The Barriers to Small Scale Infill Development

It was a sunny, if a bit windy, Saturday afternoon. My wife, mother in-law, and Ergo’d baby were finishing up a relaxing walk along Humboldt Avenue and I noticed a house had been recently renovated.

Sold home on Humboldt Avenue South in need of TLC

3330 Humboldt Ave. South in pre-renovation state. (Click image for link to more pictures)

It struck me because my wife and I had toured this exact house about a year ago. 3330 Humboldt Ave. South wasn’t in great shape; while not “dilapidated,” the signs of wear and age from being rented out were definitely showing. However, it’s a great lot in a desirable neighborhood mere minutes from the lake, Uptown, transit, etc. It now has new siding, windows, a new porch, and I can only assume nice finishes on the inside plus probably central AC. It sold for $307,000 after sitting on the market for quite a while, and my guess is it will sell for $500,000 or more.

The Need for Small Scale Infill

I’ve been wondering why we don’t see more small-scale infill within neighborhoods. 3330 Humboldt struck me as the perfect opportunity to densify – relatively cheap land owing to building depreciation, small apartments nearby setting precedent, and high housing price pressures owing to the proximity to many amenities. Instead of replacing 3-4 low-rent bedrooms with potentially 10-15, we’re getting a house only an upper crust family can afford. Don’t get me wrong, I love families and all (if we had more money maybe we would have been those renovators!), but this is a missed opportunity.

The Minneapolis Comprehensive Plan mostly calls for dense, mixed-use development along commercial corridors, and we see zoning that matches that goal. I don’t think this is a wise strategy – there is limited land abutting these corridors, and many have a mix of rentals and multiple retail or commercial tenants that make lot assembly and redevelopment very difficult. Besides, not everyone wants to live on busy streets like Hennepin or Chicago or Central. The same reasons families seek out inner neighborhood lots also apply to the #millennials everyone is so eager to attract. While the newly adopted ADU ordinance will go a long way to open the door to incremental, affordable density in neighborhood cores, it’s not sufficient.

Plus, central neighborhoods represented by the East Calhoun Community Organization (ECCO), Calhoun Area Residents Action Group (CARAG) and Lowery Hill East Neighborhood Association (the Wedge) are already riddled with small apartment buildings, oftentimes on a single Minneapolis lot (~40 ft x 128 ft). I grabbed a few Google Streetview examples plus one from just across the street from my own home to illustrate:

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These buildings are 2 to 3 stories with a garden level for an extra unit or two, laundry, bike storage, etc. There are usually 4-5 surface parking spaces against the alley, though some have detached garages. Sometimes these are condos, more frequently apartments with a mix of 1 and 2 bedrooms.

I would say that, generally, this is the type of density people would like to see. Linden Crossing was hotly contested over its perceived bulk at 3 full stories with a fourth set back a bit. The Frank-Lyn proposal received its share of criticism last year due to bulk, height, etc as well. While I supported both of those projects (with perhaps a few minor tweaks to the latter), I agree with many that smaller-scale structures do a better job of providing visual interest and are less hulking (though sometimes I like that), while still providing ample density.

Single lot development is important. It’s a small-scale process, meaning more local developers* (rather than national, publicly-traded ones) can take part. Profitable single lot development also bypasses the timely and costly process of lot assemblage with the city. Finally, it adds competition so landowners don’t hold out for combined offers on combined lots. So, can it be done?

Change the Zoning

Minneapolis Neighborhood Zoning Does Not Match Existing Scale

Click to embiggen.

Unfortunately, the Minneapolis zoning codes make it illegal to build the housing currently found in our neighborhoods. The image below shows a few South Minneapolis ‘hoods and their zoning. It’s easy to spot the small apartments in R3 or lower districts by the white roofs (right). In the Wedge, this was the result of a decades-old fight to downzone a solid chunk of the neighborhood. I’m no historian so I’ll leave it to commenters to give context in other neighborhoods.

The zoning is basically saying neighborhoods simply can’t sustain the intensity we know they actually can. ECCO has half the population density of CARAG despite being closer to Lake Calhoun and equally served by transit options. I have no doubt that zoning plays a big part in keeping it that way.

Using the example sites in the images above, we can compare existing buildings to what zoning currently allows:

SmallScaleInfillExamples

Click table to enlarge

 

That’s a lot of non-conforming uses, Minneapolis. Even if we up-zoned vast swaths of neighborhoods to R4, many of these single-lot apartments would require variances. Obviously, the city grants variances and CUPs all the time, but if you’re trying to convince someone to park money in real property here in Minnesota as a form of investment rather than the global stock market, we want to remove as many sources of risk as possible.

Removing (or seriously lowering) parking minimums, easing setback requirements, bumping up allowed floor area ratios (FAR), and extending the maximum dwelling units per lot size exemption to R3 and R4 should all be on the table. As should up-zoning. We know neighborhoods won’t spontaneously combust if apartments creep into areas dominated by single family homes.

The Economics

Before reading on, go check out the inspiration for this post – Let’s Go LA’s take on making the classic LA Dingbat a reality again (also, read all the other posts). I borrowed (stole) the methodology for penciling out development costs to see if it’s even reasonable for the Twin Cities.

First, let me say that I’m no developer, so take the methodology with a grain of salt. If you assume you can get a standard lot for $200,000, drive down construction costs from the Minneapolis average of $160/sqft to ~$115/sqft, and sail through permitting with the city, we can get a rough idea of unit pricing in new construction matching these old single lot buildings.

A 3.5 story building with small 1 bedroom units:

Expected monthly rent for 3.5 story, 1 bedroom apartment building

…and the same sized building with 2 BR units:

Expected monthly rent for 3.5 story, 1 bedroom apartment building

 

Do you think a 460 sqft 1 BR apartment could rent for ~$900 a month in the Uptown area? Maybe folks might be turned away from only 4 surface parking stalls. Others might yearn for the amenities other new apartments provide. I’ll admit $1,750/mo (or a purchase price pushing $200k) for a 2BR unit in a stick-frame building seems like a hard sell. Maybe people would pay $600/mo for a 300 sqft efficiency apartment. It’s likely that even with looser zoning restrictions, we’d still see many large apartments that drive down wasted space per unit (hallways, lobbies, etc) and spread fixed costs over more units. That’s what makes the 2320 Colfax development by Michael Lander so impressive – 66% of parking in a garage, a mix of unit sizes, good urban frontage, all within the R6 requirements (admittedly much more generous than even R5) for a target of $1,000/mo for the 1BR units.

