How to plan for economic transformation - Metropolitan Planning Council

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How to plan for economic transformation

Experts and policymakers give advice and share experiences on connecting housing and commercial development in areas being redeveloped as mixed-income communities.

The Metropolitan Planning Council’s March 10, 2006, “Building Successful Mixed-Income Communities” forum, co-sponsored by the John D. and Catherine T. MacArthur Foundation and in collaboration with the Chicago Housing Authority (CHA), brought together local policymakers, a national expert, and an audience of more than 200 to revisit the issue of economic development, which had been explored for the first time during a 2004 forum of this series.

According to Bill Little, CHA’s managing director of development, the main concern of the Authority at the beginning of the Plan for Transformation was getting homes built as soon as possible. However, now, seven years into the Plan, the focus is expanding to encompass economic development strategies. The Plan itself is a major engine for economic development, leveragingapproximately $5 billion in housing-related investments since 1999. CHA, in collaboration with the Chicago Dept. of Planning and Development (DPD), has been instrumental in acquiring land around its developments in order to start assembling sites to attract retailers.. This includes the eastern side of 39 th and State streets, lots adjacent to the Roosevelt Square site (formerly ABLA), and the Madison Street/Western Avenue intersection near West End (the former Rockwell Gardens ).

Judy Minor-Jackson, deputy commissioner of DPD, highlighted two initiatives aiming to promote economic development in two areas in the vicinity of transformation sites: the 39 th and State intersection and the Cottage Grove corridor.

Plans to revitalize Cottage Grove include amending the TIF district to encompass the west side of the street and thus entice developers. DPD is also encouraging a mix of uses; promoting infill development, and recommending the area remain pedestrianfriendly and high density; all of which is necessary to attract the critical mass of residents and visitors needed to sustain a viable commercial district. The vision for Cottage Grove is one of relatively dense mixed-use development, with retail on the ground levels and residences on top, as well as carefully designed streetscaping and signage. The local organization Quad Communities Development Corporation (QCDC) has worked with DPD in producing the plan. The 39 th /State intersection, where the City owns 10 acres, is part of a TIF district and an Empowerment Zone. The goal for this area is to attract a major grocer, which would spur additional retail on this site. Calculations by DPD show that, once redeveloped, this intersection could produce $500,000 per year in sales taxes and generate an Estimated Assessed Value (EAV) of $12 million.

Marilyn Melkonian, president and founder of the Washington, D.C.-based Telesis Corporation , began her presentation by acknowledging the tremendous effort that has been put into transform Chicago’s entire public housing stock, an initiative that she knows first-hand from her involvement in the master plan to redevelop the ABLA site into the Roosevelt Square mixed-income community. Melkonian highlighted the importance of strong partnerships among the private, public and civic sectors, and cited two examples of Telesis Corporation’s work as it relates to revitalizing housing and bringing the economy back to disinvested communities:

  • The Ellen Wilson, Capper and Carrollsburg neighborhoods in Washington, D.C., where 802 public housing units were redeveloped -- using the first round of funding from the HOPE VI program -- as a mixed-income community.
  • Bradenton Village, in Bradenton, Fla., where a public housing community suffering decades of physical decay and persistent flooding was redeveloped as a high-quality mixed-income neighborhood.

At Ellen Wislon, Telesis Corporation connected local residents to construction jobs and apprenticeships

To explain how New Markets Tax Credits can be used to spur economic development, Melkonian presented a third case study: Court Square Center in Memphis, Tenn. There, Telesis is transforming three vacant downtown-buildings into a mix of apartments and commercial space, using both New Markets and Historic Rehabilitation tax credits.

She pointed out that the complexity of this type of transactions does add some risk, due to:

– the mixture of five sources of private and public funds;

– the different recapture rules for each tax credit program;

– the fact that New Markets Tax Credit projects are, by definition, in census tracts with at least 20 percent poverty; and

– the requirement that mixed-use proposals must generate at least 20% of gross rental income from the non-residential (usually commercial) component

Click here to learn more about Court Square Center.

Nevertheless, Melkonian concluded, the New Markets Tax Credit program is worth exploring in Chicago to promote commercial development in and around the mixed-income sites.

