Category Archives: Land use & development

Marohn to Bring Strong Towns Insights to Virginia

I have written about Chuck Marohn, founder and chief evangelist of the Strong Towns movement, many times. Not long ago I urged elected officials and citizen activists wanting to revitalize Virginia’s small towns to read his blog. Marohn is, hands down, the leading thinker today about building more prosperous, livable, and sustainable communities” in America’s small towns.

At long last, Marohn is coming to Virginia. As the guest of the Partnership for Smarter Growth, the Coalition for Hanover’s Future, and the Virginia Conservation Network, he will be holding one of his “Curbside Chats” at Randolph-Macon College in Ashland tomorrow (Tuesday) evening.

How can our towns get stronger—not weaker—when our economy changes? How can we repopulate our empty streets and empty storefronts? What can we learn from the earliest days of city building about building better places tomorrow? And how can active citizens, local officials, and ordinary people like you and I make it happen today, no matter how badly we’re starting off?

This live Curbside Chat is an opportunity to hear Strong Towns’ answers to these questions, and to participate in a community-specific discussion about how the Strong Towns approach can improve your city.

This core Strong Towns presentation is a game-changer for communities looking to grow more resilient in an uncertain future.

Find out more here.

Chuck fuses Smart Growth and fiscal conservatism — akin to what I did much less successfully when I published the “Smart Growth for Conservatives” blog. He is acutely aware of the nation’s perilous fiscal condition. While others focus on the entitlement state, Chuck explores the contribution of runaway, low-ROI infrastructure spending — what he calls the “growth Ponzi scheme — to undermining local government finances. He has dissected the damage done by traffic engineers to our transportation system. Among other contributions, he coined the term “stroads” to describe street-road hybrids that provide neither the connectivity of streets nor the higher-speed mobility of roads. He believes in taking lots of small bets with public investment rather than betting the farm.

I hold Chuck in high esteem because he consistently questions the conventional wisdom, much as I try to do in Bacon’s Rebellion. Yet his thinking has not hardened into orthodoxy. He’s always incorporating new ways of looking at the world. I look forward to hearing what he has to say. I highly recommend the event to readers of Bacon’s Rebellion.

Asphalt City to Reform Parking Regs

Wow, what a great way to utilize urban land almost fronting the Potomac River!

The Old Town district in downtown Alexandria is the very model of Smart Growth — it was built during the golden age of urban development when city planners believed in such things as street grids, mixed uses, and urban densities. And in recent years, portions of Alexandria’s downtown have been re-developed according to the same principles. But the city, like many of its peers, succumbed during the post-World War II era to the siren call of suburban zoning codes, and the results outside of Old Town have been dismal.

A key component of any self-respecting auto-centric suburban zoning code was a set of regulations dictating how much surface parking was required for everything from strip malls to garden apartments. It appears that Alexandria planners applied those requirements with relish.

An astonishing 10% percent of the city’s surface is covered by parking lots, a task force comprised of Alexandria residents, developers and city leaders has found. The average peak occupancy of 60 sites surveyed was 59%, reports the Washington Business Journal. Nearly 59% of Alexandria hotel visitors reach their destination by taxi, Uber, or Lyft; 52% of restaurant patrons do not drive. And some landlords are leasing their space to others to utilize excess parking.

While on-street parking serves some beneficial purposes in defining the urban fabric — parked cars create a barrier between pedestrians on the sidewalk and moving cars on the street — excess parking is destructive to the environment and urban design. Impermeable parking lots contribute to storm-water runoff. They trap solar rays and contribute to the urban heat-island effect. Parking lots consume space that could be devoted to higher-value urban uses, either buildings that enhance property taxes or parks that enhance well-being. And they fragment streetscapes, thus undermining walkability.

The task force will submit recommendations to City Council tomorrow.

Among the major changes under consideration: Setting a minimum and maximum parking standard for everyone — as opposed to the minimum-only scenario currently in place — exempting small neighborhood businesses from the parking minimum, and allowing for shared parking between businesses.

Sounds like a big improvement over the current policy, which hasn’t changed in 50 years. But personally, I would go further. Unless a compelling public need can be demonstrated to exist, eliminate all parking mandates, period. Next, reform zoning codes to make it easy for property owners to recycle parking lots into buildings. Finally, convert on-street parking to dynamically priced metered parking that varies with supply and demand. Then you’d be talking real parking reform.

