Why do cities oppose apartment complexes?

[ctuser1]

There is a big kerfuffle going on in my town about a Luxury Apartment Complex development plan.

The developers want to put a few hundred "upscale" apartments in the middle of a commercial area (walmart/lowe's/some hotels/mall etc) pretty far from normal residential areas in the town. The city officials, however, are vocal that they want some commercial development instead - like medical offices or other office buildings etc.

I'm thoroughly confused by the reasoning behind the objections. Nobody seem to be explaining it in a way that makes any sense to me. These apartments are pretty far from residential areas - so the regular NIMBY'ism should not have much relevance here. The apartments are not supposed to be low-income. So it is not like they will bring more uppity Blacks and Hispanics from Bridgeport/Wallingford. If anything, it should bring more Millennials in town - which is good for the local economy facing demographic challenges.

For reference, this is a regular suburban NIMBY town with 90+% white population. Do you have any theories why towns like this would reflexively oppose apartment complexes?

[RetiredAt63]

Weird.  There are apartment buildings going up at the edge of a shopping complex in Ottawa.  I've been watching them get built because my library branch is there.  Given the area, probably not upscale, but you never know.  My upscale apartment building is in a not upscale neighbourhood.

[ctuser1]

Yeah, it does feel weird!!

The mayor is generally very competent. This town is dominated by white boomers (the mayor is not a boomer - but look to be a millennial, or maybe a very young looking GenX, but the rest of the city council are boomers).

There must be something about boomer sensibilities against apartment complexes that I don't understand!

This is not the first time this is happening. There have been at least 3 such apartment complexes built in this town in the last 10 years. It is the same story every time. Eventually the developers just make 20% of the apartments "low income" so that they can bypass the City P&Z board. This is, however, the most clear cut such case where the proposed apartment complex is far from residential areas. So the usual objections against "more traffic" etc. does not apply.

[FINate]

In California Prop 13 means that commercial properties are typically net tax generators, whereas residential is almost always a net tax loss. So there's a huge incentive to limit residential development (e.g. zone everything single family housing). Not sure what your local taxes are like, but maybe something similar is happening?

Alternatively, much of white affluent educated America, especially in suburbia, has developed an attitude that "people are the problem." Therefore, we have to protect our city/town/whatever by keeping people out, otherwise we'll get more crime, more traffic, the schools will get overcrowded, etc. Even if the apartments aren't directly in their backyard, they still don't want in nearby because it's going to bring more people to the general area. Nevermind the fact that blighted and crime ridden cities are primarily the result of redlining and subsequent white flight, and infrastructure problems an unwillingness to make necessary investments in growth (because, you know, doing so makes it possible for more people to live there). If cities across the US would just stop the arms race to keep people out, and instead started building dense housing in/near downtowns, then like much of the rest of the world we'd have a bunch of small thriving cities that are walkable and bikeable and livable.

[chemistk]

This might be controversial, probably not completely fact based, and maybe I'm missing some socioeconomic thing that would flip this argument on its head:

I really don't like 'luxury' apartment buildings.

And I lived in one in the past.

Why? Much of it is personal, I'll admit. But, I really think they're the worst of both worlds for a good chunk of the population they're aimed at. For $1200ish a month, I can get a 2 Bed/ 2 Bath ~900 sq. foot 'luxury' apartment. Many have some sort of garage available, as well as a fitness center and a pool. You don't have to mow the lawn, shovel snow, or change your HVAC filter.

Great? Not in my book. I said they're the worst, and I mean it.

Around me, apartment complexes are basically supplanting the small 2/3 bed, 1.5/2 bath starter homes. So instead of having a small house with a small yard, you get 900 sq. ft. with little storage and little privacy. The former starter homes are either being flipped into luxury boomer retirement homes, or being razed so that a large 'custom home' (or 2 or 3 smaller ones) can be rebuilt on the property.

Where there aren't any apartments being built, there are townhomes that are slapped up and together faster than should be possible. We rent a townhome and have no yard and still little privacy. Nobody has an incentive to renovate these townhouses because they're not well-built and the people in them are not the best neighbors.

The expectation now is that if you're young or single or young and single you move into the apartment complex because it's what you can afford. The people who are living in these apartments, I've found, can't save enough to move out of them because of the 'luxury' label - they're paying too much for what they have, and so they never move out and into the starter homes. This leaves the starter homes to those with plenty of cash to turn them into anything but a starter home.

