2015 West Palm Beach: The Dollars & $ense of Development Patterns

West Palm Beach

THE DOLLARS & $ENSE OF DEVELOPMENT PATTERNS

May 2015 1

West Palm Beach

THE DOLLARS & $ENSE OF DEVELOPMENT PATTERNS

INTRODUCTION & METHODS 1 INTRODUCTION 2 PURPOSE OF ANALYSIS 3 WHY VALUE PER ACRE

EXPLORATIONS & ANALYSIS 4 RESULTS 5 BUILDING DESIGN 7 PERFORMANCE METRICS

OPPORTUNITIES & CHALLENGES 8 VACANT / UNDERUTILIZED LAND 9 IMPACT FEES 11 ADDING THE SPIKES

W

est Palm Beach has persevered through the Recession and emerged as the regional center of Palm Beach County. As a bustling

center of regional shopping, commerce, and civic services, Downtown has helped anchor the city of West Palm Beach and Palm Beach County. The city has complemented investment along historic Clematis Street and CityPlace by providing urban core employment centers and encouraging significant housing density in the area. Those investments have had a ripple effect on some neighborhoods adjacent to downtown, and others have seen spill-over investment and infill projects. The linchpin in West Palm Beach’s success is the leadership’s role in investigating the impact of policy on downtown investment and an encouraging an open conversation on maturing the heart of the county.

Above: View of West Palm Beach skyline

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While West Palm Beach has arrived as a healthy mid-sized city unto its own, with a confident and thriving downtown, there is still work to be done.

With these challenges come great opportunities.

The days of despair behind it, it is no longer the beggar, but the “place to be”, as such, comes a maturity and responsibility of a new city. A city of promise and potential and a benefit for all of Palm Beach County and South Florida.

Indeed, Downtown WPB has always held the mantle of the seat of government in the County.

But for generations, it served as a secondary element to tourism destinations elsewhere in the community, particularly the Town of Palm Beach and other beaches. As those areas flourished,

“What we choose to build or allow to be built in our communities has a direct impact on our ability to repair roads, provide quality education, and pay our bills.”

West Palm Beach languished. Surprisingly, West Palm Beach was featured as a backdrop for an HBO episode of “Cracktown USA” in 1989. The city has since repaired itself. Vibrant pedestrian activity, street cafes, and retail help put past challenges and the recent successes into perspective.

This report serves as an economic MRI. Much like a check-up with a doctor, this analysis quantifies the physical and fiscal shape of the county, city and downtown. The property tax potency of various community designs and building types were measured to give the community an idea of what areas are producing efficient community revenue and what locations could be improved. Further, the value of downtown is examined in the context of Palm Beach County to provide a relative metric of revenue production.

The Downtown Development Authority (DDA) and The City of West Palm Beach commissioned Urban3 for this study to illustrate economic trends in an easily digestible way. Urban3 is an internationally-recognized consulting firm specializing in land value economics, property and retail tax analysis and community design.

Urban3 uses analytic methods that are typical in site-specific real

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THE VALUE PER ACRE METHOD estate analysis and applies them to

Total Tax Value

(miles per tank)

development across entire counties and regions. Additionally, Urban3’s Principal, Joe Minicozzi, is deeply familiar with the community having served as the zoning administrator of downtown West Palm Beach from 1998 until 2003.

The focal point of Urban3’s analysis is the “Value per Acre” method. This metric views development and property values on a per acre basis, utilizing land consumed as a baseline of productivity.

West Palm Beach and Palm Beach County have a limited supply of land to develop and more expansive developments

Tax Value per Acre

(miles per gallon)

typically carry a higher cost of servicing with public resources (i.e. streets, water and sewer, etc.). Normalizing property value by the acre allows for an “apples to apples” comparison when examining various developments in different locations.

Property taxes are the backbone of local government revenue. Efficient property tax production has a direct impact on the ability to repair roads, provide quality education, and pay the bills. Identifying

Just as different cars have differently-sized gas

development that packs a financial

tanks, we use the gallon as the measuring stick of

punch is critical to cultivating community

efficiency, not the tank. In other words, we use

wealth.

“miles per gallon”, not “miles per tank” to make a relative comparison of cars and trucks. Using a “per acre” metrics for land helps better understand the potency of one parcel against not only its neighbor, but also the entire city and county.

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RESULTS Downtown West Palm Beach

3D Tax Value per Acre

East of Slough

Source: Palm Beach County Appraiser

Above: The county

Palm Beach County’s value per acre peaks in downtown, with the Two City

is broken into

Plaza achieving a staggering $99 million/acre. Apparent is the steep drop-

two zones: the

off in value in western parcels, particularly west of I-95. As you travel down

agricultural lake

westward down Okeechobee, lower densities bring lower value per acres.

region west of the slough, and urbanized areas east of the slough.