In any case, we should at least let these options play out. I’d welcome more of these low-impact apartments into my neighborhood if it meant an increase to the tax base and long-term housing affordability for more people. I guess, that’s preferable to letting unremarkable single family homes spiral up into the $500,000 range. Especially if we could move those unremarkable houses to other parts of the city that desperately need them.

*Let’s put “local” and “small” developers into perspective. They’re still going to be pretty rich. About the same as people we’ve named neighborhoods and streets and Facebook groups after.

DeveloperIncomePercentile

 

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63 Responses to The Barriers to Small Scale Infill Development

  1. Julia March 11, 2015 at 9:55 am #

    Thank you! I find this problem huge and incredibly sad for our city.

    One other problem that is likely behind decreasing density that doesn’t get mentioned is the make-up of modern families/households compared to historical households. My grandparents were able to live in a “single family” home in the Wedge, them plus their twelve children. They did so with my grandfather’s wages, but also the kids’ wages/earning (even the school-aged ones had multiple paper routes, sold flowers door-to-door, etc.). The oldest children lived in an accessory dwelling unit until they got married and moved out).

    With smaller families, stricter child labor laws (yay!), more single people, less live-in help (pertinent in the mansions near there), more seniors living independently, fewer extended family situations, and larger square foot minimums (I think?) for what constitutes a legal apartment, we HAVE to have significant development in order to return to even a historical density.

    What is the city doing about this? It seems like part of what needs to happen is de-incentivizing (or perhaps penalizing even) people who want to turn multi-unit homes into single family homes. We need to not focus our efforts on inequity in the city just in addressing how poorly we treat NoMi, but in making sure that the Wedge, Lowry Hill, and SW Minneapolis generally are MORE accessible for low-income households, not less, and given our market-based economy, that means upping the density.

    I am appalled at the absence of historical preservationists’ voices on these matters. My understanding is that 2320 Colfax was particularly desirable for developers because it was zoned R6, which is rare in the Wedge despite the demand for apartments there. Reading between the lines, the developer would have preferred an empty lot. The city’s very low density zoning, propelled by misguided neighbors and decades of bad policy from past (not current) decisions that suburbanized our core, put a target on the Healy House. Those, myself included, who truly care about Minneapolis and its historic architecture, need to actively push for preemptive rezoning in order to protect our city and beautiful old houses.

    We also need to remember that few of the grandest of these homes EVER functioned as “single family” homes for just one or two people–looking over the census (1925, 1930, 1935) for the East Lowry Hill neighborhood, it is very clear that most large houses included live-in help (often new immigrants), larger families, extended family members, or even boarders during lean financial times. We aren’t looking to replicate Minneapolis’ past, but even these homes are built for higher density.

    When we have low density/single family housing, we all end up paying the cost–maintaining streets and sidewalks and boulevards/trees for the benefit of only a few, decreasing the number of people served by (and funding) each fire and police station, increasing response times, decreasing walkability, shopping options, safer streets, public transit services, and other amenities.

    I get the pain of seeing old houses demolished and watching affordable multi-unit housing turn into homes for one or two wealthy individuals–it really saddens me. But when we focus our attention only on the direct consequences of the first, we miss out on the destructive (to the fabric of our neighborhoods) nature of the second and the opportunity for us to steer development towards something that protects both the historic buildings of our city AND moves us back towards being a city full of diverse people in every neighborhood. Thank you for highlighting the second one here!

    • Adam Miller
      Adam Miller March 11, 2015 at 10:01 am #

      As these renovations generally increase the value of the homes, I’m not sure this type of density reduction necessarily reduces revenue (they may even increase it), but the opportunity cost is real.

      • Julia March 11, 2015 at 10:55 am #

        Can a renovation-for-fanciness of a single family home that easily increase revenue for a city as much as other options? (Muti-unit renovation/development, ADU?) It seems to me that property tax is only part of a city’s revenue. Ignoring licenses and fees associated with multi-unit housing, there’s also taxes on spending (sales, food and drink, etc.) and the revenue from businesses that provide those goods. Having a greater density of spending power (i.e. more people) is an on-going boon to a city, especially if the individuals are able to be car-free (i.e. lower wear and tear on city infrastructure, greater percentage of spending within city bounds*). I mean, property taxes are based on value, value is based on desirability, and people want to live in these neighborhoods because of access to amenities, not just for the bones of a home–those amenities are supported by the density of people.

        * No idea if this is accurate–perhaps most people without cars buy everything online and don’t go out–but I’m carfree, rarely shop online, and spend 90% of my money within walking distance of home and 99% within Mpls proper.

        • Alex Cecchini
          Alex Cecchini March 11, 2015 at 12:41 pm #

          I think Adam’s point was that there are 3 options: keep a SFH house as a lower value 4-person rental, renovate and sell as an expensive SFH, and re-develop as a small apartment. The first sees no net increase in property taxes. The second might bring in a little more net revenue. The third would bring in even more. Renovating isn’t a “negative” to the city, but there is an opportunity cost in keeping the parcel from reaching an even higher value via the apartment.

          There’s a very nice home in my neighborhood that recently sold for $500k and pays ~$6k in taxes. Just down the block is a 2.5 story apartment building like I highlight in the article on a standard lot. It pays $14k in taxes and likely hasn’t been renovated in quite some time.

      • Wayne March 11, 2015 at 11:40 am #

        I would think that the advantages of a higher population would outweigh the marginal gains from upgrading a single family house. Because of the way the levy system works, even if their share goes up a little, the opportunity cost of spreading that number across more people is probably more than you’ll get from a small uptick. Increasing density almost certainly increases the percentage of the overall levy paid by that lot far more than some upgrades to the kitchen and deck.