And so here we are, stuck because our townhome is too small and poorly laid out for our family, but what were starter homes are now going for $250-$300k when 7 or 8 years ago, they were going for $160-$200k.

I'm sure it's good for communities long-term (unless the community doesn't have the septic infrastructure to handle a massive development...) but for people like me, it sure leaves us in a shit situation.

/rant

Perhaps the people who are voting against the apartment complex are ones that don't want to see an influx of young and single people because then "there goes the neighborhood".

[RetiredAt63]

Chemistk, here it's almost the opposite.  The luxury apartments are being occupied by boomers and older who don't need a big house and don't want house hassles, but don't need the support of a seniors residence.  So they have sold their houses and are buying condos or renting in luxury apartments.  They (well we, I'm one of them) want the in-apartment laundry and the nice surroundings. And here, where life revolves around planning for winter, underground parking and an in building pool and exercise room and big bike storage room (ours is packed, btw) means we don't have to be snowbirds, winter is survivable. 

We still have small houses and lots of townhouses to either rent or purchase.

[Michael in ABQ]

Commercial developments generally generate more in tax revenues than they consume in services. Residential is the opposite.

The major costs for local government are education, emergency services, and utilities.

Office or Retail don't increase the need for education, have minimal need for emergency services, and minimal need for utilities that are typically provided by the local government (water, sewer, and garbage). They will require electricity and potentially natural gas, but those are usually provided by private companies.

Contrast that with residential development. Potentially dozens of new students which increases the burden on the education system. Far more calls for emergency services whether it's domestic disputes, theft, or more serious crimes. More call for ambulances and if there's a fire, an apartment complex is going to get a lot more attention than a big box retail store that could be quickly evacuated. Finally, water, sewer, and garbage used for residential will be much higher.

Commercial development usually means jobs which means more tax revenues whether from sales or income tax or various fees.

[TempusFugit]

Generally, established neighborhoods and suburbs that are predominantly zoned for single family homes will resist, sometimes bitterly, any plan to build multi-family residential developments (apartments). 

The factors they will cite are increased traffic, increased utilization of the infrastructure (and costs associated with build-out), increased crime, and a loss of the 'character' of their neighborhoods.  All of these things of course affect property values.

Most of these concerns are valid, but that doesn't mean that people are always in the right to oppose the developments.  People do need places to live, and many people can't afford to buy a home. 

[Poundwise]

Speaking from vantage point of having worked for a demographer for 15+ years... every kind of housing can be calculated to have the likelihood of producing X number of schoolchildren and require X in services, traffic.  So, when communities want to assess the impact of a development, they should be calculating the net tax gain/loss over the lifetime of the building.  It seems that in general, commercial developments generate taxes, whereas developments for families are a net loss, from the vantage of people already living in a community.

[Paper Chaser]

I'd wager in this case it's mostly tax reasons, but I also wonder if there are rules about police/fire resources, schools, etc that adding a few hundred new, densely packed citizens to a new area might impact? Perhaps having full time residences in that area would mean more police/fire people and equipment needed, new school bus routes, larger class sizes at the local schools, more water treatment needs, etc. Could be some expensive ripple effects, especially if it's not expected to generate the same tax revenues as a commercial space.

Many towns have master zoning plans where residential and commercial aren't to be mixed for tax reasons, and planning infrastructure, traffic flow, and resources like previously mentioned.

[chemistk]

Chemistk, here it's almost the opposite.  The luxury apartments are being occupied by boomers and older who don't need a big house and don't want house hassles, but don't need the support of a seniors residence.  So they have sold their houses and are buying condos or renting in luxury apartments.  They (well we, I'm one of them) want the in-apartment laundry and the nice surroundings. And here, where life revolves around planning for winter, underground parking and an in building pool and exercise room and big bike storage room (ours is packed, btw) means we don't have to be snowbirds, winter is survivable. 

We still have small houses and lots of townhouses to either rent or purchase.

This is really interesting to me.

I can see the appeal for older folks to want to shed the hassles. I already know that when our kids are up and gone, we're going to downsize to some kind of low-maintenance situation.

When we lived in our apartment, there definitely were a number of older residents but if I had to guess, I'd say the median age was 35 or under. More than half of the people who live in the luxury apartment complexes that are about half a mile from us are younger or childless.

It still doesn't ruffle my feathers any less because it disincentivizes building starter homes or keeping starter homes as-is and not trying to double their value to attract people who aren't in the market for a starter home.

