“Not in My Backyard!”
Commercial Real Estate Pros Learn How to Overcome Opposition to New Projects.
Real estate professionals facing opposition to development or zoning changes these days must hack their way through a forest of initials. In many communities the original NIMBYs -- Not in My Backyard -- have subdivided into CAVE (Citizens Against Virtually Everything) dwellers, BANANAs (Build Absolutely Nothing Anywhere Near Anyone), and LULUs (Locally Unwanted Land Uses). But when developers actually see the people instead of the labels, they usually discover some familiar faces: the folks next door.
“The opposition is, without fail, from a group of neighboring homeowners,” says Thomas J. Settle, CCIM, a multifamily developer with P.A.C. Land Development Corp. in Winter Park, Fla. “Regardless of whether the proposed apartments are affordable in nature or the Taj Mahal, the universal cries are ‘ too much traffic, decreased property values, and crime.'”
Commercial real estate professionals from around the country agree that multifamily developments often rouse the loudest cries of “not in my backyard.” “The bottom line is that communities don't want apartments,” says Philip McGinnis, CCIM, GRI, of McGinnis Commercial Real Estate Co. in Dover, Del.
However, opposition is growing in other sectors as well, from national big-box retailers that find themselves zoned out of communities, to local charitable organizations that encounter resistance to placing shelters and halfway houses in neighborhoods.
Nationwide, development opposition is “more sophisticated, vociferous, and effective,” says Bill Hudnut, Urban Land Institute's senior resident fellow in public policy. Growing anti-development sentiment was the No.1 concern at ULI's midwinter meeting, he reports.
Many factors play into this movement. Cell phones and e-mail make it easier for people to organize. The media loves a good protest and often highlights coverage of zoning issues and new development. People also have more things to protest about: historical preservation, suburban sprawl, depleting natural resources, traffic congestion, and air pollution, to name a few. And every one of them can be -- and has been -- tied to commercial development projects.
Although beating the opposition takes time and money, it can be done. Strategies such as concessions, landscaping, education, and even using the ballot box have worked. But every situation is different and, unfortunately, nothing works all the time.
Research, Concessions, Buffers
A typical multifamily scenario was McGinnis' quest for zoning approval on 200 garden apartments in a mostly single-family area of south Dover. He received town planning staff approval and planning commission recommendations, but homeowners opposed the development on the usual grounds of school overcrowding and increased traffic congestion.
McGinnis met with local school officials who said that the development would not burden the local school system. He videotaped the road in front of the proposed development to get traffic counts and spent $16,000 on a traffic study. It determined that about $50,000 worth of intersection improvements were necessary -- and he agreed to make them.
“In fact, without the development, the neighborhood would not get the traffic intersection improvements,” he says. But neighborhood groups continued to complain. One parent brought up the fact that children getting off school buses might be hit by cars. McGinnis found nothing to support this claim; yet he worked to get the school bus route changed so children would be dropped off at a protected shelter.
But as soon as he solved one problem, the protesters found another. They expressed concerns that the local volunteer fire department could not get to the three-story apartments in time with the area's only ladder truck. Even though the fire department said it could arrive in seven minutes, McGinnis offered to install sprinklers and reduce the height of the apartments to two stories.
On the night of the final approval meeting, the neighborhood group brought in “a guy [from outside of the area] who started spouting traffic counts in the middle of another conversation,” even though traffic objections already had been resolved. McGinnis finally offered to split the deal in half, with 100 apartments and 50 or 60 town homes that would buffer the apartments. He still lost, by one vote.
“There's a whole anti-development attitude,” he says. “We've empowered these neighborhood associations without making them accountable to anyone but themselves.”
John H. McCrocklin, CCIM, CRB, of Jim McCrocklin and Associates Real Estate in Wimberley, Texas, agrees. He spent more than two years fighting with a citizens' group for a multifamily zoning change on a 25-acre tract in a neighborhood that was 87 percent renters.
“The city had empowered the neighbors by giving them the right to submit recommendations for zoning changes,” he says. “They created a citywide neighborhood council but they didn't address the issue of creating legal entities for the purpose of determining quorums. This created a nightmare for us. ... Each time we thought we had an agreement, they would have different residents show up to say that they hadn't participated, and we had to negotiate all over again.”
