development potential and pricing in UD & Balancing Affordable Housing and Profit - Printable Version

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development potential and pricing in UD & Balancing Affordable Housing and Profit - Kaoru Takara - 10-17-2023

The concept of development potential and pricing in urban redevelopment is critical in achieving a balance between affordable housing and profit generation. It involves assessing the capacity of a site or area for redevelopment and determining the pricing mechanisms that will allow for a sustainable urban transformation. Striking this balance is crucial for creating inclusive, economically viable, and socially sustainable urban environments.

Development Potential:

1. Site Assessment: Identifying the development potential begins with a detailed assessment of the site, including factors like location, size, current land use, and infrastructure. Understanding the site's constraints and opportunities is essential.

2. Zoning and Land Use Regulations: Municipalities often set zoning and land use regulations that define what types of development are allowed in specific areas. Developers must assess how these regulations impact development potential.

3. Market Analysis: Analyzing market demand for various types of properties (residential, commercial, industrial) helps determine the potential for profit generation. Developers need to consider the market's appetite for different types of developments.

4. Infrastructure and Utility Capacity: The capacity of existing infrastructure and utilities, such as water supply, sewage, and transportation, significantly affects the development potential. Upgrading or expanding these services may be necessary.

5. Economic Viability: Development potential also depends on the economic conditions in the region. A municipality with a robust economy is more likely to attract investors and developers.

6. Public and Private Partnerships: Collaboration between public and private entities can unlock additional development potential by combining resources and expertise.

Pricing in Urban Redevelopment:

1. Land Valuation: Determining the fair market value of the land is crucial. This valuation should consider factors such as location, size, current use, and potential use under redevelopment.

2. Affordable Housing Mandates: Municipalities can incorporate requirements for affordable housing within redevelopment projects, either through inclusionary zoning policies or negotiated agreements with developers.

3. Density Bonuses: Incentivizing developers to include affordable housing units by offering density bonuses or other financial incentives can encourage affordable housing development.

4. Tax Incentives: Tax credits, abatements, or exemptions for developers who commit to affordable housing can be used to encourage developers to price units at more affordable rates.

5. Subsidies and Grants: Providing financial support to affordable housing developers through subsidies and grants helps bridge the affordability gap.

Balancing Affordable Housing and Profit Generation:

Striking a balance between affordable housing and profit generation can be achieved through various strategies:

1. Mixed-Use Development: Integrate affordable housing units within mixed-use developments. This can cross-subsidize affordable housing with income generated from commercial or market-rate residential components.

2. Public-Private Partnerships: Collaborate with private developers to create affordable housing units while ensuring that the financial arrangements are structured to be mutually beneficial.

3. Incentive Zoning: Use incentive zoning mechanisms to encourage developers to include affordable housing. This can be linked to zoning bonuses, tax incentives, or reduced development fees.

4. Land Trusts: Establish land trusts to retain ownership of the land and control future development, ensuring a long-term supply of affordable housing.

5. Community Land Banking: Reserve land for affordable housing through community land banks to address housing affordability challenges.

6. Transparency and Accountability: Ensure that all pricing and development decisions are transparent and subject to public scrutiny, holding both public and private actors accountable.

7. Continuous Monitoring: Regularly monitor the impact of redevelopment projects on housing affordability and make necessary adjustments to policies as needed.

Striking a balance between affordable housing and profit generation requires a nuanced and adaptable approach, tailored to the specific needs and conditions of each urban area. Collaboration between municipalities, developers, and the community is key to achieving sustainable, inclusive, and economically viable urban redevelopment.

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