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there seems to be a lack of time, desire and
<br />interest in controlling those costs, because they
<br />are simply passed through to us."
<br />"Municipal costs and fees won't kill a deal," added
<br />Maenner, "but if they are unjustifiably high, they
<br />really color our perception of a city, and it sets the
<br />tone for whether a community is a reasonable
<br />partner in the development process." Cities should
<br />balance their fees against the great economic and
<br />tax benefits that most developments bring to their
<br />community, added another. "Too often," said
<br />Charles Pfeffer, Jr., Pfeffer Company, "cost /benefit
<br />formulas are not part of the equation. In most
<br />jurisdictions, it's a matter of their perceived
<br />needs -which will only increase:'
<br />"Municipal costs and fees won't kill
<br />a deal, but if they are unjustifiably
<br />high... it sets the tone for whether a
<br />community is a reasonable partner
<br />in the development process."
<br />- Paul Maenner, JMW Development LLC
<br />The closer cities align their fees to reflect the direct
<br />impact or needs of a specific proposal -a sewer
<br />connection, for example -the more justifiable it is
<br />in the mind of the developer, and the more they
<br />make "economic sense" for the deal. Dennis Zylla,
<br />Grubb & Ellis /Northco said developers, "should
<br />pay fees based on a true nexus between the project
<br />and the services being provided."
<br />"In building and grading, through reviews and
<br />inspections, you see a direct relationship to the
<br />fees," said Kuechle. "We often see no relationship
<br />or value in park dedication fees."
<br />The consensus among NAIOP members seems to
<br />be that the phenomenon of constantly increasing
<br />permit and application fees, and unrelated
<br />charges like park dedication fees, are likely to
<br />become major factors in developers' decisions on
<br />where to take a proposed project.
<br />3E MORE OPEN AND UNDERSTANDING
<br />OF DEVELOPERS' NEEDS
<br />A city's cultivation of a more open and inviting
<br />attitude toward development, and city staff that are
<br />willing to look at proposals with the needs of the
<br />developer in mind, are also factors in deciding where
<br />to develop. As Pat Mascia, Duke Realty Corporation
<br />put it, "Everything else being close to equal, we will
<br />always choose the path of least resistance."
<br />"If one city is more open than another we are
<br />considering, great," said Maenner. "But if not, the
<br />fact is that we'll roll up our sleeves and slog
<br />through whatever they throw at us :'
<br />"Even just an expressed willingness
<br />to work together can go a long way."
<br />- Greg Munson, McGough Development
<br />Other developers indicated they do not have the
<br />time, money or staff to "slog" through the process.
<br />The common reaction ro less welcoming attitudes
<br />was expressed by several members interviewed. "If
<br />the city process appears to be impossibly difficult,
<br />there is only one solution - walk," said Pfeffer. "It's
<br />not likely that an economically favorable change in
<br />process can be secured within an acceptable time
<br />frame, if ever!" His view was reinforced by Tom
<br />Lohmann, Pinehurst Properties, who said he
<br />"avoids cities whose reputation is negative toward
<br />development ?'
<br />Said Munson, "Compromise is something we
<br />expect. But having to charge through flat out is
<br />not a path we choose. Even just an expressed
<br />willingness to work together can go a long way."
<br />Attitude and responsiveness are clearly hard to
<br />measure objectively. Patterson observed, "I know
<br />them when I see them. If a city has a negative
<br />attitude toward developers and development, you
<br />won't go there unless you absolutely have to."
<br />That viewpoint was reinforced by Zylla, who said
<br />"We look for city staff to have a `can do' kind of
<br />attitude, and find solutions for us, not
<br />roadblocks ?'
<br />Michael Leuer, ivloen Leuer Construction, said
<br />cities should be more open and flexible in
<br />discussing modifications to their requirements.
<br />Martens and Carland also commented on the
<br />need for cities to be less rigid in their dealings
<br />with developers. Robert Pfefferle, Hines, agreed
<br />that cities should be more supportive in terms of
<br />planning and zoning. "We're willing to work
<br />within the comprehensive plan, but it's a fact that
<br />markets change. Cities need to recognize that, and
<br />offer some flexibility to developers based on what
<br />is actually taking place in the market," he said.