        • Adam Miller
          Adam Miller March 11, 2015 at 1:04 pm #

          Please see what Alex said above.

          A renovation like this likely increases the property taxes relative to the pre-renovation house, and that’s likely the overwhelming factor in the amount of revenue generated by the house (i.e., it’s probably more money than the loss of consumption and other taxes from perhaps reducing the number of residents).

          Obviously, building something newer and denser might both increase the property tax generated and add more people to generate other revenues.

    • Alex Cecchini
      Alex Cecchini March 11, 2015 at 10:47 am #

      Thanks for the thoughtful response!

    • Wayne March 11, 2015 at 11:58 am #

      “When we have low density/single family housing, we all end up paying the cost–maintaining streets and sidewalks and boulevards/trees for the benefit of only a few, decreasing the number of people served by (and funding) each fire and police station, increasing response times, decreasing walkability, shopping options, safer streets, public transit services, and other amenities. ”

      I think this is something that needs to be talked about more. It’s a intra-city version of the suburbs vs. city argument, or metro vs. outstate. Denser development will *always* have the economies of scale advantage of dispersed and lower-density land uses. Because of that, it generally will always be more profitable and contribute more per sqft/person/etc than other development patterns. And because low-density sprawl is the default setting for American preferences, the dense and more efficient development patterns will seemingly always subsidize the sprawl, even at the city level. Just like how I pay plenty of taxes for roads that are actively hostile to me as a pedestrian and subsidizing people who drive even though my lifestyle is more efficient. But I have no recourse because I’m in the minority.

      • Wayne March 11, 2015 at 11:59 am #

        economy of scale advantage *over* lower density uses. Sorry, typo.

  2. helsinki March 11, 2015 at 10:05 am #

    Excellent points.

    You write: “The zoning is basically saying neighborhoods simply can’t sustain the intensity we know they actually can.” I found this sentence interesting because it unconsciously imputes to zoning an intention that was never actually present. The whole point of zoning is to prevent development other than single family homes. Richard Babcock (pro-zoning author of “The Zoning Game”) himself wrote that the purpose was “the protection of the single-family house neighborhood … As might be expected, such a motive is rarely articulated as a rationale for this popular device, either by the supporters or critics of zoning.”

    I agree with much of your article. But zoning is a wholly political debate, not a technical or market-driven one. The goal of the legal regime is to prevent the construction of apartments, based on WWI-era assumptions about the social status and morality of house dwellers vis-a-vis apartment tenants. Logical and desirable changes to the zoning code that fundamentally upset this premise – like those described here – will need a compelling political argument to rebut the emotional investment in the status quo.

    • Adam Miller
      Adam Miller March 11, 2015 at 10:34 am #

      How’s this: apartments are for rich people too now.

      • helsinki March 11, 2015 at 12:49 pm #

        Well, and they always have been. The Upper East Side wasn’t a neighborhood of single family homes 100 years ago either.

        It’s not much of a slogan. But I think the impulse to make renting as socially acceptable as owning is the right one. People really look to their peers when thinking about their place in the pecking order. For some reason, the older generation views indebting oneself to a bank to pay a mortgage on a condo unit in a multifamily building as somehow qualitatively different from paying rent – even in these days when investors hold huge portfolios of rental property so there is oftentimes no difference between a “mortgage-holder” and a “landlord”. The financial crisis put a dent in this view, but it’s surprising how persistent it still is.

        • Wayne March 11, 2015 at 1:12 pm #

          “For some reason, the older generation views indebting oneself to a bank to pay a mortgage on a condo unit in a multifamily building as somehow qualitatively different from paying rent – even in these days when investors hold huge portfolios of rental property so there is oftentimes no difference between a “mortgage-holder” and a “landlord”. ”

          THIS! SO MUCH THIS! Thank you, this is a sentiment I’ve had for quite some time but haven’t quite been able to articulate. I’ll be stealing this for use in personal debates. For anyone who isn’t certain they will have the same needs from their living space for at least 5-10 years (like, oh, say … needing to move for work or anything like that), owning seems like a wash with renting. I’ve run the numbers for myself over and over and it’s hard to find a scenario with my personal needs where owning makes more financial sense. Since I’ve been all over the place with income I’m especially keen on the flexibility of renting, where you can up- or down-size depending on needs within a year no matter what the housing market looks like at that time.

          • helsinki March 11, 2015 at 4:03 pm #

            I would add some conditions to your enthusiasm. In most states (so called “lien states”) the borrower does actually have legal title to a mortgaged property (by contrast in “title” states the bank has title, and you the borrower do not). This allows a degree of control: for instance, the bank generally cannot raise your monthly payment (unlike a landlord, who is generally allowed to raise rents if proper notice is provided). The downside for the mortgagor, of course, is that if she defaults the bank can accelerate the debt and demand payment of the whole balance all at once and then proceed to foreclosure and recover the balance via default judgment when payment is not forthcoming.

            This is a long way of saying that there are benefits to “owning”, but they are themselves qualified. My point about institutional investors owning both mortgages and streams of rental income is that the relationship between the person who lives in a unit and the person she pays for the privilege of doing so is utterly irrelevant because “owners” and renters are usually paying the same people anyway.

            • Adam Miller
              Adam Miller March 11, 2015 at 4:21 pm #

              They may be paying largely the “same” people, but there are lots of other ways owning, regardless of mortgage, is a lot different from renting. The biggest direct difference is that a mortgage is subsidized via the mortgage interest deduction.

              Then there are lots of differences about the degree of control over the property and ease for the person receiving payment to kick you out and/or rewrite the terms of the deal.

              None of which is to say that choosing between renting and owning is simple. I’ve actually given some thought to renting again, but high rent prices in Minneapolis and the mortgage subsidy make that unlikely to be the wiser choice, even if it costs me some of the liquidity and flexibility that Wayne values.

