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VOLUME 1
Center of Excellence in Planning - CEP ON-LINE JOURNAL
ISSUE 1
June 2014
Advanced Studies in Urbanism and Real Estate Development (ASURED) Programme – Student Papers This is the first issue of the on-line journal of the Center of Excellence in Planning (CEP), dedicated to ASURED students work.
Foreword
The issue presents selected papers from the first ASURED class, October 2013 – June 2015. The purpose of publishing on-line the best student work results is to encourage them to constantly improve their own performance, to recognize their effort and show appreciation for their dedication and passion in their activities under the ASURED Programme, and to guide the next classes of students in their own efforts and work. The papers in this issue are intended to set a bar of quality which must be equaled or surpassed by subsequent work and next classes of students. Mircea Enache, Ph.D. CEP Director June 3, 2014 1
Inside This Issue
Impact Analysis – Urban Places;
Authors: Dan Rovența, Jianca Stefan, Ovidiu Ion, Rafael Trebolle, Sorin Doru Ciomartan 2
Public-Private Partnerships for Affordable Housing in Romania –
Challenges and Opportunities Authors: Dan Rovența, Jianca Ștefan 3
Analysis of the Pedestrian Street in Bacau City, Romania
Author: Costina Chisarau 4
Reurbanization of Historic Downtowns for Long-Term Sustainability
Author: Celeste Roche 5
The Property Development Process
Authors: Cornelia Dragomir, Florin Ianculescu-Popa, Ovidiu Ion, Sorin Doru Ciomartan 6
Sustainability and Sustainable Developments
Authors: Cornelia Dragomir, Florin Ianculescu-Popa, Ovidiu Ion Page | 1
Center Excellence Planning Center ofof Excellence inin Planning 3-5,Mihail Moxa Street, Bucharest, Romania 3-5,Mihail Moxa Street, Bucharest, Romania Phone: +40.021.212.50.81 Fax: +40.021.212.50.82 Phone: +40.021.212.50.81 Fax: +40.021.212.50.82 PAGE 2 office@cep-edu.euwww.cep-edu.eu office@cep-edu.euwww.cep-edu.eu
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INTRODUCTION IMPACT ANALYSIS – URBAN PLACES The Impact of Timpuri Noi development, in a New Urban Pole of Bucharest By: Jianca Stefan Dan Roventa Rafael Trebolle Ovidiu Ion Sorin Doru Ciomartan Professor: Mircea Enache Date: 30.01.2014
1. Introduction 2. Fiscal Impact Analysis 3. Traffic Impact Analysis 4. Socio-Economic Impact Analysis 5. Environmental Impact Analysis 6. Putting It All Together 7. Cost of Community Services
Scope of paperwork The main purpose of this paperwork is to exercise the instruments, establishing sources, finding data and using specific tools in measuring the impact of a new development to the surrounding areas and least but not last, to describe the role of the Impact Analysis in a development process. From the beginning we must assume that the impacts of different types affect the different areas at different levels and scale. We started with an overview of what a Development Impact Assessment process involves and continue with what are the types of Impacts. Identifying common issues between the various types of impacts will help organize and integrate the information collected during the assessment process. Just as it is important to identify areas of common benefit or cost to the community with regard to a particular project, it is also essential to evaluate the differences among impacts and determine how to address the differences which are most significant. Identifying such differences among the various impacts of a proposed development or other developments by comparisons is the key to evaluating whether to proceed with a project and identifying potential alternatives to the proposed project which avoid or mitigate significant impacts. We must indicate as a primary source of inspiration and guidance the Community Guide to Development Impact Analysis, Wisconsin Land Use Research Program, University of Wisconsin-Madison by Mary M. Edwards.
What is a Development Impact Assessment? Development impact assessment involves a process to comprehensively evaluate the consequences of development on a community. The assessment process should be an integral part of the planning process as it provides extensive documentation of the anticipated economic, fiscal, environmental, social and transportation-related impacts of Development Area - Timpuri Noi, on its community. The development impact assessment process makes use of existing information, where possible to determine potential impacts of a proposed development. It also employs techniques to gather additional, new information, where necessary. Development impact assessment is to be done using a guide which provides a framework to integrate these data, models, spatial and statistical analyses and experiences in other locales to predict development impacts. For each, impact area (i.e. fiscal, environmental, socio-economic, and transportation), there are a series of methods that may be used to collect information that will assist‌planners in assessing impacts. In our case, we will use different sources (e.g. websites with assessment description and guides for specific developments impacts) and our experiences in diminishing the error rate for the assessment. Page | 2
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What Types of Impacts? Fiscal Impacts Fiscal analysis involves assessing the public service costs and revenues associated with the development. Such an analysis projects the net cost of the development on the fiscal balance sheet of the community. Since fiscal feasibility plays an important role in determining whether or not to proceed with a proposed development, fiscal impact analysis is a critical component of any development impact assessment. Socio-Economic Impacts Socio-economic impact assessment focuses on evaluating the impacts development has on community social and economic well-being. This analysis relies on both quantitative and qualitative measures of impacts. Development impacts are generally evaluated in terms of changes in community demographics, housing, employment and income, market effects, public services, and aesthetic qualities of the community. Qualitative assessment of community perceptions about development is an equally important measure of development impacts. Assessing proposed developments in a socio-economic context will help community leaders and residents identify potential social equity issues, evaluate the adequacy of social services and determine whether the project may adversely affect overall social well-being. It shows a series of methods to conduct public consultation in order to avoid missing perspectives on the issues. Traffic Impacts Traffic is a natural result of many development projects and has in its scope the mobility of people involved as a degree of liberty. Thus, in considering a development proposal, it is important to evaluate potential transportation-related impacts including additional infrastructure requirements (e.g., more roads, traffic lights, good configuration), and increased traffic congestion. A transportation impact assessment will assist the community in ensuring that traffic in the community continues to flow adequately. When prepared in conjunction with the other impact assessment components, the transportation impact assessment will help determine the feasibility of additional transportation projects needed to accommodate growth and whether there are environmental and social issues that need to be addressed if additional infrastructure is required and/or traffic increases. Environmental Impacts Development often leads to environmental impacts including, but not limited to, loss of open space, impacts on groundwater and surface water quantity and quality (e.g., drinking water supplies), changes in air quality, increases in impervious cover (e.g., paved roads, parking lots), alteration of wildlife habitat and changes in landscape aesthetics. To the extent that a proposed development affects natural resources in a community, an environmental impact assessment is designed to identify the level of impact and assist the community in ensuring that development plans avoid, compensate and/or mitigate associated environmental impacts.
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New Urban Pole of Bucharest (Timpuri Noi) The area of old Lemaitre factories from the XIX century was producing a range of industrial installations for factories in Bucharest. Here under the name Timpuri Noi (translate by Modern Times) were produced massive iron sewer covers, which can be seen today on some streets, such as for example Amzei Street. Description of the studied area Studied Area Map with PUZ area of study and presumed housing area of impact
After 1990 the factory were privatized by the workers and in early February 2010 the demolition work took over and let the possibility of new development on site. The main shareholders of the company were the Association of Employees (73.6%) and SIF Muntenia (21.9%) who developed a PUZ (Urban Zoning Plan) to obtain a planning permit. In July 2010, the real estate investment Interprime Properties, part of Inter IKEA, acquired Timpuri Noi platform in order to develop a project "long term" which will include residential buildings and office buildings.
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Description of the proposed Mixed Use Development parameters/population From the start we must assess the difference between Timpuri Noi area as the development area of Timpuri Noi old factory bought by Interprime Properties/IKEA on one side, the Development Area including the prior area is the development area of Timpuri Noi old factory together with the rezoning area of the PUZ area of urban regeneration and the Studied Area which is the referenced area considered for the impact and is different according to domain of impact interest.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.
DEVELOPMENT DESCRIPTION PUZ STUDIED AREA LAND AREA TOTAL BUILT AREA TOTAL AREA LAND OCUPANCY FLOOR AREA RATIO BUILDING MAXIMAL HEIGHT NEIGHBORHOOD ZONES BASEMENT AREA TOTAL GROSS AREA RETAIL GROSS LETTABLE AREA HOTEL GROSS AREA OFFICEGROSS LETTABLE AREA HOUSING GROSS AREA EDUCATION GROSS AREA LANDSCAPE GROSS AREA CARS BASEMENT PARKING CAPACITY INVESTMENT ESTIMATION
PARAMETERS = 24.4135 ha = 54,060 sqm = 23,430 sqm =324,000 sqm = 44% = 5.99 = 162 m =8 = 224,600 sqm = 548,600 sqm = 62,550 sqm = 35,000 sqm = 186,250 sqm = 38,610 sqm = 3,100 sqm =30,763 sqm =5,460 cars = 677,950,000 Euro
POPULATION 500 200 20,000 1,200 100 -
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FISCAL IMPACT ANALYSIS The purpose of fiscal impact analysis is to estimate the impact of a development or a land use change on the costs and revenues of governmental units serving the development. The analysis is generally based on the fiscal characteristics of the community (e.g., revenues, expenditures, land values and characteristics of the development) or land use change (e.g., type of land use, distance from central facilities). The analysis enables local governments to estimate the difference between the costs of providing services to a new development and the revenues, taxes and user fees, for example that will be generated by the development.
TRAFFIC IMPACT ANALYSIS Traffic impact studies help communities to: Forecast additional traffic associated with new development, based on accepted practices. Determine the improvements that are necessary to accommodate the new development. -
Assist communities in land use decision making.
Assist in allocating scarce resources to areas which need improvements Identify potential problems with the proposed development which may influence the developer’s decision to pursue it. Allow the community to assess the impacts that a proposed development may have. Help to ensure safe and reasonable traffic conditions on streets after the development is complete. Reduce the negative impacts created by developments by helping to ensure that the transportation network can accommodate the development. Provide direction to community decision makers and developers of expected impacts. Protect the substantial community investment in the street system. In order to be able to analyze the impact from a project to a specific area is necessary to have all the information of the existing situation. For this analysis has been impossible to find information about traffic in the area, not only we do not have information about the number of cars per day, or the average per hour, we do not have any information about which streets have more traffic, and we do not know what kind of vehicles move around the area.
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It was also impossible to find information about the pedestrian traffic in the area. There is a Metro station in the area, but we couldn’t find any information about how many people use it every day. In order to have an idea and some base information we have used the information about traffic provided for the app. Google Maps. We have checked it in several hours during a weekday, and try to have an idea of the situation of the traffic in the area. A least we can know which way the cars are choosing for circulation.
We have considered as the area of impact the square limited for the Blv. Dimitrei Cantemir, Tineretului, Mihai Bravu, Calea Vitan, Blv. Marasesti and Blv. Octavian Goga. 8:30
At 8:30, the main traffic is in the direction south-north. The picture can show in red colour the intersections with more problems. This hour is a peak time for commute son this will be one of the most affected period of the day with the increase of traffic.
12:30
At 12:30 the traffic with some less problems in the intersections. It is still an area with a lot of traffic but there are not big agglomerations.
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15:00
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At 15:00 there is less traffic in the area, focus, mainly in the intersection in front of the project. The north part of the area is where the cars are more concentrated.
We have analyzed the traffic at 8:30; 12:30; 15:00; 17:30 and 20:00 We have consider these hours because the project has a main used for economic activities (offices and retail) so the main traffic of people would be at these hours. From the socio-economical study of the project, we can conclude that the project will suppose an attraction for workers. More than 20.000 people would start to move to this area, to these people, we should add the parallel services and traffic (visits, couriers, etc.)
What is the current situation? 17:30
At this hour the people are starting to leave the office, so the traffic north-south is more intense. The concentration of cars is still in the perimeter of the area, and only the main crossroads of TimpuriNoi is with heavy traffic. The street NervaTraian, start to concentrations in the direction to south.
20:00
have
big
At 20:00 the traffic has been reduced, only there is heavy traffic in the street NervaTraian from North to South.
