A blog for better streets and public spaces in Portland, Maine.

Tuesday, September 15, 2009

How much is a redeveloped Franklin Street worth?

Detailed images and simulated animations for the three concept designs for Franklin Street are now online at franklinstreet.us. The Committee that's refined these three concepts is now accepting public input and thinking about "phase II" - a detailed design and planning process focused on one design scheme, which will probably cobble together the best elements from these three concepts.

Below, a view of the "urban street" concept, looking towards the harbor from the corner of Cumberland Avenue and Franklin Street. This concept would replace the southbound leg of the current Franklin Arterial with redevelopment along the eastern edge of Lincoln Park:

An important unanswered question about all three concepts is how the city can afford to build any of them. While the infill development surrounding the new street would be built by private developers, who would buy the land from and pay future property taxes to the city, the private development won't happen until the City pays the up-front construction costs of the new, improved Franklin Street. And with a project scope that includes several new intersections, extensive excavation work, and miles of new sidewalks, that construction project is likely to cost well over ten million dollars.

That sounds expensive, especially in this fiscal environment. But there are a couple of important factors to keep in mind: first, this is a federally-designated highway (Route 1A) and is therefore eligible for federal funding. In fact, in other similar projects, Washington has paid up to 80% of the total construction costs, leaving the remaining 20% to local and state governments.

Second, the redesigned Franklin Street is going to open up acres of very valuable land for redevelopment. Much of that land is already owned by the City of Portland.

And third, even land that's privately-owned, and blocks away from Franklin Street, is going to become more valuable once the new, improved Franklin Street improves access between downtown, the Old Port, Bayside, and Munjoy Hill. As those properties increase in value, they'll contribute more money to the city's property tax revenues, and become more attractive for higher-value redevelopment.

Taking these three points together, then, we can form a hypothetical scenario in which the Franklin Street project could actually make a lot of money for City Hall. Suppose the City endorses a Franklin Street concept that would cost $20 million (a conservatively high estimate), but would also open up 4.5 acres of publicly-owned land for redevelopment (by way of comparison, the entire Top of the Old Port Parking Lot is a bit less than 3.5 acres; it's privately-owned, but the city owns all of the empty space in the existing Franklin Arterial median, and the City's Housing Authority owns a lot more underutilized land along to Franklin Street in Bayside).

Let's say the Federal government agrees to pay 80% of the cost of the construction, since this is a marquee economic development project that will improve mobility and livability, and the fact that it has the support of Maine's swing-vote senators doesn't hurt. And let's also assume that Portland's State House delegation flexes some muscle and gets Augusta to pitch in 10% of the project's cost from the state's gas tax revenues.

That leaves 10% of the cost - $2 million - remaining. That portion of the costs would easily be covered by sales of City-owned land along Franklin Street.

Where Franklin meets Middle Street, the old Jordan's Meats factory recently went back on the market (in a recession) for a list price of $4.75 million. That's a two-acre parcel of land, and even though there's a building there it will probably be torn down by the new owners. That means the land in that neighborhood - adjacent to the Old Port and the India Street neighborhood - is worth about $2 million an acre. And, coincidentally, the City and the County, together, own about an acre of land within two blocks of that site. The County's land, next to the Courthouse and Lincoln Park, would be particularly valuable for law offices and was even proposed as the site of a high-rise office tower two years ago.

In addition to the land near Newbury Street, the City owns about three acres of underutilized "parkland" on the east side of Franklin near Oxford Street, and in the empty median strip next to Franklin Towers, plus another acre of land in various Portland Housing Authority parking lots. This Bayside real estate is less valuable than land near the Old Port, and some of this acreage might be preserved as the highly-productive Oxford Street Community Farm. Still, in order to invite new vitality into East Bayside, the City could offer up 2 acres of its land near Oxford Street for redevelopment, and net another million dollars for construction and redevelopment efforts.

Furthermore, once Franklin gets rebuilt and the City's properties are sold, the City will enjoy new property tax revenues. If the city sells 4.5 acres to private developers, and that land is worth (on average) $4.5 million, the City will immediately begin collecting an extra $120,000 in additional property tax revenues - enough to hire two more teachers in local schools.

And once private developers start building multi-story buildings on that same land, the assessed value of those properties will double or triple, along with the city's revenues.

In sum: with typical matching funds from the State and the federal governments, plus real-estate investments from the private sector, the City should easily be able to rebuild Franklin Street. And doing so is likely to add millions of dollars to the revenues side of its balance sheet.

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