              • helsinki March 11, 2015 at 4:55 pm #

                Right. The structure of incentives is designed to encourage ownership because the government wants you to buy, not rent. Fannie Mae and Freddie Mac don’t exist in a vacuum; they exist because homeownership is valued politically – both for benign reasons (stakeholders are presumed to be more engaged in the civic life of their communities) and for more sinister ones (people tethered to enormous debts are politically docile).

                At the same time, renters have quite a few rights. You can’t just be kicked out. Also, you generally have fewer responsibilities as a renter for maintenance and you only pay property taxes indirectly when the cost is passed on via rent increases. So, yes – I agree that there are absolutely benefits to both sides.

                My original point is that zoning is all about the single family home. We’re told patronizing stories about the horrors of the industrial revolution and how zoning is meant to keep the meatpacking plant from opening up across the street. These are straw men: the byzantine gradations of residential density allowed by zoning codes are just about protecting the single family home – not alleviating the horrors of industry. As has been mentioned elsewhere on streets.mn before, many zoning codes largely fossilized the development pattern that predated their existence. They weren’t designed with some higher understanding of the most beneficial use for any given area.

              • Rosa March 11, 2015 at 7:36 pm #

                Wayne’s point about being locked in if your future needs change is a big one, though – the costs of selling, even in a good market, are high in time and money. And in a bad market they can be debilitating.

                • Wayne March 12, 2015 at 8:45 am #

                  Right, and I wasn’t trying to say that renting is empirically better than buying (although many people would claim the opposite is true), only that it is a legitimately better option for a sizable portion of the population.

                  I just get so tired of people (and neighborhood organizations, and politicians …) treating me like I’m either crazy or stupid or a piece of human garbage because I rent. It’s like we as a society assumed that (single family) homeownership is what everyone should aspire to and anyone who disagrees or lives differently is deviant and deserving of scorn or pity.

                  I also think it’s mortgage interest deduction is extremely unfair and we either need a renter’s equivalent or to do away with it altogether. But that’s probably a discussion for another day.

                  • Caddy K March 12, 2015 at 8:50 pm #

                    Wayne, have you ever heard of a renters credit? It is a large tax return for people who do not own but rent. This is only available to resident tenants and not to commercial leases.

                    • Rosa March 12, 2015 at 9:32 pm #

                      it’s also a state-level program, not a federal one. So the scale is completely different.

                    • Janne Flisrand
                      Janne March 13, 2015 at 10:40 am #

                      Acknowledging Rosa’s comment on the state-level program vs. federal mortgage interest tax deductions…

                      I’d like to add that there’s also a state property tax rebate for owners that matches the state’s renters credit. HOWEVER, the renter’s credit has been cut again and again when there were budget short-falls, so the renters credit is worth MUCH LESS than the state’s owner’s property tax credit.

    • Alex Cecchini
      Alex Cecchini March 11, 2015 at 10:46 am #

      Yes, though the opinion of the court in Euclid v Ambler includes the following:

      “With particular reference to apartment houses, it is pointed out that the development of detached house sections is greatly retarded by the coming of apartment houses, which has sometimes resulted in destroying the entire section for private house purposes; that, in such sections, very often the apartment house is a mere parasite, constructed in order to take advantage of the open spaces and attractive surroundings created by the residential character of the district. Moreover, the coming of one apartment house is followed by others, interfering by their height and bulk with the free circulation of air and monopolizing the rays of the sun which otherwise would fall upon the smaller homes, and bringing, as their necessary accompaniments, the disturbing noises incident to increased traffic and business, and the occupation, by means of moving and parked automobiles, of larger portions of the streets, thus detracting from their safety and depriving children of the privilege of quiet and open spaces for play, enjoyed by those in more favored localities — until, finally, the residential character of the neighborhood and its desirability as a place of detached residences are utterly destroyed.”

      Traffic, noise, other people being overcrowded, sun/air, parking, impervious surfaces, etc. Those all play in to arguments against denser development, though I would agree there’s a much stronger societal focus in protecting single family home neighborhoods from those changes than others.

      • helsinki March 11, 2015 at 12:55 pm #

        Yes, this makes the point perfectly. The foundational precedent for the constitutionality of zoning pretty accurately boils down to “apartments are nasty”. Which is rather silly, if you think about it: for a nation ostensibly devoted to individual property rights, there is an almost comically flimsy legal basis for severely restricting the property rights of urban landowners.

        • Caddy K March 11, 2015 at 5:56 pm #

          There is a huge misunderstanding of property rights. Part of it is security in your property. It’s as much about restricting your neighbor as ensuring your freedom.
          The earliest references I have found to our version of property rights are from early days of urbanization in North America and are about preventing hog farms from encroaching on other urban uses. So preventing apartments from overtaking a single family neighborhood is for better or worse a protection of property rights.
          This is why cities like MPLS have all kinds of restrictive nuisance laws. I assure you that the legal basis of these laws and Zoning codes are anything but flimsy and are an interpretation of “property rights”.
          That being said a lot of Zoning is overbearing and needs to be changed.

          • helsinki March 11, 2015 at 8:29 pm #

            Well, nuisance law is better understood as part of tort law (harms that aren’t crimes). A hog farm is generally a nuisance because of the extremely unpleasant smell. Nuisances require that you actually harm someone else.

            Zoning is different. Zoning says: you may own this land, but you can only build on it what the zoning ordinance says – regardless of whether this causes actual harm or not. This has no precedent from the early days of urbanization in America; it’s a 20th century phenomenon.

            • Wayne March 12, 2015 at 10:14 am #

              I remember how interesting the origins of zoning were when I took my land use law class (seemingly forever ago now). But I continue to be dismayed at how something originally intended to prevent harm has been twisted into an instrument used to inflict harm on certain groups and reinforce very bad social policies and habits.

              I also think it’s kind of hilarious that people are so vehement about certain perceived negative externalities but completely ignore others (such as the ones they produce).

            • Caddy K March 12, 2015 at 9:19 pm #

              The point was about property rights in general.
              People think it means owners get to do whatever they want with their property. The reality is that it is more nuanced than that, and often involves constraint of one owners desires.