A Reminder that the James River is Richmond’s Greatest Asset

Laura and I ate lunch today at the Conch Republic at Rocketts Landing and enjoyed the perfect temperature, delightful breeze and wonderful views while seated outside on the deck. Rocketts, a residential-retail development retrofitted from old industrial acreage just south of the Richmond city line, didn’t exist when I moved to Richmond three decades ago. But it’s thriving now — and it serves as a great example of how this metro area has changed for the better.

The Capital Trail, which leads to Williamsburg, is visible in the photo above. It wasn’t as busy as Arlington’s biking trail along the Potomac, but we did see many dozens of bikers. We also saw kayakers and recreational boaters on the river today. The Richmond Rowing Club’s crew team puts its sculls into the water nearby as well. Biking, hiking, kayaking, rowing and motor boating — those are amenities that people value when they decide where to live. They comprise the soft infrastructure of the 21st-century knowledge economy. For a long time, Richmond didn’t have it. At last it does.

Bacon Bits: The Latest in Government Ineptitude and Short-Sighted Thinking

It’s Hard to Teach without Teachers. With a week to go before the start of the new school year, the Richmond Public Schools still has about 90 teacher openings, according to the Richmond Times-Dispatch. Why the shortage, which seems to be a chronic issue? Perhaps the school conditions are so terrible that no one wants to work for the city schools. Or perhaps the school administration is dysfunctional that it can’t execute basic tasks. Whatever the case, I’ve seen no reporting to suggest that any other locality in the Richmond region has a comparable problem.

Hopewell the Next Petersburg? The City of Hopewell is now 21 months behind completing its Comprehensive Annual Financial Report, and that has some City Council members broiling, as reported by the T-D. One city official points to a $51.8 million in year-end cash and investments as proof that the city’s financial position is OK. But an auditor said he had uncovered about 90 instances of money being transferred without documentation — the same practice that preceded Petersburg’s fiscal meltdown.

What Hurricane Harvey Portends for Hampton Roads. Flood damage in the Houston area will run into the tens of billions of dollars. Much of the cost will be covered by an under-priced, under-funded federal flood insurance program that subsidizes construction in flood-prone areas. (Much of the balance will be covered by an under-funded federal government that will have to borrow the money.) According to Politico, about one percent of insured properties have sustained repetitive losses, accounting for more than 25 percent of the nation’s flood claims. So far, Congress has resisted serious reform, but the program is fiscally unsustainable.

Thought experiment: What would happen to Hampton Roads if federal flood insurance charged actuarially sound premiums? What would that do to property values?

A related question: Who insures infrastructure? Presumably rate payers cover the cost of maintaining electric lines. How big is that subsidy? I’m guessing that state and local governments have no insurance for roads and highways. What is that potential exposure? And how about the implicit subsidies for water and sewer service? People who choose to build and live in vulnerable locations — this now effects me, because I now am a co-owner with my brother and sister of the family beach cottage — should pay the full cost of their locational decisions.

Will that ever happen? Probably not.

Richmond’s Growth Bottleneck: Building Permits

Proposed 7west project.

Jeremy Connell wants to build a dozen high-end townhomes in Manchester, right across the James River from downtown. The $6 million, 7west project envisions four-bedroom, three-story townhouses priced in the $700,000s, providing a nice boost to the City of Richmond’s tax base and offering a short, easy commute to the region’s central business district.

He originally hoped to begin construction in April of 2016. Four months later, when demolition began, he revised the timetable to September. Yet today, 16 months later, work has not proceeded beyond the foundation-laying stage, reports Richmond BizSense.

The City of Richmond is experiencing an unprecedented boom as a wave of Millennials, empty nesters, and corporations move into downtown and surrounding neighborhoods. There is enormous pent-up demand to live and work in the amenity-rich city, with its walkable streets, historic buildings, museums and cultural institutions, and its canals and James River parks. But there’s a hitch. The city’s building inspectors can’t keep up. Writes BizSense:

“It is by far the worst it has ever been to get a project developed in the city of Richmond,” said Connell, who has been developing in the city for 15 years.

“The process is undermanaged, understaffed and overwhelmed,” Connell said. “It’s a bad three-way combination that retards development in the city.”