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Conclusions of the analysis of the situation The area has a perimeter with a lot of traffic, but the street that cross it have heavy traffic only in the peak hours, concentrate in the direction south- north in the mornings and north-south in the evenings. The small streets are almost free during the day. The centre of the area has a intersection (just in front of the project) with traffic during all the day, is important try to avoid pushing the new cars to this intersection and take advantage of the boulevard Splaiul Unirii, that is with few traffic during all the day. Proposals in order to mitigate the impact. The big pressure will be the increase of traffic in the peak hours, and collapse the street Nerva Traian, that now is helping in order not to block the perimeters of the area. During the construction This would be a big project, and probably it would suppose a construction time longer than two years. The city can not afford to have problems in the traffic during this time in this area, for this reason, the developer must have a plan for the movement of the trucks and people during the construction and shouldn´t be allowed to use any of the existing lines of the streets. The developer should have the construction camp inside the limits of his plot, including the parking for the trucks and for the workers. Is is very important not to block any line in the streets Nerva Traian and Splaiul Unirii. The constructor should guarantee not to block the pedestrian cross in the intersections of Nerva Traian and Splaiul Unirii in order not to oblige the people to invade the area for cars. The traffic for cars should be controlled in order to have the entrance and exit to the construction camp in the street Ion Minulescu
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Mitigation of the impact of the project The main objective should be to direct the entry and the exit of the cars in order to use the secondary streets of the area and have a direct exit to the boulevards of the perimeter. For the developer should be easier to locate the entrance and exists of the complex in a way are pushing the cars to take a specific street if it want to go north or south. We propose this distribution of entrance and exit.
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SOCIO-ECONOMIC IMPACT ANALYSIS A socio-economic impact assessment examines how a proposed development will change the lives of current and future residents of a community. The indicators used to measure the potential socioeconomic impacts of a development include the following: -
Changes in community demographics;
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Results of retail/service and housing market analyses;
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Demand for public services;
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Changes in employment and income levels; and
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Changes in the aesthetic quality of the community.
Socio-Economic Impact Assessment 1. Defining the Scope The project define a city growth pole in an area of Bucharest City with Mixed Use parameters from the General Master Plan in an area of urban regeneration-reconversion from industrial use to mixed use with the potential to becoming a growing pole of the city . 2. Identifying and Evaluating Development Impacts A.
Quantitative Changes
DEMOGRAPHIC IMPACTS Demographic impacts include the number of new permanent residents or temporary occupants associated with the development, the density and distribution of people and any changes in the composition of the population, (e.g., age, gender, ethnicity, wealth, income, occupational characteristics, educational level, health status) relevant for the scope.
2011 Census Data for Bucharest District 3 - Male/Female acc. to INS - National Census Institute
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We assume that ethnic population shall be similar to the existing one. However a number of expats is possible to alter the percentage and the amount of different ethnical group. This must be considered by the promoter in the mix use profile of retail, educational/cultural, etc. For a period varying from 3 to 10 years there will be an amount of working population in construction, workers that will be influencing the actual population. HOUSING MARKET ANALYSIS Housing market analysis helps determine whether the proposed development will be beneficial to the community in terms of its effect on our housing market needs. In our case of a residential development, the market study assists in ascertaining whether there is sufficient demand for the type of housing proposed and whether a sufficient number of households in the area can afford to purchase or rent the proposed type of housing. Considering the diminishing of population asserted by demographics surveys in the area the housing developer should concentrate to find the market demand in terms of quality and price per unit considering what for occupants are mostly concerned about. On the other side if the proposed offices, hotel, education amenities and other work area involved in the development expected to generate a specified number of high-wage jobs, the community’s current housing market absorb the new white collar workers and there is a need for more affordable housing in the impact area. The development does not help to satisfy current or projected housing needs, as far as for 20,800 office workers the housing area is providing a cover of 1,200 people. The proposed residential development does contribute to the diversification of available housing opportunities (types and prices).As far as the development is successful, rents and housing prices are affordable to new segments (new employees) of the population. The development result in further concentrations of one type of housing is not desirable from the viewpoint of the community but the amount of apartments involved is not an issue. However if there is a need for affordable housing in the community, this development does not help to meet that need. The development is easily accessible to public and private facilities and services, such as retail establishments, parks and public transportation. If the residential development is specialty housing, have the unique needs of the special groups been considered the designer must consider it properly. As an observation, the early years of development program (3-10) the population shall keep a certain mix of low-wages/high-wages population depending of the technology used for the development construction in the area and in the late years (after construction) the high-wage population shall prevail in the population structure. In comparison with a similar development, considering on one side the capacity and the types of building we could compare with Asmita Gardens development that it is not occupied because maintenance cost is higher for higher buildings and less occupied ones. RETAIL MARKET IMPACTS New development often attract a variety of new commercial facilities including both free-standing stores and neighborhood or community shopping centers in order to provide with products, services and conveniences important to the quality of life of local residents. The challenge to accommodating these types of new developments becomes one of minimizing losses to existing retailers in the area, such as those downtown, while allowing the market to respond to the wishes of the increasingly demanding consumer.
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The specific figures of the commercial areas considered the demand from 22,000 of daily residents/population (6% population using but 0,002% of the land area of District 3) but it will absorb also the demand from the impact area which is probably less. First is needed a close look at retail activity, particularly in the central business district for comparison with conservative retail in the area of impact. Key indicators of economic health in the retail sector include vacancy levels, property values, store turnover, retail mix, employment, tax revenues, new business incubation, critical mass/concentration of retail, and the availability of goods and services demanded by the community. In our case we observe in time an adaptability of the old retail business in the past especially after the implementation of Bucharest Mall. Second, changes in trade area demographics should be estimated. The trade area is generally defined as the geographic area in which three-fourths of current customers reside. A significant increase in population in the area of impact could signal new opportunities for retail expansion or development. The profile of these new or anticipated residents can help us assess future market demand for various types of products or services. In our case the specific is given by the location density and concentration of demand in the area of development and the fact that people are not necessarily residents in the area. The decrease of population will act contrary in the area of impact which shall be as large as similar commercial profile location is competitively involved Third, regional retail competition must be assessed. New retail concepts are threatening traditional retail stores. These concepts include large non-mall stores offering assortment and low prices for selected types of goods like electronics, off-price apparel stores, food/drug stores and neighborhood drug stores that offer convenience, outlet centers, warehouse clubs and the internet. By recognizing the changes in competition, both locally and regionally, your assessment of proposed retail developments can offer valuable insight into the changing market and risk facing the traditional retailers in the community. In our case the concentration versus traditional retail store will bring a great impact and dramatic changes in the retail space in the area of impact. Finally, with an understanding of general retail trends, changes in trade area demographics, and regional competition we can use secondary data to measure market gaps in the community and assess the impacts of the proposed development. Two techniques can be used: retail mix analysis which will show how different type of retail store can be supported and retail space analysis that will show how the extra space is supported by the community in the area of development impact study. These steps can help us to anticipate how well the market will respond to changes in the number and type of retail businesses. In our case (66550 sqm GLA Retail Area) is affecting the retail concentration in Sun Plaza Mall (81,000 sqm GLA) or Bucharest Mall (70,000 sqm GLA) in the regional area of impact. It is obvious that this Retail Area will affect also the traditional commercial spaces in the surrounding area of impact, and the measures of sustainability of these commercial centers of profit value are not measured by the municipality.
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EMPLOYMENT AND INCOME Development directly influences changes in employment and income opportunities in community and in the area of impact. Such changes may be more or less temporary (construction projects, or seasonal employment if we discus about construction period of time which may vary from 3 to 10 years or more in our case) or may constitute a permanent change in the employment and income profile of the community. The development project should bring long-term job opportunities for community residents (establishment of an office cluster and commercial area like in our case). Assessing these types of changes is an important component of social impact analysis because growth in employment places brings additional demands on community services and resources. For example, a development that brings higher-wage jobs to a community may generate the need for different types of housing in the area like was mentioned before in the text (considering that the amount of housing area in the project is less than the office capacity). Changes in income also influence the social environment in a number of ways such as raising or lowering the average standard of living for residents in the area of impact. PUBLIC SERVICES The new residents and their associated activities will require a variety of services provided by the areas public and private institutions. A social impact assessment must determine the quantity and variety of anticipated needs. The goods and services most commonly included in a social evaluation are open space and parks; cultural and recreation facilities; education; health care; special care for the elderly, the disabled, the indigent and preschool-age children; police and fire protection; and a variety of administrative support functions. The optimum amount of resources that would be required for the satisfaction of needs is based on either planning standards, which are guidelines established by professional organizations and government agencies, or service levels, which are observed national average amounts of resources expended per capita or some unit of size. The present level of services in the community is the following: The current distribution of services in the community (to social groups or to neighborhoods)? The anticipated needs and accessibility to services of the future population? Are there organizational or coordination problems currently being encountered by service organizations or agencies? May such problems be encountered in future service delivery? If so, what are they? What are the implications of future service and facility requirements and revenue sources on tax levels, net fiscal balance and service quality? AESTHETIC IMPACTS Impacts on the aesthetic quality of a community are often the most obvious sign of development. In our development case, it presents an adequate response with the real estate boom 2007-2008 in order to speed up the acquisition, and in this respect obtained a proper floor area ratio (FAR) for the development. Without any impact comprehension for the city, the promoters decide that under a city growth pole justification, is better to have very high figures for the building GLA, in order to maximize the profitability for the land value. While aesthetic impacts are often associated with environmental impacts, the highest buildings (110 meters) also have a significant impact on the social well-being of the community and resident perceptions about the quality of life in the community. Except for the lack of sunlight and huge occupancy rate the people are marked in a very positive way about technology and safety offered by the big buildings with high technology included.
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We are referring to the methods available for assessing the potential impact of a proposed development on the aesthetic quality of a community as follows: 1. Setting Characteristics: Review the proposed development for visual and experiential appropriateness to the surrounding area (i.e., neighborhood character, main street, community entry, business park). Especially the entrance in the business park is depending on the city configuration of new bridges and need to be supported by the area involved in the impact. The proposal doesn't show any alternative for the traffic in the inner area of development. 2. Site Plan Review: Does the proposed development integrate natural resources, buildings, parking and landscaping which is both functional and aesthetic, and in keeping with desired future character? The massive blocks of the development area is overwhelming the area of influence and the open space and landscaping in the area is minimal in comparison to the area of impact. It is obviously that the development is supported by the surrounding area as open space. However the landmark function of the development is a plus for the development and, visibility of the buildings in the area is being positive for orientation in the city. 3. Architectural Review: Are the proposed buildings sensitive to the existing desirable built environment; will the architectural style provide a new desirable quality for community character? However we are not in the position to appreciate just some volumes and the detailed simulations of it, but assuming this is done properly, the way the space alternates between blocks of building and the existing ones, manifest in the impact area a differentiation in technology and expression from an architectural point of view. 4. Landscaping Review: Is the development of sufficiently high quality in planting design; amount of green space; sensitivity to species selection; and preservation of sensitive areas? Does it “fit� with the desired future character? It is hard to compare with the impact area from the landscaping point of view but necessarily, it fits to its own character of space with high density building. A way to naturally dispose the rain water is however a must and a sustainable item for the project. 5. Signs Review: Is signage directional rather than advertising information; relates to street graphics more than conventional signage; consistent in size, number, and materials which reflect desired community character? The signage should meet the uniqueness of the presented concept and the plazas around the TOD area whatever there is . Other technologies involved in aesthetic assessment 1. Geographical Information Technology which provides the basis to plan by documenting and analyzing current growth management factors, allocating new uses and assessing social, environmental, and economic impacts. In our case is very simple to look to a Google Earth image to observe that the development area is under pressure of the new proprietary development request even if the Master Plan is considered valid, the authority decide to issue new building permits in spite of the Master Plan. The land reservation policy is a must for authorities in order to develop the area properly and according their rule. 2. Image Processing Technology which provides the basis to visualize and evaluate the consequences of alternative planning, management, and design scenarios as each would appear on the landscape. If you look to the Timpuri Noi Master Plan computer simulation of the volumes of buildings you find in a glance the huge impact on the area involved which is far from imagination. Sky scraper of 110 meters defines the area of a huge demand in terms of development boom considering also the silhouette of the recognizable city landmark.