              The funny thing is reading the very old documents on neighbors concerns about hog farms sound and awful lot like some recent concerns voiced about apartment buildings. Ha.

              Recently in Houston a neighborhood enforced fines against a developer for building a high rise in a residential area without any zoning the nuisance concept was used.
              Zoning ordinances did come into common use in the 20th century, but really originated in the 19th. One of the earliest examples I can find of a zoning code not called a zoning code is the Minneapolis liquor patrol limit dating to 1884. repealed in 1974, still leaving a legacy of land use patterns.

              I do think we need some limited zoning and land regulation for the common good but modern zoning especially single use zoning have gone way to far and hurt our cities.

              My point was only that the legality is not flimsy and if we want to change it we need to do it legislatively not through the courts.

              • helsinki March 13, 2015 at 11:25 am #

                “My point was only that the legality is not flimsy and if we want to change it we need to do it legislatively not through the courts.”

                I completely agree.

                The doctrine is, of course, firmly established. By ‘flimsy’, I meant the rambling nonsense in the Euclid decision about the evils of apartments and how their perceived vices provide legal justification for prohibiting them.

                Your second point is spot on. The city council is the proper forum here. Pleading for variances from an ideologically hostile legal code will not fundamentally alter residential density levels.

      • Peter Bajurny March 11, 2015 at 12:59 pm #

        But we can use our legal pen to cross out the sentence about air circulation and sun rays though, after the Fontainebleau Hotel ruling. Thought that still leaves a lot of legal boogeymanning

  3. Matt Brillhart March 11, 2015 at 10:44 am #

    Two examples of newer small-scale, single-lot infill on Grand Avenue in Minneapolis:

    3824 Grand (40′ wide lot, built 2013): https://www.google.com/maps/@44.933306,-93.284374,3a,75y,263.17h,88.8t/data=!3m4!1e1!3m2!1sujyYje5sIaszOijGEB0qIA!2e0

    3036 Grand (46′ wide lot, built 2007): https://www.google.com/maps/@44.947021,-93.284291,3a,90y,268.38h,93.31t/data=!3m4!1e1!3m2!1stoDru4qwGTuJJIk8sz6goQ!2e0

    Though in both cases, the property was already zoned R4 or R5.

    Why such high zoning along Grand Avenue (a minor collector and minor transit route)?
    OR
    Why do large swaths of R2B zoning remain along Bryant, Hennepin, Lyndale, Nicollet (major transit routes)?

    • Alex Cecchini
      Alex Cecchini March 11, 2015 at 11:12 am #

      Great examples, and thanks for those!

      Here was the staff report detailing the variances for 3036: http://www.minneapolismn.gov/www/groups/public/@cped/documents/webcontent/convert_258283.pdf
      It has 2 1BR units and 4 2BR units. Since the first floor (of 3) is ground level (lacking a half story bump in a garden level), that explains the difference in total sqft from my model. The back does have a small 5 stall garage below a deck for the tenants. I assume that this project faced very little resistance, but that was very much helped by the R5 zoning and 46′ wide lot (which allowed a bit more breathing room).

      3824 is another Lander project, 4x 2BR units. A bit smaller than the older apartment buildings I reference, but another great example. The lot was vacant prior to construction, so at $75,000 up-front costs were low.

      Both were zoned R5 prior to any applications. I think this shows there is appetite for these type of buildings if the zoning is right. Maybe they also show construction costs are lower than I estimate given both have enclosed ground-level parking (or, they charge higher rents).

      Good questions on the high zoning along Grand vs other transit corridors. 38th & Grand makes some sense given the 23 and all the commercial at the corner. ~31st & Grand is just off Lake St but shows that equal walking distance to Nicollet and Lyndale are still desirable places for new moderate density.

      • Jim March 13, 2015 at 12:11 pm #

        The Grand Avenue zoning is simple: It was a streetcar line and lots of multi-family buildings were constructed along it between Lake Street and 40th prewar as that area of the city was filling in. it is the highest concentration of housing in Kingfield along those six blocks from 36-42. the larger buildings begin to tail off by 46 because the streetcar didn’t cross the creek. When the zoning code was put in place in the 1960s, it retroactively allowed most everything that was there. Not long after, grand ave’s bus didn’t get the same level of local service (but now has express) as bryant/lyndale or nicollet, so looking at things today, it doesn’t add up quite the same way as it did then.

        • Matt Brillhart March 13, 2015 at 2:56 pm #

          Thanks for the context.

          With my “OR” clause, I was actually targeting the lack of the same level of allowed density along those other transit corridors. I’m totally cool with Grand having R4/R5 zoning. If a minor collector like Grand Avenue can have R5 zoning all the way down to 40th Street, then other major transit corridors should not be zoned R2B, as much of Bryant Ave is through CARAG.

          Nicollet has some absurdly low R1/R2 zoning as far north as 36th Street in Kingfield. Not really ideal on one of the most frequent bus lines.

          HOWEVER, another thing to keep in mind is that cities don’t usually just rezone property willy-nilly, unless it’s following a major update to their Comprehensive Plan. Absent of that process every 10 years or so, the normal practice is to leave zoning alone until a proposal comes along, and let the developer apply to have the zoning changed. As we have seen in recent development controversies, that situation is not super helpful when you have anti-development folks saying “leave the zoning the way it is”, but that is the standard practice.

    • Matt Brillhart March 11, 2015 at 11:16 am #

      Just did some code-surfing, as I’ve long wondered what the differences are between R1 and R1A, R2 and R2B.

      My reading is that a new two-family dwelling in either R2 district would actually require a 10,000 square foot lot, whereas many existing duplexes obviously exist on 5,000 square foot (40’x127′) lots.

      Is that right? You aren’t allowed to build a new duplex on a standard 40′ wide (5000 sf) lot in the R2 districts? Can any CPED folks confirm?

      In the R4 and R5 districts, it appears you can build a multi-family dwelling by right on a standard city lot. In R4, there’s a limit of one dwelling per 1,250 sf of lot area (so 4 units on a standard lot).

