UP FRONT: Cultural shift to 'new urbanism'

Posted on Apr 1, 2014 :: Up Front
Posted by , Insight on Business Staff Writer

Wisconsin’s aging city centers face some common problems — it’s easier and cheaper for developers to build new construction than it is to adapt a factory, bank or old church for a new use. Re-use often requires extensive, and expensive cleanup or asbestos removal, and available parking space is often limited in the middle of a city. That’s why almost all inner-city projects require some grants and other types of assistance.

On the positive side, cities are now attracting people who want to live downtown. As auto manufacturers have seen to their dismay, the percentage of young people who have driver’s licenses is lower than it has been in decades. A youth cohort has found car ownership less attractive and would rather live in a city where they don’t need to drive. At the same time, many retired baby boomers are happy to hang up their rakes and snow shovels and move into apartments or condominiums where they can walk to restaurants and cafes.

“We’ve seen a cultural shift in the country, and not just in big cities,” says Greg Flisram, director of economic development for Green Bay. “It has been termed the new urbanism. I think the market is larger than most people realize.”

Like several other cities in Wisconsin, Green Bay is working to revive its core.

Flisram says his department often deals with fragmented property ownership when it tries to raze or renovate old buildings to create a site that will attract a developer.

“We try to put two to four pieces together for a larger redevelopment site. And we do the predevelopment work no one likes to do — getting the titles cleaned up and the environmental reports done so we understand what we are dealing with. In some cases we pay for remediation such as removing asbestos.”

The state recently doubled the state income tax credit on rehabilitation costs for historic buildings to 20 percent, while the Federal Historic Preservation Credit returned 20 percent of the cost of rehabilitating qualified historic buildings as a reduction of federal income taxes.

In Green Bay, Franz Hobart of Cedar Rapids, Iowa, is leading the development of the Northland Hotel, which had been empty for years. It will become an independent boutique hotel through a $30 to $35 million renovation.

For Glass Nickel Pizza on Dousman Street, the city assembled three parcels, did some cleanup and gave the owners a building for $1. The first franchise operation of the Madison-based pizza company then invested $800,000.

“We made it worth the time and effort to do it,” Flisram says. “The lesson for municipalities is that if you want these deals to happen, you have to subsidize them directly or indirectly, acquiring and writing down land costs, leveraging money from the state or EPA for cleanup and putting them into a TIF (tax increment financing district, which uses increases in tax revenues from a defined district to pay down the debt of the improvements). A lot won’t happen without direct government intervention.”

Green Bay is also working on housing developments, including 200 luxury mid-rise units on the east side of the river.

“We need to have more housing downtown, more housing types at more price points to get downtown to come alive 24-7.”

He expects it to appeal to urban professionals, such as those working at Associated Bank or Schreiber Foods, and empty nesters.

The city is using an Iowa development firm because most local developers aren’t interested in historic rehab or infill projects, he says.

“Louie Lange in Fond du Lac is about the only guy I can think of in this region who does historic renovations.”

Lange, president and founder of The Commonwealth Companies, says there’s a good reason not many companies do redevelopment.

“Money is always a challenge and trying to renovate a building is difficult unless you have a tenant lined up, and there are fewer and fewer of those available,” he explains. “The cost of the deal is usually more than the rent can justify. Adding sprinklers, abetting asbestos and other environmental concerns adds up pretty quickly.”

Some communities have design review boards, which can add to the challenge, and many are unrealistic about what can be done with an old building. He has torn down parts of a complex and then built new in a different style to go alongside the old.

“The result is somewhat eclectic and it shows the public that new things are going on in the community. You have to end up with something that is useful and that has been done in a cost-effective manner, and a lot of community members don’t care about that piece.”

People may want downtown living, but they also want amenities like ample parking and spacious apartments to hold all the stuff they have acquired over the years.

Cities have found that an attractive downtown is important when trying to attract new businesses, helping existing business bring in new staff or helping an expanding hospital draw new medical staff. Lange is relocating his company to the Wells Manufacturing factory in Fond du Lac. The city had planned to raze the 220,000-square-foot factory and make a park. He will tear down some of it with money the city would have spent for demolition, keep 60,000 square feet and add new construction in a $2 million project, which keeps it on the tax rolls.

Amy Hansen, executive director of the Downtown Fond du Lac Partnership, says the city has generated $86 million of private investment since becoming a Wisconsin Main Street Community 10 years ago, qualifying for technical support and training from the state’s Department of Commerce. The city’s Business Improvement District has 214 properties and 295 businesses in 47 city blocks and does various marketing efforts and aesthetic projects. A face improvement grant program awarded 118 grants, typically around $2,000, which stimulated $1.3 million in property investment.

Drawing on a recent study by the Wisconsin Economic Development Corp., Hansen says the city needs 69 new condos to meet demand from people who want to live downtown – empty nesters and people looking for vibrant urban living.

“There are folks who want to go out at night and walk home,” Hansen says. “Others are concerned about the environment and would prefer to walk or ride a bike, and some want connectivity in their community.”

The city has also tapped local CEOs to help develop a vision plan.

“They were clear that they need this to be a community they can attract quality professionals to. Mercury Marine is bringing in engineers and designers, but we need for this to be a place they want to relocate to.” Hansen wants to encourage downtown retailers to open up their second floors for apartments.

“We have some property owners who have done that, and the apartments have never been vacant.”