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3. Multimedia Technology which provides the basis for combining the proposed planning outcomes and visualizations with relevant ordinances, laws and planning principles. 4. Communications Technology such as the internet and web browsers provide the basis to interactively share information plans and evaluations to a broad spectrum of interested and affected parties and gather feedback on proposed solutions. B. Measuring Community Perceptions About Social Well-Being Socio-economic impact assessment is also important for assessing changes in a community’s social well-being that result from development. This type of social change is more difficult to quantify than changes in the social environment because the assessment relies on the perceptions of current and new residents about how a proposed development may affect their quality of life. Social impact assessment of this nature is important because it can help local officials, planners, developers and the public identify and address potential conflicts of interest that may accompany development. In addition to quality of life issues, it is important to assess how a proposed development may influence neighborhood cohesion or cultural differences among members of the community. QUALITY OF LIFE The attitudes community residents have toward development and the specific actions being proposed as well as their perceptions of community and personal wellbeing are important determinants of the social effects of a proposed action. Such attitudes are a reflection of the quality of life residents seek to enjoy and preserve, whether it is limiting growth in order to maintain the proper image of a community. Changes in a community’s social well-being can be determined by asking the individuals and representatives of groups or neighborhoods in the area to make explicit their perceptions and attitudes about the anticipated changes in the social environment. Information about attitudes and perceptions should be gathered from community leaders because their attitudes are important and may lend insight into the overall attitudes of residents if community leaders are perceptive and sensitive to community concerns and interests. Focus Groups: Includes small discussion groups to give “typical” reactions of the general public. Normally conducted by a professional facilitator. May be several parallel groups or sessions. Advantages: provides indepth reaction and detailed input; good for predicting emotional reactions. Disadvantages: may not be representative of the general public or a specific group. Might be perceived as manipulative. Interviews: Face-to-face interviews with key persons or stakeholders. Advantages: can be used to anticipate reactions or gain key individual support and provide targeted education. Disadvantages: requires extensive staff time and an effective interviewer. Hearings: Formal meetings where people present formal speeches and presentations. Advantages: may be used for introductory or “wrap-up” meetings; useful for legal purposes or to handle general emotional public input safely. Disadvantages can exaggerate differences without opportunity for feedback or rebuttal; does not permit dialogue; requires time to organize and conduct. Meetings: Less formal meetings of persons to present information, ask questions, etc. Advantages: highly legitimate form for public to be heard on issues. May be structured to allow public to be heard on issues and small group interaction. Disadvantages: may permit only limited dialogue; may get exaggerated positions or grandstanding; may be dominated by forceful individuals. Workshops: Smaller meeting designed to complete a task or communicate detailed or technical information. Advantages: very useful to handle specific tasks or to communicate, in a hands-on way, technical information; permits maximum use of dialogue and consensus building.
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Disadvantages: inappropriate for large audiences; may require several different workshops due to size limitations; requires much staff time in detailed preparations and many meetings. Surveys/Polls: Carefully designed questions are asked of a selected portion of the public. Advantages: provides a quantitative estimate of public opinion. Disadvantages: susceptible to specific wording of questions; provides only a static snapshot of a changing public opinion; can be costly. CONCLUSION High Density Development is an utopia for Low Tech, but is not for High Tech buildings and cities and we must pass in a proper manner from one to another by learning how this type of the cities works. High Tech buildings are “active” buildings and this fact indicates that peoples inside (users) are secured in a most active way. They live inside by a lot of procedures, implying a “culture” that brings amenities in their life. The assumption that the project duration shall be 3 to 10 years is the most acceptable for Bucharest and even for Europe. This impact is in our view the most important and it will affect fiscal, traffic, social, and environmental as well The main conclusion from socio-economic point of view is that a Multi Use development has a multitude of issues, but within the integration, the response of the mixed-use development to the city request is appropriate to its nature. However a mixed-use development mitigates mobility issues, always a city is dependent on mobility, even when we have an inner city (24 hours city) in the city. This transit should be done through the nature and culture of the population involved in the process. High, buildings, bridges and new streets go together with progress but the nature of man is the same and this must be the focal point of any initiative or development of life quality environment and well-being.
ENVIRONMENTAL IMPACT ANALYSIS Community environmental impact assessment provides a systematic process for identifying, describing and evaluating community natural and human resources in order to improve decisions about their management. Choosing to assess the community environment does not imply that all identified resources must be preserved or protected. It does imply that the community must be knowledgeable about its resources, so that development decisions reflect the range of community values, not just economic values. An environmental impact assessment facilitates community planning by assisting local government officials, community leaders, and citizens: - identify valuable environmental resources in the community and surrounding area that may be affected by a proposed development; - evaluate the community’s capacity for additional development given environmental protection priorities; - identify the deficiencies or trade-offs between possible development alternative or courses of action and the environmental impacts associated with each alternative; - determine which groups in the community may be directly or indirectly affected by the project or action.
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Economic development As view in the presentation block, this is a mixed-use and multi-use development comprising Housing, Office, Hotel, Retail, and Education premises in an intensive and high density development This type of investment is not common in Bucharest and the amount of work to develop the area is obviously a great performance for a Developer as long as is a performance for the municipality as long as the area involves need urban equipment and have traffic issues. Considering also the position in the city as a central growing pole, Timpuri Noi shall be a business area with great profitability involvement. The Development area comprises also a lot of economic improvements of the area outside the owner land like: a bridge over the Dambovita channel for the traffic, remodeling of the traffic in the area, remodeling of the channel with a water feature (channel “exedra”) and some other buildings. All of that are on the surrounding areas of developing own by municipality (public) and by others (private). Social equity Referring to the fact that population in the area of impact is decreasing and the population supposing to occupy the Timpuri Noi area is probably at a higher living standard, there are some social conflicts. However this is true, an exception occur for the period of building execution when the workers involved in the execution shall be distinctive at lower living standard. This must be solved properly by including a mix of different housing typologies for different income classes, so different incomes and household types can live in this area. Ecological preservation The area after demolition of the factory with all the implication of hard technologies excluded from it, is expected to be in a very good ecological status, but during and after the construction of the new buildings, the area shall be affected by the new technologies as well as it was or less depending on the options of the developer. In the same time the provisions of the proposal presented before take some advantage from the channel neighborhood and site configuration by an esplanade along the Dambovita channel and a water “exedra” (water feature or lake, if we could say so) along the channel. By all means the land ground, open space, air water, sun, plants and other life are the benefit of this land like any other land. TIMPURI NOI CASE ENVIRONMENTAL IMPACT This assessment basic information are not taken from the actual design, there are but assumptions of the state of the art experience in building technology used in Bucharest. Operator of the buildings bring/select technologies and knowledge that give sustainability to the activities and support involved like, designing, construction, operation and recycling of buildings. Some of the items mentioned here are good practice recommendation inspired from the configuration and proposal of Timpuri Noi PUZ, not necessarily and clearly expressed by the design (so they will appear theoretical), but fairly to introduce it in further details, for the benefit of the community. The land is now, after demolition, on the way to change the environment parameters and finally it shall be prepared to be built. This development shall change again these parameters according to development. However, what is happening if it becomes a park in the benefit of the population is obviously a different approach and different consequences. Resources impact on environment From economical point of view a park is not bringing but few business revenue, so it is preferable to build some premises to a good business in the area. The amount and the type of development is a matter of a feasibility study with an option that could be a park in the area. Page | 18
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However this is not a zero option of a feasibility study, it is a waste from business point of view. On the other hand, a very dense development brings a very poor ecological attitude. What if we use the land resource in the most profitable way, they say and they did. When money is invested to clean up a former industrial site (eliminate pollution), then this is a positive ecological development, made possible by the investment but is not an economy if the investment didn’t produce revenues and could be considered a lost if, after a while, huge garbage deposit freely and human indifference/negligence occur. However when the decision is to highly develop the area, it involves as well, resource efficiency and recycling , environmental quality, biodiversity, waste treatment, water cycle management, energy, etc in order to eliminate the conflict. Development impact on environment The land is now, after demolition, on the way to change the environment parameters and finally it shall be prepared to be built. This development shall change again these parameters according to development. However, what is happening if it becomes a park in the benefit of the population is obviously a different approach and different consequences. By building intensively on the land, an owner tends to maximize the benefit from the land sale, but this is not sure as long as, ultimately we observe a minus for the habitability and thus for profitability. So the impact of the economy and development on environment and the social equity implications. Property impact on environment The property conflict comes from the understanding of the value of the property coming from the proprietary in opposition with the social factor who probably prefer to have a park. The mixed-use or multi-use development should at any time give a good part of it to public use and open public space as well. The way this is happening is a matter of good design and habitability of the development and must be expressed in public amenities, utilities and facilities. The private-public partnership needed in our views to develop this area have its reason according the possible conflict of interests between the owner of the land area of Timpuri Noi and municipality who simply must develop all the surroundings, giving the sense and equilibrium of the project by looking to the benefit of the first, where from the issues are coming. Social equity impact on environment This development shall change the social parameters by modifying the standards. Different population, compared to the area of impact as per ethnical (expats at work), active age (18-65 old) and high-wages (income) criteria will finally make some difference in the economy of the area population. Gentrification is a social phenomenon often observed when a development occur and must be taken as a huge disadvantage for the population in the area of impact where the increase price of the properties can push out the poor people to sell and leave the area. This is happening naturally when a development rise the standard of living in an area, but could also be considered a disadvantage if this is caused by exterior means. In our case the influence of the development shall be not on the people on site which are few or none but for the peoples from surrounding area of development. Green cities model impact on environment Looking at the impact area and assessing the rezoning (PUZ) provisions, is hard to believe that except for the area of development, the city shall provide on their own cost a land to be occupied with green areas and water features on the other side of the channel, not thinking to profitability. It is obvious that habitability is a concept against ecology and wild life preservation. However if you think to some compensation there are some possible responses: a) Replacement of costly technology (e.g. replace the costly technology to purify air by letting trees to remove pollution). This will bring for every outdoor parking place 4 trees in the area like the regulation in Timpuri Noi, but what about indoor parking place!!!
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b) Avoided cost method (e.g. costs avoided via alleviation of storm water–induced problems, based on calculating the costs of building conventional ‘hard’ structures for storm water management (underground pipeline network etc.). Now in Timpuri Noi, Bucharest regulations and planners encourage dewatering by natural means instead of using sewage system of the city which is not adapted to convey the storm water to emissary. c) Hedonic pricing most commonly applied to variations in housing prices that reflect the value of local environmental attributes or even just by the value of view attraction. d) Willingness to pay of the peoples a “price of access to a site” such as a park. In conclusion “green city” actually means a new way of enhancing the sustainability of urbanized areas and ecosystem services lie at the core of the concept. If life is valuable then “green” is valuable and this impact is solved by sustainability. Growth management impact on environment Knowing that economic growth is a limiting factor for wildlife conservation (animals habitats, or people) we will consider that a source of infinite impact on the site ecology and conflicts put in front of the planners When economy is in force, the property value is modifying rapidly and the developments increase velocity. In that case the development became hard to be managed in terms of efficiency, because the owner is developing in short time, thinking of profit and not to habitability in the area of impact. Especially for big investments the execution period is to be considered with attention in order to have a good balance of the population involved in the process and obliged to live and work together in the same community, its mobility or needs are diversified between low and high income peoples. When growth starts, it starts with the necessary access and accessibility. This will be best for the long term development in connection with different stages and sequence of development. A practical study to show where growth is desirable and where it will be restricted from city point of view (amenities, etc.). The planner shall be focused on its transportation issues and the road network very well configured not only for cars, pedestrian, public transit and/or bicyclists, but for transit for the city for relating adjacent land use types like residential and designating location, for transit-oriented developments or mix modal according to development stages. Timpuri Noi is not an exception from this basic start, but if you look at the streets network generated in the plan you’ll find that most of the peoples involved in the perimeters doesn’t have a quick response to access and evacuation of the area. CONCLUSIONS 1) In Timpuri Noi case the density is a quality of the development directly connected to the scope to increasing value of land. However this is a quality for sustainability this is not sustained from social equity and must be compensated properly. 2) The street network with two bridges involved could be a solution for transit transport in the area, but without a complete solution for the modal local, public transportation for bicycle, and pedestrian for 22,000 people considering subway connection. 3) Especially the bridge over the Dambovita channels provided for the inside land service are a matter of property compensation and social equity and must be solved by a public-private partnership development. 4) A business relationship between a private-sector company and a government agency for the purpose of completing a project that will serve the public, in other words called public-private partnership must be Timpuri Noi development solution. Looking otherwise to the site and admitting that the subway should be solving enough mobility, its location must be the gravity centre of the development higher density and a sustainable principle of transit – oriented development too.
