Sports entertainment districts

Two recent articles present two very different takes on glitzy sports entertainment districts – Kansas City’s Power & Light District and San Francisco’s Mission Rock project. The former is completed; the latter has just been announced. What do they have in common? Both are anchored by a sports facility; the Baltimore-based Cordish Companies acted as the developer; and each includes the usual mix of chain retail, bars and restaurants.

Power & Light District, Kansas City

The Wall Street Journal has labeled the Power & Light District a dismal failure and significant drain on the city’s budget. The San Francisco Chronicle touts the all but assured success of Mission Rock. While I know San Francisco is not Kansas City, the Power & Light District is a cautionary tale for cities betting their future and investing their dollars in one of these districts.

Kansas City finds itself using general funds for more than 2/3 of the debt service on the $295 million in bonds it issued for the project because projected sales and property taxes generated by the project have lagged. In addition, the city funded more of the $276 million cost of a new arena that has been waiting for its first sports tenant since its 2007 opening. As a result, the city has been forced to cut back on basic services.

The story is much the same in Glendale, Arizona, where the city provided hundreds of millions in funding for a hockey arena and spring training complex only to see the hockey team and adjacent mixed-use development, Westgate, go into bankruptcy. For each of the past two years, the city has covered $25 million to the NHL which now owns the hockey team to cover operating losses. Now the city is facing a $35 million budget deficit and the possibility it will still lose the hockey team to another city.

San Francisco’s plans are even more grandiose – $1.6 billion cost for a park, 1,000 rental units, 1.7 million square feet of office and retail, and parking garages. The Giants and Cordish plan to ground lease 27 acres comprised of existing surface parking lots and Pier 48 and begin construction in 2015. I suspect San Francisco’s efforts to use a sports facility as an anchor and catalyst for a major redevelopment project will be more successful than either Kansas City or Glendale. The worrisome thing is that there are numerous second and third tier cities currently looking at smaller scale, sports entertainment districts (e.g., Allentown, PA) as an avenue to urban regeneration. One hopes that they will not only look at the promise of projects like Mission Rock but also the reality of projects like Power & Light and Westgate.

Mission Rock site plan


The Green House movement

Despite the name, the Green House movement isn’t about the kind of environment you would think. It’s about the environment our rapidly growing population of infirm elders will spend their final years. It aims to reinvent the nursing home by making it smaller and more patient centered. Speaking from the personal experience of selecting and then regularly visiting a nursing home for my mother after she suffered a serious stroke and was left incapacitated, I have long been a firm believer that nursing homes needed to look and feel and operate less like hospitals and more like extended stay hotels. If the people running these institutions (and those regulating them) would ask patients or their families, I am certain the vast majority would opt for more privacy and independence and dignity over the most aggressive and sometimes suffocating medical care. In fact, a 2011 poll conducted by NPR, the Robert Wood Johnson Foundation and the Harvard School of Public Health showed that among the top concerns of both pre-retirees and retirees expressed about nursing homes was having to spend time in an institutional environment and the loss of privacy. The aim should be to make the remaining time of the residents as enjoyable as possible not to prolong it for a few days or weeks.

This past week saw the opening of a Green House project in Baltimore serving an inner city population with modest financial resources. The 48-unit project is organized on four separately functioning floors each with 12 private bedrooms, a communal living and dining room and kitchen as well as dens, spa and porch. An individual caregiver may administer medicine, give a bath, or cook a meal thereby engendering a close, personal relationship with the residents.

Residents at Green House in West Orange, NJ

Green House project at Green Hill, West Orange, NJ


There are currently 124 Green House projects operating with 30 more under construction and another 78 in various stages of pre-construction development in locations throughout the United States.

Location of Green House projects

With the population of those aged 65+ forecast to increase from 40 million to 88.5 million over the next forty years, we are going to be faced with the challenge of not only meeting their specialized housing needs but doing so in a way that meets their human needs and honors the lifetimes of service and accomplishment.


Stadium blowback – at last?

Updated: April 24, 2012

Updated to reflect bill being sent to floor of house for vot.

Updated: April 21, 2012

Updated to reflect action by senate committee.

Earlier this week the House Government Operations Committee in Minnesota voted against the proposed funding measure for a new $975 million Vikings stadium. After years of wrangling it had appeared that the measure, which is strongly backed by Governor Mark Dayton, was poised for passage. It would have provided $398 million in state funding raised from charitable electronic gaming alongside $427 million from the team and NFL (relatively generous compared to many recent stadium deals) and $150 million from the city of Minneapolis.

