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The city is set to make a decision that could set back growth at The Forks

The city’s executive policy committee voted Thursday to award CanWest Global Park a 16-year-lease on a parcel of land at The Forks, overturning the past practice of signing year-to-year leases for lands the ball park uses for parking.

This decision if it is allowed to stand following council’s meeting next week, raises a number of important questions, particularly the appropriateness of approving a deal that may sweeten the bottom line of the park’s owner, namely Mayor Sam Katz.  But before we get into that, here’s a little background.

Many people have different ideas about where The Forks begins and ends; it is in fact a 32-hectare site extending from the confluence of the two rivers, west to Main Street and north to the CN Rail bridge by the baseball park.  Part of this area is owned by Parks Canada, part is owned by The Forks Renewal Corporation, and part is owned by the City of Winnipeg.  The Forks were used as a rail exchange yard for nearly 100 years, until, in 1986-88, the three levels of government obtained the lands from CN, and created The Forks Renewal Corporation (FRC). The FRC was given the responsibility of planning the Forks Mandate Area, which includes all of these lands.

As part of its mandate, the FRC developed a long-term planning framework and planning guidelines, that were approved by all three levels of government.  The gist of these guidelines is that The Forks is to become an integral part of the city, with a rich mixture of commercial, residential and recreational development; the vacant lands left by the rail yards are to be filled with a network of integrated, inhabited places.  The intent of the guidelines is being realized. In the past 20 years, new buildings and finished public parks have replaced much of the empty lands, and the Forks has become, more and more, an important destination for tourists and an integral part of our city.

The FRC has adopted a policy regarding surface parking lots:  There should be few of them, and each should hold fewer than 50 cars.  Most surface parking should be replaced with parking structures and separated from public areas.  This will take time, but the policy includes the city-owned lands north of York Avenue and in particular, the land to be discussed by council next week.

When a new arena for the Jets was proposed for the site of the current baseball park, extensive studies were completed to determine whether there was enough parking in the area to satisfy the needs of a 22,000-seat facility.  It was established that there were enough existing spaces within a five to ten minute walking distance, none of which were on the Forks site.  This would suggest that there is more than enough parking available to meet the needs of the ball park, which holds only one third as many seats as the ill-fated arena.

The mayor and the owners of our baseball team have had a year-to-year lease on several parcels of land around the ball park since it opened.  These lands are used for parking, but the right to use them for parking can be taken away with a 12-month notice from the city.  If there is viable development proposed for these lands, they will be made available.  This policy is not an accident.  It is an integral part of the long-term plan for The Forks Mandate area, and was developed with the full co-operation and support of the city’s planning department.

Special care was exercised by the city’s property department to assure that the land immediately southeast of the baseball park would fall under this year-to-year arrangement in order to facilitate development of the site.  (This area lies between the Hu’s on First restaurant and the intersection of Water Street and Waterfront Drive.)  The long-term plan identified the site as key to the area’s development, and as a potential place for a gateway structure between St. Boniface and downtown.

That plan will no longer be possible, at least not for another 16 years, if council approves the recommendation from executive policy committee.

The city’s own experts in the property department have recommended against awarding the lease, but executive policy committee apparently believes the site is necessary for restaurant parking, and that it is too small for development anyway.  Both of these claims are highly suspect.  If there is plenty of parking in the area for 22,000-seat arena, there is surely plenty of parking for a 7,500-seat ball park 40 nights per year and a mid-size restaurant.  The site is approximately 135 feet by 200 feet, and it is larger than most of the new development sites along Waterfront Drive.  It is large enough to support a significant private-sector development.  A quick calculation suggests that a six-storey 90,000 square foot building could be built on the site, and still leave 60 feet clear on the side facing the ball park.  To put this into perspective nearly one quarter the size of The Bay.

There is a growing consensus that we have too much surface parking downtown on serviced land, and that this land could better support productive, multi-use development.  If city council awards this 16-year lease to the ball park owners, it will prolong and extend this deadening condition.   The mayor should ecplain to the public why it should not interpret this deal as anything but an example of political and economic self-interest trumping the general good.

