I’ve seen only two serious proposals for preserving the Warehouse District. Neither, it seems to me, has much chance of working.<
Both involve preserving the entire district (the precise boundary of which has yet to be defined). The first strategy is to designate the district as a historic district, which would give the property owners tax abatements but no other compensation. The second is preserve district properties but compensate property owners with transferable development rights. These would be credits for additional floor-to-area ratio (FAR) that could be sold to developers elsewhere to increase their entitlements.
But I think the property owners would bitterly resist both. Neither provides enough compensation to make them happy. Transferable development rights would have little value because FAR is not particularly scarce downtown. Because approving a district over the property owners’ objection would require a super-majority vote on Council, neither is likely to happen.
But I think there might be a way for the city could do this on the cheap without any contentious public hearings.
The individual lots in the Warehouse District are too small to redevelop unless they are assembled into larger lots because you can’t get much density with just a partial block. Because the blocks in this district are so short (only 300’ or so), a developer would probably have to assemble most or all of a half-block. If the city were to purchase conservation easements from strategically located property owners — in the middle of the blocks, say — it could forestall the assembly of large parcels and thus the possibility of redevelopment.
At first blush, this might seem an expensive strategy. Property owners would demand a premium to sell a conservation easement on their lots. After all, if a developer were to approach them to assemble a large tract, they would demand a premium — which the developer would have to pay because it would need every lot on the block.
But a conservation easement would be different. The city would only need one or two per block. Once it bought one easement, the redevelopment premium for the other properties would vanish.
Suppose the city were to approach three owners of centrally-located lots. It could offer the following deal: “We will buy one, and only one, conservation easement. We will compensate you with tax abatements and no more than $_________ in cash. Let the (open, multi-round) bidding begin.”
And property owners should bid down the price. Getting cash and a permanent tax abatement in exchange for continuing business as usual is a pretty sweet deal. But even if a property owner wanted to hold out for a redevelopment premium someday, he’d have to worry about his neighbor. If his neighbor took the deal, then the property owner would lose forever any chance of a redevelopment premium and the cash and tax abatements. No, he’d be better off trying to underbid his neighbor.
Open, multi-round bidding would drive down the cost of the conservation easement. In fact, I’m not sure there’s an equilibrium price above zero.
Note this strategy would not require any rezoning, special districts or even public hearing, other than authorization and approval of the purchase.
Perhaps the property owners could collude to avoid being pitted against one another. A high initial offer might cause one to break ranks, though.
If this strategy succeeded, I’d still offer all of the property owners tax abatements in exchange for agreeing to a historic district. The city shouldn’t be too prickish.