      That’s kinda crazy when you think about it though – all of those beloved century-old 2.5 story walkups typically have at least 8 units (4 per floor, plus any garden level). Not only could you not build that density today in R4, many of them are actually *really* nonconforming in areas with R2B zoning.

      I work in zoning myself, and a huge pet peeve of mine is when modern zoning codes actually prohibit things we really like, like small scale apartment buildings on standard city lots.

      • Alex Cecchini
        Alex Cecchini March 11, 2015 at 12:08 pm #

        I’m seeing a two-family dwelling in the R2 district requires a 12,000 sqft lot. I think R2B is much more common, though. In fact, it looks like R2 only exists up in the northern areas of Kenwood?

        But yes, that was a strong point of the article – even R4, a medium-density zoning district, doesn’t allow the type of low-impact 2.5 story units most people find extremely charming to be built today by right. The fact that many exist in R2B districts now shows the length to which we’ve made re-creating them impossible.

        I think the lot size per dwelling unit exemption Schiff got through should be passed down the line to R3 & R4 zones. That closes the gap between ADUs + conversion of SFHs to duplexes/triplexes and the next level of small lot density (12-15 bedrooms or so).

  4. Wayne March 11, 2015 at 11:49 am #

    I feel like the residents of this area throwing their hats in with meg Tuthill and that lady from the TV show to throw a hissy fit about the Colfax apartment building and the one at Franklin/Lyndale are the same (now very old) people who fought so hard to get the area downzoned originally. I look forward to the old age die-off that might finally allow some sensible homeowners who won’t fight to block urbanization of an already-urban area. You can’t call backsies once a good half or more of the neighborhood is above the allowable zoning limits for density. it’s absurd that places further from downtown and jobs with worse transit access allow denser development that this part of town, tucked right next to downtown with some of the best transit access available (which isn’t saying much here, but still).

    • Alex Cecchini
      Alex Cecchini March 11, 2015 at 12:12 pm #

      I wouldn’t be so quick to generalize, even if I might agree with the overall notion. I see lots of young people living in Minneapolis right now who really question additional development, impacts, etc. A friend of mine wasn’t a huge supporter of ADUs because they might change the single family nature of neighborhoods. To my knowledge, some of the most vocal opponents of the FrankLyn proposal were younger condo owners behind the building.

      I don’t want to be lumped together as a bunch of “millennials who will just leave for the suburbs” or anything like that, so it’s probably best for both sides if we work to understand each others’ desires & motives as best we can.

    • Julia March 11, 2015 at 6:31 pm #

      I think it’s a mistake to assume that either older people or long-time residents are against higher density. I come from a family that’s been in Mpls (and the Wedge area) for a long time and I grew up on stories of the benefits of a walkable city with corner stores and decent public transit. In my view as a lifelong multi-generational Minneapolitan, I am gleeful that it finally looks like we might stop the subsidies of the wealthy that we’ve had and design a city for higher density and better transit. I hear this hope shared by other long-term Minneapolitans (including some who could be Meg Tuthill’s parents).

      Check your ageism/timeism at the door, please. I want a Mpls that is welcoming and accessible for all, regardless of how long they’ve been here or how old they are, and I believe that’s true of many/most of us. Fear-mongering and divisiveness aren’t needed–denser development done right will be a boon for all of us!

      • Julia March 11, 2015 at 6:36 pm #

        I went to the Frank/Lyn meeting and as much as I support higher density development (including that proposal, even with its flaws), the proposed design was unnecessarily car-centric, with those intangible costs to be borne by the condo-dwellers. They were essentially going to be window-level (and not that far away) with a huge parking garage, with all its ugliness and poor air quality. Very poor design for a development in that great of a location.

        • Adam Miller
          Adam Miller March 11, 2015 at 10:10 pm #

          This sounds a lot like the perfect being the enemy of the good, in particular in an area where parking concerns are going to be a first order obstacle (as much as they shouldn’t be).

          Or to say it more directly, “we won’t be able to park” is an argument that current residents will win with. “There’s too much parking” rarely is.

      • Wayne March 12, 2015 at 9:00 am #

        Fair enough, I recant! I’ve just grown frustrated by the level and fervor of opposition to seemingly *every* development proposed here. Even when people build new single family homes in the city the neighbors cry that they’re ‘too big.’ While there is a definite correlation between older home owning residents and this opposition, it’s definitely unfair of me to characterize the way I did, though. The old saying about assumptions …

        I just really wish there were a way to convince people that bigger is actually better. But I keep coming up against the same arguments that basically amount to ‘I’ve got mine, everyone else can bugger off.’ It gives me a sad and an angry all at once, and sometimes I lash out. But I still despise the crybabies with the Healy house garbage. The lady from the TV show is just the worst, sending an army of trolls forth to abuse local elected officials because she couldn’t get someone else to give her a house for free and pay to move it for her. She’s the kind of person that would much rather have nothing but single family homes in the city, renters and poor be damned!

        • Adam Miller
          Adam Miller March 12, 2015 at 9:55 am #

          Even worse: really expensive single family homes.

          • Wayne March 12, 2015 at 12:59 pm #

            Or maybe museum pieces where they always leave the downstairs windows open and lights on so you can see their immaculate (and never used) furniture setup. I used to get so mad when I saw that in Beacon Hill in Boston, but I can think of a few houses just like that here.

        • Rosa March 14, 2015 at 10:55 pm #

          come live in Phillips or Powderhorn, we like apartment buildings. Central probably does too.

  5. Janne Flisrand
    Janne March 11, 2015 at 5:17 pm #

    I can verify that people are willing to pay $640 for a 370sf garden-level, studio apartment. Even one that is not new.

  6. Caddy K March 11, 2015 at 5:32 pm #

    You make some good points here Alex, I would point out that the city currently has 250 vacant lots for sale.
    http://www.ci.minneapolis.mn.us/cped/housing/cped_vacant_lot_home

    It seems they are all R2B or lower zoning. How about up zoning all these parcels? Allowing and encouraging the kind of infill you describe. There are environmental costs to demolition culture, there would be major benefits to encouraging dense compact infill while discouraging demolition.
    It’s also important to note that the demolition policies of the last few decades are a major contributor to lowering density and creating these vacant, unproductive lots.

