Market Urbanism

Liberalizing cities | From the bottom up

“Market Urbanism” refers to the synthesis of classical liberal economics and ethics (market), with an appreciation of the urban way of life and its benefits to society (urbanism). We advocate for the emergence of bottom up solutions to urban issues, as opposed to ones imposed from the top down.

The Tyranny of Zoning: Exhibit A

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The Washington Post reports that the redevelopment of the Giant grocery store at Wisconsin Ave and Idaho Ave will finally be getting underway. Through the sick humors of the real estate gods, I live pretty close the this grocery store and can attest that it is an eyesore in bad need of a renovation:

It is one of the most belabored Washington development projects in recent memory, but on April 12 the Giant grocery store at 3336 Wisconsin Ave. NW will finally close, making way for construction of a $125 million housing-and-retail project that will feature a much bigger new store.

Giant began discussing plans to replace the out-of-date, 18,500-square-foot Giant almost a decade ago, but questions about what the company ought to build in its place grew to monstrous proportions in the Cleveland Park neighborhood. Eventually, the debate reached the point that some neighbors on opposing sides of the issue ceased speaking to one another.

Last week I attended one of the Urban Land Institute’s Real Estate 101 courses about this project and learned about this project from the land use attorney’s perspective.  Phil Feola with Goulston & Storrs shared the story of the entitlement process for this project, going back to the first ANC meeting in 2005.

Part of the property that Giant wanted to develop as retail is zoned residential, so rather than attempting to amend the code, they sought approval of a Planned Unit Development. Typically a PUD is easier to achieve than blanket upzoning for a parcel because with a PUD both city planning and the project’s neighbors know what they will be getting with the redevelopment. The neighbors initially requested 32 changes to the PUD, and after making some adjustments, Giant’s proposal received near-unanimous support from both the Zoning Commission and the National Capital Development Commission.

Current Wisconsin Ave Giant

Aerial View of Redevelopment Rendering

 

 

 

 

 

 

 

 

 

 

 

 

When it looked as if Giant would receive permission to redevelop, neighbors who opposed the project sought to get the building landmarked. Mercifully, the Historic Preservation Office denied this request. When this failed, the neighbors returned with a lawsuit saying that the redevelopment would be in violation of what DC’s Comprehensive Plan calls for at this site — low-density housing and commercial uses. As Lydia DePillis reported in December:

Not that there was really any question that those proposing to turn the one-story, mid-century Giant Foods on Wisconsin at Idaho Avenue NW into a mixed-use development called Cathedral Commons were right on the merits, when the Zoning Commission unanimously voted to approve the project back in 2009. The question, rather, was whether Giant would persevere through the delays to actually build the thing—it wouldn’t be the only project to die after prolonged neighborhood intransigence.

This case is far from the typical PUD process and represents the worst-case scenario under zoning. However, I think it’s appalling that it took 10 years and untold legal costs for a property owner to earn permission to better serve its customers, not to mention the opportunity cost of having a terrible little grocery store for 10 years when a refurbished one could have been serving the neighborhood for much of this time. Feola said that he estimates the typical PUD approval process costs property owners around $500,000 and takes 3-4 years.

Imagine that this property wasn’t a grocery store owned by a multinational corporation, but rather an independent retailer or restaurant. A small business could simply never afford the transaction costs of this type of redevelopment. This case illustrates how the entitlement process contributes to the banality of our cities by setting redevelopment costs so high that small businesses often can’t compete. Increasing as-of-right permissions to build and redevelop would make the DC land market more dynamic and better allow entrepreneurs to meet consumers’ demands.

When an audience member asked Feola what he learned from this project, he quipped that he learned not to build on Wisconsin Avenue. While it’s true that the neighborhood is home to some passionate and well-resourced NIMBYs, it’s equally true that the DC entitlement process could be streamlined to shift the balance of power toward property owners, giving NIMBYs a little less control.

  • Anonymous

    The permitting process took more than 10 years. I remember attending the ANC meeting in 1999 when the project was proposed. A professor of historic preservation got up and said the plain brick box was historically significant because it was the only remaining grocery store of its type. I thought, “There’s a reason for that!” The type is so lousy that the others were torn down. The original builders never expected it to be a lasting monument. No one claimed it was attractive and it certainly was obsolete. The only reason to landmark was a purely academic interest. I’m all for historic preservation and even for living history museums, but a building needs more than abstract academic interest to warrant preservation.

    The Cathedral Commons project was delayed by neighborhood intransigence, but it was also approved with a great deal of neighborhood organizing, advocacy and support. There were contested ANC elections and battles for control of neighborhood associations. It was about more than one single project; it was about an overall vision for development in that part of the city.

  • Emily Washington

    Thanks for the insight on the timeline. Do you think that the real reason for seeking historic preservation was the academic interest, or do you think that the academic angle provided some cover for the NIMBY interests aside from the professor? Good point that it only takes a minority of neighbors with NIMBY views to stall development, even when a majority offers vocal support of it.

  • Market_Urbanism

    Emily – I think the professor was sincere but mostly it was a marriage of convenience for the NIMBYs. If the building was in another part of DC, I don’t think they would have cared about it.

  • Jerome Knapp

    A thoughtful critique as always, Emily.  I would love to have you take a look at Milwaukee!

  • Emily Washington

    Thanks, Jerome. Are there any projects in Milwaukee in particular that would be good to take a look at?