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5) The integration mixed-use development part of the project is providing into the project a good experience of a 24 hours city/building in Bucharest and need to be followed by proper public amenities details. In spite of the fact proper amenities are not provided in the design, we consider this is a lack of attitude of the developers and authorities involved in the process. 6) This good integrative program of necessary public amenities is valid also for residential area completing the Timpuri Noi development and the outer part of the land owned by others. 7) The amount of green areas inside the Timpuri Noi area is providing organization, habitability value, healthy and recreational environment. 8) Assessing the outer part of the project properties we must consider the followings: a. The esplanade along the channel is an interesting solution that brings both water and trees together, remembering Dambovita river good years. b. The lake formed from a channel exedra is an interesting item too, and helps the image and site profitability 9) The assessment consider just the integration premise of design, like collocation of uses, pedestrian connection, and good signage for orientation, because the integration testing couldn’t be done but after implementation so an experience is needed. However, some of the principles already provided shows that Timpuri Noi development must be revised in most of the criteria of sustainability
PUTTING IT ALL TOGETHER We will follow these steps for identifying areas of commonality and differences include: •Review data collected for each impact area (i.e., fiscal, traffic, social and environmental) to identify similar and different concerns about a proposed development. • Compile additional information from similar projects in the community in order to identify common/different impacts and issues. • Decide which information is ultimately useful in reflecting real impacts and assess the significance of fiscal, traffic, social and environmental impacts relative to one another. Such decisions can be based on particular standards or criteria (e.g., ranking/coding, accuracy of information, community preference). As a primary assumption for the Development are Timpuri Noi we must summarize some of the discontinuities and impacts commonly assessed. 1) High density in terms of population amount and buildings services and the land resource used to develop in the era of depopulation of the city. This could induce fiscal tension by the concentration in the development area and some reduction in the area of impact. This will not bring any interest for the municipality, but just transfer in the use from different locations into the new one and restructuring of the real estates market of the area of impact. 2) The private-public property solution for the project development, considering the mix property status of the land impact on the development, and the specification/proposal from the decision of the municipality about the outer part of the Timpuri Noi site which was named “directive” with no connection with planning status of a PUZ which is “mandatory”. Page | 21
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3) Mobility impact about the transit through the development area by public transportation considering the street network and two extra bridges provided in the area in order to facilitate the transit through the city. 4) Mobility impact of the 22000 peoples involved in the traffic surround the development area, supposing of huge attraction by modal share (bicycle, walking) from subway station to the new developments in the area. 5) The integration mixed-use development part of the project is providing into the project a good experience of a 24 hours city/building in Bucharest and need to be followed by proper public amenities details. 6) Impact on residential area completing the Timpuri Noi development solved by a good integrative program by providing different standards of apartments in order to cover the diversity of incomes of the population involved, especially in the construction years, Gentrification is a social phenomenon often observed when a development occur and must be taken as a huge disadvantage for the population in the area of impact where the increase price of the properties can push out the poor people to sell and leave the area. 7) The more people act like a planner in our society, the more concerns and solution are issued for the impact of the social on environment, so we consider that new challenges will enrich our understanding of equitable made places and motivate citizens to participate to debate of the planning process and adopt the integration values of the community, so social cohesion is another scope to be followed in Timpuri Noi development planning.
COST OF COMMUNITY SERVICES The COCS approach compares annual revenues to annual expenses of public services for various land use categories. Local revenues and expenditures are apportioned to major categories of land use and the result is a set of ratios showing the proportional relationship of revenues and expenditures for different land uses at one point in time. Various assumptions are made in apportioning costs across land uses, and these are most often based on discussions with local staff and officials. 1. Define Land Use Categories 2. Collect initial local data 3. Calculate a default percentage for allocation of various costs and revenues 4. Allocate expenditures by land use category 5. Allocate revenues by land use category 6. Compute the cost-revenue ratios for each land use type.
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Glossary and Used terms Timpuri Noi area is the development area of Timpuri Noi old factory bought by Interprime Properties/IKEA Development Area is the development area of Timpuri Noi old factory together with the rezoning area of the PUZ area of urban regeneration Studied Area is the referenced area considered for the impact and is different according to domain of impact interest District 3 and 4 of Bucharest is the area of resources reference in terms of land and population characteristics both quantity and quality (density, amount by sex, age, ethnic, language, etc)
Bibliography and quotes 1. Edwards, Mary., (2000)Community Guide to Development Impact Analysis, Wisconsin Land Use Research Program, University of Wisconsin-Madison. 2. Godschalk David R. - Land Use Planning Challenges –Coping with Conflicts in Visions of Sustainable Development and Livable Communities 3. Wood Martin (1.October 2001) Resident Participation, social cohesion and sustainability in neighborhood renewal: developing best practice models. 4. Graham Harris – 2007- Seeking Sustainability in an Age of Complexity 5. Heikki Setälä- Green city – what does it actually mean?”
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Public-Private Partnerships for Affordable Housing in Romania – Challenges and Opportunities By: Jianca Stefan Dan Roventa
Public-Private Partnerships – Concept and general overview Governments around the world have realized that the public sector cannot always deliver major investment projects alone, and have therefore turned to public-private partnerships as one financing solution that could be beneficial for both parties. Moreover, the private sector had the potential to bring about benefits like increased efficiency and the increase in innovative ways of delivering public services or improved management of the risks involved in completing complex investment projects to time and budget, and providing quality services thereafter . Public-private partnership describes a government service or private
Romania is confronted with a clear shortage of adequate and affordable housing, placing last in terms of living conditions provided to its citizens among the other European Union states. This paper aims to examine the public-private partnerships (PPPs) as a possible financing option for addressing the need for affordable housing units in Romania, in the context of the current financial challenges and budget strains. The paper first looks at the concept of affordable housing and PPP and continues with an overview of the UK system for the provision of affordable housing. It then presents the housing situation in Romania, as well as current policies for affordable housing, and looks at a model for raising the stock of affordable housing in Romania through publicprivate partnership.
business venture, which is funded and operated through a partnership between the government and one or more private sector companies. The Public-Private Partnership projects are long-term partnerships (typical projects have the duration between 20 and 40 years). Another distinctive feature of the PPP projects is the fact that the private partner carries the risk for the invested capital, not the public sector, as it is the case of projects based on outsourcing. PPP projects enable the risk to be optimally spread, and each subject of the partnership to take the risks they are able to manage best . In some types of PPP, the government uses tax revenues to provide capital for investment, and it jointly runs the operations with the private sector or it contracts out the service to a private company. In other types (notably the private finance initiative in UK), private sector provides capital investment on the strength of a contract with the government, which is responsible to provide agreed services. The contributions of the government to a PPP may also be in kind, which is the case of the transfer of existing assets. In the case of projects that are aimed at creating public goods, such as infrastructure sector, the government may provide a capital subsidy in the form of a one-time grant, in order to make it more attractive to the private investors. In some other cases, the government may support the project by providing revenue subsidies, including tax breaks or by providing guaranteed annual revenues for a fixed period of time.
Wilkinson, Sara & Reed, Richard, Property Development, Fifth Edition, Routledge, 2008, p. 19 1
Daniela PÂRVU, Cristina VOICU-OLTEANU, Advantages and Limitations of the Public Private Partnerships and the Possibility of Using Them in Romania, Transylvanian Reviewof Administrative Sciences, 27E/2009 pp. 189-198 2
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The basic implementation condition of a PPP project is its ability to achieve, from the point of view of the public sector, a greater benefit in relation to the expenditures, compared with the situation when the public sector implements the given project by itself, using its own forces and from its own sources, i.e. respecting the principle of value for money. General Advantages and Risks of PPPs Advantages
Risks
Possibility for smaller investments
Limited influence of public authority over the investment
Possibility for conducting other public investments
Increase of the prices charged to the users of the infrastructure
Savings to the budget
Reduction of bargaining position of public authorities
Transfer of new technologies
High transaction costs
Sharing the risk
Poorer quality of the services
More competition on market
Limited accessibility to services
More competition on market
Decrease of employment in the public sector
Guarantee of the services for a longer term
Financial risk for public partner
Decrease of the political influence in economy
Opportunity risk for public partner
More transparency in the economy
Political risk for private partner
Source: Brzozowska, 2006, p. 24, in Parvu, 2009, p. 4. Advantages and Risks of PPPs for Housing and Urban Development Advantages Cost savings Whole of Life-Cycle Output-Based Contracts Risk Sharing PPPs Deliver on Time Enhancing Public Management Improved Levels of Service Increased Availability of Infrastructure Funds Source: UN-Habitat, 2011, pp. 3-53
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Risks Additional Costs Reduced Control of Public Assets Loss of Accountability Mitigating Risk Rigidities in Long-Term Contract
Public-Private Partnerships in Housing and Urban Development, UN-Habitat, Nairobi, 2011.
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PPPs and affordable housing system in the UK Public Private Partnerships are a key element in the UK Government's strategy to deliver high-quality public services and promoting the UK's competitiveness. Partnerships have been a significant contributor to lowering costs and increasing operating efficiencies for urban development projects ranging from affordable housing to water treatment facilities, roads and hospitals. PPP/PFI (Private Finance Initiative) has grown in 2007 in the UK to £60 billion, out of which housing represents 2,1%, with the largest share being assigned to transportation, hospitals and schools (~67%) 4. Private-public partnerships have been a solution for large scale investments in the provision of complex infrastructure projects, but also in affordable housing. Broadly speaking, affordable housing is a term used to describe dwelling units having a total lease/purchase and maintenance cost that is considered affordable to people with low and middle incomes. They must be adequate in terms of living standards and location. Usually, when discussing affordable housing, the costs relating to accessibility and maintenance (the cost of heating, for example) are also taken into consideration. Affordable housing can be owned and managed by local authorities or by developers who rent them at lower rents than the ones on the free market. The difference between affordable housing and social housing is that the former refer to emergency shelters, transitional housing or housing for people with no income. In the UK5, affordable housing has a broader sense, being defined as social rented, affordable rented and intermediate housing, provided to eligible households whose needs are not met by the market. Eligibility is determined with regard to local incomes and local house prices. From April 2012 affordable housing is defined in the National Planning Policy Framework. Social rented housing is owned by local councils or housing associations (currently known as private registered providers, as defined in section 80 of the Housing and Regeneration Act 2008), but it can also be owned by other persons. These homes are offered at the lowest rents which are set by Government (sometimes called target rents). The United Kingdom has a long tradition of promoting affordable social rented housing. Affordable rented housing is owned and let by housing associations and homes and they are managed and maintained in the same way as social rented homes. But Government allows higher rents to be charged (up to 80% of open market rents). Because more rent is charged, the housing providers can generate income to help build more homes. Such rents are often charged on new built homes. Intermediate housing is homes for sale and rent provided at a cost above social rent, but below market levels. These can include shared equity (shared ownership and equity loans), other low cost homes for sale and intermediate rent, but not affordable rented housing. As for the institutional structure, it is the Department for Communities and Local Government that sets the policy for housing in England. In Scotland policy is set by the Scottish Parliament; inspecting and regulating activities falls to the Scottish Housing Regulator. Social housing in Northern Ireland is regulated by the Northern Ireland Housing Executive. The body that funds new affordable housing in England is currently the Homes and Communities Agency (HCA), which is a non-departmental public body. It was established by the Housing and Regeneration Act 2008 and incorporated the investment functions of several bodies - the Housing Corporation, English Partnerships and parts of the Department for Communities and Local Government – as well as the functions of the Academy for Sustainable Communities and the government's advisory team for large applications. This reorganization was done following the comprehensive review of English housing regulation done by Professor Martin Cave, also known as the Cave Review6, which recommended that a new regulator be set up, separating the regulation and investment responsibilities of the Housing Corporation. Public Private Partnerships (Ppp) And Affordable Housing By David Hoicka, http://www.slideshare.net/DavidHoicka/publicprivate-partnerships-ppp-and-affordable-housing-by-david-hoicka 4
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Definitions of general housing terms, GOV.UK, https://www.gov.uk/definitions-of-general-housing-terms
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Section 106 Agreements The current mechanism for securing the provision of affordable housing as part of a planning application for new housing development is through the use of a Section106 Agreement. This is most often used in England and Wales, to ensure affordable homes remain at an affordable price for future eligible households. Section 106 agreements, also known as planning obligations, are agreements between developers and local planning authorities that are negotiated as part of a condition of planning consent. The Town and Country Planning Act 1990 enables local authorities to negotiate contributions towards a range of infrastructure and services, such as community facilities, public open space, transport improvements, as well as affordable housing. In addition to securing affordable housing, other uses of a Section 106 obligation are: a. restrict the development or use of the land in any specified way b. require specified operations or activities to be carried out in, on, under or over the land c. require the land to be used in any specified way; or d. require a sum or sums to be paid to the authority (or, to the Greater London Authority) on a specified date or dates or periodically. Planning obligations can be positive (requiring a specified action to be taken before the start of a development), negative (preventing development from taking place until a specified action has been taken by the developer) or restrictive (restricting how the development may be used by the developer) 7.
