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27 June 2019

‘Observations and Learnings’ from VPELA/UDIA Study Tour

Our CEO, Colleen Peterson, recently took part in the UDIA VIC and VPELA international study tour of three major cities in the United States of America; San Francisco, Washington DC and New York.  

Here’s Colleen’s story on this amazing experience…

Two weeks in the USA at the commencement of a Melbourne winter was an excellent motivation for me to delve into my inner planning nerd and join the VPELA/UDIA study tour. Seeking out a better understanding of planning issues internationally is a great way to understand what we are doing well here in Victoria and where we can improve. 

Of course, what wasn’t surprising was to learn that many of the challenges we have here in Melbourne are common to the cities we visited in the US. San Francisco, Washington DC and New York are all grappling with issues of affordable housing, congestion, development of urban renewal areas and the like.

However, there were a number of key observations about planning in the US, which surprised me. Some differences were startling because of their inherent cultural origins and others due to the radically different approach to the integration of the free market into property development.

Foremost was the role that the US constitution plays in property rights and the way in which planning, and its restrictions or lack thereof play out. Essentially, you can’t take my property rights away from me!

The 5th amendment of the US constitution protects the right to private property in two ways:

  • Firstly, a person may not be deprived a property by the government without ‘due process of law’.
  • Secondly, restricting the capacity of the government to acquire property for public purposes. 

In reality, this approach seems to change the emphasis on what you can do with your property, as opposed to what you can expect your neighbour not to do, which is the case here in Victoria. From my observations and meetings with key government and planning figures, it would appear that the planning system is more interested in protecting the rights of the individual as opposed to protecting the amenity of neighbouring properties. This includes issues of overlooking, overshadowing and neighbourhood character being unheard of in most planning settings.

This approach is far-reaching, ranging from approaches to inclusionary zoning, and a general emphasis on code assess planning, where much of the development in places like New York doesn’t actually need a planning permit. We learnt that 90% of development in New York does not require a planning permit! This includes the ‘supertalls’ being constructed around Central Park, much to the chagrin of many New Yorkers.

It was also evident that there is, overall, less regulation when it comes to planning decision making. There is a much greater emphasis on the development of the initial strategic framework plan, setting a strategy for the development of a precinct and then stepping back and letting the market take control with little further input. 

For example, in the case of New Rochelle, a commuter suburb, 30 minutes by train from Grand Central Station in New York and home to Betty and Don Draper, the local Council spent 12 months preparing an extensive strategic work for its downtown precinct.  This work aims to concentrate all of the municipality’s residential and commercial growth into the central business district.

The outcome was to change this 300-year-old centre into a range of high-rise towers, with 28 stories as the maximum height limit.  The result is that in the 3 years since implementation, 25 permits have been issued for high rise residential and commercial development with not one single ‘call in’ from a Councillor.  

Click here for strategic plan for New Rochelle

That said, this market-led approach is a result of mandatory controls, particularly regarding building height. The consequence of this was that, particularly in San Francisco and Washington, we saw mediocre buildings in an urban renewal precinct whose architectural quality was lacklustre.

Click here for an example of a typical townhouse style development in Washington DC – note the absence of balconies or private open space

Tapping into the ‘as of right approach’ is the capacity throughout the US to buy the ‘air rights’ or development potential of your immediate neighbours to increase your own site’s development potential. For example, if your property is in an area with a 10-storey height control, you can buy the potential of the three adjoining properties, say 5 stories each, and build a 25-storey building without the need for a planning permit. This approach is effectively a legal transaction that is registered on title and issues of overshadowing, visual bulk, and character of streets are not given consideration.

The market also plays a significantly bigger role with Business Improvement Districts (BIDs) commonplace. These entities are effectively an amalgamation of business interests, including landowners in a precinct, which works to maximise the development potential and business interests of its members. Obtaining revenue by taxing its members, we saw many BIDS that have completely transformed urban renewal areas in San Francisco, Washington DC and New York. Such transformations have occurred quickly and radically, with significant heights proposed and with little fuss.

I also consistently observed a system that is significantly more advanced in tackling issues around affordable housing. In most instances, affordable housing is a mandatory requirement for all new residential development and is typically planned for in the initial stages of a development’s feasibility. Developers are aware of these expectations up front and through the suite of federal and state tax incentives, accept them willingly.

With ‘Build to Rent’ the preferred model for providing new housing in the US, a model that is favoured heavily by the banks, we consistently saw high quality apartment buildings with anything from 10-30% of housing reserved for affordable units, with this housing typically pegged at between 40-80% of the median rental price for the suburb in which it is located. 

Click here for the lobby of a high-end residential development where 10% of apartments are affordable (Washington DC)

The number of affordable housing units and the proportion of their subsidisation is effectively influenced by tax incentives on offer. Other tools on offer include rent control, local rent supplements, tax exempt bonds, inclusionary zoning where a 20% density bonus was on offer for affordable housing provision and housing choice vouchers.

What is most surprising is how the private market has embraced the requirement to construct and plan for affordable housing within each development, which is facilitated by tax rebates and other financial incentives at a local, state and federal level. Given the multiple levers to tackle housing affordability, there was much to take away on this issue.

I am a complete convert to the study tour and could prattle on forever about what we saw and learned. Feel free to check out my LinkedIn page for more detailed discussions on specific issues and for the best hashtag ever #notajunket #okmaybeitsajunket

Author: Colleen Peterson, ratio: CEO 


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