Locally, LISC/Chicago’s New Communities Program is bringing economic development to neighborhoods across the city, including two areas experiencing intense public housing transformation: the Westhaven community (formerly the Henry Horner Homes) and the Quad Communities (including Oakland, Kenwood, Grand Boulevard and Douglas), where seven major CHA sites are being redeveloped as mixed-income communities.

Joel Bookman, New Communities director, highlighted the importance of working with the community-based organizations selected as “lead agencies” in these two areas, Near West Side CDC and Quad Communities Development Corporation (QCDC). Near West Side CDC has been guiding the transformation process at WestHaven since well before the inception of the CHA Plan for Transformation, working with community residents, developers and investors. Currently, a bank branch, a brand-new Walgreen’s, and a dental office are up and running on Madison St., the first commercial development in the neighborhood in more than four decades. QCDC, assisted by a market analysis by MetroEdge and a plan developed by Skidmore, Owings and Merrill for the Chicago Dept. of Planning and Development, is working to put its community area back into the economic mainstream.

According to Bookman, a number of elements are necessary to re-create a market in a previously disinvested area and attract investment, including:

- an advocate or champion who is aggressive, sophisticated and willing to push through the entire process, from the inception of the economic development plan to the marketing to retailers and beyond;

- an adjacent or nearby area where development is spreading quickly, such as the West Loop near Westhaven Park, or the South Loop in the vicinity of the Quad Communities;

- an effort to remove negative images and perceptions: the demolition of dilapidated high-rise public housing played a key role as the symbol of the sunset of an old era and the beginning of a new one;

- emerging new housing opportunities, such as the ones created by the Plan for Transformation via mixed-income communities, or by the Dept. of Housing through the New Homes for Chicago program;

- research and market studies showing promising trends; and

- strong partnerships with community-based organizations and institutions that can help market the area to investors.

Before becoming a successful entrepreneur as the president of Chicago Community Ventures (CCV), Stephen Maduli spent his childhood and early youth in Chicago’s Englewood neighborhood, an area with high rates of unemployment and large pockets of poverty. Maduli founded CCV in 2000, with the goal of helping small businesses located in low and moderate-income neighborhoods around the city. Part of CCV’s work focuses on stimulating economic development in the vicinity of mixed-income communities located on the Near West Side and in Mid-South, through a 30-month program that delivers monthly business workshops, 140 hours of consulting services, and access to peer-to-peer networks for business owners. Currently, 11 businesses participate in this program; four from the Mid-South and seven from the Near West Side. The companies are in diversified industries such as service, manufacturing, retail, and nonprofit social ventures. Revenues of participating businesses range from under $100,000 to more than $2 million, while company size varies from one to 42 employees.

In addition to assisting businesses, CCV has developed Chicago Prospector, a free online commercial real estate listing service and research tool that uses Geographic Information Systems (GIS) technology to provide valuable data about available property in low-income areas. The Web site is a resource for investors, developers andplanners interested in exploring economic opportunities in the city. Available data includes current neighborhood demographics, information on existing businesses by industry, and tax incentive information. Click here to access Chicago Prospector

The following are a small sampling of the exchanges during the Q & A session with the audience that followed the panelists’ presentations

- How do you gauge progress when working in disinvested communities?

- Stephen Maduli: It is necessary to be realistic, manage expectations properly, and acknowledge that you can’t expect the same speed and results from a firm run by a public housing resident who is starting his or her first business in a developing neighborhood as you’d see with a business located in a developed area and run by a well-trained and experienced manager..

- How do you work with the unions?

- Marilyn Melkonian: We work very closely to connect our own construction-related apprentice program to those sponsored by the local unions. When our residents were done with our training, they were able to transfer to one of the programs provided by the unions.

- How do you convince land owners to sell a lot that you need immediately for commercial development when they are unwilling to do it and prefer to wait until the market price is substantially higher?

- Joel Bookman: There are different ways to do this without having to resort to eminent domain. For instance, finding community spokespersons and residents willing to communicate to the owner the importance of being cooperative can sometimes work. Land swaps are also a possibility.

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