The Situation of Housing in Romania Living conditions and housing quality Among EU countries, Romania ranks last in terms of living conditions and housing quality. One of the key dimensions in assessing the quality of housing conditions is the availability of sufficient space in the dwelling. The overcrowding rate describes the proportion of people living in an overcrowded dwelling, as defined by the number of rooms available to the household, the household’s size, as well as its members’ ages and their family situation. According to Eurostat statistics, in 2011, 54.2 % of the Romanian population lived in overcrowded housing units. It is the highest overcrowding rate registered among the EU countries, with the average of the EU-28 being 17.1%.
In December 2006, the Secretary of State for Communities and Local Government (CLG) commissioned Martin Cave to conduct a review of the regulation of social housing - in particular to establish objectives for social housing regulation and propose a system of regulation, and an institutional framework, capable of achieving those objectives. Report “Every Tenant Matters: A review of social housing regulation: Report by Professor Martin” available at http://webarchive.nationalarchives.gov.uk/20120919132719/http://www.communities.gov.uk/publications/housing/everytenant matters 6
NorthDevon Council, Planning Guide to Section 106 Agreements http://www.northdevon.gov.uk/index/lgcl_planning/nonlgcl_planning_unit_customer_charters_best_practice_notes/nonlgcl_pla nning_guide_to_section_106_agreements.htm 7
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Within the population at risk of poverty (in other words, people living in households where equalized disposable income per person was below 60 % of the national median), the overcrowding rate in the EU-28 was 29.1 % in 2011. Romania registered the second highest overcrowding rates among the population at risk of poverty, with 66%, after Hungary (71.0 %). In addition to overcrowding, some other aspects of housing deprivation — such as the lack of a bath or a toilet, a leaking roof in the dwelling, or a dwelling considered as being too dark — are taken into account to build a more complete indicator of housing quality. The severe housing deprivation rate is defined as the proportion of persons living in a dwelling which is considered as being overcrowded, while having at the same time at least one of these aforementioned housing deprivation measures. Across the EU-28 as a whole, 5.5 % of the population suffered from severe housing deprivation in 2011, and among EU states, the share peaked in Romania, with just over one in four persons (25.9 %). In terms of housing affordability, according to the latest Eurostat available statistics (2011), an 11.4 % share of the EU-28 population lived in households that spent 40 % or more of their equalized disposable income on housing8. The proportion of the population whose housing costs exceeded 40 % of their equalized disposable income was highest for tenants with market price rents (26.1 %). Compared to the EU-28 average, 65.3% of the tenants in Romania with market price rents had housing costs that exceeded 40% of their equalized disposable income, thus putting Romania on the second place among all EU states, after Lithuania (66.5%). The very low level of housing affordability in Romania even in 2011 should be considered in the context of the dramatic drop in housing prices (both rent & sale) as a result of the crash of the real estate bubble. A study 9 was made at the beginning of this year on the evolution of housing units prices, comparing the levels registered in 2013 to the period before the economic downturn (2008). At national level, the prices of existing apartments have dropped 41% in 2013 as compared to 2008, with 684 Euros/sqm. Similar values have been registered for the main 15 cities in Romania (considered „development poles”), with a depreciation of 42% and an average price of 769 Euros/sqm. The same trend can be observed in the price of existing dwellings in small cities (39%, average price 578 Euros/sqm). The data on the poor living conditions in Romania, and especially regarding the high overcrowding rate, shows the need for more housing units that are at the same time affordable. However, according to government data of the National Institute of Statistics (NIS), in 2010 in Romania were built only 2.7 housing units for every thousand residents, which is almost twice below the European average of 4.9 housing units. In addition, according to data released by the NIS, a decrease was registered in 2011 compared to the same period in 2010. Institutional structure and programmes for affordable housing The institution implementing the social and affordable housing programmes in Romania is the National Housing Agency (NHA), a public institution established in 1998 for the development of housing construction at national level and operating under the Ministry of Regional Development and Public Administration. Although the term “affordable housing” is not specifically mentioned in the legislation and programmes on the provision of housing in Romania, the following programmes carried out by the NHA fall under its definition. The three programmes currently being implemented by the agency are: - Mortgage-financed dwellings - Rental Housing units for young people - The Rebirth of the Romanian Village The equivalised disposable income is the total income of a household, after tax and other deductions, that is available for spending or saving, divided by the number of household members converted into equalised adults; household members are equalised or made equivalent by weighting each according to their age, using the so-called modified OECD equivalence scale. 9 Studiu. Cum a evoluat pretul apartamentelor in 2013, Jan 20th, 2014, http://www.capital.ro/studiu-cum-a-evoluat-pretulapartamentelor-in-2013.html 8
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The Programme for mortgage-financed dwellings was the first programme of the agency, as the agency was the first institution to grant mortgage loans and the main promoter of the mortgage market in Romania. The purpose of the programme was to build personal property housing units financed from mortgage loans and to create a privately owned housing stock. There are two types of dwellings provided for through this programme: apartments and houses. The dwellings are built on lands assigned by the local authorities to NHA during the execution of the construction works. So, the plots of land are taken over from the public patrimony of the state or of the administrative territorial units. Local councils also provide the infrastructure of the mortgage-financed locations. The owners of the dwellings may also purchase or take out a lease on the land from the local authorities. The amount of the loan for the construction of housing is provided to the loan beneficiary in instalments, and the payment is made directly to the constructor. The agency organizes and performs the procurement of the design and execution of works and obtains the building authorization, as well as checking the financial trustworthiness of the applicants for the construction of housing units for private ownership. The loan beneficiaries for the construction of housing units through the NHA are mandating the NHA to represent them during the performance of the contract for the construction of a housing unit. The construction of housing units, their acceptance and delivery to beneficiaries is followed up and carried out by the NHA, together with the beneficiaries of housing units. Now, in light of the new legal provisions allowing for private financing, the National Housing Agency can no longer rely on subsidies from the state budget as sole financing source, thus being allowed to set-up any type of partnership for the development of new residential complexes.This will be explained in detail further on when presenting the steps undertook by Romanian institutions to implement a policy allowing for private-public partnership in affordable housing development. Another programme carried out by NHA in parallel with the programme for mortgage-financed housing is the Rental Housing Units for Young People Construction Programme, which is in place since 2001. This is a special rental dwelling construction programme, addressing young people, aged 18 to 35, who cannot afford to buy or rent a housing unit on the free market. The rental housing units for young people are built through the NHA. Upon their completion, these housing units are handed over to the local councils which assign them to eligible young applicants. The lands where the housing units are built as well as the necessary utilities are provided by the local councils. Thus, just as with the other programme carried out by the NHA, the housing units are built on plots of land belonging to the public or private patrimony of administrative-territorial units, granted for free use to the National Housing Agency, for the construction execution period. These units may be bought by the leaseholders (tenants) at the end of at least one-year uninterrupted lease, on the basis of an application to the local councils. The need and opportunity to build housing is analysed and established by the Ministry of Regional Development and Housing and the local councils, on the basis of the applications for housing units and the available plots of land for building. Investment promotion and financing related to the construction of rental housing units for young people are made through the Ministry of Regional Development and Housing, in its capacity as main fund manager and the National Housing Agency, in its capacity as implementing authority. Therefore, the financing for this type of housing has two main sources: • State budget and external loans: the design of the technical project and execution detail phases, as well as the execution of construction-assembly works are financed from sources of the state budget and/or external loans purchased and guaranteed by the state, through the Ministry of Regional Development and Housing and the National Housing Agency;
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• Local budget: the design of the pre-feasibility and feasibility study phases, which substantiate the necessity and opportunity, the main characteristics and the technical and economic indicators of investments; the provision of urban utilities and equipment is financed from sources of local budgets and from the sources of the economic agents that operate utilities networks. The Rebirth of the Romanian Village programme addresses the teachers, the doctors, the nurses and the police officers who work in rural areas, but the mechanism is merely at the beginning and, in face of the lack of funding, it has had little success so far. Another state programme for affordable housing, even though it is not explicitly named as such, is the National Programme supporting the construction of privately owned housing, initiated through the Government Emergency Ordinance no. 51/2006, and later approved by Law no. 12/2007, with further amendments and completions (Law no. 351/2007 and G.E.O. no.215/2008, approved by Law no. 67/2009). This programme is carried out by the Ministry of Regional Development and Tourism and it consists in granting, from the state budget, subsidies of 30% of the value of the built housing unit, provided that the subsidy does not exceed 15,000 euros. The purpose of the programme was to develop the construction of new housing, by granting subsidies from the state budget and creating a system for subsidizing housing construction costs, in order to maintain a reasonable ratio between these costs and the income of the population. The applications for subsidy are addressed to local councils by applicants living in the administrative-territorial area where the plots of land for the construction of housing units are located. In order to establish the subsidy amount, local councils take into consideration the value of the housing unit, established by summing up the expenditures presented in the general cost estimate of the building. The annual proposals for subsidies established by local public authorities are sent to the Ministry of Regional Development and Tourism, with a view to substantiating the draft state budget for the year when the housing units of the subsidy beneficiaries are commissioned. The amounts representing subsidies are allocated from the state budget, through the budget of the Ministry of Regional Development and Tourism, upon the substantiated request of local councils. The beneficiaries are, again, young people, aged no more than 35 years, interested in building a privately owned housing unit, who concluded a contract for the construction of a housing unit with mortgage loan with economic agents specialised in the construction of housing units and/or with real estate project developers. Another government initiative aimed at increasing the affordability of housing was adopted in 2013, was a measure to facilitate the acquisition of dwellings rented in NHA buildings by their tenants, including facilitation of mortgage loans guaranteed by the state, through the government programme “Prima Casa” (First Home). The ceiling for mortgage loans made through this programme was 500 million lei. Moreover, the sale price of a NHA housing unit in 2013 was 326 euros/sqm (including VAT). The depreciation value from the date of commissioning the dwelling until the moment of the sale is subtracted from this price10. The price of an NHA dwelling is a small one compared to the prices on the real estate market in Romania. According to a survey conducted in July 2013 by the real estate webportal Imobiliare.ro, the average price of existing/old flats on the free market in the main Romanian cities can be more than three times higher than the NHA prices: Bucharest - 1,093 euros/sqm, Cluj-Napoca - 930 euros/sqm, Timișoara - 797 euros/sqm, Constanța 859 euros/sqm, Ploiești - 785 euro/sqm and Brașov - 835 euros/sqm11.
10
This value was set by Order 2401 of 30 July 2013 issued by the Ministry of Regional Development and Public Administration.
Chiriașii ANL își pot cumpăra locuințele la prețuri de dumping, September 1st, 2013, article available at http://www.bizbrasov.ro/2013/09/01/chiriasii-anl-isi-pot-cumpara-locuintele-la-preturi-de-dumping/ 11
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The need for affordable housing Governments have the obligation to provide all citizens with the opportunity to have a decent home, that they can afford and in the communities in which they wish to live. Of course, the involvement of local authorities in providing an appropriate mix of quality housing for people with incomes that do not allow them free access to the housing market is crucial. There are many categories (such as teachers, doctors, residents, police officers) for which local authorities have an interest to provide them with a home at a cost they can afford. Also, affordable housing can solve the housing problem for young graduates whose early career earnings are small and medium. In Romania, the National Housing Agency was founded in 1998 with the aim to provide social and affordable housing to people who could not afford to rent or buy a dwelling on the free market. And the programmes it has carried during these years have helped tens of thousands of people get a decent home and it provided very accessible renting prices for young couples. For example, in 2012, the rents in NHA buildings started from 34 lei/month for a studio to 59 lei/month for a one bedroom apartment and 116 lei/month for a 2-bedroom apartment, which means a price up to ten times lower than the ones on the free market. The lowest rent paid in Bucharest is 360 lei/month for a studio, 730lei/month for a one-bedroom flat and 790lei/month for a twobedroom flat12. Also, just through the Programe providing housing for young people under 35 years old, the agency made available 30.840 dwellings since 2001. However, this merely covers a fraction of the existing need at national level, since every year there are 100.000 applications for obtaining a dwelling through one of the NHA’s programmes. Regarding the NHA housing units for rental, in 2012, there were only 292 dwellings made available to be rented in Bucharest. Thus, given the increasing need for affordable housing countrywide coupled with the limited financial possibilities of many Romanians, it seems that the agency is far from meeting its target.