One thing that has also been popping up all around where I live is 55+ communities. Most new development in the last 5 years, if it hasn't been luxury apartments, has been 55+ communities.

But those starter homes or reasonably priced single family homes? Nearly extinct here. I get that if a developer has 20 acres, he's going to get way more $ by building luxury homes, luxury apartments, or densely packed 55+ communities. I get the economics. I suppose you can call me jaded or bitter.

I also know we could look elsewhere, but where the single family homes are (for goodness' sake, all I want is a yard to send my boys into) means we're too far from my in-laws or too far from work for a commute to even be reasonable.

/rant2

[ctuser1]

<trying to not give exact details in order to prevent actual town from being identified - to protect my privacy>

There is a social media thread going on for this very topic. It seems there is a clear divide between the younger generation and the older generation + the city officials.

The younger people are arguing:
1. Many of the businesses are going to go under in the Main street. You better get residential areas going in order to not have that part of the town look like Detroit.
2. What's wrong with apartments??
3. We could use more density.

The older folks seem to be sticking to short and sweet "No" 50% of the time without explaining a whole lot.

This will be interesting!!
 

[clarkfan1979]

I lived on Kauai for 4 years. They have 0% for-profit apartment complexes. Only individually owned condos. The only apartment complexes on the island are low-income and owned by the county.

This directly results in low income people being housing insecure. I really do not understand why they do it. All the other Hawaiian islands have for profit apartment complexes. Not sure why Kauai has to be different.

[Michael in ABQ]

Chemistk, here it's almost the opposite.  The luxury apartments are being occupied by boomers and older who don't need a big house and don't want house hassles, but don't need the support of a seniors residence.  So they have sold their houses and are buying condos or renting in luxury apartments.  They (well we, I'm one of them) want the in-apartment laundry and the nice surroundings. And here, where life revolves around planning for winter, underground parking and an in building pool and exercise room and big bike storage room (ours is packed, btw) means we don't have to be snowbirds, winter is survivable. 

We still have small houses and lots of townhouses to either rent or purchase.

This is really interesting to me.

I can see the appeal for older folks to want to shed the hassles. I already know that when our kids are up and gone, we're going to downsize to some kind of low-maintenance situation.

When we lived in our apartment, there definitely were a number of older residents but if I had to guess, I'd say the median age was 35 or under. More than half of the people who live in the luxury apartment complexes that are about half a mile from us are younger or childless.

It still doesn't ruffle my feathers any less because it disincentivizes building starter homes or keeping starter homes as-is and not trying to double their value to attract people who aren't in the market for a starter home.

One thing that has also been popping up all around where I live is 55+ communities. Most new development in the last 5 years, if it hasn't been luxury apartments, has been 55+ communities.

But those starter homes or reasonably priced single family homes? Nearly extinct here. I get that if a developer has 20 acres, he's going to get way more $ by building luxury homes, luxury apartments, or densely packed 55+ communities. I get the economics. I suppose you can call me jaded or bitter.

I also know we could look elsewhere, but where the single family homes are (for goodness' sake, all I want is a yard to send my boys into) means we're too far from my in-laws or too far from work for a commute to even be reasonable.

/rant2

It generally comes down to economics. There's far more profit in luxury apartments and homes than basic apartments and starter homes. I was a commercial real estate appraiser and the cost to build low-income apartments or luxury apartments is not that different on a per square foot basis. On a per unit basis the luxury apartments were usually larger so they might cost $120-$130k to build while the low-income apartments are $80-90k per unit. Though I saw some low-income properties that the costs were far higher than they should have been. The problem is that at those prices you need to charge a certain amount of rent to get a return on your investment. Low-income properties usually get some government subsidy to make up for those lower rents. In some cases it's a government requirement to build X% low-income, in other cases it lets them build more density (30 units per acre instead of 20-25), or it can be tax credits that the developer sells for $0.97 on the dollar.