According to BizSense, Connell’s experience is frustratingly common. Doug Murrow, in charge of permits and inspections, attributes the delays to departures and vacancies that left the department temporarily short-staffed. Other observers quoted by BizSense (in a very well-sourced article, by the way) say the problems run deeper. The city has been slow to embrace new digital-permitting technology that would speed the process.

“The culture in Room 110 has been: this is the way we’ve always done it, this is the way we’re always going to do it,” says Charlie Diradour, a local landlord and developer. Diradour says that he hopes that the new mayor, Levar Stoney, will break the logjam.

For his part, Stoney says he is looking to neighboring Henrico County to see how the city might perform better. “We are suffering from staffing issues,” he told BizSense. “I wish we had the numbers that our friends in Henrico have: at least 70-plus people working on commercial and residential permitting. But we don’t have those numbers here. I know that the departments are doing everything they can to keep up with the uptick, but we can always do better.”

Bacon’s bottom line: In theory, core urban jurisdictions like Richmond should be kicking suburban butt in the race for development dollars. While Richmond clearly is rebounding, urban renovation is not occurring as rapidly as it could. In the past I have focused mainly on the zoning code as a throttling force. When Richmond could still annex country land a half century ago, it adopted a suburban zoning code that restricted denser, mixed-use development — precisely the kind of development the market wants to see. City Council has finally addressed that problem, especially in the Broad Street corridor (see “Richmond’s New Growth Corridor.”) But the city hasn’t fixed its permitting bottleneck.

In the competition for development, the City of Richmond enjoys immense advantages over its suburban neighbors, Henrico and Chesterfield Counties. But the counties do have one competitive edge — efficient government administration. The hassle factor is much lower. As Diradour told BizSense, contractors have told him that they add a point or two to their overhead when they do business in Richmond to account for the inevitable delays.

I don’t know if other cities have similar problems. BizSense suggests that the City of Roanoke has moved to a more efficient digital permitting process. Regardless, Richmond better get its act together, or it could squander a historic opportunity to rejuvenate itself.

Richmond’s New Growth Corridor

Pulse construction on West Broad Street. Photo credit: Richmond Times-Dispatch.

In 1950, the population high water mark for many American cities, about 230,000 people lived in the city of Richmond. A few years later, when the city annexed a large swath of Chesterfield County, population peaked around 250,000. Then, as suburbanization took hold and average household size shrank, the population declined steadily over the following decades to less than 200,000.

After a half-century of decline, the city’s demographic fortunes kicked into growth gear again. As young people and empty nesters flocked to the metropolitan region’s urban core, the population rebounded to 210,000 by 2015.

That upward trend is far from spent, says Mark Olinger, the city’s planning director. Indeed, if no big issue arises, such as a spike in the crime rate, he says, “I can see the city getting up to 300,000 by 2037.”

If he’s right, such a surge would represent one of the biggest booms in the city’s 235-year history. The idea is not implausible. Following a national pattern, Millennials crave the excitement of life and work at the urban center, real estate developers are building housing to accommodate them, and employers are following the workforce. The real estate action in the Richmond metropolitan area right now is in the city, not the once-dominant suburban counties of Henrico and Chesterfield.

The big question is how long the boom can continue. Much of the new housing stock has come from the conversion of old warehouses and industrial buildings, fueled by historic tax credits. As the stock of old buildings gets used up, it is harder to find locations to build. The omnipresent NIMBY impulse restricts any development that would change the character of established residential neighborhoods.

One way to avoid the NIMBYs is to focus growth in aging commercial corridors that have long been separated from established residential neighborhoods — in particular, the Broad Street corridor west of downtown. West Broad was developed according to standard suburban zoning codes with large lots, loads of parking, and one- and two-story buildings. For the most part, the architecture is hideous and not worth saving. Historic preservationists will not get exercised to see it bulldozed.

Last month Richmond City Council effectively designated West Broad as a major growth corridor by adopting a zoning framework that allows for development at significantly higher density in a true urban pattern. City officials hope that the opening of the $53 million Pulse bus rapid transit line this fall will jump-start re-development along the corridor, especially around the transit stops. In turn, higher-density development will feed ridership to the system and support it financially.

The economic justification for the Pulse suggested that the BRT system would generate $1 billion in additional assessed property value. The way Olinger talks, that estimate is conservative. He sees tremendous potential for the stretch along West Broad around the Cleveland Street,  Science Museum, and Allison Street stops. This “Greater Scott’s Addition area,” as he calls it, encompasses about 700 acres — roughly twice the size of Richmond’s famed Fan district. At present, the assessed value of property in Scott’s Addition is roughly $850 million, while that of the Fan is between $2.3 billion and $2.5 billion.