Private-public partnerships as a solution to the budged cuts for housing? In 2012, the NHA had 4.400 housing units for young people in execution and 1.259 units contracted with mortgage-financing. However, the 13,4 million euros it got after the budget adjustments, only allowed the agency to deliver 800 units for rental. The lack of funding had also hindered the Agency’s plans for starting a very ambitious development project for 10.000 housing units in Ghencea, a neighborhood in Bucharest. Another initiative that was stopped is the „Rebirth of the Romanian village”, that promised the construction of 10 houses in every village for teachers, medical staff and police forces13. But, in order to be able to start these projects, the National Housing Agency had to find financing on its own. It seems that the Government started to take some action for attracting private developers to invest in affordable housing in partnership with the state only when realizing that the economy did not show signs of recovery. It is only in 2012 that the NHA started to seriously look for private investments, when its budget was cut almost in half14. So, it is maybe mainly because of the budgetary constraints that the policy initiatives for promoting/encouraging the construction of affordable housing units by the private developers/investors have started to appear in 2009, mostly reacting to the economic crisis, as an attempt to re-launch the real estate sector. Chirii de la 34 de lei pentru locuintele ANL, article available at http://www.ziare.com/casa/chirie/chirii-de-la-34-de-lei-pentrulocuintele-anl-1192167 13 Seful ANL: Nu putem vinde case in pierdere de dragul de a incasa 2-3 lei, September 18th, 2012, http://www.ziare.com/casa/anl/seful-anl-nu-putem-vinde-case-in-pierdere-de-dragul-de-a-incasa-2-3-lei-1190693 12
Seful ANL: Nu putem vinde case in pierdere de dragul de a incasa 2-3 lei, September 18th, 2012, http://www.ziare.com/casa/anl/seful-anl-nu-putem-vinde-case-in-pierdere-de-dragul-de-a-incasa-2-3-lei-1190693 14
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Center of Excellence in Planning 3-5,Mihail Moxa Street, Bucharest, Romania Phone: +40.021.212.50.81 Fax: +40.021.212.50.82 PAGE 32 office@cep-edu.euwww.cep-edu.eu
A programme for attracting private capital for the construction of affordable housing In the meeting of 30 June 2010 (OUG 112/2010), the Government approved the Emergency Ordinance amending and supplementing Law no. 152/1998 on the establishment of the National Housing Agency. This normative act introduced the possibility of developing a housing construction programme in public-private partnership15. The law was amended as a consequence of the large number of applications to obtain housing led through the National Housing Agency, with the aim to promote measures to accelerate the process of building housing units for rent and/or for sale by attracting private investors. Thus, the Ordinance provides for the promotion and development of a programme on building housing units for rent and/or for sale by attracting private capital, on the basis of public-private partnership contracts, as well as the possibility, within the programme, to finalize buildings already under various stages of execution. The following year, in 2011, the Ministry for Regional Development and Tourism undertook the first steps to launch a programme for housing development with private funding, named „Construction of rental housing units, by attracting private funding”. There were several problems that pressed the Ministry to propose measures in order to accelerate the construction of rental housing by attracting private investors: - The large number of requests for obtaining housing, - The impossibility of the local authorities to provide finance for rental housing, - Inadequate funding from the state budget for the construction of more housing for young people through the program implemented by the National Housing Agency - Limited access to obtain a mortgage loan for buying a house; In the proposal16 of the Ministry of Regional Development and Tourism (MDRT), the estimation was for the construction, by private investors, of 1,000 housing units that are leased to them for a period of 20 years, during which they will rent them to people who cannot afford a dwelling, based on criteria established by the state. The feasibility studies, concession documents and award documentation are paid by the state, while the land is also offered freely by the state. According to the calculation presented in the proposal MDRT, the private companies were to participate with over 40 million Euros including VAT, money which will cover the work of design and construction and mounting. To these, other costs are added, for maintenance, of nearly 20 million. The investor was to recover the money through a system of uniform periodic payments that will be made throughout the concession period (20 years), except for the time while the housing is being built (up to two years). Based on the same calculation, these payments were estimated to be 5 million per year. Theoretically, the state planned to recover its investment from the rents collected. The estimatation was made for the construction of 1,000 one-bedroom apartments, with a cost per unit of 450 euro/sqm, including VAT. The private investors seemed interested at the time the Ministry’s proposal and welcomed the initiative to change the legislation. "At the moment, the biggest problem is the current legislation regulating the municipalities and local councils' ability to borrow money, the laws on municipalities’ property rights over land, as well as the ability of municipalities to ensure payment of the amounts to be paid by potential tenants. 15 Housing
construction programme in public-private partnership, Ministry of Regional Developing and Housing, http://www.mdrl.ro 16 Andrada Ghira, Ce spun dezvoltatorii despre proiectul de case al Elenei Udrea, September 5th, 2011, article available at http://www.money.ro/ce-spun-dezvoltatorii-despre-proiectul-de-case-al-elenei-udrea_1074961.html
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We will support this initiative", declared Andrew Prelea, CEO of Ozone Homes, one of the leading companies in Romania in the area of real estate development. The company showed real interest in the Ministry’s legislative proposal of a public-private partnership for building affordable housing and had a series of meetings with the Ministry representatives at the beginning of the year17. However, the real estate development companies are only interested in a PPP as long as it is profitable. Companies, such as Adama, the largest player on the real estate market in Romania, were very frank about this: „Adama, which is focusing on developing housing for the medium-income market segment, is interested by such a partnership as long as there is a business to be made from such a collaboration.”, said Asher Lax, the Sales Director of the company which is owned by the Austrian Immofinanz18. The proposal was endorsed unchanged by the government and on December 22nd, 2011, the Government amended the Law 152/1999 on the organization and functioning of the National Housing Agency, in order to allow the NHA to attract private capital for the construction of rental housing19. A few months later, in April 2012, the Government approved the programme Construction of rental housing, achieved by attracting private capital20. The programme is implemented and conducted by the Ministry of Regional Development and Tourism (MRDT), through the National Housing Agency (NHA), by concluding public works concession contracts. The financing of the design, construction and operation of the housing units are provided by private investors from own or attracted sources. The financing of the economic, technical and legal structure of projects, including the elaboration of studies for the substantiation of the concession decision and of the contract award documentation necessary to implement the program are conducted by NHA from state budget sources. In return for the housing units developed, a share of the rents received will be directed to the private investors, in addition to some unitary payments made regularly, to be reimbursed by the National Housing Agency from state budget sources. In return for the housing units developed, a share of the rents received will be directed to the private investors, in addition to some unitary payments made regularly, to be reimbursed by the National Housing Agency from state budget sources. The site servicing works and the urban-technical equipment are to be provided by the local public authorities and/or investors, in line with the contracts concluded by the NHA with the administrativeterritorial units and/or private investors. Thus, the site servicing and urban-technical works outside the housing development project perimeter are to be carried out by the local public authorities, while the funding will be provided from state budget sources and/or local budget. The site servicing and urban-technical works for the housing to be developed within the perimeter is done either by the local public authority, if funds can be allocated for this purpose, or by the private investor under the concession contract. Ce spun dezvoltatorii despre proiectul de case al Elenei Udrea, September 5th, 2011, article available at http://www.money.ro/ce-spun-dezvoltatorii-despre-proiectul-de-case-al-elenei-udrea_1074961.html 18 Andrada Ghira, Udrea vrea locuințe sociale pe banii privaților. Ce spun dezvoltatorii, September 5th, 2011, article available at www.money.ro 19 Government Emergency Ordinance 121/2011 for amending some normative acts, published in the Official Gazette no. 931/29.12.2011. 20 Government approved programme on construction of rental housing, achieved by attracting private capital, Press release of the Ministry of Regional Development and Tourism, April 18th, 2012, http://www.mdrt.ro/en/comunicare/presa/comunicate/guvernul-a-aprobat-programul-constructia-de-locuinte-cu-chirie-realizateprin-atragerea-capitalului-privat17
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The private investor is the one that, in addition to assuming the responsibility for the construction, will manage the housing built, collect rents and maintenance costs. Upon termination of the concession contract, the assets realized under the Programme would remain in the public domain of the state and under the management of the NHA. The local councils of communes, cities, municipalities, respectively of the Bucharest Municipality sectors and the General Council of Bucharest Municipality set up the necessary measures to be taken for registration and analysis of the applications for housing, as well as receiving the applications and the supporting documents required, to be analysed by committees set up for this purpose. Regarding the beneficiaries, one of the conditions set by the programme is that the average income of the holder of the housing application needs be at least 50% of the gross average wage in the economy, but not higher than 100% of the gross average wage per economy. The amounts received as rent are to be distributed as follows: 50% of the amount constitutes revenue to the state budget, 30% of the amount goes to the private investor, and 20% of the amount goes to the National Housing Agency. Amounts collected from rents going to the National Housing Agency, will be used both to financing housing construction programmes and for general administrative expenses of unoccupied dwellings. Also, an important aspect is that the housing units that are built from public funds are not required to fall into the minimum market price any more. The programme for the construction of rental housing units with private funding allows also for the private investors to promote housing developing projects, in addition to the local authorities. Finally, the Rental Housing units with private financing can now be built by the NHA also on lands owned by natural or legal persons, and not only on plots owned by the state or the territorialadministrative units (UAT).
A possible model for privately financing affordable housing in Romania One solution that could cover, at least in part, the demand for affordable apartments, might be "Inclusionary Housing"21. This is a program more and more used in the United States for increasing the number of affordable housing with the help of private developers. Inclusionary" is defined as a requirement or a voluntary option to reserve a certain percentage, usually ranging between 10-30% of the total number of apartments, in a new residential project to low-income families. For the successful implementation of the programme, the most important aspects are: the reserved percentage, the categories of income that can qualify for the program, the facilitations offered to the developer, as well as the duration of the programme. In exchange, developers can get special non-financial facilitations under the form of larger urban planning indicators; flexible functions in the approved urban plan, etc. This method could substantially and uniformly increase the number of affordable housing units throughout the city and will increase the areas with mixed-communities. Thus, gentrification of the neighborhoods could be avoided, making the residential areas more diversified, in terms of income and professions. "Inclusionary Housing" can take the form of mandatory programs, but the most efficient are considered to be the voluntary ones, based on the facilities provided to developers. The location of these housing units having a special price could be evenly spread throughout the site of the development project, on one side of the plot or even in another location (when it is impossible to build at a low price because of the high price of land). Also, the developers who do not wish or are not able to build these lower-cost residential units may choose, for example, to pay a solidarity tax to a government fund for the construction of social or subsidized housing. These programmes could offer a variety of ways for the developers to indirectly cut costs that could make them increase profitability of their investment. In order for the developers to willingly and actively participate in the program, the profit is one essential requirement. Inclusionary zoning, also known as inclusionary housing, is an American term which refers to municipal and county planning ordinances that require a given share of new construction to be affordable by people with low to moderate incomes. In practice, these policies involve placing deed restrictions on 10%-30% of new houses or apartments in order to make the cost of the housing affordable to lower-income households. Solutii din import pentru piata de locuinte din Romania, Mai 31st, 2010 http://www.wall-street.ro/editorial/358/Solutii-din-import-pentru-piata-de-locuinte-din-Romania 21
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Following are some examples of facilitations that developers could obtain: • Allowing for the increase of urban planning indicators over existing zoning regulations (buildability, density, height, etc.). This allows developers to build more apartments, without the need to buy more land. • Facilitating the reduction of the minimum size by 5-10 %.This facilitation can lower the total price of the apartment. • Reduction of parking requirements by 5-10%. The developers are required by law to build a certain number of parking spaces, according to the total area built, but some buyers could not be interested in buying a parking lot. • Flexibility in design. This option could introduce solutions to maximize the living area, where this is possible (changing densities, heights). • Tax reductions or exceptions. Although there should be done an impact study before, as this represents a reduction in the revenues to the state budget, this facilitation is quite important for the developers. One option could be to postpone taxation until the moment the apartments are sold. • Speeding the process of obtaining building permits and approvals. This is a solution that could potentially have a great impact in Romania, where the bureaucracy is heavy and the waiting period to obtain permits is quite long. The waiting time until obtaining the building authorization (1-2 years if there is no PUZ) represents an additional cost that will be found in the final price of the apartment. One or more measures from the examples above could be implemented, and every added measure has the potential to further reduce the final price of the apartment, while the application of all facilities can reduce the final price up to 30 % or more. "Inclusionary Housing" is an example of program that have virtually no effect on the revenues to the local and state budgets and that can be applied immediately, without logistics, personnel and additional costs from the state.