Originally published in Winnipeg Free Press, Sunday, September 23, 2006

Owners of vacant land downtown should be taxed at a higher rate to spur development

A recent article in this newspaper bemoaned Winnipeggers’ lack of pride, and our embarrassment about our city as a place to visit.  There is a lot about the city which makes it well worth the visit, and we have, for years, enjoyed showing surprised visitors how large, varied and rich Winnipeg is.  Many years ago we gave a short tour to famed urbanist and thinker Jane Jacobs – whose comment was that Winnipeg was remarkably urban (the ultimate compliment) – and much more urban than bigger and faster-growing Vancouver.

However, there is one overriding reality in Winnipeg that makes it very difficult to convince those who love to experience good cities that Winnipeg is anything more than an overgrown town.  That reality is the immense amount of un-built space in our downtown.

Just 40 years ago this un-built space was full of four- and five-storey buildings, and the lack of those buildings in today’s downtown has resulted in a distressing range of problems for our city.  The most obvious of these problems is aesthetic.  The wide-open spaces between Broadway and Portage Avenue are the epitome of un-inviting place.  With little to attract residents or visitors, and with little to attract exploration or buying of goods, it is very difficult to introduce the small-scale and incremental commerce which is the hallmark of the world’s great cities.

If the problem were only aesthetic, an unattractive place can be simply ignored, and we can all go to the park, or explore the Exchange District, or stroll our tree-lined residential streets, or go to the mall.  After all, every city has its less-than-perfect underbelly, and what’s the big deal if we have one too? The big deal, of course, is that a downtown is not a place to be hidden away and forgotten.  It is the symbolic and very real face we present to ourselves and to others.

The costs of a wind-blown downtown are great.  Winnipeggers themselves are embarrassed by our downtown.  We are surprised that someone might want to visit, and we appear to feel that there is nothing worth seeing.  The most rapidly growing sector in the world’s economy is tourism, and we shut out our share of the world’s market because of the downtown we show the world.  The costs of having a city no one wants to visit are real and large.  The attractiveness of Winnipeg is so low that even our children leave for the bright lights of the romantic cities in remarkable numbers, and not many come here looking for our bright lights.

Costs are not just aesthetic and social.  The streets of downtown were built and equipped at great expense to service many times the demands which are put on them.  Sewer, water and road systems are capable of serving at least 10 times their current load at no additional expense. And those under-used systems continue to cost money simply to be kept operational – even though they remain under-used.  Public moneys have been and continue to be spent, and literally wasted, because of our development history.  (Another side of this under-use is that additional serviced lands “have to” be constructed on the city’s outskirts, even though there is a supply of underused serviced land lying fallow downtown.)

When tourists and residents stay away in droves, the snowball effect of inaction is costly.  Businesses are less successful, and either fail, or, at best, pay less tax.  The under-used serviced lands downtown generate some tax revenue from surface parking lots, but the tax which is generated is miniscule compared to that which can be generated by successful continuous urban development.

Winnipeg is not the only city to have this problem.  Cities like Dallas and Houston make Winnipeg look downright dense.  But no one wants to visit downtown Dallas or Houston, either.  Because these problems are not limited to Winnipeg, there is a tremendous resource out there in the rest of the world – of planners, architects, politicians, policy wonks and citizen activists who have been struggling to get rid of the holes in their city centres.  Some of the tools used in other places have worked, and some have not.  Some of the tools which have been successful in other places would not be appropriate here.  But there are lessons to be learned, and a real problem to be solved.

In Des Moines, Iowa the city expropriated abandoned or under-used lands, cleared debris and empty buildings, and installed topsoil and sod – creating so-called greenfield sites in brownfield locations.  The result has been new investment and revitalization.  Montreal passed a law two years ago with a blanket prohibition of surface parking lots.  In Lisbon, landowners in an older section of the city showed no interest in investing – waiting until some magic day in the future when everything would be rosy.  They resisted the city’s efforts to encourage development, and the city expropriated their lands, built what they had been trying to encourage, and, in many cases, re-sold the improved lands to the original landowners – who are now making handsome returns on the entire affair.

In Winnipeg we have a problem similar to that in Lisbon.  Landowners are able to operate surface parking lots at a reasonable level of profit, and pay taxes based on low use of their lands.  The framework is ideal for sitting still until some far-off day when real profits can be made.  And the inertia is killing us; the true civic cost of having to build more serviced streets while the streets downtown remain underused, and the true civic cost of choking a vital and robust downtown are not borne by those who sit on their vacant lands.  Those costs are borne by the rest of us – as we literally subsidize the long-term interests of the wait-and-see landowners.