The city made it apparent that McCrocklin's client needed the council's approval to get the zoning change, which McCrocklin saw as a violation of his client's property rights. However, the client decided to negotiate instead of suing.
After $125,000 worth of concessions involving access roads, setbacks, building height reductions, the creation of a park, and the donation of two lots to Habitat for Humanity, an agreement was struck.
The battle was well worth it; the added density brought by the zoning change increased the property's worth by 32 percent, McCrocklin says. “But from a real estate perspective it is safe to say that the city allowed the neighborhood to extort whatever incentives that they wanted from us.”
On granting concessions, Settle usually makes those that follow the out-of-sight, out-of-mind approach. “Oftentimes, the answer lies in creating buffers -- landscape, berms, walls, fences, increased setbacks. They just don't want to see you. If you're seeking a zoning change from single family to multifamily, it is easy to show how ... a two-story home set back a mere 20 to 25 feet is a far greater invasion of privacy than a three-story apartment building set back 75 to 100 feet.”
Opposition to multifamily projects is so widespread that the National Multi Housing Council and the National Apartment Association have launched a public relations effort aimed at dispelling current myths about apartment dwellers. They distributed Creating Successful Communities: A New Housing Paradigm at the January 2002 U.S. Conference of Mayors in Washington, D.C., and New York and mailed it to local planning officials and members of Congress.
Using 2000 U.S. Census information, the publication counters typical NIMBY objections by pointing out that 40 percent of American apartment residents live in apartments by choice, and that households earning $50,000 or more annually are the fastest-growing segment of apartment dwellers. The brochure also concludes that renters usually pay higher property taxes through rent increases, have fewer children than single-family homeowners, putting less burden on local schools, and are more likely to use public transportation. Research also indicates that homes near apartments maintain their value and that multifamily developments do not add to crime in communities.
“In terms of the crime argument, our target market rents correlate to tenant incomes not significantly different than [those of homeowners in] the surrounding neighborhood,” Settle says. “In fact, it is not uncommon for our rents to exceed the typical [principal, interest, taxes, and insurance] mortgage payments of those neighbors.”
In some cases, multifamily developments raise neighborhood ire because they provide less-expensive housing than single-family homes. Paradoxically, most communities need more affordable housing. Moderate-income families, such as those headed by teachers, firefighters, police officers, and nurses, are growing faster than low-income families, according to a recent ULI forum on affordable housing. They often pay more than 50 percent of their salaries in housing costs or they must drive farther away from their jobs to find housing, thereby increasing traffic congestion and pollution. Thus, those who oppose multifamily developments on those grounds often are compounding the problem through their opposition.
McGinnis says that elected officials are beginning to see the larger picture in terms of economic development. “They ask, ‘We're a nice town, why won't company A or B locate here?' [It's] because we don't have any housing that their workers can afford. If you have no apartments, you have no affordable housing,” he says.
Opposition to Special Uses
While multifamily developments face the most frequent opposition, occasionally commercial real estate professionals face a tough sell for other NIMBY projects. Last year, C. Ralph Kitchens Jr., CCIM, of Blanchard and Calhoun Commercial Corp. in Augusta, Ga., helped locate a transition center for prisoners returning to the community after incarceration.
“It was truly ‘ we don't want this in our backyard,'” he says. “The local governing board even passed a new ordinance that required special approval.” When three sites failed to win approval, Kitchens got involved. After he found a site, the crux of the matter depended on educating the neighbors. Kitchens had state corrections officials attend community meetings to answer questions. “We provided pictures and locations of other sites in the state, which allowed interested individuals to see where other centers were located and talk to people who lived near the centers,” he says. He also arranged for people to visit a transition center in another city and meet individuals who use the center.
Key to gaining community approval was helping people understand that transition centers did not attract released prisoners to the community, Kitchens says. “It's not a situation that if you build it, they will come. Prisoners typically go back to their home communities when released. ... We simply made the community realize that these people deserved a better chance and that the transition center was their best chance to become productive citizens.”
Open Space Issues
Educating community members also helped David C. Mayo, CCIM, president of Vector Realty Advisors in Louisville, Ky., overcome opposition to a residential subdivision. Mayo was blindsided by the protest because the land in question -- a swath of green that separated one subdivision of well-off retirees from a golf course development -- already was zoned for development. However, for 10 years it sat undeveloped and “the perception had built up that the property had been set aside as open space,” he says.
