Activity: Living Downtown

Living Downtown: Context

Problem Statement

There is a spatial and emotional disconnect between Downtown and the surrounding ring of neighborhoods. The residential population Downtown is too sparse to activate the needed supporting retail and service venues to make it a great place to live and to keep it alive after the Downtown workforce goes home. In addition to being sparse, the existing housing is not in areas of concentration that give the critical mass needed to establish quality neighborhoods.

There is no Downtown-wide neighborhood association and no clear voice for Downtown residents. This may in part be due to the confusion surrounding the definition of Downtown. To some, the Central Business District bounded by Elmwood, Edward/Goodell, Michigan and the Waterfront is Downtown; others have a broader definition. The Queen City Hub plan envisions Downtown as extending to the 1832 boundaries of the City encompassing 4.5 square miles, including the waterfront housing on Lake Erie, the West Village, the Lower West Side, Allentown, the Buffalo Niagara Medical Campus, the Fruit Belt, Willert Park, Ellicott Town Center and near East Side communities all the way to the Buffalo River. Understanding Downtown this way would establish a political voice for Downtown of over 18,000 residents and the capacity to address the important quality of life issues crucial to the success of the Living Downtown activity program.

There are many reasons for promoting living in Downtown Buffalo. More people mean more activity in the evening, more patrons for restaurants and shops, a better sense of security, and the possibility of an urban lifestyle not available anywhere else in the region. It also means a stronger tax base for the City and a better ability to deliver services citywide.

Until now, the greatest inhibitor of the development of new housing stock in Downtown Buffalo has been the lack of gap financing, generally defined in terms of the difference between the cost to rehabilitate the existing building stock or to build new and the amount of revenue that can be generated by a project. Finding the dollars to fill this gap is difficult given current market conditions in a city that is losing approximately 3,000 people every year and has thousands of vacant housing units.

A second inhibitor has been the lack of a clear delivery system to allocate the appropriate incentives for Downtown housing while sustaining a level playing field for all developers and engaging the powers of the municipality in site acquisition, development, and the provision of key infrastructure.

Current Status

• Current housing developments are scattered and occur on an ad-hoc basis. They are not serving to create Downtown "neighborhoods." There are no detailed urban design and neighborhood development plans describing in the necessary detail how the targeted neighborhoods should be developed.
• Developers often have their hands out before exhausting all other sources of funding. There is also a real or perceived lack of a "level playing field" for those who seek to develop housing Downtown.
• There is no formal process for housing development in the Downtown core. The chain of command or responsibility for housing development is unclear and answers to developer questions are found in multiple locations with multiple people. As a result the development process is unpredictable and difficult for local developers and even more so for out-of-town developers.
• Current parking requirements are a deterrent to residential development. Many existing and potential buildings that are suitable for residential conversation do not have the required number of parking spaces to meet market demand or current zoning requirements.
• Fear of loss of equity discourages investment in housing stock.
• There is an emerging demand documented but the depressed price of housing in the city makes it difficult to develop market rate housing with sufficient rents to offset development costs. Banks and other lenders remain largely unwilling to loan against the full promise of the emerging market.
• Data indicates that Downtown could absorb as many as 300 units a year in market segments with ability to pay rents ranging from $350 to over $2,500 a month. It is not clear how deep this market is and it will not be clear until it is tested over time.
• Several tax incentives are now available that add greatly to the potential to fill the gap in financing.
• A new Downtown Neighborhood Development Corporation is in the process of being formed. It will work in close cooperation with the City, finance community, and developers.

Strategies

• Focus on target areas, create a critical mass of neighborhoods and connect strategic investment areas in Downtown.
• Standardize incentives and "level the playing field" for all developers.
• Deliver incentives until the market can deliver the needed product without help.
• Expand the geography of Downtown while retaining traditional definitions for the Central Business District.