In response to this problem, there is a growing movement to re-consider the way urban land and property are taxed.

The traditional means of establishing tax rates is to determine the value and earning potential of commercial property, and to tax the land and buildings based on those earnings.  Under this system, land with a building on it attracts high taxes, while an empty parcel attracts low taxes.  This is an ideal framework for wait-and-see owners of vacant land, who can sit back while those who develop and own buildings pay the nearly full share of downtown subsistence.

The concept of taxing the land, rather than the buildings on the land, is gaining support as a tool to counter all of the ill effects of wait-and-see vacant-land ownership.  In a land-tax system, building owners must still pay significant taxes.  The difference is that vacant-land owners must pay taxes based on the real value of their lands, and they quickly find that “sitting” on vacant land is not such an attractive proposition.  They are forced to sell their lands to those who are prepared to build and truly use their lands, or they are forced to build and become real participants in the economic life of downtown.  With a successful cycle of re-birth, land values rise, and gross tax revenues rise, and people do not avoid the formerly empty places, and commercial enterprises can thrive.  It is a pretty attractive picture, and one which makes a lot of sense for Winnipeg.

Originally published in Winnipeg Free Press, Sunday, September 3, 2006

One hundred years ago, Winnipeg’s economy was booming, and land costs here were equal to those in Chicago. 

This period of big-time prosperity was relatively short-lived.  As a result of a number of factors, including the opening of the Panama Canal and the skittishness of investors following the Winnipeg General Strike, Winnipeg’s economy declined.  And downtown land values declined as well.

For the past 30 to 40 years, downtown land values have stood at approximately $25 per square foot.  This value has reflected the long-term investment and construction potential of the land, and it has been remarkably stable for several decades.

In the past two to three years, however, downtown land value has risen rapidly.  The value of vacant land between Portage and Broadway avenues, and between the Legislature and Main Street, has risen to $50 per square foot.  This doubling of land value might be perceived as an extension of the boom in residential real estate value, and proof that Winnipeg’s downtown is thriving.

However, Winnipeg’s downtown is not thriving.  There has been little new private-sector, market-driven construction.  The Hydro Building is the quid pro quo for the purchase of Winnipeg Hydro, and the MTS Centre was a highly subsidized attempt to solve the embarrassment of the Eatons Building. Developers tell me that there is virtually no demand for new office space in Winnipeg.

If new construction is not driving the increase in land values, what is?  It is being driven by the nemesis of our downtown: surface parking.  Monthly rates for surface parking have risen dramatically over the past five years, and it is now common to pay $120 to $130 per month for a surface parking space. This monthly charge for daytime parking, coupled with charges for evening and weekend parking, supports a purchase price of $50 per square foot for vacant urban land.

With this formula for land valuation, maybe everything is OK – the market is determining value, and supply and demand are in a nice neat balance.

But everything is not OK.

Rents for commercial space are established on the basis of what the market will bear.  If a project costs too much to build, and if market rents do not pay the costs of development and reasonable profit, projects do not proceed. The main “hard” costs for a project are for land and construction.   Within this framework, land costs are a set percentage of project development costs.  Higher land costs must be dealt with by building larger buildings to keep the percentage of project costs assigned to land acquisition in balance.  In private-sector development, higher land costs demand either higher rents or taller buildings.

At $25 to $35 per square foot, land costs constitute an appropriate proportion of project development costs for a five-or-six storey building.  Land costs of $50 per square foot demand a 10- to- 12-storey building. Although the Winnipeg market may be able to support smaller projects, the city does not have adequate demand to warrant a very large number of 10 to 12 storey buildings.

So private-sector downtown development sits at a standstill , or at a state very close to a standstill.  The price of land is simply too high for the construction of buildings appropriate to Winnipeg’s market.

Easier

Development is easier outside of downtown, where taxes and land costs are lower, and this is where the majority of our private-sector construction is occurring.  This development on the city’s outskirts is cheaper in microcosm, but creates an expensive burden for the taxpayer.

New ex-urban buildings require new municipal services, while existing downtown services remain untapped.  Surface parking generates much lower tax revenues than even modest-scale buildings. And the economic and tax spin-offs from a diverse, developed downtown remain a day dream.