<br />Local political leaders should play a more active
<br />role in shaping city staff attitudes, observed
<br />David Kordonowy, Steiner Development. "They
<br />must understand that commercial and industrial
<br />development offers citizens options for
<br />employment and services, and then have city
<br />staff carry out that philosophy."
<br />"Commercial and industrial
<br />development offers citizens options
<br />for employment and services."
<br />- David Kordonowy, Steiner Development
<br />3E FL RXIBLE IN CONSIDERING
<br />SUBSIDIES OR :CONCESSIONS
<br />Greater flexibility in considering developer
<br />requests for concessions or subsidies is also
<br />important, according to the survey respondents.
<br />"We compete against Minnesota cities that are
<br />aggressive, and Wisconsin cities that are even
<br />more aggressive," explained Glowa. "Without an
<br />even playing field, we can't compete." If a city is
<br />unwilling to help with unusual development
<br />costs on a site that has problems, "that's enough
<br />for us to look elsewhere," said Collins.
<br />That willingness on the part of a city to keep an
<br />open mind about providing assistance to a project
<br />that needs it- whatever form the help involved
<br />might take -is often the difference between, "a
<br />project that can happen - 4 - ie that can't;' said
<br />David Carland. "In many cases," explained
<br />Willson, "given the increasing costs of land and
<br />construction materials, subsidies are the only way
<br />we can consider pursuing some projects. The
<br />ability to limit some of the infrastructure costs or
<br />offer tax incentives is very often crucial to our
<br />being able to compete in the marketplace."
<br />Such assistance is particularly important in urban
<br />revitalization projects, according to respondent
<br />Tom Lohmann, Pinehurst Properties. "Tax
<br />increment, if used wisely, can be a catalyst for
<br />development beyond the project for which it is
<br />used" He described subsidies as, "necessary evils
<br />that first and second tier municipalities must
<br />consider in order to revitalize parts of their
<br />communities." Added Patterson, "Subsidies can
<br />have a huge impact on our decisions. From a
<br />user's perspective, and for the decision - making
<br />process, sites need to be economically equal'
<br />CONCLUSION
<br />The survey's results make one fact clear: in the
<br />opinion of most of the developers-contacted, the
<br />great majority of metro area cities and their staffs
<br />are excellent to work with, and try to meet
<br />developers' needs.
<br />"Most cities are excellent ", said Glowa.
<br />"Occasionally, we see some with attitudes
<br />opposing development. But cities are not islands.
<br />They should work hard with the business
<br />community to achieve win -win results."
<br />"Most cities are excellent."
<br />-- Dale Glowa, United Properties
<br />In the experience of Paul Hyde, Real Estate Recycling,
<br />"projects get done where all of the stakeholders -the
<br />city, the neighborhood and the developer -share the
<br />same goals. You need everyone sailing in the same
<br />direction." "Still;' said Wall, "some cities can be
<br />nightmares," while others, "embrace our projects and
<br />are receptive, friendly and helpful:'
<br />"Cities and their staffs should not view developers
<br />as adversaries," commented Kent Carlson, Ryan
<br />Companies, "but as active facilitators in the
<br />growth of the community. We act as mediators
<br />and agents between the city and the businesses
<br />who occupy the buildings we develop. In that role,
<br />we can be a city's strongest and most,productive
<br />advocate to the broader business community."
<br />As Cook observed, "cities and developers should
<br />work as partners. Any successful partnership is a
<br />combination of attitude, responsiveness,
<br />efficiency and cost."
<br />"If all of those are in place and working well,"
<br />Cook said," the process itself will also work well."
<br />"Cities and developers should work -
<br />partners. Any successful partnership :o
<br />a combination of attitude,
<br />responsiveness, efficiency and cost"
<br />- Arne Cook, First industrial Realty Trust
<br />Y. NAIOP 4248 Pork Glen Road • Minneapolis, MN 55416 • p: (952) 928 -7461 • f: (952) 929 -1318 • www.naiopmn.arg • '0 Copyright 2005 Minnesota Chapter of NAIOP
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