Downtown Madison Inc. has proposed their version of how to fix inclusionary zoning. There is merit in parts of their proposal, but as we know, the devil is in the details. In this case, BIG details!
The basic concepts in their proposal are as follows:
1. Developer makes a proposal to the city.
2. The developer chooses any incentives on the City’s list of incentives and also can propose additional incentives if there is something specific to their project. (i.e. We get rid of the incentive points in the ordinance.)
3. The developer determines the “cost of IZ”. They then choose incentives to offset the “cost of IZ”. The developer puts a value on each of the incentives to help determine if the costs of providing the IZ units are offset. There are no restrictions on how many incentives the developer can ask for and they may get even more incentives than the “cost of IZ” in some circumstances.
4. If the City does not want to provide the incentives the developer requests, the developer can reduce the number of units. (DMI does not support buy-outs or payments to the City instead of providing the IZ units.)
5. The developer can provide the “dispersion” as they see fit (they can lump the IZ units together instead of providing them throughout the project) and provide units off-site if they want to regardless of if the incentives offset the “cost of IZ”.
6. If the elected officials don’t like what the developer proposes, elected officials do not have the ability to make changes to the project, our only choice is to vote “no”.
My biggest questions about their proposals are as follows:
1. How do we value the “cost of IZ”? What if we disagree about the “cost of IZ”? What if we disagree with the value the developer has placed on the incentives? What if there is disagreement about the amount of incentives that should be used to cover the “cost of IZ”? How do we resolve disputes?
2. Do they really want us to vote “no” instead of trying to make the project work?
Don’t get me wrong, I actually agree with some of the concepts in the DMI proposal and appreciate that they tried to come up with a solution. In fact, I agree that we should:
a) get rid of the point system
b) allow more flexibility in dispersion
c) continue to allow reduction (less than 15% of the units would be IZ) if the developer is not made whole
d) the developer should submit a proposal to the city based on what they think is best for their project
e) allow incentives that are specific to the project if it is not on our list of incentives
f) allow the developer to propose what they think the incentives are worth
However, the problem remains, how do we resolve conflicts? How do we make good decisions without information?
Should we just “trust the developer” as they suggest? If they say that off street parking permits are worth nothing, but without the off street parking permit they would need to build a $35,000 underground parking spot, isn’t that worth $35,000 per permit? How would we resolve a dispute like this?
How do I as a policy maker know if I am making a good decision for the taxpayers of Madison without further information/verification of the “cost of IZ” and the value of the incentives? If the developers says the “cost of IZ” is an additional $200,000 beyond the incentives the City agrees to and they want another $200,000 reduction in park fees, should I be given the best information available to decide if the “cost of IZ” is real? Isn’t it my job as an elected official to make sure the taxpayer is protected?
The developers answer to resolving the disputes remains, surprisingly . . . allow the reduction in the number of units as proposed based on the developers assessment of what the “cost of IZ” is and the value of the incentives, or “just say no” to the entire project.
I guess that works out great for the developer, but what about the rest of the City and the taxpayers? Doesn’t it seem that this would lead to more rejections of otherwise good projects that we want for the city?
The proposal may have merit, but there has to be a better dispute resolution mechanism regarding the “cost of IZ” and the value of incentives – or we’re going to have alot of ridiculous decisions. In the absence of facts, these decisions will be made because it doesn’t “feel good”. We need good information to make these decisions to make sure our decisions are fair to the developers and so we can do our jobs on behalf of the public.
Note: To be fair, after the meeting yesterday, one of the developers offered that they would agree to provide documentation about the cost of their incentives, tho up to this point, that was not the impression I had after discussing this for nearly 4.5 hours with developers.