According to AreaVibes,com, the Fan district has a population of about 13,000. Extrapolating from Olinger’s property assessment numbers, re-developing Greater Scott’s Addition at Fan densities would accommodate 75,000 additional people and add some $3 billion to $4 billion in assessed value to the city’s tax rolls. Is that remotely realistic?

The Demographics Research Group at the University of Virginia forecasts that the four core localities of the Richmond Metropolitan Area — Richmond, Chesterfield, Henrico, and Hanover — will gain 193,000 people by 2040. The UVa group expects the city of Richmond to account for only 20,000 of that increase. But demographic forecasts tend to project trend-lines from the past, missing inflection points caused by emergent influences such as the construction of the Pulse and rezoning of the Broad Street corridor.

To realize Olinger’s aspirations, the city must get the details right. Transit-oriented development requires more than mass transit and mid-rise buildings. The glue that ties the two together is the streetscape. People won’t walk quarter- to half-mile distances to BRT stations unless the streets are inviting to pedestrians. And right now, the Broad Street corridor is a relic of ’50-s, 60’s- and 70s-era suburban, autocentric design, violating almost every principle of walkabilty.

Acutely aware of the discrepancy between vision and reality, Olinger says the city will make significant commitments to West Broad walkability in coming years. Under the new zoning code, buildings will help define the pedestrian zone. Building entrances will face the street. Commercial uses will be closer to the street; residential uses will be set back slightly (though less than under a suburban zoning code) to foster privacy and create semi-private spaces. The code will discourage monolithic building facades and encourage lively, varied sotre and office fronts. Landscaping will help define a “streetwall” to mitigate disruption caused by surface parking lots. Indeed, the code aspires to move surface parking off West Broad Street-facing lots into underground parking or behind-the-building lots.

The state will provide $6 million for streetscape improvements over “the next few years,” and private interests will contribute millions more. Whole Foods, which would build a new store on West Broad Street as part of a C.F. Sauer redevelopment project, has created a one-block streetscape plan it is willing to pay for, says the planning director. “They want to make that whole stretch look good.”

Broad Street has fairly wide sidewalks — sidewalks are 18 feet wide in the area near the proposed Sauer redevelopment — which provides a lot of room to work with. The sidewalks can accommodate trees, outdoor dining, and street furniture. Olinger talks about re-orienting the street lights, now used to illuminate traffic lanes, to provide pedestrian-oriented sidewalk lighting instead. At this early stage of re-development, he does not foresee spending public money on fancy crosswalks and brick sidewalks, which are nice but not essential to the pedestrian experience. “We want to make streets inviting to walk — comfortable, safe, and engaging,” he says.

Under the new zoning code, West Broad Street will have its own unique, corridor-like look-and-feel distinct from surrounding neighborhoods. Maximum building heights will be lower on the south side of WestBroad, with its established residential neighborhoods, but could rise as tall as 12 floors on the north side. Four- to five-story buildings would be the norm. “We’re creating this corridor as its own place,” says Olinger.

The challenge is getting from West Broad Street as it is constituted now — largely a walkability wasteland — to the urban corridor Olinger envisions. It would be hard for a private developer to justify plopping down a 12-story building next door to a fast-food joint or auto parts store. The best bet for early re-development is in the Great Scott’s Addition area, where considerable mixed-use investment is taking place already, and near the Science Museum, a major civic landmark. If early projects succeed in attracting tenants and residents, they will attract imitators up and down the corridor.

Perhaps the biggest advantage Richmond has going for it right now is the lack of effective competition from Henrico or Chesterfield. The political establishments of both counties understand that they need to update their zoning codes to allow the kind of walkable, mixed-use neighborhoods that people increasingly desire, but they are literally two years or more behind the city in allowing such development on a wide scale. Don’t be surprised if Richmond plays fast catch-up with its prosperous neighbors in growing its population and tax base.

Another Useless, Irrelevant Debate

Sterile

Ed Gillespie, Republican candidate for governor, has gotten himself in a political pickle. According to press reports, he has been blasting his Democratic rival Ralph Northam for backing the 2013 transportation tax package as “the largest tax increase in Virginia history.” But as Democrats have been pointing out, Gillespie was gubernatorial campaign chairman for Bob McDonnell, who pushed the bill through the General Assembly with significant Republican support.