Proposed Vikings stadium

Like many states, Minnesota has been wrestling for the past several years with extraordinary budget challenges and this measure had difficulty garnering any support from members of the governor’s DFL party or even those from the host city on the committee. Having already funded a baseball stadium, a university football stadium (Query: Why couldn’t the Vikings have shared that stadium with the Gophers as the Steelers do with Pitt?) and a hockey/basketball arena, this was apparently the straw that broke the camel’s back.

The NFL is left with few options other than to raise the specter of relocation (LA anyone?) and trot out Commissioner Roger Goodell to issue dire warnings about whether the market is adequately supporting the Vikings. One wonders why 15 years of sell-outs is not considered sufficient “support” by the league.

One local observer has suggested this vote may signal the end of the era of publicly funded sports facilities. Given the track record of each of the four major sports in garnering billions of dollars of public funds for these sports palaces, I am not so sanguine about his prediction. Dave DeLand does offer some compelling statistics. According to him, the inflation adjusted cost of the current 1982 stadium was $161 million; the projected cost for the proposed stadium is over $1 billion. I think it is fair to ask whether NFL owners would have engaged in a stadium “arms race” over the past two decades (perhaps best epitomized by Jerry World in Dallas) if public dollars had not been so readily available. Would we be so much worse off as a nation if we were still watching games in stadiums and arenas with 1960s era comfort levels?

DeLand points out that in 1991 the NFL’s Fan Cost Index (i.e., the cost of a family of four attending a game) was $151.55. After two decades of public funded stadiums, the Index has skyrocketed to $427.21. So taxpayers have paid for the privilege of paying even more to see their favorite teams play.

One could argue that sports facilities are an addiction that U.S. cities cannot afford but which they cannot resist. The real action today isn’t in major league cities, but in second and third tier cities which are trying to emulate their big brothers in a kind of perverse trickle down fashion. For example, El Paso (!) elected officials are considering a ballot measure that would provide $150 million for an arena, $45 million for a minor league baseball stadium, $50 million for upgrades to the Sun Bowl, and perhaps another $100 million for a soccer stadium.

I suspect that Minnesota will find a way to pass this measure to avoid losing its beloved Vikings. In fact, days after the house committee rejection, a senate committee voted to approve a similar funding measure giving the project renewed life. Subsequently the bill was also revised in the house with an unrecorded positive voice vote in a different committee paving the way for a floor vote.

No single city is likely to be able to stem the tide of public financing for sports facilities. Doing so would take unprecedented concerted action by a group of several dozen cities or legislative action at the federal level. Neither seems likely. A broad-based, multi-jurisdictional taxpayer revolt may be the only way to force a reexamination of how sports facilities are funded in this country.

One man’s quest to save California’s coast

An article about California’s coast that caught my eye recently turned out to be a remembrance of Peter Douglas, who was responsible for writing and helping pass the measure that created the California Coastal Commission and then served as its executive director for 25 years. I did not know Mr. Douglas personally, and I am not going to recite his accomplishments on behalf of that spectacular coast; but I will share my personal memories of it.

I grew up in northern New York as far from sunny beaches as one could be. Never a strong swimmer and with fair skin that burned from even short exposure to the sun, when I moved to Los Angeles in 1982 it was not for the siren song of Malibu beach! But like many before me I soon found myself making a regular trek to the coast. Los Angeles seemed to have no end to it or at least not one that didn’t require a couple of hours of driving. From my west LA apartment a 45 minute Sunday morning drive not only got me to the beach but well up the coast to what became my favorite haunt – Westward Beach in Malibu. Adjacent to the better known Zuma Beach, what attracted me to it was its relative isolation and solitude. I would arrive early – always before eight – and leave early as well just as the crowds were starting to build. I was usually covered from head to toe in clothing for sun protection and rarely did more than dip a toe in the water. Nonetheless the beach became for me my retreat from the city and something I looked forward to all week long.

As I read about Mr. Douglas’ advocacy on behalf of the public’s right to access and enjoy California’s coastline, I thought about those Sunday mornings and was grateful for his efforts and those of so many other who recognized the incomparable gift that the state’s coast is. It became a bit of a game over the years as I traveled the coast to spot the coastal access signs that were result of the Commission’s work (and all too often in the face of dogged opposition by the privileged and wealthy who are fortunate enough to own a piece of that coast and somehow feel that their enjoyment of it will be lost if it must be shared with the public). I can think of no better memorial to Mr. Douglas than to insure those signs remain forever and grow in numbers over the years.