West Palm Beach has cultivated a significant amount of value in downtown. Immediately noticeable in the model, downtown is the financial mountain visible in the county. There are areas throughout the county that bring considerable value, particularly along the coast.

Obviously, ocean front views and access have had a huge impact on coastal property values and development. Unlike ocean front property, however, the urban pattern in downtown doesn’t suffer the same limitation. In other words, downtown West Palm Beach is its own beach-one that can continue to grow and be replicated.

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BUILDING DESIGN Land use and building design have a great impact on tax value per acre efficiency. Downtown development is clearly the heavy hitter of property value within the county. Put simply, the more stories of taxable development you add onto a lot, the more revenue is generated from that one plot of land. Dense, high-rise buildings in the downtown produce the highest value per acres in the county.

Downtown’s City Palms building achieves an impressive tax value of over $34 million/acre. To put this into perspective, the Walmart Supercenter on Belvedere Rd attains a value

23 %

The Downtown Development

of $599,455 per acre. Put another way, City Palms has a tax

Authority area produces 23% of

value 57 times the potency of the Walmart Supercenter.

West Palm Beach’s value on less

Less intense mid-rise and modest mixed-use building

than 2% of the city’s land area.

are tremendously potent as well. Footwear and More on Clematis Street reaches a value per acre of $7.9 million, 13 times the Walmart.

Walmart

land consumed

total tax value

18.5 acres

$11M

6 acres

$48M

1.8 acres

$62M

tax potency

$600K/acre

$8.1M/acre

Clematis St Corridor

$34M/acre

City Palms 5

DENSITY PAYS

City Tax/Acre, West Palm Beach

The chart (left) indexes various building typologies in West Palm Beach based on their municipal property taxes produced per acre. While mixeduse developments like Magnolia Court certainly produce efficient value, older single-family neighborhoods like Grandview Heights generate surprising revenue potency.

Grandview Heights pays twice the amount of property taxes as Ibis on a per acre basis.

There are lessons outside of downtown, such as the Magnolia Court Townhouses on Dixie Highway and Tuxedo Lane. Producing a surprising $5.7 million/acre, this development demonstrates the efficient revenue punch of well-executed infill. There are ample opportunities for more infill development along Dixie Highway, however, consideration should be given towards calming the street as it runs through residential areas south of downtown. A calmer street would allow for “nodes� of neighborhood mixed-use development. Larger cities like Nashville and Charlotte provide excellent case studies of similar infill and transportation projects.

39.7 acres of Magnolia Court Townhouses would match the tax production of the 599 acre Riverwalk

Magnolia Court

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equals

Riverwalk

PERFORMANCE METRICS Property Value per Acre, 2014

Palm Beach County’s economic indicators were generalized into Hexagonal Grid models to compare metrics across the

downtown WPB

massive developed area east of the slough.

Property taxes, retail sales, and employment figures across the county were generalized into equal-area 933-acre hexagons. Roughly the size of the downtown area, organizing metrics into hexagon areas allow for an accurate relative comparison of values from the downtown to the western communities.

Significant land area (and thus portions of

Retail Sales per Acre, 2013

hexagons) in western areas are committed to streets, water retention and buffers, which brings their per acre productivity down tremendously.

downtown WPB

The hexagon method is excellent for comparing values across large areas. Parcels are much larger in western areas, so applying a uniform area allows for an absolute apples to apples comparison. However, it also loses the fine grain of parcel-scale data.

Thus, these models are used more as a Source: Florida Department of Revenue

Jobs per Acre, 2011

guide rather than an absolute metric. These visualizations should be used in conjunction with the more specific, “spikey” parcellevel tax model to both recognize patterns

downtown WPB

and also focus into areas of importance.

Put simply, make more spikes happen. As Magnolia Court has demonstrated, however, these need not be skyscrapers. Small developments can still pack a big punch.

= Source: US Census, Longitudinal Employer-Household Dynamics

933 acres (approximate size of downtown)

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OPPORTUNITIES: Vacant & Underutilized Land Like many cities in the country, West Palm Beach has seen a return of residents to its downtown core. It’s also now in the throes of an urban hotel boom that will add additional pedestrian foot traffic and tourist spending to the downtown. To capitalize on these recent investments and solidify downtown as a destination, the city should focus on filling in vacant parcels and improving streetscapes between downtown retail and residential areas to leverage the new investments.