The criticisms don’t address the substance of what Gillespie is saying — Northam did back the biggest tax increase in Virginia history. But the pushback raises an obvious question: What would Gillespie have done differently? How would he have proposed to fund Virginia’s pressing transportation needs?

Frankly, both Republicans and Democrats are incoherent on the subject of transportation funding. Both sides base their arguments on three untenable propositions: (1) that building more roads or commuter rail will solve our transportation problems, if only we build enough of the right thing; (2) that someone else should pay; and (3) that current transportation solutions will be relevant in the rapidly approaching era of driverless cars, transportation as a service and Uberization of transportation.

Let’s address these issues point by point.

Building more roads and commuter rail will not address transportation congestion unless local governments allow developers to transform what we commonly call “suburban sprawl” into traffic-eating walkable urbanism. Pedestrian-friendly, mixed-used development built at moderate densities substitutes foot travel for car trips, substitutes short car trips for longer trips, and makes mass transit a attractive to more riders.

While this market-driven transformation is taking place in fits and starts — mainly in Virginia’s urban-core jurisdictions and around Washington Metro stops — it is not taking place nearly fast enough. There will never be enough money to provide congestion-free transportation for sprawling, low-density land use patterns.

The second problem is that everyone wants a better transportation system, but no one wants to pay for it themselves. Having long ago abandoned the idea of a user-pays system, Virginia politicians excel at singling out others to pay. The result is an absurd system in which there is no connection between those who use transportation infrastructure (roads and rail alike), and those who pay for it. Thus, 85-year-old, blue-haired ladies who drive 2,000 miles a year pay sales taxes to subsidize road warriors who drive 20,000 miles, Dulles Toll Road users pay inflated tolls so Silver Line riders can enjoy below-cost fares, and everyone subsidizes tractor-trailers whose taxes don’t come close to covering the wear and tear they cause on roads. The perverse result: When people don’t pay the full cost of their travel decisions, they travel more.

The third problem, approaching insanity, is that Virginia continues to build roads and rail on the assumption that driving and commuting patterns will be the same in 20 years as they are today. But that is a manifestly idiotic assumption. The advent of driverless cars will drive down the cost of taxi-like, bus-like and jitney-like transportation services, making shared ridership services a more attractive option. The rise of subscription-based transportation-as-a-service enterprises will provide an alternative to individual automobile ownership. There is no way to forecast with any certainty how these innovations will affect driving habits and the need to build more highways and commuter rail.

The debates that politicians should be having, but aren’t, are these:

  1. How can we relax zoning codes to encourage land use patterns that put less strain on the transportation system?
  2. How can we reform transportation funding to support a user-pays transportation system?
  3. How should Virginia position itself to take maximum advantage of the fast-approaching driverless/electric/transportation-as-a-service revolution?

None of these conversations are occurring. Ed Gillespie isn’t talking about them — but neither are his critics. The debate is more sterile than a mule with a vasectomy. Virginians should demand better.

Two More Signs that City of Richmond Is Kicking Donkey

Kicking donkey

The City of Richmond is on a tear. Not only is it seeing more real estate investment than it has it decades, the city is laying the groundwork for future growth and re-development. Its competitive advantage over neighboring suburban counties seems to get stronger with every passing day.

Word has leaked to local media of a privately led plans to replace the aging Richmond Coliseum as part of a larger initiative to revitalize a critical piece of the downtown district. A small working group led by Dominion Energy CEO Thomas Farrell and including Virginia Commonwealth University and the Altria Group has confirmed its desire to replace the decrepit Coliseum civic arena, which suffers from major deficiencies and drains $1.6 million a year from city coffers. Plans include a hotel to serve visitors to the nearby convention center, and encompass the historical Blues Armory building.

The working group, which is so preliminary that it does not yet have a name, is not ready to release details on the scope of the project, its cost or its financing.

Normally, when I hear of civic leaders talking up a big downtown redevelopment project, I immediately reach for my wallet. Most schemes call upon city governments to make major financial contributions, which are justified on the basis of fantasy projections of jobs, tax revenue, and spin-off investment. All too often these projects experience cost overruns, or projections fall short. (Just ask the City of Norfolk, which had its “donkey” handed to it for cost overruns of the Tide light rail project, and more recently, the Virginian-Pilot reports today, experienced a $16 million cost overrun on the $105 million Main hotel and conference center project downtown.)

