Gnarlsaurus_Sketch t1_jd3x6fg wrote on March 21, 2023 at 5:36 PM

Reply to comment by AirtimeAficionado in Let's pour one out for the developers of Pittsburgh by PublicCommenter

Raising fees while interest rates are skyrocketing effectively kicks the projected yield rate while it's down. Use all the buzzwords you want, it won't change the fact that this fundamentally discourages development because it decreases the yield rate. Developers who have already submitted proposals might be more likely to move forward, because of their sunk costs. Developers who haven't already committed could decide to build elsewhere.

Even though they are assessed at a percentage rate, the fees still affect smaller developers more because the fees are a larger percentage of their net worth than they are for bigger developers. It's the same principle that renders a percentage based flat tax unfair. Even though it's the same percentage, it affects the little guys way more.

More staff to enforce the shitty zoning we have isn't a good thing unless we reform the zoning first. Other existing expensive non-refundable costs aren't a valid excuse to impose new ones.

AirtimeAficionado t1_jd48ui4 wrote on March 21, 2023 at 6:49 PM

I’m not sure what you’re on about, this is written like an AI language model would write something after being asked to integrate a new term it isn’t really familiar with— in this case “yield.”

The yield is assessed versus the entire construction cost of the project— why I mentioned that in the first place— which is why these sums do not really matter. It’s equivalent in cost to something like four days of a tower crane rental, and does not have a substantive impact on developable yield. Period.

And these developers— Millcraft, Walnut Capital, etc— are not building elsewhere. Development is a field highly dependent on local knowledge, and these firms exist with portfolios exclusively in this area for this reason. The city-especially areas like Oakland— remain extremely compelling for development by anyone, but are particularly important to these local development firms because they have a strategy and portfolio hinging on almost exclusive development here. It would be far more costly and risky for them to go elsewhere. They are not.

Increasing interest rates and inflation matter, but are happening regardless of this policy. These are much larger costs, and the real thing holding development right now. Developers could still build in areas like Oakland in this climate, but are waiting on doing so because they foresee lowering interest rates in the future which will reduce ultimate project cost.

I’m not sure what you’re saying about the “little guys,” but the percentages outlined here should be the same or lower for them— before it was a flat rate of $15,000, now it is variable on project cost.

And I agree the zoning needs to be improved, I am arguing it will improve as a result of better staffing from better funding. I do not know anyone at DCP that is happy with the way things are going, but they are currently underwater and are struggling to keep things moving. This should help, not harm, zoning efforts.