One of the basic principles of real estate is highest and best use. That is, a property should be utilized for it's highest and best use that is: 1. Legally permissible (zoning, etc.) 2. physically possible (you can't build a Wal-Mart on a 1/4 acre lot or the soil may only support a 3-story building, not a skyscraper) 3. Financially feasible (the cost of development to include construction and leasing the property must be less than it will sell for) and 4. maximally productive. The last one is the difficult one. If you have a 10-acre site that's zoned for office, retail, or high-density residential - which development will produce the greatest return? Is it spending $10 million to build and rent a shopping center that you can sell for $12 million. Or spending $20 million to building an apartment complex that you can sell for $22.5 million? There's uncertainty in all those calculations when it comes to cost, the rent you'll be able to achieve, how quickly you'll be able to lease the property, what buyers will be willing to pay a year or two in the future when the project is completed, etc. It can get pretty complex which is why there's millions of dollar to be made if you do it right (or millions to be lost if you do it wrong). The first step is legally permissible though. If the city will only allow retail or office then building an apartment complex or townhouses is off the table. Or it could be that those residential developments will produce a much greater return and the developer is willing to spend time and money on trying to get that development approved - either through lobbying, changing public opinion, or the courts.

[seattlecyclone]

A lot of times I hear people opposing these because the rent will be higher than the rundown properties they are meant to replace. They fear that expensive new homes will cause nearby homes to also become priced out of reach. I think the causation runs in the other direction: high demand in a neighborhood and escalating rents are what causes a site to look like a profitable place to put more housing. Not building that housing isn't going to help slow down the forces that were causing rents to increase in the first place; if it did, San Francisco would be a cheap place to buy a home.

Most of the time the most luxurious thing about these apartments is that they're new, some of the finishes are a step above the bare minimum, and a small portion of the building is devoted to amenities like a gym or party room. None of these things add much cost but they do help with your marketing. As materials age and fashions change, today's "luxury apartments" will become tomorrow's "apartments." In cities where rents have been climbing a big problem is that these anti-housing folks have been getting their way for the past few decades. We failed to permit enough apartments in the 80s and 90s that would have aged into relative affordability today if they had been allowed to exist. Let's not compound that mistake by continuing to view housing as a potential blight on the community that needs to justify its existence rather than a basic human need that should be allowed by right.

[chemistk]

@Michael in ABQ - I agree. I inherently know this but I kind of don't want to fully accept it. If I were on the other side (a real estate developer) I know I'd be looking at this from a totally different perspective.

@seattlecyclone - Your last point really drive home the core of my frustration.

When we were apt. hunting back in 2012/2013 there was an absolute desert in terms of older but affordable apartments. Our choices were incredibly limited. If we wanted to live in an optimal location that would be best for both our commutes, it was either the luxury apartments or absolute dumps - there was no middle ground. The only spots that had reasonable older apartments were the college towns.

I'm sure all these apartments will look like good housing options down the road since they're all fairly well maintained and have steel framing so they're very durable.

[RetiredAt63]

The thing that sets my apartment building apart from older buildings I have rented is the sound proofing.  I don't hear my neighbours, I barely hear the traffic on the very busy street outside.  Plus the kitchen is very well laid out.  Some apartments waste so much kitchen space with bad layouts.

[the_fixer]

I had a discussion with our mayor one time about this subject and their reasoning was that every resident costs the city more than they provide in taxes.

It was a good conversation, I personally feel that without residential you will not have adequate support for the businesses they like so much.

At the end of the day their wet dream would be to have a city where you have no residents but are surrounded by consumers from other cities that only come and spend money in their magical city.

It is an interesting thing to think about the balance of the local economy and where the money comes from.


Sent from my iPhone using Tapatalk

[FINate]

At the end of the day their wet dream would be to have a city where you have no residents but are surrounded by consumers from other cities that only come and spend money in their magical city.

Exactly this^^^

[Stache-O-Lantern]

At the end of the day their wet dream would be to have a city where you have no residents but are surrounded by consumers from other cities that only come and spend money in their magical city.

Exactly this^^^

I think there are some small incorporated cities in the Los Angeles area that approach this. I seem to remember years ago there were some serious corruption issues in cities that had very few voters, but substantial commercial activity.

Edit: Check out the Wikipedia page on Vernon, CA.  One of the mayors of this city of 112 souls (most of whom are city employees) retired with an annual State pension over $500k.

[seattlecyclone]

At the end of the day their wet dream would be to have a city where you have no residents but are surrounded by consumers from other cities that only come and spend money in their magical city.

Exactly this^^^

I think there are some small incorporated cities in the Los Angeles area that approach this. I seem to remember years ago there were some serious corruption issues in cities that had very few voters, but substantial commercial activity.

Edit: Check out the Wikipedia page on Vernon, CA.  One of the mayors of this city of 112 souls (most of whom are city employees) retired with an annual State pension over $500k.

See also City of Industry. 67,000 jobs, 200 residents.