But the larger point is that downtown Richmond excites the interest of the city’s major institutions and business leaders. There is something to work with. The Biotechnology Research Park has transformed the area to the north and east of the Coliseum. The neighboring Jackson Ward district to the west has been gentrified. Broad Street to the south is roaring back.  Developers are converting warehouses and obsolete office buildings into apartments and condos downtown. The Coliseum’s location is prime real estate, and it is under-utilized. Who knows, miracles do happen. Perhaps it will prove possible to re-develop the land around the Coliseum without massive subsidies.

A significant side benefit of a re-development project would be to improve connectivity downtown. As the Richmond Times-Dispatch reports: “The plan envisions a transformation of the traditional street grid, now partly sunken below grade in places and blocked entirely in others” to better connect the VCU health system, the government center around City Hall, and the biotechnology research park.

An impetus behind the initiative was the city’s commitment to build Bus Rapid Transit along Broad Street. The draft Pulse Corridor Plan calls for exploiting the “opportunity area” in the vicinity of the Coliseum. As it happens, the Pulse also will serve the Scotts Addition district, which the city is in the process of rezoning to maximize re-development opportunities.

The Pulse is expected to commence operations in October. One of its ten stops serves Scotts Addition, a light manufacturing district that has been transformed by the conversion of brick industrial buildings into apartments, condos, offices, restaurants, and breweries. City planners call for two new zoning districts: transit-oriented development (TOD) along the Broad Street corridor, and mixed-use for the rest of Scotts Addition.

The city’s planning staff calls the draft TOD-1 district “unabashedly urban,” reports the McGuireWoods land use team. The recommended ordinance is “intended to encourage redevelopment and place-making, including adaptive reuse of underutilized buildings, to create a high-quality urban realm.” Zoning would require walkable streetscapes and allow buildings of up to 12 stories in height. Most buildings would have a maximum setback of 10 feet. Parking requirements would be lifted for all uses other than hotels and large, multifamily residential buildings.

Beyond the Broad Street corridor, Scott’s Addition would be rezoned from light industrial to a mixed-use business district. Zoning would encourage “street-oriented commercial” corridors, requiring street-front retail as part of any residential use, and prohibiting car-oriented uses like gas stations and parking decks. Amendments would permit “maker” light manufacturing uses of under 10,000 square feet, which, if approved, could extend the ongoing boom in breweries, cideries and distilleries.

If both rezonings are approved, says the McGuireWoods land use team, “there may be significant opportunities for RVA’s commercial real estate community to actualize the city’s vision for denser, more urban development in this area.” 

The Pulse extends into Henrico County, terminating near the Willow Lawn mall. If county officials are planning to take advantage of the BRT service, there is no sign of it in my Google results. The only rezoning activity near Willow Lawn took place last year: approving a development and lighting plan for a Chick-fil-A.

One positive sign, however, is that Henrico has hired Clarion Associates to lead a comprehensive update of its zoning and subdivision ordinances — the first such effort in six decades. The revisions are expected to take two years, however, so even if the county commits to a vision of selective urbanization, the city of Richmond likely will continue to whup donkey.

Ferguson Deal Will Help Transform Newport News

City Center in Newport News. Photo credit: Daily Press.

A couple of weeks ago, the City of Newport News announced an economic development coup: Ferguson Enterprises, the nation’s largest distributor of plumbing supplies and one of the city’s largest home-grown companies, will locate an $82.8 million office project in City Center at Oyster Point.

The new campus will house 1,400 information-technology and administrative jobs, of which 1,000 will be relocated from local offices and 434 will be new hires. Salaries will start at $45,000 before benefits. The company, a $14 billion subsidiary of U.K.-based Wolseley plc, had considered sites in California, South Dakota, Nevada and Washington.

Snagging the investment took $15.6 million in state and local incentives. These include the donation of land valued at $3 million, $4.8 million in property tax rebates over the next decade, $2 million from the Commonwealth’s Opportunity Fund, a $2 million city match, $1 million to build a “skybridge” connection to a parking deck, and $700,000 in road improvements. It’s not clear from press reports where the rest of the local incentives are coming from, although they may be associated with construction of the parking deck.