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Living Downtown: Action Items

Short Term Policy (6 months to 1 year)

• Identify and commit to primary, secondary and tertiary development areas and direct incentives accordingly. In order to maximize the impact of any development, it is recommended that new residential target zones be established (600-800 block of Main Street, Genesee Village/ Flower District, the 500 block of Main Street and east to Elm Street, the Cobblestone District). The purpose of the development areas is not to discourage development throughout Downtown, but to encourage the creation of new neighborhoods with sufficient critical mass rather than a series of stand-alone buildings. Establishment of the zones will also help prioritize the investment of public dollars to support neighborhood development that leverages already substantial investments in strategic investment areas. Restrict other than as-of-right public incentives to only these target areas.
• Establish and adopt a policy position that all public incentives be leveraged with adequate developer equity contribution. Exclusive of as-of-right incentives such as Empire Zone, mixed use Urban Exemption Program, and Historic Preservation Tax Credits, all developments seeking public support should have a minimum percentage of developer contributions. Adopting this policy will better leverage public investments and ease over-reliance on public dollars. Once this incentive policy is established it will make the entire process of housing development more predictable for all concerned.
• Develop a project ranking system to guide decision-making. Before any public dollars are invested, projects should be reviewed and assessed to determine compatibility with defined goals and objectives for Downtown housing development. Projects that incorporate more desired goals and objectives will receive a higher ranking, thus increasing eligibility for public support. Among the factors that could be used to rank a project are:
  • Percent Developer Equity
  • Location in or near Target Zone
  • Type and Number of Units
  • Mixed vs. Single Use
  • Mixed Income
  • Uniqueness of Product
  • Environmentally Responsible / Efficient Systems
  • Use of Good Urban Design Standards
  • Exterior Amenities
  • Proximity to Transit

Short Term Implementation (6 months to 1 year)

• Support the creation of a Downtown Neighborhood Development Corporation (DND) to provide onestop service on housing delivery and marketing. The need for a "one-stop-shop" for Downtown housing development has been repeatedly mentioned. The Mayor has taken the first step through the establishment of a Board of Directors for the DND. They will spend the next 6 to 12 months establishing the corporation. In the interim, agencies that have previously provided support for Downtown housing development should continue their work while coordinating their efforts to support the new corporation. The DND should then convene a housing development gap financing task force to help further coordinate all resource possibilities.
  • Federal Government: Meet with congressional / senate delegations to request assistance in identifying and obtaining federal monies.
  • Banks and Private Lending Institutions: Work with banks and private lending institutions to develop a venture loan fund for Downtown housing.
  • Private Foundations: Across the country, private foundations are taking new roles in community development by providing soft loans and matching grants. These private dollars often leverage additional private and public dollars for development programs.
  • Renewal Community: As businesses in the Downtown area begin to realize benefits from the Renewal Community designation, ask them to consider earmarking a portion of their tax savings (10 percent) for a Downtown Development Fund. Portions of this fund could be used to leverage gapfinancing dollars.
  • Regional Employers: Exploring especially the potential for Employer Assisted housing options. These options are an effective tool in encouraging residential development in targeted areas. Assistance can come in the form of grants or low-interest loans. Working with Fannie Mae, the City of Buffalo and Canisius College have each developed and adopted Employer Assisted Housing programs that could serve as models.
• Develop detailed urban design guidelines to support neighborhood development in the 600-800 block of Main Street establishing it as the first priority residential development area in the Downtown.
• Create a Downtown Neighborhood Association as a participant in the Good Neighbors Planning Alliance. This will become a voice for quality of ife issues for residents in Downtown comparable to the voices now heard for business concerns and resident concerns in the remainder of the GNPA.

Medium Term Implementation (1 to 3 years)

• Revise zoning code to decrease parking requirements for new Downtown residential development. Current City of Buffalo zoning law mandates one permanent off street parking space for each dwelling unit (§511-96, A). Current exceptions to that requirement include public and senior housing and lodging/rooming houses. The density and land-use patterns of Downtown are different than traditional residential areas. Many buildings that are prime candidates for conversion to residential use have limited access to on-site parking. To facilitate residential development Downtown, this ordinance should be revised to allow for fewer spaces or alternative arrangements (evening ramp space, on-street residential permits, etc.).
• Explore the development and implementation of an Equity Insurance Program to guarantee investment/property values in housing. Used in places such as Chicago, IL and Syracuse, NY, Equity Insurance Programs protect homeowner investments through the creation of an insurance pool funded by a special local tax that protects against a decline in home values. If a homeowner cannot sell their house at its assessed value, the insurance will cover the difference. Participating owners must own and occupy their home for at least five years before they are entitled to file a claim. This program can minimize risk and encourage investment in newer markets converting from rental to condominium or cooperative housing options.