California coastal access


Walking, obesity, and the “right to roam”

Slate is running a series of articles on walking. Americans walk less than citizens of any industrialized country. Studies have shown that the average American adult takes 5,117 steps each day as compared to the nearly 10,000 steps both Australians and Swiss take daily. Greater levels of walking (as well as cycling) has been shown to be linked to lower levels of obesity. As an inveterate walker (75 minutes a day, everyday), I read the series with great interest and thought of how difficult the layout of many of our cities makes it to be a walker. When I walk in Phoenix with cars a couple feet away from the narrow sidewalk whizzing by me at 45 mph, I realize it may be the most dangerous activity I will engage in that day.

Walking in Nashville

So I could help but envy residents in the United Kingdom when a few days later I read an article about the ongoing struggle to implement the “right to roam” laws that have been enacted in England, Wales and Scotland. These measures created a right to walk on vast swaths of privately owned land including mountain, moor, heath, down and common land. A massive mapping effort was undertaken to identify exactly what areas would be open to the public.

Right to roam map

While landowners have fought the increased access, the laws have resulted in significant increases in acreage open to the public. One wonders if these laws will help reverse a trend in Great Britain that has seen walking decrease by 25% over the past quarter century.

If you want to check out how friendly your neighborhood or community is for walking and walkers, you may want to check out its Walk Score.


Continuing collision of property regimes

An article this past week on the Conservative government’s proposal to adopt legislation authorizing private ownership of property on First Nations reserves in Canada is a reminder that the collision between European and Native American property regimes is an ongoing struggle. Last December the Harper government voiced support for the First Nations Property Ownership Act as a way of spurring economic development on the reserves. Leaders of the Assembly of First Nations have already gone on record as opposing blanket private property rights in lieu of communal ownership though a handful of the more than 600 First Nation reserves are apparently willing to make the switch. One concern is that such a change would lead to ownership of reserve land by non-natives.

First Nations treaties and land claims

At the very heart of the conflicts between Native Americans and Europeans settlers was a profound difference in the way the two cultures viewed the relationship between humans and the land. It is not that Native Americans did not recognize property rights; they had developed a property regime that was based largely on communal forms of ownership. Europeans arrived just as the longstanding feudal system of property rights was coming to an end and were eager to use what they perceived as the blank slate of North America to implement a property regime based primarily on private property rights.

One of the great ironies of U.S. history is that a country that prides itself on being a bastion of property rights owes its very existence to displacing (often by force or fraud) a system of property rights that was in place before the country came into being. Both Canada and the United States have long struggled with the residual Native American enclaves (reserves in Canada and reservations in the United States). The Bureau of Indian Affairs management of Native American lands in the U.S. has been nothing short of a scandal. While Canada in recent years has gone to great lengths to recognize First Nations continuing sovereignty in meaningful ways (in its 1982 Constitution and by entering into self-government agreements with a number of reserves), this latest proposal makes clear the uneasy coexistence to these two very different property regimes.




Regulatory takings – and givings

One of the favorite targets of those who are concerned with protecting private property rights is so-call regulatory takings. In Lucas v. South Carolina Costal Council, 505 U.S. 1003 (1992), the U.S. Supreme Court held that a land use regulation which eliminates all economically beneficial uses of a parcel constitutes a taking and just compensation must be paid to the landowner by the jurisdiction that enacted the regulation.

Lots that were the subject of the Lucas case

For property rights advocates the Court did not go far enough; so they have resorted to legislative efforts in numerous states. Some of the more noteworthy measures include those in Oregon, Florida, Arizona, and Texas have enacted measures either legislatively or by referendum that require compensation be paid when a regulation reduces the value of a parcel of property by a state amount (e.g., 25% diminution in Texas). There is a wealth of literature about the effectiveness of these measures, their impact on land use regulation and the lawsuits they have spawned.

Most recently this issues has been raised in Maine where the legislature is wrestling with a proposed regulatory takings bill that would required compensation when 50% or more of a parcel’s value is lost due to regulation.

Delving into all of that is not the purpose of this post. I simply want to ask if landowners should be compensated when a land use regulation diminishes the value of their property, should the state or local jurisdiction be compensated by landowners when they increase zoning densities or construct infrastructure at public cost that increases the value of a private party’s property?

The truth of the matter is that in its natural state the value of most land is attributable to one’s ability to raise crops, harvest timber, harness water power, and extract minerals. In order to make use of land for anything other than extremely low density residential development requires a combination of infrastructure that is usually publicly funded (e.g., roads, sewer, storm water, water, electricity, telecommunications, schools) and regulations that bestow the right to make use of this infrastructure for various land uses and at various densities. All of this focus on how land use regulation may reduce the value (though not render it without economic value) of individual parcels of land loses sight of the forest for the trees as it ignores the fact that much of the value that remains is in fact the result of public investment and public regulation.