The negative economic impact of surface parking lots should be recognized in our municipal tax structure.  Downtown surface parking lots should be assessed taxes that reflect their true cost to the public purse and to Winnipeg’s economy.

This taxation would make surface parking less attractive to investors, and it would likely result in a re-alignment of land values to reflect real development potential (in the short term, land value would probably go down). This would in turn make real downtown development viable.

Just in case this is read as a diatribe against parking of any sort, it should be understood that an aggressive tax policy targeting surface parking would encourage construction of multi-storey parking structures, which are a viable investment at current monthly rates.

Originally published in Winnipeg Free Press, Sunday, May 15, 2005

Not long ago, I attended a lecture about cities at a national convention held in Winnipeg.  The speaker was staying at the Hotel Fort Garry, and reported that he had wandered out of the hotel the night before to see if he could find something interesting to see or do.

He walked north for several blocks, then gave up hope. 

His comment was, “It was so bad I didn’t know whether to get drunk or commit suicide – so I came back to the hotel and went to bed.”

Of course, Winnipeggers know that our city is not all that bad.

The speaker had ventured forth the in the wrong direction, without a knowledgeable guide.  Such an experience could happen in any city.

However, his fruitless excursion did not occur in some obscure part of the city, but in our downtown, where a visitor could reasonably expect that things of interest might be found.

The black eye of our downtown is the amount of surface parking we have, and the lack of buildings and uses where this surface parking occurs.  Some causes of our oversupply of surface parking have been discussed previously in this space, and I would rather explore current opportunities for healing than beat the dead horse of past mistakes.

Extensive parking lots are more than an aesthetic problem.  Surface parking revenues are attractive enough that they raise land values to a point where small- and medium- scale development is financially impossible.

Taxes on parking lands are relatively low because there are limited land improvements to the properties.

And the true cost of allowing our downtown lands to remain “fallow” is immense.  Land that is well serviced and close to all kinds of activities are unavailable for moderate-scale development, so the economic spin-off that comes with real development either does not occur, or occurs in our more suburban locations.  The central city pays the true long-term costs of ex-urban development:  Loss of central-city taxes, unused infrastructure and loss of tourism.

We are in a unique position in 2004 to take some decisive actions to rectify this problem.

A new downtown zoning bylaw is nearing adoption.

Before it is adopted, it will be possible to remove the currently existing right to develop surface parking on any downtown lands, and to require re-zoning or variance procedures for any future surface parking.  Our city fathers are in a position to act on this immediately.

The rule of thumb is that monthly parking rates must be approximately $120 to warrant construction of parking structures.  We are rapidly reaching this as a standard downtown rate, and the city and province could facilitate the construction of parking structures with financial assistance and with streamlined approval procedures (the true public costs of not doing this are real, and warrant actual governmental expense to assist with such projects).

Because there are real citywide costs in leaving our downtown surface parking in its current state, the city could reasonably and aggressively raise property taxes on all surface parking lots – in recognition of the economic cost that is imposed on all of us by this land use.  This would not be a punitive tax, but a tax that recognizes and reflects the true cost to our culture and economy.

And, finally, the city could do what Montreal did just last year.  It can make surface parking in downtown illegal.  Period.  This extreme action is certainly fraught with problems, but the problems which come with inaction are greater.

Originally published in Winnipeg Free Press, Saturday, March 27, 2004

Surface parking in the downtown distorts land values

During the 1950s and 1960s, planning policies were put into place which had unanticipated negative impact on our downtown.

Basically, they resulted in a large number of buildings being demolished and turned into parking lots.

This impact easily could have been averted had the drafters of the new zoning bylaws of the 1960s foreseen what they were doing, and prohibited the development of new surface parking lots.

OF course, it’s easier to have 20-20 hindsight than 20-20 foresight, but we hope we are able to learn from our mistakes.

However, at times this seems a rather idle wish.

When planning for the new downtown campus for Red River College begun several years ago, the college demanded that very large amounts of parking be provided by the successful developer.  Following some public chastisement for importing their suburban habits to a downtown revitalization project, the college administration reduced their demands – but continued to make it clear that more parking would be required (even though such parking might not be formally provided by the project developers).

Since the college has opened, at least eight buildings in the immediate vicinity of the college have been demolished.