The retired homeowners had plenty of time to organize and attend planning meetings on the density change Mayo was seeking. They brought up issues of flooding and traffic. In the time it took to make them understand the reality of the situation, Mayo lost a spring selling season. “Those costs are hard to quantify,” he says. In addition, site plan and engineering costs for the project doubled because of the need to present additional renderings and studies to counter concerns about flooding and traffic flow.
In retrospect, he would have held educational meetings prior to the planning commission meetings to gauge the community's response. “You need to have a realistic perception of what the public will accept,” he says.
Richard G. Knutson, CCIM, of Moison Investment Co. in San Leandro, Calif., had a good idea what the homeowners in a wealthy San Francisco Bay Area community wanted done to the five contiguous parcels of land he had under contract in their neighborhood. Open land is a big issue in the densely built Bay Area, so after contracting to sell with five separate landowners, Knutson contacted the city, the county, and a state organization about purchasing the land for open space, but all three declined. After that, he contacted a developer who drew up plans for a development of about 50 homes. When adjoining homeowners saw the plans, they protested, raising the open land option. Knutson informed them that it was no longer viable.
The homeowners decided to go the political route, putting a bond measure asking for a parcel tax to purchase the land on the ballot. Such political actions are common in California, but many times developers and real estate professionals work against their passage. However, Knutson actually joined the homeowners, writing letters and contacting voters to help the measure pass.
In 1990, the ballot measure passed, and three of the properties sold on the first round of financing in 1991. However, as is sometimes the case with political solutions, other circumstances intervened. Before the next round of financing was approved, the 1991 Oakland firestorm -- which destroyed 3,400 homes in the area -- started on one of the vacant properties. Although the value of the two remaining properties was not affected, one of the property owners had to spend $100,000 to remove eucalyptus trees from a $400,000 property to comply with new vegetation regulations enacted after the fire.
The last two properties sold in 1996, almost eight years after Knutson put the land under contract. Although he has yet to collect his commission on one of the properties, throughout the entire process, his first priority was always to his clients. “I just wanted to get a fair price for the land,” he says.
Commercial real estate professionals who hope to overcome opposition must be a part of the process long before the problems surface. For example, Lesley Munger, CCIM, senior vice president of T.F. Merrick Co. in Long Beach, Calif., credits her past experience as a planning commissioner with helping her deal with resistance to placing a gaming parlor in a neighborhood.
McGinnis also has served on planning commissions and technical review committees. “You can make a lot of friends and you can educate people,” he says.
Munger and other brokers also made use of pre-planning commission meetings to gauge resistance and modify plans before the final zoning approval meeting. Others met with community members beforehand either going door to door or gathering in small informal groups to determine resistance to new development.
Research from the University of North Carolina indicates that people react better to visual concepts and are more accepting of high-density developments when they see them. Developers should go beyond architectural renderings, scanning and modifying existing photographs to show proposed streetscapes and other changes.
Finally, developers should meet with zoning board members before the final approval meeting to explain the project details. “If you wait until the night of the planning vote to sell your project, you've already lost if there's opposition in the house,” McGinnis says. In his experience, meetings are often “a circus atmosphere. [People] yell, they interrupt, they shout you down. [If] the officials are distracted, they won't get the basic details, let alone the finer points.”
Of course, there are no surefire solutions to defeating development opposition, and odd factors often crop up. For instance, Mayo once couldn't get a zoning change until he found the right shade of green exterior paint that a particular zoning official wanted. And McGinnis thought he had a warehouse project all tied up, when about 60 Delaware state troopers showed up at the zoning approval meeting, in full uniform, complete with firearms. “It was an impressive sight,” he says, adding that the planning commission defeated his project, 7-0. “It's hard to say no to guys with guns.”
It turns out the warehouse would sit across the highway from the Delaware State Troopers Association headquarters. And the association's executive director -- a well-connected state lobbyist -- didn't like the warehouse's developer. Fourteen months later, another developer asked for zoning for virtually the same project. “It passed without a hitch,” McGinnis says.
The moral? Know your developer -- and his enemies