There’s been a lot of griping from this and other sites about how the overabundance of surface parking lots in downtown Minneapolis is destroying the character and potential of what should be our city’s densest neighborhoods. This blog has paid a lot of attention to the Downtown East corridor in particular (between the Metrodome and the business corridor—see here and here and here if you’re new around these parts).
There have been indignant calls for someone to do something about all of these parking lots, because, well, just look at them! They’ve been called blemishes, scars, deserts, seas. Writers have scoured their thesauruses and dug deep into their collective Bag of Metaphors trying to figure out different ways of saying the same thing: Something Is Wrong Here. And usually, in our desperation, we appeal to the only “someone” we believe has the resources and the power to do something about the problem: “the City,” with a capital C.
When all of these lots are privately owned by people who can, by law, do with the land what they please, what tools does the city actually have at its disposal to alter the way the land is used?
But here’s the complicating factor at work that usually ends up going unacknowledged in these pleas: When all of these parking lots are privately owned by people who can, by law, do with the land what they please (with a few restrictions of course), what tools does the city actually have at its disposal to alter the way this land is used?
I posed this question a couple of weeks ago to Beth Elliott, Principal City Planner in charge of downtown development, and, as it turns out, the city is trying to figure this out, too. (At the time we spoke, Elliot was in talks with various consultants who might be hired to develop a comprehensive plan for downtown reform.)
While Elliott made it clear that the city hasn’t settled on any of these tactics and that others may exist that they’re currently unaware of (hence the consultants), she agreed to give me an overview of what tools the city has in its tool belt. A summary:
1. Change the zoning code. The city has already done what it can here. In 1999, the city voted to ban construction of any new commercial surface parking lots downtown. The only caveat: because of non-conforming use protections, all existing lots would be grandfathered in and allowed to remain in place.
2. Create tax structures that encourage development. One reason parking lot owners don’t choose to put their land to more productive use is that—in lieu of a buyer who is willing to pay the (by many accounts) unrealistically inflated asking prices many owners are seeking for their land—property taxes on unimproved lots are so low that it doesn’t take a whole lot of revenue to offset the expense of just sitting on them. One way to disincentivize this is to institute a split-rate tax structure that taxes the value of the land itself (its development potential) at a higher rate than it taxes improvements on that land (i.e., buildings and infrastructure). Essentially, this means that if land is being used at less than its maximum productivity, its owners are paying a disproportionate amount in taxes in order to keep it that way. Conversely, improvements to properties (i.e., the buildings themselves) are taxed at a lower rate, and so owners of developed land have a more balanced tax bill.
3. Borrowing against future tax revenues. A fancy name for this is Tax Increment Financing (or TIF). Basically, this is a method by which the city would subsidize development in certain areas that it sees as particularly promising or strategically important by borrowing from the future tax revenues that would be created by said development.
4. Subsidize development directly. Sometimes cities, states, or the federal government provide subsidies for development projects that have been identified as serving the greater public interest. This represents a way to get developers over a financial hump, or to encourage, for instance, a ten-story building where the developer might only have financing for six. Often, grants of this type come with mandates that developers provide a certain amount of affordable housing for low-income residents.
5. Exercise eminent domain. The city can exercise eminent domain for public use projects but not for economic development purposes. This means that while a park or transit infrastructure might fall under that heading, a mixed-use development project would not. (Not to mention, Elliott pointed out, downtown land is expensive these days, and the city would have to pay fair market value for it.)
6. Enforce existing zoning codes. In lieu of any of the above strategies, the city could require parking lot owners to meet existing zoning laws that require a certain amount of landscaping and screening of their lots. Most are not up to code, but the argument against this, Elliott said, is that property owners are even less likely to sell after they’ve been required to dump a bunch of money into improving that property.
Certainly there are other ways of bringing about change in this area, and the city is hiring consultants to explore just what those other avenues might be. But until then, it’s important to remember that, though we may choose to use it every now and again as a whipping post for our own frustration, the city isn’t all-powerful when it comes to dictating land use downtown.