Is the East Village a Cautionary Tale of Form Based Code?

Sunday, November 18, 2018, 9:04 am
By: 
Alice Dreger

Above: One version of what the City thought the East Village could look like back in 2006. Adding an inlet off the Red Cedar River was part of the idea for the giant redevelopment.

As East Lansing’s government is actively considering instituting form based code to mandate specific architectural rules throughout a long swath of the City, Council Members and others are asking whether what happened – and didn’t happen – in the East Village should be seen as a cautionary tale.

In the case of the East Village – East Lansing’s first use of this specialized architectural-zoning approach – the institution of form based code delayed rehabilitation of existing buildings and made redevelopment there difficult and expensive. The consequence of that was also the depressing of potential tax revenues for years.

What happened in the East Village? And why do some think it is reason for East Lansing to stay away from more attempts at form based, architecturally-specific codes?

“East Village” was a big dream that never became a reality.

The “East Village” is a 35-acre area that is bordered by Bogue Street on the west, Grand River Avenue on the north, Hagadorn Road on the east, and the Red Cedar River on the south, as shown in this map from the City:

The area now includes the site of The Hub, the 10-story building under construction on the edge of MSU’s campus, the site with the two big tower cranes hanging over Grand River Avenue. (We’ll get to that part of the story in a bit.)

Back in 2006, the City entered into an agreement with Pierce Education Properties, a development company, for a massive redevelopment of the East Village. Mark Meadows was Mayor of the City during development of the project, as he is now.

The City’s plan was for “an innovative project to create an exciting urban neighborhood known as East Village. This high-density, mixed-use development [would] be a unique addition to our City, enhancing the college town atmosphere.”

The area was supposed to include owner-occupied condos, a retail hub, and more. It would modernize buildings in the area and eventually produce lots of property tax revenue.

The big redevelopment never happened. The City maintains that that was because of the recession. People in commercial redevelopment who do not wish to be named have told ELi for years that it was because those developers never had the means to pull off something of this size. (It didn’t help that the developers didn’t own the properties they wanted to redevelop.)

The East Village concept ended up creating a 35-acre zone of nonconforming structures.

Regardless of the reason for that project’s failure to come to fruition, what did happen because of the East Village redevelopment concept was that, during the design phase, the City created a whole architectural code for the area – a type of zoning called “form based code.” The zoning code for the area was changed to specify not just the limits of the legal uses of properties (residential, office space, etc.) as zoning normally does, but limits on the design of structures on those properties.

So, it specified how buildings must function and look.

Many properties in the East Village were now, by law, required to have at least 50% of their ground floors dedicated to retail or office space, even if the properties were currently occupied by purely residential structures. Residential components had to include condominium apartments that would be owner-occupied.

Ground level design had to be “transparent” – with huge windows all around the first floor. First floors of commercial buildings had to be essentially two-stories tall. Parking had to be in the back.

The City couldn’t force property owners – like those who owned the properties housing 7-Eleven and Georgio’s, where The Hub is now under construction – to tear down and rebuild according to these rules.

But the City decided it could stop property owners from rehabilitating or redeveloping their properties if they didn’t bring buildings into conformance with the new code. Property owners were left with a choice: do nothing, sell, or tear down your building and start over, following all the new rules for use and style.

So, the result of this blanket rezoning was creating a 35-acrea area of the City in which all of the buildings were legally “nonconforming,” meaning that they did not conform to the zoning code.

This meant that the East Village form based code stalled the area’s economy.

According to property owners and developers who have spoken to ELi about the East Village over the last four years, the form based code left behind by the project that never materialized became a weight for the East Village area, effectively depressing investment, and therefore also depressing property tax revenues.

Back in 2016, we interviewed Nancy Marr of Prime Housing Group, which owns a number of large apartment buildings in the East Village area, including the one photographed below in 2016. Her company was looking to upgrade apartments in their buildings, in part to provide renters with more privacy in bedrooms and with more modern kitchens and bathrooms.

Doing these renovations, Marr explained, would be better for renters, better for her company, and ultimately better for the City in terms of property taxes.

But according to an interpretation by the City in 2011, Marr’s company couldn’t make these changes unless they brought all the buildings into conformance with the 2006 East Village code – something that made no sense, particularly since the law required buildings be converted in part to owner-occupied condos.

Landlords, including Marr, pressed the City to change this situation. In 2014, the City organized meetings, including landlords and homeowners in rental-heavy neighborhoods, to discuss renovation restrictions on nonconforming rental properties throughout the City.