Immigration pays

Since 1992 it has been possible under the EB-5 program for those wishing to emigrate to the United States have been able to move to the top of the list by investing either $500,000 or $1,000,000 (depending on the location of the investment). In recent years, developers have made much greater use of this provision to finance project as disparate as the Jay Peak ski resort in northern Vermont and the Atlantic Yards sports arena and mixed-use project in Brooklyn. Nearly one-half of the $2.2 billion invested over the life of the program has occurred in the last fiscal year. In 2005 only 158 visas were issued pursuant to the program; that number had skyrocketed to 2,364 in the first quarter of the current fiscal year.

Jay Peak's Pump House Indoor Water Park

As the September 2012 deadline for reauthorizing the program draws closers, a number of publications including The New York Times and Business Week have raised questions about how developers are using the program in ways not envisioned by those who drafted the measure. Because the investment required is cut by 50% if the investment takes place in a Targeted Employment Area, which are metro areas with very high employment rates and rural areas. Yet, developers in NYC used gerrymandered districts to qualify projects including the GEM Building, the Battery Maritime Building and Atlantic Yards in affluent areas of Brooklyn and Manhattan that had virtually no unemployment.

GEM Building

One stick short

Updated: April 24, 2012

Updated to reflect that D.R. Horton's has given back mineral rights on 22 lots.

Updated: April 21, 2012

Updated to include D.R. Horton's response to questions about its disclosure practices.

Property is often defined as a bundle of rights which include the rights of possession, control, exclusion, enjoyment and disposition. These rights may all be held by one party but often are held by a variety of parties. For example, a farmer may own the right to live on his land and grow crops there but may have granted an easement to a third party to use a private road that runs across the farm and to a utility to place a transmission line on the farm.

The bundle of property rights

When someone purchases a house, he typically have his attorney review title to the land to determine what other parties may own an interest in the land. Recently a homebuyer in North Carolina noticed that the homebuilder had reserved the rights to minerals under the parcel including oil, gas, water, natural gas, and coal. While it is not unusual in certain regions of the country to discover that the mineral rights were separated from the rest of the property rights by some previous owner, that was not what happened here. This involved a national homebuilder, D. R. Horton, and was a new separation of mineral rights. Not only that but the mineral rights were then being transferred to an affiliate, DRH Energy Inc., to facilitate the future removal of such materials from below the surface of the homeowner’s land. One enterprising journalist has determined that this kind of transfer has occurred on at least 425 lots in Wake, Durham and Chatham counties.

In responding to parallel inquiries by the N. C. Attorney General and the Real Estate Commission, D. R. Horton has stated that it makes multiple oral and written disclosures but will add an additional written disclosure that prospective buyers will have to sign before entering into a purchase agreement for a house. After further internal investigation, D. R. Horton has announced that it is giving back mineral rights on 22 lots on which it failed to make disclosures in the sales contracts.

This is a measure of the renewed interest in subsurface rights as a result of the widespread tracking activity to capture gas trapped in the Marcellus Shale formation. Given the emerging concerns about the environmental impacts of tracking, homeowners like this one are left to wonder whether the value of their property may be adversely affected if the party holding the mineral rights elects to exercise them in the future. Equally concerning is the possibility that the homeowner will have difficulty obtaining a mortgage since lenders such as the North Carolina Housing Financing Agency.


Property rights in space

Until the advent of air travel (first by balloon and later airplanes), landowners were said to own not only the surface of their land but also the ground beneath it and the air above it (cuius est solum eius est usque ad coelum et ad inferos). This broad definition would have required airlines to acquire easements along their flight paths had it not be narrowed by courts. It is one of many examples of how courts have been practical rather than ideological when faced with new technologies whose adoption would have been slowed or made impossible by a strict application of traditional property doctrines.

The Final Frontier

I suppose we should not be surprised that with the emergence of commercial space travel that some are calling for recognizing private property rights in space. Rand Simberg has authored a new study for the Competitive Enterprise Institute on “Homesteading the Final Frontier”. He calls for a federal law that would recognize private claims to extraterrestrial property in order to encourage private investment in reaching and exploiting resources located on the moon, asteroids and other planets.

Simberg believes that the 1967 Outer Space Treaty only precludes claims of national sovereignty not private claims. The 1979 Moon Treaty does prohibit private claims in space but the United States is not a signatory to this treaty which is unsigned by any of the countries capable of space exploration. Advocates of space exploration and human settlement on other worlds have applauded Simberg’s analysis.

It will be interesting to see whether space ends up being treated more like Antarctica as a commons for all or like the Western Hemisphere after its discovery by Europeans as a blank slate available for divvying up (of course, that involved ignoring the presence of millions of Native Americans and their long established property regimes).