Redevelopment and land values.
In the redevelopment process, commercially zoned land is normally burdened with existing improvements.
But under present joint public-private ventures, especially on Oakland Avenue here in Shorewood, some developers are being relieved of both the existing building burden and that of the high cost of land through redevelopment subsidies.
These subsidies although seemingly giving support to the trends of high land costs, may also be justifiable when taking normal free market conditions of the present and of future into consideration.
Perhaps none of or most of these redevelopment projects would not have taken place except for the public-private partnership agreements developed under Shorewood's Community Development Authority.
The Village of Shorewood seems to have established a rather successful formula of redevelopment. projects Projects consisting of 2 levels of underground parking occupying the total lot area, with 1 floor of commercial at street level and 3 floors of dwelling units above, presently the type of development that appears to be attractive to developers.
Of course, increased development of any type will augment the tax base of the community no matter how insignificantly, at least for a time period. And in this sense the CDA is achieving the goal of improving the tax base.
We would expect that most developments taking place on Oakland Avenue would be there for another 50 years. The building or improvement values would at that time be determined either on the income produced or the replacement value of the improvements.
Land values would continue their journey upward subject somewhat to the varying values of construction on the land.
The Village Board, the Village Manager, the CDA and especially Pete Petrie the Director of the CDA are to be congratulated for the manner in which they have directed the evolution of this redevelopment process in Shorewood. There is no question as to how well and how business-like they've carried out this community task.
The process has provided the means for developers to operate in an area where the field is rather risky. The CDA has generally smoothed out some of that risk.
There is an area of land values and very long range objectives that come together at a point in some years in the future that might be worth giving some attention in our redevelopment processes.
Increasing land values are not as certain as the rising sun each day, but in human terms, fairly certain. The land under each of our developments, if it were to rise merely on an annual average of 2% for 50 years, would be double today's worth. However, all indications are that land values will be rising at higher rates.
Of course, there would be inflation values to be added to that. Perhaps inflation or its magnitude is not as certain as rising land values, but most economists think the trend to be fairly certain.
As the Village is the most important agent involved in putting these public-private deals together, it would seem that it too would share in some of these successes. It of course, will gain by the normal tax revenue that any development brings to the community but these projects, it would seem are of the community and for the community.
If the Village were to retain the land or acquire it during the process of the deal, among other things it would be accomplishing two important things.
First of all, the developer gains little from the land except its location and its use. The Village by owning the land and by controlling its use would later when it needs further redevelopment , and most urbanized area do, will be in the position of owning the land.
And secondly, the Village would then gain somewhat from its efforts of generating this venture as it would not from others.
It is clear that at first, when this proposal that I'm about to present is made, that it may draw sentiments of astonishment, but it must be presented. If the Village owns the land it will not only benefit in the long run, as it will not have to purchase it again, but instead it would lease the land,.
Private enterprise has thrived on land leases in Britain so why not here. There is little actual “community gain” from our involvement in the public-private ventures as we smooth out the way for development that would not also, on a private basis produce tax revenue.
The leasing revenues could be directly turned over to community building, perhaps some of it to the school district. Here we would have some “community gain,” some return for community building which would be lacking in projects only looking at the present and present accomplishments.
Again, I want to congratulate all involved in our redevelopment processes in Shorewood and hope that the notion of land leasing eventually becomes a natural element of that process.