The downtown “core area” (see below) has a highly discontinuous, clustered development pattern. The Clematis Street corridor, CityPlace, and Okeechobee/Lakeview residential corridor function semiindependently of each other. One contributing factor is the significant amount of vacant land in the downtown core area. In fact, 11% of land in the core area of downtown is vacant commercial land. This figure does not include the numerous underutilized government-owned

US-1

properties, most of which serve as supplementary parking lots.

Although the downtown core has very vibrant areas, it is sprinkled with vacant lots and government-owned, tax-exempt properties. While large swathes of underutilized land and/ or vacant land create a discontinuous streetscape, they represent a massive opportunity for new development and better connectivity between retail and residential areas in the urban center.

Infill development in public land could be a powerful mechanism that

Okeechobee Blvd

11% vacant

revamps the entire area.

41% exempt

48% taxable

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OPPORTUNITIES: Impact Fee Analysis Impact Fees are funds collected

Impact Fee Zones, with Road Expenditures

from developments based on their added “impact� on public

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services. In other words, when

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a residential area is built, those downtown WPB

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new residents will be using parks, libraries, schools, roads, etc. Fees are organized based on the size of residential and commercial developments.

These fees are organized into different fund types that

Impact Fees Generated

delineate improvements into road funds, school funds, etc. Urban3 highlighted the Road Impact Fee production of developments from years 2003 to 2014. Then, road improvements were located and measured by their total expenditure amount.

Road Impact Fees: Revenue & Expense per Square Mile (2003-2014)

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3

4

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Source: Palm Beach County Planning, Zoning and Building Department and Palm Beach County Roadway Production

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OPPORTUNITIES: Impact Fee Analysis The overarching question is, “how much did Downtown contribute to the Road Impact Fee fund, and how much investment did the Downtown area receive from the fund?� Over the 11 year period Downtown received $6.5 million of investments in the Okeechobee/Australian interchange and the widening of Okeechobee Blvd.

Meanwhile, Downtown produced $9.3 million in Road Impact Fee funds.

There is a critical stipulation to the implementation of Road Impact Fee funds.

Pursuant to Ordinance 2005-047, Road Impact Fee funds may only be used for new roadway construction, right-of-way acquisition, or traffic signalization. Dense, downtown environments function differently than areas elsewhere in the Palm Beach County and therefore need different types of infrastructure improvements.

This policy should be reevaluated to allow funds to be spent on alternative transportation infrastructure, streetscape improvements and other investments more appropriate for the downtown area. Creating a new policy that works best for the downtown is an incredible opportunity to improve the downtown and catalyze vacant land development that benefits the city and county alike.

Loxahatchee / Ibis

Downtown WPB

Loxahatchee / Ibis

$3,200,000 value/acre

$24,800 value/acre

area received $56 million more than it generated in fees.

While Downtown received $2.8 million less than it generated.

Source: Palm Beach County Planning, Zoning and Building Department and Palm Beach County Roadway Production

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CHALLENGES: Adding the Spikes Palm Beach County has largely developed after 1960.

Curvilinear residential subdivisions and large lot commercial development dominate the landscape in the County, especially west of Interstate 95. It’s no coincidence that value potency drastically decreases in these low-density areas. While it is difficult to alter the suburban landscape, islands of mixed-use urbanism can be created in suburban

Although clearly Asheville is the

areas to offer urban amenities and catalyze new real

heart of Buncombe County at

estate development. Many other communities either have

$43M/acre, secondary downtowns

secondary downtown areas or have begun to encourage

and smaller municipalities, like

mixed-use “town centers” in suburban areas far from the

Black Mountain, NC at $15M/

downtown cores. Asheville and Charlotte, North Carolina

acre still reach considerable

provide excellent examples of town center development projects that integrate into the existing environment and link residential and commercials development together. Palm Beach County and Western Communities should explore beyond conventional suburban development patterns to

value potency. While Palm Beach County achieves a greater peak value at $99M/acre in downtown West Palm Beach, value density drops off drastically outside

create tax value “spikes” west of Interstate 95.

of coastal areas and west of Interstate 95. $99M /acre

Economic Heart Monitors Interstate 95 Florida Turnpike

west

east

Palm Beach County, FL Pop. 1.2M

$43M /acre $15M /acre

Buncombe County, NC Pop. 250K

Asheville

Black Mountain

model viewing from south to north

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END OF REPORT

Sponsored By:

Research Credit:

Joseph Minicozzi, AICP

J.T. Barnes

info@urban-three.com 2 Vanderbilt Place

Asheville, NC 28801