Clearly, fear of losing jobs was a big motivator in granting the incentives. “A city like Newport News to lose 1,000 jobs would have been devastating,” said Governor Terry McAuliffe at the announcement. “I mean, I know the numbers — this was very competitive.”

Of course, those numbers are confidential, so there is no way the public can gauge the necessity of the incentives. As always, my concern is that a private company mau-maued the state and local government into giving subsidies by threatening to make its investment in another state.

Sometimes cost and labor considerations do make it a sound business decision to locate a major operations center elsewhere. But sometimes it doesn’t –sometimes there are advantages to locating important operational activities in proximity to the corporate headquarters — and the company is just using its leverage to extract tax concessions. Neither the governor’s press release nor the news reports give any indication of which was the case.

Ferguson CEO Frank Roach certainly didn’t sound like raw self interest came into play in the deal. “Ferguson is deeply rooted in the Commonwealth and we have been proud to call Virginia home for more than 60 years,” he said. “We are excited to further invest in the City of Newport News.”

Bacon’s bottom line: Yeah, right. Ferguson is so proud of its Virginia roots that it took $15 million in incentives to keep it here. As a subsidiary of a British company that doesn’t give two hoots about Newport News, such sentimental ties don’t carry much weight. Such rhetoric doesn’t sit well with me. Either it is insincere, or Ferguson wanted to stay in Newport News all along, which calls into question the need for subsidies.

Still, all things considered, the deal could have been worse. Yes, the city will be rebating $4.8 million in property tax rebates over ten years, but that’s only half the tax revenue generated by the property, so it still will gain from the deal to the tune of $480,000 per year.  That will be almost enough to pay off its $2 million state match and $1 million for the skybridge within six years. The city also will build a parking deck, but that was part of the planned development of City Center anyway. As for the $700,000 in road improvements, they can be construed as routine public works.

What I like most about the project was barely alluded to in the official pronouncements: Ferguson will become an anchor tenant in City Center, a nucleus for re-developing a city comprised mainly of a run-down downtown adjoining a sea of suburban sprawl-style development. City Center, a project of the Norfolk-based Harvey Lindsay Commercial Real Estate, constitutes an effort to create walkable, mixed-use urbanism.

That’s exactly what Newport News needs to recruit young workers and retain the businesses that hire them. The city badly needs transformation. While the benefits of creating sustainable land use patterns may be hard to quantify, they are real. 

(Hat tip: Paul Yoon.)

Drip… Drip… Drip… Another Richmond Company Moves from the Burbs to Downtown

Bob Hilb

The Hilb Group, a fast-growing insurance brokerage with more than $125 million in revenue, has made the decision to move its headquarters from the suburban Stony Point office to the Riverfront Plaza in downtown Richmond.

CEO Bob Hilb told Richmond BizSense that he had been looking for a new location for a year in anticipation of the lease expiring on his 5,000-square feet office in 2017. “While it’s a great building, it has turned into very much a medical office space,” he said. “There’s nothing wrong with that; it just doesn’t fit our vibe.”

And what’s that vibe? It’s all about the Millennials.

The downtown office will have a more modern, open layout — “a little less wood and more glass,” said Hilb. The company will move only 17 of its 800 employees into the new 9,000-square-foot digs, but he expects the number to grow as the company continues to roll up smaller, independent insurance agencies around the country.

“A lot of a people in our business, you walk into their office and it’s like you’ve walked into a hunting lodge,” he said. “As we grow, there’s no question that being able to attract millennials and having a really nice progressive office makes a difference.”

Bacon’s bottom line: Technically, the Hilb Group’s relocation is a Richmond-to-Richmond move. But Stony Point, located on the far western edge of the City of Richmond, was developed as a classic suburban office park surrounded by parking lots and trees. Walking to the nearby “pedestrian” mall is impractical. The office park is accessible only by automobile. The Hilb Group’s new location in the Riverfront Plaza will be in the heart of downtown near the James River.

Meanwhile, the urbanization of the City of Richmond continues apace. Union Presbyterian Seminary is moving ahead with the development of a $50 million, 301-unit apartment complex in Ginter Park, a single-family neighborhood, despite stiff opposition by neighboring property owners.

And the city planning commission has signaled its intention to rezone Scott’s Addition, a light industrial area transitioning to mixed-use residential and commercial, under a new, more urban zoning classification. Local businesses, says the T-D, would see changes to parking regulations, square footage restrictions and the allowance of small-scale manufacturing.