creating new skilled jobs of the future with the government providing a measured incentive to help close the deal.

And then there is Gaylord.  Also featured on page 1 yesterday is the release of the downtown-sponsored economic impact analysis of the Gaylord hotel deal in Aurora.  As expected by many (including us), Gaylord’s planned all-inclusive Colorado-themed convention wonder park will drain an estimated $186 million from existing hotel and convention business during just its first four years.  The impact is spread throughout the city, and not just downtown, potentially hammering the smaller hotel properties located near Stapleton and DIA.  Just like Wal-Mart coming to town and siphoning retail business from Main Street and small businesses, Gaylord will suck life out of downtown and our hospitality sector as both struggle to emerge from the recession.

The economic development debacle is that Aurora, and maybe the State of Colorado, are giving Gaylord more than $300 million in subsidies to support a property that will likely do more harm than good.  Compare the math to Arrow.  For Arrow, the state is offering a modest $9,120 subsidy per job for new skilled positions – engineering, accounting, sales and marketing.  For Gaylord, Aurora, and potentially the state, are giving away a $166,667 subsidy per job for service jobs.  Plus, Arrow creates all new jobs, while Gaylord will potentially erode the job base of the entire metro area.

Perhaps the contrast will help our policy and business leaders develop a bit more backbone in opposing the Gaylord deal.  While Aurora has already completed its deal with the devil, the request for a state incentive package remains to be considered by the Colorado Economic Development Commission (EDC).  In the latest touch of irony with the Gaylord deal, tourism taxes generated by impacted Denver hospitality properties could be used to subsidize their own demise.

With the exception of some modest saber rattling from several Denver City Council members, our political and business elites remain politely restrained in the name of regional cooperation.  But regional cooperation is not about supporting cannibalization, nor is it about enriching out-of-state billionaires to build what amounts to a gated resort property.  It’s time to start sending a clear and unambiguous message to the EDC that the Gaylord deal is bad for Colorado and bring some rationality back to our economic development policies.

Global Trends REVISITED!

Five years ago, we conducted ground breaking research to identify the top trends shaping American cities. The original “Top Ten Global Trends Affecting Downtowns” was prepared for the Downtown Denver Plan to forecast our hometown’s growth and development patterns for the next 20 years. From the findings, we also developed practical recommendations for all American downtowns to anticipate and benefit from change. The trend report was subsequently utilized in many cities to support a variety of downtown planning, marketing and economic development initiatives.

By 2011, we determined that an update to Global Trends was needed to respond to the impact of economic recession and ongoing changes in demographics, lifestyles and global competition -- forces that together are creating new patterns shaping our cities. About half of the trends we initially identified have remained intact and are updated with the latest data and thought. We also highlight trends that have become increasingly important, including education, the emergence of young professional women, changing consumer behaviors, shifts in transportation and mobility, and implications from an age of austerity. The 2011 edition of Top Ten Global Trends Affecting Downtowns REVISITED offers a provocative view of the future and tangible ideas for anticipating change in the context of an increasingly volatile world.

To develop our trend report, we utilized more than 100 independent sources reflecting the latest data and the world’s most sophisticated thinkers and urban philosophers. Special thanks to research assistant Meg Bradley who developed our supporting research, and Rena Leddy, CEO of the Town Green District in New Haven, who encouraged us to update the trends.

This past weekend we unveiled Global Trends REVISITED at the International Downtown Association's Annual Conference in Charlotte. It is now available as a download from our website.