Monday, April 30, 2012

What Developers Mean When They Say “No” and How We Should Respond

In the late 1970s and early 1980s, McDonalds had a series of battles with communities who were unwilling to allow McDonalds’ golden arches into their cities.  The communities didn’t object to McDonalds per se, but felt that local design standards were more important than the kitschy architecture of a franchise.  In response, McDonalds insisted that the arches were an essential part of their brand and that they couldn’t make their restaurants profitable without the arches.

In some cases, the cities yielded.  In others, McDonalds found other communities more willing to accept the arches.  But in a third category, the one that eventually predominated, McDonalds yielded to the local standards.  And as a result, today there are McDonalds tucked into cities everywhere despite stringent design standards.  There is a McDonalds in a timber-fronted building with a vista of the Windsor Castle battlements.

This story illustrates something about the thinking of developers.  Sometimes “No” means “We’ll do what you ask if we must, but we’d prefer not to.”  And sometimes it means “No way will we ever do what you ask.”  And a community has little way of judging which “No” is meant in a specific situation.

I mention this because I recently heard someone say that he had unable to put a land deal together because a city was asking for a type of development that the market wasn’t yet ready to accept.  Perhaps it was true.  Or perhaps it was a developer trying to make the McDonalds argument.  We really don’t know. 

You may think that this uncertainty indicates perfidy on the part of developers.  You’d be wrong.  Developers themselves often don’t know how far they can stretch the parameters of their proposed project.  There may be corporate management which retains the right to make a final decision.  Or there may be a construction lender who will remain uncommitted until the details of the project are finalized.

There is often similar ambiguity on the part of the community.  There is a zoning ordinance that lays down a set of standards.  There may be people, both in city hall and in the community, eagerly assuring the developer that any hurdles in the zoning ordinance can be overcome.  If the project attracts public attention, there may be editorials, letters to the editor, or blogs weighing in all sides.  And there may be a city council whose majority opinion won’t be known until the end of the process.  From the developer’s perspective, he’s seeing just as much lack of clarity as when we look at him and try to decipher his “No”.

Ultimately, land use decisions are multi-faceted negotiations in which neither side has complete knowledge of the opposing side or even of their own side.  The term “fog of war” can apply to a land use battlefield almost as well as to a real battlefield.  It’s a messiness that is unavoidable in a capitalist system.

How should a community deal with this untidy reality?  With a three-fold approach.  First, it should establish a clear vision of what the community wishes to become.  This is usually done through general plans and specific plans.  Whatever the results, they won’t be unanimous opinions.  Someone’s vision won’t be incorporated in the final documents.  But the process should include sufficient public input and deliberation that everyone can accept the result as fair and reasonable.  If one must lose on some points, losing with equanimity is essential.

Second, trust the process and don’t look for scapegoats.  Visions don’t move to fruition quickly.   If a parcel that is targeted for vertical mixed-use is still bare dirt six years later, that isn’t a reason to convert it to a big box site.  If the original vision was a sound long-term strategy, then it should be retained.  Nor does the bare dirt mean the developers are withholding the projects that the community wants or that the city council mishandled an opportunity.  Sometimes, good results just need time to percolate.

Third, incentives have a place.  If the community wants a particular type of project, it should give a boost to those projects.  Perhaps the right to move to the front of the entitlement processing line.   Perhaps some public dollars to solve a difficult infrastructure problem.  If a community fails to provide incentives for the projects that it says it wants, that’s a muddled message to developers.  And muddled messages are never helpful.

The nature of the process is such that developers will often send mixed or unclear messages about what they’re willing to do.  But if we, as rational communities, can portray our interests in the clearest possible terms, then we help facilitate good, community-enhancing, land use decisions.

As always, your questions or comments will be appreciated.  Please comment below or email me.  And thanks for reading. - Dave Alden (

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