Archives for May 2009

You’re probably reading that title and asking yourself what in the world this post could be about. That is unless you are a developer or downtown building owner – then you probably know exactly where this is headed…

We have a vacancy rate of over 30% in the downtown CBD, and a walk down many streets makes it feel like much more than that. Building after building looks like they’ve been abandoned for years or even decades. In some instances that is in fact the case, but why? It seems like many if not most of these buildings are in good enough shape that with a little money to clean them up they could be brought back to life by locating small businesses in them. But a “little money” turns out to be much more when it comes to bringing a building up to code, and that has in many cases been the difference between being able to bring a building back to life (and bring some jobs back to the core) and making it impossible to do anything and thus continuing our vacancy disaster.

Just as in any city, there are various zoning and building codes that must be met here in Dayton to ensure public safety and use that is proper for the surrounding community. Dayton recently updated its zoning codes as far as what types of uses are permitted in each district in the city, and from my layman’s point of view Dayton’s new zoning codes are actually very good. The downtown district is very flexible in that it allows residential and commercial, even in the same space, which is conducive to the whole urban work-live-play mantra. I also like the fact that surface parking lots are no longer permitted anywhere downtown, which shows forward-thinking on the part of the planners who wrote it. But then there are the individual building codes that must be met, and this is where many have run into trouble and simply given up.

Now, I will say that many building codes are completely reasonable and we should be glad they exist as they keep us safe and ensure that everybody including the handicapped have access.  And many of these building codes such as ADA are dictated at the state or federal level.  But have we made these codes so restrictive that we’ve destroyed any good chance of bringing our long-vacant downtown buildings back to life?  Is there any room for some flexibility and compromises that still ensure proper safety AND make it cost-effective to redevelop and re-inhabit our downtown buildings?

Of all of the various things a building must have these days in order to be compliant, it appears that there are three that are usually the deal-breakers:  restrooms, elevators and fire-suppression sprinkler systems.  Restrooms are an obvious need for almost any building use so that one sounds a bit silly – until you realize that because of ADA standards, restrooms must have minimum sizes and dimensions in order to accommodate a wheelchair.  Well that sounds fair enough for new construction, but I’ll bet most of our vacant downtown buildings and units that have existing working restrooms do not meet today’s standards.  A large business that is filling 30,000 square feet or more usually doesn’t have a problem paying to have new restrooms installed, but those are also the businesses that find much of our downtown space obsolete for today’s business needs.  Meanwhile there are probably many small businesses that would love to locate in some of the smaller spaces but are simply unable to foot the bill for new restrooms, while building owners are unable to do so as well for the small lease amount that a small business will likely be paying.  How about elevators – seems like if a building never had an elevator (or instead had one of those very cool old freight elevators), then it should simply be exempt.  Hell, we would probably help the obesity problem if we forced folks to take the stairs anyway (as I try to do as often as I can from my fourth-floor condo).  But then it wouldn’t be accessible to the handicapped, and if restrooms are too expensive then just forget the elevator – it just ain’t gonna happen.  Finally, the fire-suppression sprinkler system – no, they didn’t have those either when most of these vacant buildings were built, and like the others don’t come cheap.

Why is this such a problem in Dayton and not other larger urban cities?  I’d guess it is how cheap leases go for here.  In more successful cities, lease rates are much more expensive – over $100 per square foot in places like N.Y.C.  and San Francisco.  With that kind of rental income, building owners can afford to bring their buildings up to code.  But here in Dayton we’re looking at lease rates of $5-$15 per square foot, and new restrooms, elevators and sprinkler systems aren’t likely to be much cheaper here than in N.Y. C. or San Francisco.  Hmm, perhaps our “low cost of living” isn’t such a good thing after all – at least when it comes to vacant downtown buildings.

