A proposal aimed at stimulating construction of high-rise residential and hospitality projects Downtown will undergo at least a month of incubation after the Downtown Investment Authority board deferred a vote on it March 20.
At its monthly meeting, the board considered a resolution that would adjust the DIA’s formula for calculating the return on investment of incentives for high-rise projects.
The proposal, Resolution 2024-03-06, is designed to encourage developers to build concrete-and-steel towers that would support DIA goals to promote resilience, high density and residential development.
Currently, the DIA’s multifamily incentive programs do not distinguish between high-rises and cheaper forms of construction, such as the so-called “podium” variety which generally consists of four or five wood-framed floors built on one- or two-story concrete bases.
Lori Boyer, CEO of the DIA, told board members that the incentives “almost disincentivize” builders from pursuing concrete-and-steel projects.
“There’s reason to adopt the less expensive construction type because in the end the proportional incentive is greater,” she said.
The resolution would address the issue by changing the DIA’s calculation for the return on investment for its multifamily incentive programs.
Instead of calculating the ROI based on projected city ad valorem taxes a project would generate over a 20-year period, the resolution would stretch that period to 30 years for high-rises.
The DIA targets a 1-to-1 return of private investment from publicly funded incentives for most projects.
Board chair Jim Citrano said he agreed with the resolution in principle but felt the board should explore it further before taking a vote. At his request, the item was deferred to April.
“We shouldn’t drive developers to a lower density wood-framed project versus high-density concrete-and-steel that is more desirable for the area we’re working in,” Citrano said.
“So I’m supportive for changing in some form or fashion the calculation to make it more equitable if you choose to build a higher-density product.”
Among the issues Citrano and other board members wanted to explore was what would constitute a high-rise under the resolution. Boyer said the term is technically defined as a structure over 75 feet, which Citrano pointed out could consist of four stories of residential construction over a parking garage.
“That doesn’t get you the density,” he said.
Other questions included whether the city should seek a higher ROI from high-rise projects for extending the period of tax collection.
Citrano also questioned the impact that incentives for higher-cost projects could have on the city’s general fund, suggesting the board consider playing a “gatekeeper” role by screening out projects that could overburden the city versus being a “pass-through” board that would automatically approve projects that fit the DIA’s guidelines.