The demolition of these buildings has not resulted in new downtown  buildings and enterprises.  Instead, it has led to “construction” of literally acres of new asphalt parking lots.

This was hardly the vision of the planners and politicians who worked so hard to develop this important downtown project.  It was supposed to bring new housing, more public-transit usage, local services and commerce, and an overall good sense of downtown life – it was not supposed to bring new parking lots.

Some of this was predicted by some city planners, who recommended that, in order to avert wholesale development of surface parking lots in the area, zoning bylaws should be changed before the campus was developed.  And there was an opportunity to make the appropriate changes – but it was decided these measures were not necessary.

I will continue to discuss the impact that rampant surface parking has on the psyche and economy of our downtown.  (And I anticipate some complaints that we do not have adequate parking downtown.)

But today I want only to point out an evolving dynamic:  Land values in the Exchange District stood for a number of years at approximately $200 to $250 per square meter.  At this value, it is feasible for private sector development to occur for mid-rise buildings (that is, buildings of a scale comparable to the scale of the Exchange District’s existing buildings).

But as parking rates have increased downtown, the effective value of land has doubled (based on what landowners who cover their land with asphalt can earn).  This has distorted the market and development potential of all land in the Exchange District, and is making it impossible to carry out normal land purchase and development activity at the scale of the existing urban fabric.

Montreal has recently passed a bylaw prohibiting the development of surface parking lots in the city’s downtown.  This bylaw is retroactive, and will result in the removal of all such land use in the city.

There are certainly legal fights to come.  But Montreal’s decision should be taken as a good and knowledgeable omen for those who are charged with the management of our city.

Originally published in Winnipeg Free Press, Saturday, February 21, 2004

Preparations for postwar boom made downtown Winnipeg a bust

Gwynne Dyer , whose syndicated column appears in the Free Press, normally writes about global politics and evolving economic realities.  Yet, a couple of years ago, he broke out of his usual range of concerns and wrote an article about cities that started me thinking about some of Winnipeg’s history over the past 50-60 years.

Dyer’s main proposition was that the cities of the world are developed at their cores very early in their lifetimes – and that the defining character of a city’s downtown is established at this early stage of its life.

This observation gains significance when we study occasions where there have been self-conscious attempts to redefine city cores – and when the inherent character of a place is stripped away.

Central Winnipeg experienced one of these well-intentioned attempts at redefinition in the years after the Second World War – and the results of this effort have had a long-lasting and negative impact on our city.

Our downtown area between Portage Avenue and Broadway was well developed by the time the war ended.  It was full of four- to six-storey apartment buildings and small commercial enterprises.  The streets were lined with hundreds of elm trees.  And there was a general sense of continuity and coherence in the area.

After the war, it was decided that our downtown should be prepared for the coming boom in development.

In order to pave the way for this to happen, several things were done.  The first, and most violent, was that the streets of downtown (especially between Portage Avenue and Broadway, and between Main Street and Isabel) were widened and turned into one-way traffic carriers in the belief that more efficient traffic movement would bring development.  When these streets were widened, those hundreds of healthy elm trees were deemed to be in the way of progress, and they were all cut down.

Once this groundwork was completed, the second initiative of modernization was carried out in the form of a zoning by-law change that allowed for a substantial increase in the allowable scale of buildings – and which demanded an accompanying increase in parking provision.

Because the land costs were relatively low, it became attractive for developers to build large buildings, and to buy neighbouring older buildings and lands on which to put the surface parking lots to serve their buildings.  (It was cheaper to purchase existing buildings – and to demolish them for surface parking – than to build parking structures for their new buildings.)

The long term result of these policies was that by the mid-1970s, this area of our downtown looked more like something hit by a bomb more than a healthy downtown.

In the last 30 years, the area has been slowly healing itself with new buildings.

The healing process might be seen to be about half done (through an optimistic lens), and if we can fill our current plethora of surface parking lots in the area with real building projects, with parking structures, and (please) with some small public parks, this hole in our downtown will no longer be a hole.

However, even if we are able to fill in the holes, and achieve some reasonable level of urban coherence, we are unlikely to achieve the pleasant character which was so blithely destroyed with visions of a new world 50 years ago.

Originally published in Winnipeg Free Press, Saturday, February 14, 2004