Thursday, May 19, 2011

PSA: On Subsidy and Charity

DMagazine's FrontBurner blog has a link to a worthless Financial Times report/article about how strong Dallas is, as indicated by the number of cranes(?!) in downtown. In a normal world, yes, that would be a key indicator. But, was Dubai strong in 2008? Is China, where half the cranes of the world are churning out entire cities soon to be occupied one unless by gunpoint. Is that strong? And as I point out in the comments:
I’m struggling to figure out what/where the other cranes might be: Convention Center Hotel, Nature/Science Museum, Dallas Baptist, and Hunt-Hill Bridge, and Parkland (is that downtown) are the only possibilities. All of which are subsidized or donated charitably. The city won’t truly come back (and what is back? back to the future?) until downtown development can be profitable without subsidy and with taxable floor-area downtown.
Oh, and I forgot Museum Tower. However, you tell me if million dollar condos sat within an off-ramp is a good investment for the police/fire pensions (and I'm all in favor of pensions going into real estate, but not until the systemic issues related to short-term vs. long-term gains are worked out).

In actuality, we're treading water (at best). As I suggested in the comments, if we were truly dedicated to downtown, we'd be trying to figure out how to flip the fundamental equation in downtown Dallas real estate, that land prices are far higher than demand warrants in order to make development work. We've gotten by thus far, by heavily subsidizing projects to this point.
We can't possibly keep treading water before we drown. Instead, the 360 plan drew development plans that can't possibly work without obscene levels of subsidy and participation from the city's side. And trust me, I'm no tea partier, but both developer AND city would prefer that scenario just to be out of each other's hair.

Fortunately, I've figured out how to flip the equation so that demand is higher than land costs. Take out freeways (where the city/state/and feds own land depending upon which Right-of-way). Broken record, I know. It will cost, what a 1/5th of what we're trying to spend rebuilding the various freeways in/around downtown?

And we can flood the development market with land at cut rates (in exchange for agreements for a certain level of quality development), remove the fundamental impediment to necessary desirability (highways which make living in Oklahoma rational), and set up a TIF to build the street/block/park infrastructure (hell maybe even streetcars, woot!), because of the increase in taxable land value from ZERO, to whatever that increment might be? $30/sq.ft for dirt? Higher?! Rather than the only return being sooty lungs and deformed and/or premature babies (and I'm not joking).

In one sense it is a public safety issue, which potentially brings condemnation into play. Ironic, considering we hate condemnation b/c it was used to build freeways. It may now be our salvation.

When something is an economically, environmentally, and socially profitable, do you say no? "Cuz it's too hard?" That ain't (excuse me grammar-snoot sister) the Dallas way. Perhaps I can shame/goad Dallas into it...the "world class" cities are doing it.

Sorry for interruption. Recommence irrationality, insanity, and "doing things big!111!!!" or something.