What is the solution?  I suppose we could just say to hell with handicapped folks and just make downtown a handicapped-free zone, but that would ensure Dayton’s position on Forbes list of the Top Ten Asshole Cities.  Perhaps we could be a bit more flexible when it comes to granting variances (and I really have no idea how flexible we currently are).  But ideally we should strive for compliance AND making things cost effective for small businesses and building owners to be in compliance.  So this is my proposal:  What if the city simply passed a policy that says that for the next five years, a significant percentage (all?) of economic development money that might otherwise go toward tax incentives to larger businesses to locate in the city (ie corporate welfare) or toward tearing down a bunch of buildings in hopes that a developer will happen along and develop something there, went instead into dozens (or even hundreds) of much smaller projects that focused on bringing most of our downtown buildings back into compliance so that they were move-in ready for small businesses.  We could set up a sort-of competition among building owners for access to this pool of money by which they would have to do the leg work of submitting plans, with an independent committee determining which ones get the green-light based on predetermined criteria to ensure we get the biggest bang for the buck.

This solution would bring vibrancy back to the core, not to mention businesses, jobs and the income tax that comes with them.  Sure, many of these small businesses will be small potatoes, especially service-type businesses like restaurants and small retail.  But these are what will make our downtown vibrant and alive again, and probably a much better way to attract those larger businesses than with huge tax incentives that only temporarily lure them here until they find a better tax incentive somewhere else.

This is a simple idea that obviously needs many details to be ironed out, but it is still an idea – and a fresh one at that.  And these days, it is going to be new and fresh ideas that push our city forward, because the old line of thinking is simply not going to cut it anymore.

“What about the public schools?” This is a question I’ve heard time and time again, whether I’m casually talking to another person or giving a talk to a large group about why they should be aware of the interesting things happening in the urban core of Dayton, efforts to make our city vibrant again and why they should care. It is almost as if many people in this region refuse to give the city a second thought unless somehow the pubic school problems are miraculously solved (without their help, of course). But is this even a legitimate show-stopping question? I say no, it isn’t – and for many it is in fact completely irrelevant.

In terms of this discussion there are four main demographic groups that make up the total housing market for both rental and ownership: 20-something and older singles, married but childless couples, families with young or school-age children and empty nesters. When it comes to the public school question, here is the breakdown (note I have no stats backing my claims, only common sense):

20-Something/Older Singles with No Kids – this demographic is the sweet spot when it comes to attracting urban residents. While the younger of this group may not have as much disposable income as older generations, there are increasingly more and more singles in their late 20’s and 30’s who do have significant disposable income (and incidentally prefer urban living). More importantly, this single demographic spends a much higher percentage of their disposable income on the very amenities that make for a vibrant downtown – coffee shops, bars, restaurants, movies, non-traditional theater, etc. And most importantly – this group couldn’t care less about public schools because they have no kids!

Married with No Kids – same as the singles in terms of disposable income and where it is spent, but depending on future plans may be more concerned with schools. And if they have already been living urban and prefer that lifestyle then they’ll strongly consider all choices and alternatives (private schools, etc.) before giving in and moving to the burbs, especially if they are in higher income brackets.

Families with Children – Yes, this is the ONE demographic that has legitimate concerns about public schools, so give this demographic to the suburbs unless they are in the tiny minority that has already been living urban and figured out educational alternatives. And that is ok, because this demographic is also the least likely to be spending much in the local economy when it comes to urban amenities, as they are probably spending much more time at home with the kids. This isn’t to say that this demographic should be shunned or ignored, just that it should not be a priority until the urban core has successfully attracted all of the other demographics it can.

Empty Nesters – this is the other demographic sweet spot as they have no school-aged children, will not have school-aged children anytime in the future and thus do not give a hoot about how good or bad public schools are, at least in how it affects them personally. They are the most likely to have the money to purchase expensive downtown condos as they downsize from the now-unnecessary large suburban homes. They have the disposable income and may not be frequenting the bars but will be eating out quite a bit and subscribing to the various traditional theater seasons. In fact, the places they spend money at may be quite different than the young generation and thus the urban core will have a more diverse offering of amenities (not to mention the diversity of residents).

So of all of these groups, there is only one that is more than likely to be turned off from living in the city because of the public schools. Sure, you can say that the quality of public schools effects real estate values, but that is more a Realtor-created problem than based on urban reality. Of course, most Realtors are clueless when it comes to urban markets – at least in Dayton – so that is a perception that will be tough to crack here. Just like the crime perception, but that is for another post…

Btw – I belong to the Families with Children demographic and I live in Downtown Dayton.  It will be another three years before I have to figure out the school thing, but I can tell you that my wife and I are not two parents you’ll see retreating to the suburbs because of public schools.  And while we are in the minority, we are far from being alone.