Public, private sector bend communication challenges
It’s a story everyone has experienced to some degree since 2007: When the economy was healthy, cities were doing everything possible to keep up with the growth. When the recession hit, everything slowed — some projects were stopped in their tracks. Cities were no longer able to build the infrastructure necessary for rapid growth due to the slowdown as well as restrictions on impact fee-related funding. Belts tightened on public and private sectors alike.
As the recovery shakes its way fully to the surface over the next few years, cities are beginning to see dirt pushed around, projects come off drawing boards and economic development efforts in full force. Communities are waking up, stretching for their full potential. “Every city wants to see healthy development, wants to create a welcoming community and wants to meet the demands of its residents. The private partners are essential in building those beautiful communities,” says Ken Strobeck, executive director of the League of Arizona Cities and Towns. That said, there is no one size fits all approach to development. The only common denominator is the importance of communication.
“Arizona is full of cities that have decades of growth ahead of them,” says Strobeck. “In order for us to continue growing and build sustainable communities, it is essential that developers and cities work very closely together to be creative, form partnerships and find ways to meet the needs of growth, while not creating an extreme burden on existing residents.” These partnerships are something Curt Johnson, senior vice president at CVL Consultants, helps facilitate on a daily basis between his clients and the public sector. “A lot of cities have the same passion as we do when it comes to design,” he says, noting that while it sometimes takes “trial and error” to figure out what makes a city tick, it’s ultimately about a balance of needs.
“Private developers don’t like surprises, so having things approved or mocked up with city’s conditions is starting on the right footing,” says Johnson. Developers “owe the public sector the details they need to make a decision,” he says, adding that the city should return that courtesy. He notes one example of when communication between parties broke down. In Buckeye, he says, fire trucks require larger culde- sac loops with a 60-foot radius to accommodate their size. However, this fact wasn’t brought up by the city to one of his clients until late in the design process. Other things, like city street and sidewalk width restrictions can sometimes be changed to lower overall construction price as well as reduce heat island effects. It’s a city’s openness to these types of changes that can bring balance to developers and the public sector alike.
That said, all it takes is enough residents to file a legal protest at the city council level for a project to be stalled for about a year unless a super majority vote is reached. A recent example happened last May, when Mesa property owners near the location of a proposed medical marijuana dispensary development triggered a failed majority vote to rezone the property, despite the General Plan approval.
“Some owners may never be satisfied, as I have encountered adjacent owners that do not want any development on the privately owned land next to them,” he says. “This puts a tremendous burden on the land owner, who may not be able to entitle their land appropriately and for the developer, who may not have the time or financial resources to fund a long drawn out entitlement process. In that case, the developer would move on to another project someplace else.”
Often, developers have thrown so much money at a project they won’t just pack up and leave if it’s protested. One such developer and client who wishes to remain anonymous, he notes, was working on a five-acre infill piece in Scottsdale. Infill is particularly difficult as it usually has neighbors on multiple sides that must be appeased. It took the developer more than two years to get the design approved by council and even then the developer had to compromise a design of 22 housing units per acre to 10 units per acre.
“Most of my clients are gritty and willing to stick it out and do what they need to develop that piece,” Johnson says. Since the downturn, he adds, the mood toward development has changed.
“We need each other,” he says.
According to Strobeck, for city growth to come into fruition, zoning and general plans may need to see minor changes or amendments. City leaders. Strobeck adds, always need to consider economic conditions and market needs as they grow.
“Whether it is a recession or economic boom, sometimes the initial zoning is a hindrance to growth and needs to be adjusted. This is common and healthy exercise,” says Strobeck, adding it’s important for residents and developers alike to pay attention to public rezoning hearings so all parties can voice concerns and stay in touch with what the other wants.
When Bell Lexus wanted to move into a space among the core of auto dealerships along north Scottsdale Road, the City of Scottsdale and Arizona State Land Department (ASLD) had to reevaluate the existing zoning to the Crossroads East Planned Community District. The partnership turned into a win for the respective parties. The dealership was able to relocate to one of the highest traffic intersections in the city, the land reaped the highest value achieved for State Trust Land at auction and the sale also resolved long-standing drainage and infrastructure repayment issues while ensuring Scottsdale received high-value sales tax revenue.
“The successful development of Bell Lexus not only was an example of a productive private-public partnership, but will pave the way for additional success stories on the hundreds of remaining undeveloped Trust acres adjacent and proximate to the dealership,” says Arizona State Land Commissioner Vanessa Hickman.
Cities are responsible for regulating the general plan, even if it is beyond their direct control. Many development regulations are imposed on cities by state and federal laws. Cities are also obligated to its residents.
“Each city has its own unique character and wants to form a community that is responsive to its local residents,” says Strobeck. “When approving plans, cities want to make sure that development plans fall in line with that vision.”
