July 7, 2018 | Urban Land
By Nicole Martinez
For the first time in the history of ULI’s Florida Summit, a keynote panel addressed the issue of resiliency across the state. Long a taboo among Florida’s development set–Florida’s current governor Rick Scott even banned the phrase ‘climate change’ on official state communications–resiliency has finally emerged as a proactive solution for an increasingly unavoidable issue.
In the past, a discussion on resiliency was inextricably linked to an alarmist train of thought: Chief among those was the idea that Florida was no longer investment-worthy as it would soon be underwater. Resiliency, however, isn’t just about climate change – it’s about centering the needs of a community and ensuring its continued progress in the face of mounting challenges, like climate change, affordability, and job stagnation.
“Resiliency requires a much broader focus on the people who create the community,” says Leroy Moore, senior vice president and COO of Tampa Housing Authority. Joined by David Martin, principal at Terra; Billy Grayson, the executive director for ULI’s Center for Sustainability and Economic Performance, and John Macomer, a senior lecturer in the finance unit of the Harvard Business School, panelists sought to address how developers might apply resiliency strategies to guarantee the life of their investments.
Real estate developers are on the front lines of resiliency planning, since large-scale development often brings with it the tax revenue necessary to make tremendous infrastructure improvements. Recognizing that the community plays an active role in resiliency planning presents a dilemma for Martin, who notes that local governments and municipalities are often the first to present a roadblock. “Everyone is talking about affordability and resiliency, but planning and zoning is preventing us from unlocking that,” says Martin.
He suggests that city officials might consider just how critical a boost in tax revenue can be for a city that’s facing impact from sea level rise. In South Florida, in particular, developers are often viewed unfavorably, but in reality, their projects are often game-changers when it comes to funding necessary infrastructure improvements. “The fact is those tax revenues pay $10 million to $11 million per year, and they’re doing a lot to reduce density and water and sewer impact,” says Martin.
“I think our investment horizon gets expanded in private sector when govs are responsible about managing tax dollars,” Martin continues. “So more investment in resilience means a longer investment horizon.”
Leroy, who’s currently in the midst of redeveloping an affordable housing project in Tampa, notes that finding revenue sources for key public projects remains challenging. “The decision to do public development is easy because it’s yours to have for 80 years,” he says. “But the investment requires dollars, and they are difficult builds when you incorporate resiliency. It requires 12 to 14 sources of funding and takes years to amass.”
Nonetheless, as a critical public project, it was important for the city to consider how this asset would remain sustainable for the next 80 years. “We knew we wanted to redevelop with the highest levels of sustainability and resiliency in mind and was planned for that,” he says. “Now, there are roads circling around instead of going through it. We wanted to restore city grids, build for connectivity and resiliency, rebuild the road network and do it with the right partners.
Macomer, whose work frequently guides developers seeking to address whether they need to be thinking about resiliency in their current and future projects, suggests that developers must become smarter if they want to measure the probability of continued value in their development investments. Relying solely on pro forma statistics offered by government agencies simply won’t be enough to make that determination.
“The question to ask is, ‘How is my property less likely to be impacted and in harms way? How will it be less vulnerable?'” he says. “Would resilience design reduce loss and reduce the probability of loss? Will mortgage agencies look at climate vulnerability in addition to debt service? People get paralyzed but there are ways to think about it systematically with analysis and by understanding the cost of inaction,” Macomer notes.
Another factor to consider when making this analysis is whether the infrastructure improvements necessary to maintain resilience will create undue burdens on current residents. In Miami Beach, for example, public outcry has been fierce regarding the city’s resiliency strategy, which raised roads and made major infrastructure improvements in rapid succession. Older residents and those with family outside of Florida see these efforts as pointless and disruptive. “It’s hard to have a continuous systematic solution-based plan unless the residential and business community coalesce and say its our priority,” notes Martin.
Despite the insistence that resilience strategies should be in place for developers working in Florida, panelists cautioned against fear-mongering tactics that do little for sustained development activity in the region. “As we navigate through mitigation and adaptation bonds and taxing, we have to be careful but we also have to keep in mind that cities are competing with one another for these dollars,” says Martin. “We don’t know what will happen down the road.”