  • Anonymous

    Two comments.  A local business would have had a much easier time in that they would have been more likely to be sensitive to their impact on the neighborhood and how to develop something the neighborhood would want.  A lot of Giant’s problems came from no longer being a local company and being controlled from a far.  In fact, a large part of the delay was due to internal corporate issues that arose from Giant’s acquisition by Royal Ahold and the financial problems of some of Royal Ahold’s other U.S. acquisitions which caused it to shelve active work on the Cleveland Park Giant.  I would urge Emily Washington to find out the facts, rather than the myths, about what happened on this project.

  • Ellen Mccarthy

    It is true that the saga of the Giant redevelopment actually began in 1999, but the absurd delay in getting a modern store, while owing quite a bit to the NIMBY’s, and the relative ease with which opposing neighbors can tie up an approved project by threatening to appeal in court, is not entirely due to the entitlement process or the neighbors.  Management turmoil, lack of focus from the New England grocery chain which currently owns the store and the financial crisis all contributed as well.  

    In 1999, Giant Food commissioned an internationally-known, and highly regarded retail expert to design a new store.  In keeping with the urban neighborhood, it proposed replacing the one-story box with a second story of local-serving office in a very attractive design that related well to the main arterial, and enlarged the store by expanding into the large surface parking lot behind, putting the parking underground.  The city’s Office of Planning (OP) was enthusiastically supportive, but Giant pulled the initial Planned Unit Development application after the NIMBY’s formed a committee to oppose it and actually defeated local elected officials who supported the project.  Although OP staff urged the company to go forward, given the unattractive, auto-oriented nature of the obsolete old store, Giant demurred, and nothing happened for a few years.  Giant then came back with a matter of right project which enlarged the store by closing an adjacent five and dime and other smaller retailers, and expanding into their spaces.  That’s when neighborhood groups submitted an application for historic designation, and the planners entered into a lengthy mediation with the NIMBY’s and the company, which resulted in an agreement to withdraw the historic application in return for the company making some design changes, including preserving an entrance on Wisconsin Avenue. Nothing happened for a few years, because the local company had been bought by a Dutch firm that was undergoing financial and management turmoil.  Then came the 2005 redesign, and the lengthy process outlined above, which was made far more lengthy by the collapse of the capital markets.  

    The grocery chain could have proceeded at its own risk after its application was approved, given how careful the Zoning Commission had been to create a strong record in explaining its reasons for approval, but it’s not surprising that they delayed instead, given the skittishness among lenders at that time.  

    This was one of several projects that were delayed or whittled down till they were insufficiently profitable or finance-able in that same corridor.  I think that the problem does not lie so much in the entitlement process, which is actually fairly straightforward in the District, and does not involve any Council action.  There should, however, be some thought given to changes in the appeal process, to winnow out appeals that have no chance of succeeding, but are used to bludgeon developers into reducing the size of projects, or to delay projects until they no longer make sense for the developer (a proposed 7 story condominium project with ground floor retail, which would have replaced a used car lot immediately adjacent to a Metro rail station in an area designated by the Comprehensive Plan as a “regional center” was delayed by a citizen suit that was dropped after a year, the day that the main filing would have been due).

  • Local Lady

    The Cathedral Commons PUD is hardly an example of “the tyranny of zoning”. In fact, the entire DC government caved to the developers’ demands despite existing zoning. And the project is only a little bit about a grocery store, which will occupy  only a small part of the two-block redevelopment. The story is really about how a PUD can rezone R-1 property, next door to single family homes in a prime neighborhood, for commercial use, and upzone C-1 property for higher, denser multi-use development. What was a “neighborhood shopping center” with specific zoning protection will become a “destination” center via the PUD process. 
    Most neighbors are glad that the old, small Giant will be replaced, but many are concerned about the impact of such a large project, especially on parking and traffic on residential streets. And it’s questionable whether existing businesses adjacent to the PUD, including six thriving restaurants, will survive the two-plus years of construction.  

  • awp

    Even without zoning, Politically powerful Nimbies can stop development for a while (I think its been about five years now.  The city just settled with the property owners and it is now going ahead).  Even if the politicians have to pull a dusty “driveway ordinance” out of City Hall’s basement.  

    Houston, TX. Ashby Highrise.  

  • Jerome Knapp

    This is a perennial struggle in Milwaukee, as I am sure it is in most cities.  Yes, there are specific examples — and Milwaukee has a protracted formal and informal process for zoning approval.  The latter, referred to as “aldermanic privilege” is particularly obnoxious in our city.  On top of that we have a Dept. of City Development that arbitrarily grants zoning variances (as well as arbitrarily supports pet projects with creative subsidies).   

  • EDG reppin’ LBC

    “…but many are concerned about the impact of such a large project, especially on parking and traffic on residential streets.”

    Complaining about parking or traffic in a large city is silly. It is one of the trappings of an urban environment. As for the restaurants, if they are indeed thriving, they will continue to thrive I’m sure.

  • TimDudley

    If 2Amy’s goes out of business I will literally eat my hat.

    That place has a 45 minute wait at 1:30pm on a Tuesday. I think they’ll be ok.

  • Anonymous

    There’s actually a really good story in here about NIMBYs and the tyranny of semi-legitimate entities like the ANCs, but all of that was lost in an anti-zoning crusade. Zoning had almost nothing to do with this project.

  • ”
    Imagine that this property wasn’t a grocery store owned by a multinational corporation, but rather an independent retailer or restaurant. A small business could simply never afford the transaction costs of this type of redevelopment.” 

    Last I checked, small businesses weren’t clamoring to turn neighborhood grocery stores into the next Columbia Heights.  I get the frustration with NIMBY-ism, but why don’t businesses proposing massive projects that radically change neighborhoods ever shoulder the blame for the deadlock?  Is there no solution in between ‘crappy run down giant’ and ‘massive retail corridor’?  

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