Long Term Implementation (3 to 5 years)

• Facilitate the development or redevelopment of 1500 housing units in the Downtown area over the next five years. Several housing market studies conducted over the past few years (Danter, R/UDAT, Downtown Worker Survey, BNMC survey) have determined an average absorption rate of at least 300 units per year for new Downtown housing. Taking into consideration local market and macro-economic conditions, that goal has been modified. The new goal for housing development is 50-100 units per year in the CBD and 100-200 units in the greater Downtown area. This number includes the rehabilitation / upgrade of existing housing units as well as apartments or lofts created by the adaptive reuse of existing structures.

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Living Downtown: Snapshot

Current Status

Downtown Residents

• There are 3,210 residents in the Central Business District; another approximately 15,000 reside in the surrounding neighborhoods
• The CBD represents 1.1 percent of Buffalo residents and 0.34 percent of Erie County residents
• The median age of Downtown residents is 45
• 93 percent of Downtown residents are 18 years and older
• Only 5.3 percent of Downtown households are families with children under 18, compared to 29 percent of the City and 30 percent of the County

Data: U.S. Bureau of the Census, 2000

Downtown Housing Stock

• There are 1,207 occupied housing units in the CBD. This represents 0.98 percent of all occupied units in Buffalo and 0.031 percent of Erie County. The total number of residential units is 1,233, representing an occupancy rate of 98 percent.
• There are 927 rental units in the CBD with an average rent of $508.
• There are 306 owner-occupied units (condo and traditional homeowner) in the CBD that have an average assessed value of $187,734. The total assessed value of the units is $57,446,771.
• In 2001, there were an estimated 2,250 new residential permits issued in Erie County. 265 of those were issued in the City of Buffalo.

Source: U.S. Bureau of the Census, 2001; Buffalo Place Inc., 2002

Work to Date

Legislative/Policy Completed

700 Block Urban Renewal Plan

800 Block Urban Renewal Plan

City of Buffalo Permit Fee Reform

Extension of Empire Zone Credits to Residential Mixed Use

NYS Mixed Use Urban Tax Exemption Program for commercial space conversions to mixed use

City of Buffalo Mixed Use Urban Tax Exemption Program

Reform of the NYS Building Code

Legislative/Policy Under Development

Proposed Historic Tax Credit Legislation

Planning/Organizational Completed

Buffalo R/UDAT 2001

Downtown Buffalo Housing Sourcebook

The Danter Report – A Downtown Multifamily Housing Analysis

The Dennison Study – The City of Buffalo Housing Delivery Study

Planning/Organizational Under Development

Buffalo Downtown Housing Development Corporation

Buffalo Niagara Now Initiative

Capital Projects Completed

Gull Landing Phase II

The Bellasara

Watkins Building

Lofts at Elk Terminal

Ellicott Lofts Phase I

Capital Projects Under Development

Century Centre I

The Belesario

Sidway Building

Tent City Building

Ellicott Lofts Phases II and III

Holling Press

Saturn Building

Greystone

Hope VI

Living In Brief

Measures of Success

• Increase in total residential population in neighborhood focus areas
• Increase in total number of units
• Increase in diversity of product
• Increase in occupancy rates
• Increase in number of new or renovated units per year
• Increased/stabilized property values
• Increase in median rental rate

Top Rules for Living Downtown Action Plan

• Density and concentration
• Diversity – all cohorts, all types
• Green design/connect to transit
• Historic District/Infill
• Mixed-use, service retail
• No parking requirements
• Public/private participation
• Quality of architecture
• Unique product

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