    Also what info does anyone have about our state of density? I understand we are in the top 10 for population density among major cities in the us . . . Much higher than Portland . . .

    • Adam Miller
      Adam Miller March 11, 2015 at 10:05 pm #

      I really like the idea of up zoning vacant lots.

    • Alex Cecchini
      Alex Cecchini March 12, 2015 at 8:40 am #

      I also like the idea of upzoning areas with vacant lots. I also support the city doing the type of things that make living in those areas more attractive. But upzoning them will only matter if 1) there’s enough demand to fill units at the prices I noted above, or 2) we subsidize them to lower those costs. I’m comfortable with the latter (as long as we’re not just continuing to concentrate poverty), but we need a city-wide (region-wide) solution as well that allows development where it’s demanded.

      As to our state of density. Tough to find by city alone. Comparing the 51 MSAs over 1M people in the 2010 census, MSP was #16 by population and #30 by weighted population density (not average, which is far less meaningful). Seattle and Portland are 40% and 30% more dense than MSP,respectively (and, our region became less dense from 2000-2010 while those two densified). We come in less dense as a metro than Houston, Dallas, Phoenix, and Las Vegas (!!). MSAs aren’t the be all, of course. Ours includes a lot of sparsely populated rural countues. But population-weighted density largely takes care of that.

      It’s tough to find city-only population-weighted density numbers, but the US Census does post population weighted density for the areas bounded by mile-increments from city hall for the metro. Using 5 miles from Minneapolis city hall as a proxy for Minneapolis density relative to other cities with that same radius, we come in 27th (Seattle is 12th with a 51% higher 5 mile radius density, Portland 23rd with just 3% higher density). And, still behind Houston, Dallas, Phoenix, and Vegas. We’re not a very dense core city.

      • Adam Miller
        Adam Miller March 12, 2015 at 9:52 am #

        We have almost no housing in the core of our core.

      • Caddy K March 12, 2015 at 4:01 pm #

        Alex,
        Thanks for the reply.

        These are interesting numbers and tell part of the story.
        According to what I can find

        Minneapolis proper has a density of 7,287/ sq mi.

        Portland proper has a density of 4,375/ sq mi.

        The Wedge has a density of 15,000/ sq mi.

        From what I can tell these #’s are all from 2010 so density is probably higher in all places.
        Of course this also only tells part of the story but it is not what I expected.
        The problem with msa’s is what you said about sparse areas. The problem with a radius is the city is not a circle and that brings us into areas like St. Louis Park.

        Urban central core areas often have low residential population due to their central location and the demand on land that serve the greater region such as commercial, stadiums, theaters, offices etc.

        • Adam Miller
          Adam Miller March 12, 2015 at 10:49 pm #

          Casual observation says that our central core is particularly devoid of population.

          I’d be interested in whether other cities have ended up so extremely skewed away from housing in their cores.

        • Alex Cecchini
          Alex Cecchini March 13, 2015 at 9:18 am #

          I’m not sure the fixation on Portland (in general, not you specifically). But bear in mind Portland is 145 sq miles, about the size of 2 Minneapolis & 0.6 St Pauls. So the radius calculation seems at least somewhat fair since their city includes areas that would be equivalent to St Paul’s neighborhoods & Minneapolis inner-ring suburbs (Edina, SLP, Robbinsdale, etc). I made a chart yesterday highlighting weighted density at 1-mile increments for all 51 top metros, highlighting Minneapolis, Portland, and Seattle. I posted it on the Twitters.

          Minneapolis is just not a very dense city. We do have a university and stadiums and a convention center, but so do many other cities. It’s not a “bad” thing to be less dense, but we should just acknowledge that it’s true and that we could fit 50% more people in our land area and be about as terrible a place to live as Seattle.

          • Caddy K March 13, 2015 at 7:09 pm #

            I agree with you about the Portland fixation, that is why I used is as an example.

            Seattle is a good example because our level of density is very close.

            Washington state also has a fantastic statewide public transit system that encourages people to live in compact vibrant smaller towns and still benefit from the amenities of the larger cities.

            I think using political boundaries of a city is important because we have little to no control over land use in areas outside of the city limits. It is also important because that is where most of the heated discussions and decisions are happening and adjudicated about the nature of development.

            I am curious as to your basis of saying that MPLS is not a very dense city.
            Out of the 50 largest cities in the US MPLS ranks 11th for density while being 46th for population.
            (Right ahead of Oakland and right behind Seattle for density)

            MPLS is ranked 36for density out of the 295 cities over 100,000 in the US. Seattle is 32nd.

            My source is the US Census.

            So MPLS is not very dense compared to New York, Tokyo, and Paris. Compared to most other American cites we are relatively dense. Not to say we should not build on that, but the fervor of disdain for those with concerns about projects claiming we are density weak seem pretty unfair given the stats.

            If we added 50% more people to MPLS we would have a density of 10,928 / sq mile making us the 5th most densely populated of the top 50, and far ahead of Seattle.

            Your original point about density only on transit and restrictive zoning is great. In fact the most important thing on transit is destinations. Housing can be located a small distance from transit and still have the desired effects.

            I have for years been an advocate for density. I pushed for greater density in new projects on many occasions because I believe this is a great tool to aide preservation of virgin land, historic properties, existing non historic buildings, and farmland.

  7. Rosa March 11, 2015 at 7:47 pm #

    The LA blog you link to makes the point that one of the things that fueled the building of the “dingbat” multifamily units was savings looking for a good return on investment. I feel like we have that now – the interest rates on savings and bonds are ridiculously low. Maybe we need some good old-fashioned local S&Ls to get into the local development market with local bank or investor backing, and make your “who can afford to do development” chart a little wider.

    • Alex Cecchini
      Alex Cecchini March 12, 2015 at 8:08 am #

      The last chart was mostly for fun, and is not based on any research or anything. I actually feel bad for disparaging ADUs – it’s probable that non-top 15%ers who have owned their homes for a while and didn’t pay much (relative to today’s prices in Mpls) may be able to save up $40-50k to build an attached ADU.