If residents feel a development plan doesn’t align with the city’s character or their lifestyle, they can stall or block plans from being approved at council. The most important thing a land owner and developer can do is work with the city staff, educate residents and make sure all respective voices are heard, recommends Strobeck.
“Early and constant communications with the planning department and the office of economic development helps lead to success for both the developer and the city,” says Strobeck. “Many items can be resolved when more time is spent with residents and there is lots of communication. Residents have great investments in their communities and they take their pride of ownership seriously.”
The approach in some cities is to do less regulating and more facilitating in order to help developers’ plans meet the vision of the city.
One such city is Mesa.
Whether holding special zoning meetings to accommodate developer’s timelines or developing a new zoning code, as the city did for DMB Associates’ 3200-acre, master planned development of Eastmark, Mesa has made a conscious push to go the extra mile with developers who return the favor. For the First Solar building acquisition by Apple and GTAT in the city, staff sat down with Apple and discussed the timeline and expectations. What would normally require 18-day turnarounds were whittled down to five, says Mesa’s Director of Development and Sustainability Department, Christine Zielonka.
“We flexed the system to allow for a rapid development,” she says. This is a trend Carolyn Oberholtzer, attorney at Bergin, Frakes, Smalley & Oberholtzer, PLLC, has also observed.
“Some municipalities are trending toward flexibility in an effort to be nimble enough to capture development/ end user opportunities and avoid their communities getting skipped over in favor of a neighboring city that can accelerate the speed to market,” says Oberholtzer. “‘Time is money’ is especially applicable in the development business. Recognizing that, we have seen some municipalities even initiate zoning cases on their own accord to help the process along.”
But this all started with DMB Associates, which City of Mesa Economic Development Director Bill Jabjiniak says went “out of its way to make sure it met with all the right people to make Eastmark a good fit for southeast Mesa and the Gateway area.”
“They worked closely with our planning department to put together a plan that would give them the flexibility they needed, yet adhered closely to the vision and guidelines the city has for the Gateway area,” says Jabjiniak. “The perfect success story is the new Apple/ GTAT manufacturing facility. Because of the flexible approval process developed with DMB, we were able to bring the facility to the Tech Corridor within Eastmark in record time.”
In order to facilitate a strong partnership between Mesa and the private sector, Jabjiniak says, the city has invested heavily in infrastructure and cut development risk by facilitating entitlements. Recently, Mesa’s Planning Board approved an overlay zone for the Elliot Road Technology Corridor.
“This zoning overlay will allow private landowners in the Tech Corridor the opportunity to opt-in to the overlay zone when they have a high-tech company that is interested in building a facility on their property,” he says. “When developers are ready to build, all they need to do is submit the necessary paperwork to the planning department for administrative approval. The overlay zone will cut the entitlement process from several months down to a matter of a few weeks.”
However, when developers don’t pull their weight in communication projects tend to see delays. If developers don’t also consider off-site costs, such as city infrastructure installs or improvements they have a high hurdle to clear through an appeal to the city manager.
“Community Facilities Districts are a critical tool in the public-private partnership tool box that enable a developer to finance large public infrastructure projects,” says Oberholtzer. “Communities that lack facilities in their growth areas will have a difficult time capturing development if they do not allow Community Facilities Districts.”
Any time legislation has cropped up that could potentially put the two entities at odds organizations such as Valley Partnership have worked to broker compromise.
“You saw that in the last session with the Transaction Privilege Tax changes and proposed legislation that could have jeopardized Community Facilities Districts,” says Oberholtzer.
Zielonka says the first time she looked at Mesa’s General Plan map, it looked like a zoning map with small areas. Since 2002, the city has started to loosen its zoning to accommodate more creative causes for density and growth.
“It’s the private sector that has to come in and say this is no longer the best use [for a building],” Zielonka says, noting that this long-term thinking of building uses over time began with Eastmark, two days before the recession hit.
“The recession didn’t inform that alternative approach,” she says. “It’s saying [the general plan] is more of a high level, inspirational document, not a detailed document. [Mesa] spent years working through that philosophy internally.”
The same goes for development in Mesa.
“We’re trying to push Mesa forward,” says Zielonka. “We don’t want to allow mediocre development. One of the outcomes of the recession is money is tougher to get. Purse strings have tightened. One thing we’re constantly pushing on is high-quality development… one of our current challenges is we’re not allowing development that won’t hold up in the short-term or long-term.”
From a napkin sketch to something more advanced, Zielonka says starting conversations as early as possible is key to success. For instance – a project doesn’t have to be the size of Eastmark or involve a company like Apple to get special attention. Benedictine University, which now occupies the building of a former hospital in downtown Mesa, was what Zielonka calls a very close collaboration.
“The state and federal government can pass laws and discuss policy but at the end of the day, the partnerships between local communities and their development partners are what will generate job growth, healthy communities and continued economic growth,” says Strobeck.