Selected bibliography: NOTĂ DE FUNDAMENTARE la Hotărârea Guvernului nr. 352 /2012 pentru aprobarea Programului „Construcţia de locuinţe cu chirie, realizate prin atragerea capitalului privat” Law no. 152/1998 on setting-up the National Housing Agency, republished, with further amendments (Government Emergency Ordinance no. 16/2010, G.E.O no. 33/2010) Public-Private Partnerships in Housing and Urban Development, UN-Habitat, Nairobi, 2011 Wilkinson, Sara & Reed, Richard, Property Development, Fifth Edition, Routledge, 2008 Daniela PÂRVU, Cristina VOICU-OLTEANU, Advantages and Limitations of the Public Private Partnerships and the Possibility of Using Them in Romania, Transylvanian Review of Administrative Sciences, 27E/2009 pp. 189-198 European Commision, www.ec.europa.eu Eurostat Database http://epp.eurostat.ec.europa.eu Department for Communities and Local Government, www.communities.gov.uk North Devon Council www.northdevon.gov.uk Ministry of Regional Development and Tourism, www.mdrt.ro Online journals www.capital.ro www.bizbrasov.ro www.ziare.com
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EMPLOYEE NEWSLETTER
Introduction Reurbanization of Historic Downtowns for Long-Term Sustainability
In its first life, the American city was a slum: dirty, crime-ridden and
By: Celeste Roche
tolerable place. As the conditions of cities improved, families moved in
Professor: Edgar Kiviet
to support holistic lives, all within walking distance. The advent of the
unappealing. But because people continued to move to cities as manufacture overtook agriculture due to technological advancement, the city had to change. Workers’ rights, human rights and environmental regulation all moderated the city into a clean, safe, to be close while working; entertainment and other amenities developed automobile and interstate highways, coupled with the decline of heavy industry, shifted the focus and funding in the United States to the creation of suburbia: cities fell into disrepair and were again dirty, crime-ridden and unappealing. Over the past few decades, life in the United States has shifted back towards cities, citing environmental concern, social equity concerns and personal references of younger generations. However, it can be difficult to actively reurbanize an area that was, at one point, actively suburbanized.
Case New Britain was for a long run one of the great industrial hubs of the northeastern United States. When manufacture declined, so did the population, though it never dropped so low for New Britain to lose its status as a city. However, this technical population-based designation did not stop people from attempting to turn the city into a suburb of Hartford (the state capital, whose authentic suburbs abut New Britain’s fringes). New Britain always had some quaint more suburban style neighborhoods—the main issue came when it was decided that both a highway and freeway would be put down directly through the traditional downtown of the city.
Map showing the intersection of Route 72 (Highway) and Route 9 (Freeway) in Downtown New Britain.
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Many of the problems in New Britain and similar cities result from having too low of a population density in an area that was originally built to support people quite literally living one on top of the other. Reurbanization seeks to increase the number of people who spend time in an area, whether working, playing or simply living. An increase in the number of people in an area contributes to safety and also brings resources into the area in greater density. Those resources tend to be put towards improving infrastructure and amenities, making the area more pleasant for people to be in. New Britain does not have much opportunity for infill development—fewer than three acres of land in the city can be considered vacant, and less than one acre is considered virgin or green. Of those properties, they are divided into small parcels, suitable for only small houses or pocket parks. While some properties could lend themselves to intensification and will probably experience an increase in laborers or residents when the rapid transit busway opens in 2015, simply filling buildings currently in use will not fully reurbanize even the core of Downtown, due to the huge amount of carrying capacity that was removed when the highway and freeway were dug through the city. Regarding the potential for adaptive reuse, there are plenty of properties— particularly brownfields—mostly former industrial facilities, which could be converted into housing or mixed-used properties, and they could very well become a “hip and sexy” housing option for recent graduates of the local university. As far as full-fledged redevelopment goes, New Britain is rife with properties that could use a thorough urbanistic makeover.
Possible Solution
While there are many things that can be done to reurbanize New Britain, the emphasis should be put on its downtown (the area most intended to be urban), especially as twelve bus lines currently merge there, and a high speed busway system will also have a station there in the near future. It should be an area that is dense enough that people can feasibly get around to a variety of services without needing to use a car. New Brite Plaza is a suburban-style strip-mall in Downtown New Britain. The entire strip is single story, though even the houses, church and synagogue behind it are multistory: they were part of the older, more traditional downtown. New Brite houses predominately low-end retailers and services (such as off-track betting and a discount department store). More than half of the multi-acre property is covered with a single-level parking lot. One member of the Orthodox Jewish congregation located just north of the plaza describes the walk across the shorter side of the parking lot as “comparable to wandering in Sinai, but with a greater chance of being hit by a car and a lesser chance of manna appearing.” The plaza is also known for attracting certain individuals who are considered less-savory: the homeless, sex workers, drug addicts and so on. Redeveloping New Brite into a more traditional multistory mixed-use pedestrian-centered model could conceivably have numerous benefits. For one, it would assist in reestablishing the urban core by creating a walkable space. Having residencies on top of offices on top of retail would undoubtedly drive up the active population in the area. This would make the setting more intimate and more public at once by increasing the amount of time people spend in the area, as well as the amount of people who visit— there would more than likely be a decrease in crime in the plaza. Furthermore, restructuring the plaza into a pedestrian-driven center would recreate visual harmony and spatial continuity that is disrupted by the highway and the low-lying plaza. The distinct shift in architectural trend creates the sensation that there is a division between the two sides of Main Street. Creating multistory buildings in the place of New Brite would bring the area back into its own neighborhood. Nearby parking is available in two municipal garages, and the bus depot is a short walk from the property. Reducing the parking should not create an issue if people learn to use the underutilized parking garages and public transit. Creating underground parking could become problematic due to the proximity to the highway and freeway, but there is the possibility that there could be one level of underground parking, which would leave visitors with approximately the same number of spaces as they currently have—perhaps a few more, even. If there is one outlet on Martin Luther King Drive (east) and one inlet on Main Street (west), traffic should not be an issue if there is sufficient lead-in area for the inlet. If there is no cue for cars to drive into during peak hours, there would probably be a bit of a tie-up on Main Street, and even though New Britain’s Main Street is not as busy as it was in its heyday, the congested artery could become a problem for emergency response vehicles being dispatched from Downtown and the southern portion of the city. Page | 37
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Image of New Brite Plaza from: http://www.chartweb.com/
Image of New Brite Plaza from: http://www.nbcconnecticut.com/
Previously, there was a plan proposed to revamp New Brite Plaza, replacing the bulk of the property with a stadium for the local university. The university, instead, built on its own property in the northeast of the city. While a stadium would add economic value to the area, it would have visually crushed all surrounding buildings, none of which are even visible in the renderings.
Artist’s rendering of stadium from: http://ysoa.architecture.yale.edu/UDW/projects/newBritain/
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New Brite is currently valued at about USD20million, so redevelopment to the effect of dismantling and rebuilding in a new form would run into numbers that may seem unrealistically high. The incentive could already be there, though. There is substantial literature regarding social justice in urban redevelopment (e.g. Goodman and Monti, Monti and Burghoff), and there is a belief that if local government commits to involvement, then an area can be redeveloped without experiencing total gentrification (or as some developers like to put it “repositioning of residential tenancy.”). In a city as rife with poverty as New Britain, concerns of social justice are particularly valid. While such a redevelopment project isn’t suitable as a public-private partnership in a city that attempts to be capitalistic and market-driven, this project would be an ideal one in which to employ a substantial citizen-stakeholder engagement model. Few people in New Britain are at all fond of New Brite Plaza—but public feedback would help developers to design a suitable mixed-use area, possibly filling in some gaps in the housing market. More people would live in Downtown if there were spaces in Downtown geared towards them: nearly all apartments are two bedrooms or fewer and under a thousand square feet. Families with more than a couple of children and young students and professionals wishing to live with roommates often cannot find their place in Downtown due to a lack of variety in the options that are available. With the new CTfastrak rapid transit busway system opening within a two-minute walk from the plaza and the Downtown Bus Depot moving to within a few seconds of it, creating a space that can take advantage of foot traffic brought about by mass transit can generate huge returns for businesses of all varieties, including for landlords, as proximity to mass transit generally increases property values. (Estrin)
Action Plan Although the author would love to redevelop New Brite Plaza into a property suited to an urban center, she doesn’t have the money to do it just yet. New Brite Plaza will be one of the properties used in upcoming citizen engagement planning and development workshops. Residents will be invited to remodel the property according to current zoning regulations, possibly and hopefully designing structures more suited to Downtown. Particularly compelling plans may be developed into marketing materials for consideration by potential investors. Potential investors will be actively courted. Because of the lack of undeveloped land in the city and the lack of undeveloped land available for purchase adjacent to the city’s borders, the vertical development of land should be regarded as having the same asset-building potential as the acquisition of a green patch near the city line would. While private investment in New Britain is lacking, especially after a particularly bad administration brought about two instances of bond ratings being lowered in the same fiscal year, the new mass transit options opening in 2015 and the continued expansion of Central Connecticut State University into Downtown New Britain and other areas of the city should create some amount of excitement in the local real estate market. Given that the city lacks virgin land, redevelopment is the only option for many investors. An infrastructure overhaul coupled with an increased population of upper-middleclass students could be a large enough incentive for an investor with a heavier portfolio. The City may also be willing to provide additional incentives, such as tax abatements, given that the current state of New Brite contributes to crime in the city— which has direct costs associated with keeping the police force well-used, but also indirect costs in harming the reputation of the city.
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References and Acknowledgements Special thanks to the residents of New Britain who shared their views of and hopes for New Brite Plaza in personal communications and through the I Remember New Britain Facebook group. Special thanks to the Honorable (former) Mayor Tim Stewart, Executive Director of the Greater New Britain Chamber of Commerce for information regarding the stadium plan. Estrin, Michael. "Public Transportation Affects Home Values." Bankrate. N.p., 20 Sept. 2013. Web. 22 Dec. 2013. Goodman, Michael D., and Daniel J. Monti. "Corporately Sponsored Redevelopment Campaigns and the Social Stability of Urban Neighborhoods: St. Louis Revisited." Journal of Urban Affairs 21.1 (1999): 101--‐27. Print. Jr., Daniel J. Monti, and Daniel Burghoff. "Corporately Sponsored Redevelopment Campaigns And The Demographic Stability Of Urban Neighborhoods: St. Louis Re--‐ Revisited." Journal of Urban Affairs 34.5 (2012): 513--‐32. Print.
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Introduction Analysis of the Pedestrian Street in Bacau City, Romania By: Costina Chisarau
Context: Bacau – 150.000 inhabitants, situated in the north eastern part of Romania; Nicolae Balcescu Street is one of the oldest streets in Bacau. It has been the main street of this city since the 17th century. Initially a promenade bordered by mainly 2 to 3 story buildings, this historical road was transformed into the main traffic transit path during the dictatorship years. The promenade zone was established on one side of this new main street.
Professor: Edgar Kiviet
the main street -1920
This paper is a study case of a walkway situated in the heart of Bacau, a city of 150.000 people in the NorthEast of Romania. Some important characteristics will be considered, as protection of the people, the feeling of being invited to spend time in a place, the delight that space produces on us.
the main street – 2014
After the fall of the communist regime in 1989, the city of Bacau (as many other East Romanian cities) started a transformation under the rise to power of the private sector. A business boom occurred and the main street was at the very heart of this phenomenon. Due to the broad walkways and the embedded social status of this “downtown” area, small local commercial businesses flourished here. Everything from restaurants to barbershops to clothing, department stores and so on. Functions were mainly focused on the large influx of people using the broad space as a promenade which resulted in a direct tie between the bordering buildings and the walkway. The public was invited inside to buy, eat or just relax on their weekend stroll. This interaction between the inside and the outside governed the functionality of the surrounding commercial spaces up to the economic depression.
