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Working Group 03

STRENGTHENING THE MIX OF USES

FACILITATOR – Katie Unger

Download the meeting handout for Strengthening The Mix of Uses PDF (340 KB)

Ongoing Challenges

  • There is a desire to preserve the neighborhood’s mixed-use character but existing zoning tools are inadequate for achieving a genuine, stable mix of uses
  • Retaining and strengthening local manufacturing
  • Retaining and strengthening local artists and cultural spaces
  • Balancing different uses, both in terms of real estate costs and day-to-day operations

List of Ideas

Establish new zoning tools to regularize existing mixed-use buildings & mixed-used blocks. Explore requiring those buildings which are currently mixed-use to remain that way.

Preserve the essential character of the neighborhood by landmarking historically significant buildings

Create design guidelines for new mixed-use buildings that include light industrial, artist, and residential uses. Explore use of FAR bonuses to incentivize a good balance of uses.

Increase allowable density for industrial uses (recognizing divergent viewpoints on acceptable building heights)

Implement commercial rent regulation

Retain and strengthen local manufacturing by:

  • Strengthening Industrial Business Zones
  • Creating an Industrial Business Improvement District
  • Creating tax incentives for industrial businesses
  • Limiting non-industrial uses, like hotels, under industrial zoning

Develop workforce training programs and local hiring provisions

Retain and strengthen local artists and cultural spaces by:

  • Creating art incubators
  • Explore models for non-profit ownership
  • Creating incentives for artists who produce work in Gowanus
  • Requiring private developers to create space for arts and culture

2 Comments

  1. Louis Kleinman
    January 24, 2014

    Tax incentives for businesses should include community benefits agreement regarding local training & employment. Work arising out of the Superfund should include local training & hiring.

  2. Neil Carlson
    January 28, 2014

    First Principles–
    Given the broad consensus that the existing mix of commercial, manufacturing, and artisan uses is one of Gowanus’s most attractive features, I think it’s worth laying down some principles that will guide future policy:

    Policy should protect and support existing commercial, artisan, and creative businesses. Incumbent artists, restauranteurs, small business owners, etc. have played a huge role in making Gowanus the vibrant mixed-use neighborhood that it is today. But many of these are facing enormous economic pressure–mainly from escalating real estate prices and lease rates. At a minimum–specifically zoning changes and tax and financial incentives–should be used to hold harmless existing business. Better yet, policy should support and reward those businesses–many of whom are vital local institutions and pillars of the neighborhood’s cultural life.

    Wherever possible, policy should support the goal of existing users controlling their real estate, whether through long-term leases or direct ownership. Many of the challenges of “retaining mixed uses” result from the fact that businesses don’t control their real estate. Just as federal housing policy supports homeownership, local policy and incentives should focus on helping small businesses own their real estate. With appropriate safeguards against speculation or misuses of public assets, targeted incentives could help small businesses build equity and invest in the long-term stability, diversity, and economic vitality of the neighborhood.

    Public incentives and policy should be used to discourage speculative real estate investing. The precipitous rise in Gowanus real estate prices is the direct result of speculation. Investors are buying property at prices that only make sense if they presume that the area will be rezoned to accommodate maximal luxury housing. This kind of speculation becomes a self-fulfilling prophesy as developers howl at the prospect of losses (or lower gains) when alternatives are proposed. I say, “let them howl.” Let’s build a political constituency the supports more inclusive uses. Done right, this constituency could support affordability requirements on both commercial and residential sides in exchange for greater FAR. But the public holds most of the cards now (since any zoning changes require public approval), so we should push for the best possible mix.

    City Policy Options–
    The City’s policy options are fairly limited in scope, but nevertheless have the potential to counterbalance unbridled market forces and protect the public interest. In my view, the levers are as follows:

    Zoning and land use. These include: bulk, height, and use restrictions; community use designations and FAR bonuses; special zoning restrictions; as-of-right building limits; variances; plan approval process at DOB; and affordability requirements/inclusionary zoning.

    Public incentives. Property tax abatements; bonding; use of public funds; council member budgetary allocations;
    Administrative powers. For many small businesses, navigating city bureaucracies–DOB, DOH, FDNY, etc.–are major barriers and expenses. City agencies could appoint navigators or point persons to minimize red tape and streamline permits and approvals for the uses and businesses.

    Specific Policy Recommendations/Options–

    ZONING/LAND USE
    Create a special zoning district that protects and preserves mixed uses, similar to Industrial Business Zones.
    Any rezoning must account for as-built environment. For instance, my company occupies the third floor of a building zoned for two stories, so any rezoning would need to account for that context.

    Place explicit limits on big box retail outlets.

    Change zoning language to limit as-of-right construction of hotels, clubs, and large-footprint restaurants.

    Consider density bonuses for any developments that are abide by affordability guidelines for residential AND commercial.

    Expand definition of “community uses facility” to include incumbent uses–office, artisan, creative, etc.–thus encouraging owners to develop affordable space for desired uses under the commercial FAR bonus. In practice, I think artist studios or offices for small businesses serve the public interest as much as another kidney clinic.

    Put explicit limits on big box retail.

    INCENTIVES
    Use public resources to help small businesses purchase their real estate. The SBA has a robust commercial lending program, with attractive terms: 90% LTV with a fixed 25-year mortgage. In exchange for a deed restriction tied to the mortgage term (to discourage speculation and flipping), the city could provide equity assistance for small businesses wishing to purchase their property. The city could also set aside a portion of funds as a loan guarantee fund for any mortgage that went bad. This would have the advantage of leveraging other sources of commercial debt, without the mess of the public taking an equity stake.

    Provide favorable real estate tax treatment and streamlined approval for buildings that are willing to go “commercial condo.” This would support the above goal of making more real estate available/affordable to small businesses. Developers would likely get a higher cost per SF if they took their buildings condo, thus increasing the supply of affordable commercial space.

    Create a “Creative Gowanus IBZ” that would make real estate more affordable by offsetting real estate tax pass through for commercial lessees.

    Conversely, the city could create real estate tax vouchers that would adhere to current lessees that are in danger of losing their leases. For instance, if a lessee was facing a $3/sf increase in rent, a tax credit of $2/sf could make the difference between making it and closing their doors. If the tenant had to leave, that real-estate pass through credit could be transferred to another building, ideally within the Creative Gowanus IBZ.

    Create a “public purpose equity fund” that developers could have access to if they agreed to develop property deemed to be the the public interest–i.e., current Gowanus-type uses. With a lower equity hurdle from this patient public capital (vs. private real-estate equity funds), developers would be required to pass along the savings in lower cost leases, longer terms, and less aggressive escalations–and still make reasonable returns.

    Use public resources–perhaps combined with other forms of patient capital–to assist owners who want to keep their building dedicated to creative uses.