“What is the benefit of not allowing improvements?” Marr (and other landlords) asked at the time.

The response of opponents was that not allowing improvements might force property owners to make more of the kinds of changes others wanted to see. In the Bailey neighborhood, the desired change was reversion of houses to owner-occupied structures. But in the peculiar case of East Village, it meant forcing changes to promote a development from 2006 that never happened.

In November 2016, after years of debate and pressure from landlords, Council finally passed Ordinance 1382, which allowed some renovation of properties in the East Village. But a decade had, by that point, gone by, a decade in which property reinvestment in the area had been effectively impossible.

The Hub rises (late) as a symbol of the East Village’s form based code.

One building is finally being constructed under the current East Village form based code, and that’s The Hub, the 10-story, mostly-student-rental housing under construction at the southeast corner of Bogue Street and Grand River Avenue.

When that project is done (as shown in the rendering above), it will result in hundreds of thousands of dollars a year in new tax revenue for the City of East Lansing. In fact, the income from it is anticipated to be so high, the City’s Finance Director breaks that property out specifically when she talks about income projections for the City.

But even in the case of The Hub, the East Village form based code was found unworkable by redevelopers, and delayed investment.

How so?

ELi contacted David Pierson, the lawyer who represented the developers of The Hub. He told us via email that “the Hub only happened after a three-year campaign to amend the requirements of the East Village zoning district. Only after those changes were made could it be proposed.”

Pierson also says the form based code significantly drove up the costs. And the higher the costs of redeveloping a property, the bigger a developer must build to see profits.

The East Village code still requires that the first floor have double-height ceilings, effectively eating up a floor of rentable space, and costing extra in terms of heating and cooling costs once operational. It also requires that most of the first floor have giant glass windows, an expensive proposition. So The Hub will have all that. Here’s a photo showing that first floor under construction:

The form based code for the East Village also requires a very wide sidewalk along the main streets, cutting into the possible footprint of the structure and causing developers to need to build higher to recoup costs. Finally, it specifies stepping-back of floors in a way that further cuts into how wide the building could be constructed.

The architects have had to use what Pierson calls the “baked-in aesthetic” of 2006, as that was when the code was set.

All this helps to explain why The Hub took years longer to build than would have been the case, and why it looks the way it does.

Council wonders if this is a cautionary tale:

During a late-October discussion of the possibility of using form based code in more parts of East Lansing, Mayor Pro Tem Erik Altmann asked whether this would create large numbers of “nonconforming” buildings.

The consultants hired to advise the City on form based code did not directly answer the question, but the answer is “yes.” If the Council adopts the plan now under consideration, thousands of properties in East Lansing, including everything from some owner-occupied houses to many commercial properties, will become nonconforming.

Below: Erik Altmann, Shanna Draheim, and Mark Meadows at a recent Council meeting.

Mayor Mark Meadows – who, recall, was also Mayor when the East Village form based code was in development – also expressed concern at the late-October meeting about more form based code. He noted that the East Village “never really redeveloped in anyway whatsoever,” after the form based district was established.

“Were there things that we did that we shouldn’t have done?” he asked the consultants hired by the City.

Kathleen Duffy from the Smith Group responded that the East Village code seemed “hyper-specific” to her. She said that it was “not the way we would write form based codes today.”

Meadows replied “we did have a specific user that we were hoping to have located in that area and that didn’t pan out at all.”

But this, critics of form based code say, is precisely the problem: that it locks in architectural and design aspirations of one particular moment. And those aspirations may turn out to be economically infeasible and environmentally irresponsible.

Inevitably, while (or because) it is aimed at creating better public spaces, form based code reduces what property owners can do. Ultimately, that can impact not just the property owners and would-be developers, but residential and commercial users of those properties, and the citizens who depend on reinvestment leading to rising tax revenues.

And that, critics of form based code say, is the reason East Lansing should not make this mistake again.

In contrast to the doubters, proponents say form based code is a good idea, because it means predictable design in a given area, with design that looks good and creates positive spaces where public property meets private. They see form based code as a way to create a rising design tide that will lift all boats.

 

This is a companion case-study to a general report on form based code from ELi. Reporting contributed by Jessy Gregg. Disclosure: Nancy Marr is a financial supporter of ELi, as are a number of other East Lansing landlords. See our complete list of sponsors.

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Correction: When this article was published, it said that Meadows was Mayor during 2006. While the plan was chiefly developed while Meadows was Mayor, Sam Singh took over the Mayorship in 2006 when Meadows moved on to serve in the State House.

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