      But I 100% agree on the other point. We should loosen rules on smaller, local investments that would allow a bunch of families to pool together money to build these type of properties. The co-op model that’s been tossed around here before (thinking the Northbound, etc) has promise. Or, a return to local banks that are willing to finance these small projects because they have a deep understanding of the area and market needs, and do so by providing better returns on savings/etc to Twin Cities residents.

  8. Sam Newberg
    Sam Newberg March 12, 2015 at 9:00 am #

    It’s a hopeful sign that we are nerdily delving into our city’s zoning code. Do I sense some emerging small-scale developers here? Hope so.

  9. Eric March 12, 2015 at 2:11 pm #

    In my neighborhood in Cambridge, MA, there are a lot of large lots with small houses on them that look a lot like the one you’re talking about here. In my neighborhood, a lot of infill is happening, but usually by building two new small single-family houses in the backyard of the old one. At the same time they renovate the old house. This happened right across the street from me; the developer bought the whole place for about 500K, built two new houses in the backyard, renovated the old one, and quickly sold all three houses for about 500K each. In our case, I think the zoning let them do this…

  10. R. John Anderson March 12, 2015 at 9:40 pm #

    Alex,

    You have clearly given this issue a lot of thought. I think I can help you with your approach to figuring out the basic, back of the envelope development math. email me: janderson@andersonkim.com.

    A key concept is that you take your likely rents, likely construction costs, likely soft costs, and likely operating expenses, likely cost of capital, and _then_ you arrive at what you can afford to pay for a finished lot to put your infill walk-up apartment building or mixed use building on. Land price should be a residual, not a driver. The building has to make enough money to justify the risk of building it and getting it leased. You avoid overpaying for the land by arriving at the upper limit for land cost as a residual.

    • Alex Cecchini
      Alex Cecchini March 13, 2015 at 9:22 am #

      Thanks for the comment! That’s actually the method I used (in my head), but wanted to tell the story since it’s easy to point out examples of land prices from public sales data & current rents. If I were more thorough, I would have matrixed out what current rents for a given geography would justify structures at different finish qualities with an upper bound on land prices, then find some potential sites that fit that mold.

      • R John Anderson March 13, 2015 at 11:28 am #

        Alex, There is typically not a smooth curve in the cost of construction, but some rather abrupt stair steps. Wood frame (TYPE V) construction with fire sprinklers allows for 4 units on each upper floor and three stories on a single means of egress (rated stairway). Go to four stories and now you need a second stair which needs to be separated from the first stair by at least half the diagonal of the floor plate with a rated corridor. The additional stair, and corridors are a step up in construction and operating costs. per the Fair Housing Act, a building with 4 or more residential units all the ground floor units must be accessible/adaptable. If there are no units on the ground floor, the Fair Housing Act will tread the _second_ floor as the ground floor and all those units will need to be accessible/adaptable -which typically will require an elevator and a bump in construction and operating costs. As you have noted, a city requiring more parking than needed can skew costs, particularly on oddly configured parcels.

  11. Matt Brillhart March 13, 2015 at 8:34 am #

    If anyone is interested in continuing this conversation, and sharing more examples, we have a topic on the forum: https://forum.streets.mn/viewtopic.php?f=6&t=301

  12. Archiapolis March 26, 2015 at 9:53 am #

    Excellent article. Having worked extensively at large architecture firms that specialize in large-scale multi-family housing this article is extremely enlightening on many levels.
    I can’t count how many times I’ve heard the phrase, “[small scale infill projects] don’t pencil out.”

    It would be very interesting to be in a room at a development firm and hear how they analyze a site (vis-a-vis zoning limitations and ROI). We would often get requests to do a study of a site “maxed out” in terms of what the zoning will allow and the developer has usually done the spreadsheet pro forma already with efficiency percentages already input (for circulation, common spaces, amenity spaces, etc) that we were expected to meet pretty closely. For example, the usual “efficiency” goal was about 85% meaning that 15% was the expected maximum percentage of circulation (not rentable space).

    I’m sure there are other articles on the subject but a study of parking for small scale infill could merit its own article. A huge chunk of the cost to multi-family housing projects is in “getting out of the ground” and this is being driven by parking requirements. To get to the unit sizes that the article is analyzing, it should be remembered that the rear 24′ (ish) of the site will be consumed by enclosed parking (18′ stall + circulation + wall thicknesses). Constrained in width by Mpls parking stall standard width of 8.5′ and the width of the lot (e.g. 50′ lot / 8.5 stall width = 5 stalls + room to swing doors) and the required setbacks. Most (if not all) market rate developers will say that the number of stalls will be a big determining factor in how many units you can get on a site.

    We can question/argue the city requirements all day (and we should) but it should be understood that “the market” appears to be well behind the “urbanists” calling for less parking. Stanton gets a lot of attention for being so outspoken about the fact that he feels that he needs all of the parking that he can get and more (even in urban settings). Given the costs for structured parking, he wouldn’t be asking for it/building it if the demand wasn’t there. We can and should talk about ways to diminish the demand. Sadly, it is my opinion that the expectation for “market rate” housing is that an enclosed parking stall will be available per unit and in condos – per bed.

    I’m not an expert on parking but I can say from my experience I have never heard a developer advocate for LESS parking in Minneapolis (and first ring suburbs).

    An interesting example is the “Zest” project at 54th and Nicollet. It isn’t directly comparable to the area studied in the article or even as urban as 38th and Grand but it is on a major artery with hi-frequency busses and commuter lines at the doorstep that travel on an interstate. Variances were sought for that site and parking wasn’t one of them, it has a 1:1 stall to DU ratio consistent with the City of Mpls requirements in addition to parking required for the commercial components.

    Again, thanks for the article and for streets.mn overall.

  13. Chuck Wolfe March 26, 2015 at 3:23 pm #

    FYI re the “plot-based” urbanism movement in the UK: http://www.planetizen.com/node/72217 and http://www.myurbanist.com/archives/10986

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