The goal of this paper is to analyze the conditions and parameters of the pedestrian street in Bacau, in order to determine if the space is wellused, defensible, attractive, with identity and state changes that would improve the functionality and representativeness of the area.
map of Bacau, year 1897
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Over the last few years, things changed again. The current situation of this unique space, which bears the only promenade in the city, is much more different than it was five years ago. The economic downturn has produced significant transformations in the way the promenade relates to the commercial ground floors that border it. Most small businesses are forced to relocate and the ones that survive have very short lifetimes here. Their place is now taken by banks and corporate public relations offices (Orange, Vodafone, Tarom etc.). Now, most of the people pass by or go straight to the spots they have to reach, not taking time to sit down, have a pause, stand, enjoy the views. The walkway has become itself a transit path, like the street next to it, moving easily away from its initial social role it played within the city.
map of Bacau, year 2013; the position of the pedestrian zone on Nicolae Balcescu Street
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The analysis of the next parameters will reveal some more important aspects about the actual state of the pedestrian zone, in order to better understand what needs to be done for improvements. Page | 43
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Protection The need of feeling protected is a decisive human factor in the city. A comfortable, inviting space is one that offers the sensation of protection – physical, as well as psychological. We prefer the places that give us shelter in case of rain, snow, over-heating, pollution and at the same time, make us feel safe from crime and violence. The feeling of being safe is crucial for people to use urban space. Usually, the activity and people make for a safer city, in terms of real protection and as well as perceived protection.
new parking places; people crossing the street freely
Protection against vehicular traffic In the last 50 years, cars have invaded many of the world’s cities, including Bacau. This brought along huge amounts of traffic and increased rate of accidents. Instead of working on the source of the problem, politicians and traffic planners searched for ways to fix the damaging results and went for finding more space for cars, on streets and in parking places at the street level. The main street in Bacau has recently been modernized, to create more space for parking on one side of the road. This street, that was initially used by pedestrians only, afterwards added the use of car transit, is now more used by automobiles than ever, because many drivers come here in search for a parking place. Making more parking places in the city centre, at the street level, meant bringing more traffic into the city centre. This turned out to be a wrong change, which contributed to the bad functioning of the city. Good parking places are usually made in the proximity of the city centre, so that cars are encouraged not to enter the zone and stop close to it; after this point, people walk.
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The pedestrian space is situated adjacent to the main traffic street of the city. Although there are three zebra crossings along 320 m, people still commonly walk free of them. This shows the necessity that people feel for having a stronger connection between the two sides. The free movement between the two sides of the road is preferred over walking the distance to one of the zebra crossings. Although the distance would be of only 140m, which is usually acceptable, many times of the day, the main street is not used by cars, so people have the tendency to attribute it to them.
walking to the theatre
The pedestrians walking often on the space of the cars show the opportunity of introducing the concept of “street sharing� between cars and people. This change can be taken into consideration along with the study of the hours most used by the two parts and with organizing the means of sharing the space through negotiation. With the main street that margins the pedestrian zone, people on the walkway have the perception of a wider space, as the main zone reserved for people is not enclosed by buildings at both its edges. When there are no cars passing on the street, the space seems emptier although there are some people strolling. Still, there are alignment trees towards the street, which help counteract this effect and somewhat define the space.
the main perspective over the pedestrian zone
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The visibility of the walkway is very good. Situated in the heart of the city, open towards the street on one side, everyone drives by it on their daily routine. The main sitting public places, the benches, are very exposed, with their backs unprotected, situated higher than other parts of the street. It might be part of the reason why sitting on a bench is not so popular. Other things that contribute to this people’s choice can be the noise, car horns and traffic fumes, as sketched in the image below.
But even when cars are not on the street, the benches are not used. The sense of protection when sitting is reduced by over-exposure. There are people walking, but few of them sit down.
Protection against crime and violence Social inequality, the habit of people and the background of a nation are often fundamentals for why people are afraid of theft and the invasion of private life. In Romania, this is a deep strong feeling in the character of people since the communist regime, when people where imprinted the “panoptikon” effect of constantly being in fear that you could be watched and listened to. They were encouraged to honest work and compromise; any form of art expression was not allowed, as it implied freedom. With this background, people have the same behavior now, even though the country is a democracy and this aspect is seen very much in the attitude towards public space. The relation between public space and private space is usually cut and replaced with over-protection of the private. In these conditions, the ground floor of the commercial street closes all the lights after the functioning program and the blinds are shut, remaining lit only the luminous logos of the companies. The black ground floor has a repellent and unsafe feeling. The walkway is lit at night with soft, yet insufficient lighting. This offers the space a pleasant atmosphere near the road, but the lack of activities in the evening and the black margins of the surroundings make the zone look uncomfortable. The way ground floors are designed has a great impact on the vitality and attractiveness of urban space. They are the only thing one sees when walking along a building. At night, when not much happens at the ground floors, the furniture, flowers and even the exposed products can be testimonials of the presence of other people, which is a grateful feeling. This is why, light is better to be kept on, blinds not shut, inviting people to walk along and take a look at the exhibited products in the window. But unfortunately, there are too few stores that act this way, for the walkway to be animated. Permeable margins could send people the message that the city is hospitable, which in this case, doesn’t happen. Consolidation of the city vitality, so as a considerable number of people to walk and spend time in the common areas, raises the security and also the feel of safety. The presence of other people indicates that the place is a reasonable secure one. There are other people around to see if anything happens. A lively city is a secure and comforting city.
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In the evening, on the walkway in Bacau, there is no sense of security that one usually has when there are more people around. The space is not animated. It is deserted and unprotected. At night, people avoid this place, choosing the pub areas or the mall.
at night the walkway is not activated
Protection against unpleasant sensory experiences
The comfort sensation is influenced by many factors, as temperature and clearness of air, humidity, wind or solar heat. Good weather is an essential condition for people to spend time outside their homes. When the sun is shiny, one sees more smiles on people’s faces because we are happy we can go outside and also, sun exposure encourages the production of endorphins. But too much exposure is not searched for in Romania, as the sun is very powerful in summer, often reaching up to 40 oC at noon. On the analyzed walkway, buildings allow for the sun to enter the zone. But protection from it, when in need, is hardly found. The wind is not a problem, thanks to all the existing urban facilities, which have a good effect on interrupting the draft. There are no protection areas, for sheltering when it rains, snows or when the sun is too powerful, with the exception of the recessed ground floor. The entire area is open and has no cover; the only way one can find protection is reaching for the recess of the ground floor (of one meter), as seen in the following image.
The trees and flowers between the benches are small and they do not provide shade. The proximity of car traffic can make the environment polluted and dusty at rush hours. Not being protected against many unpleasant sensory experiences, the space is only rarely suitable for reading and relaxing: in weekends, when there is no car traffic and if the weather is very good. People usually pass by and don’t stop to spend more time. Page | 47
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Invitation and Delight There is more that the urban realm should provide, besides protection qualities. These are often not enough to make places successful and used with pleasure by people. They are functional qualities that provide the basic needs for a place to be able to get used. But if they are coupled with qualities that invite and delight people, the public spaces are at their best.
Walking
The reasons why people go for a walk are many and the city is more vibrant as there are more people moving through it. They make the space look more dynamic, attractive, alive and interesting. The presence of people is the main attractor in an urban space, more important than sculptures, architecture or other facilities. If in one place you see nobody, you will assume there is nothing interesting to be done or seen there, so you will find it of little significance. The encouragement of people to walk is a vital part of every urban project, which aims at increasing the quality of the city. The compact city, based on the mix and quality of public transport, pedestrian traffic and cycling, is the only urban model that we can count on, for our future. A walk through the city is understood as a background for the social interaction that takes place on the way. As the living room we spend our evenings at home, having a good time with friends, is a decisive factor in defining our standard of life, the same does the public space inviting to people interaction for the standard of our city life. When designing a house, often the most surface area is given to the daytime activities zone. This is usually made up of the dining and living area. We refer to the space where we interact with our guests, our friends, our families, as the “living room”. This is no coincidence. Human beings, as individuals, are a social species, relying on each other in order to sustain our lives. Socializing is how we connect to the world and through it we establish and strengthen our connections with the people we need in our lives. Thus, the space inside our houses that is dedicated to this interaction becomes the heart of a home; it serves an essential part of our daily lives and is, therefore, the “living” room. The city’s living room is the public space. It provides the same function as the day time zone in our homes, but on a larger scale. It is the space in which new connections are formed, where a community reinforces its bonds, the place in which an individual can feel a sense of belonging, which fulfills his social needs. The characteristics of the pedestrian area are generally favorable in the case of inviting people for a stroll. There is plenty of room for walking, which is a good aspect, but sometimes it may look empty. The walkway increases accessibility to key areas, linking The Cathedral Trandafirilor Park – Luceafarul Commercial Center – The Statue of Bacovia, but it is on the other side of the road from the Cinema Central and Bacovia Theatre. The facades at the upper levels are in a bad condition and have a boring or low quality architecture, which doesn’t support an attractive urban image. The surfaces close to human notice are of medium quality. The ones facing the street are chosen with more attention than the side and back ones, but still the overall aspect is good.
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There are no obstacles on the way. One can walk straight ahead from the beginning to the end of the pedestrian zone. One inconvenience is that the other side of the street has the pedestrian zone more narrow, with no benches, nor other amenities for people. Furthermore, there are more activities available on that part of the street, like small shops, bookstores, jewelry shops and three bars, besides Cinema Central and Bacovia Theatre, whereas, the pedestrian zone is dominated by big companies. Making the public space of the two sides more attractive for people would increase the sense of identity of the place, offering a more representative image of the city centre. Also the theatre, one of the few historical monuments that survived the dictatorship demolishes, would be much more valued, as people would have the opportunity and necessary angle available to view it.
Standing, staying and sitting
People walk, stop or sit when the quality of urban space invites them to do so. The overall conditions for people to stop and stay in a public space are: nice microclimate, placement towards the margins, with your back protected preferably in niches, a good view, low level of noise to allow for conversations and absence of pollution. People also prefer to be able to see other people, trees, flowers, water, interesting architecture and statues. In the study case, the places where people can sit down are many, but they are not used very often. They are composed of wooden benches with curved sitting, comfortable and with backrest. But they are not protected at all from sunlight and they are very exposed. Instead of being placed one in front of the other, they are organized in groups of three, back to back to other groups of three, facing nothing interesting, with the green area between them. Some people choose to stand on the margins of the building, watching the beautiful arrangement of public space, instead of using it, as in the sketch below.
In time, the trees between the benches will grow and will filter the light nicely, offering comfortable shade and a more protected feeling, but until then, people will have to settle with the recess of the ground floor. It is useful to observe how the defined spots for sitting are not used, people finding their own better alternatives.
For sitting, people often choose the protecting margins of the buildings over the exposed benches.
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Known as the “margin effect”, the limits of the buildings defining the public space often attract people like magnets. Here, our senses can define and understand space, we can see what happens in the street, our back is protected and we are out of the pedestrian traffic. The microclimate is better and we feel a physical and psychological support, so it is a good space for spending some time. The support points situated usually at the margins of a public space offer the sensation of not being alone and of having the situation under control. They are useful as waiting places, especially when one is alone. They have a very important role in attracting people to spend time in the public space, offering psychological and practical support. On the studied walkway, the offer of individual objects to lean against or stand next to is very low. The trees that could play this role are situated along the road, too close to the car traffic, so nobody uses them. The attractive possibilities that public seating offers are people watching, relaxing, resting, the possibility of chatting and socializing; but few people use it. Private cafe sitting is missing, as the nearby pubs are on the other side of the road and don’t have enough space to make outside terraces. If both two sides of the road would provide enough space for people’s activities, the three bars would have the opportunity and space to take out tables and chairs to create some terraces. This would create a better mix of public and cafe seating.
Visual contact
Watching the life of the streets is, as said earlier, one of the most important and attractive things to do, when one is outside their home. “People watching” is a universal activity, which takes place whenever we walk, sit or stand. The most populated benches are the ones that offer good views over different kind of attractions and especially over other people. In the case study, “people watching” is possible, but it is not practiced. As the benches are situated back to back, one gets to see people walking by. A positive aspect about the positioning of benches is that they are situated in groups of three, arranged in a concave form, which encourages visual contact and conversation. But, in spite of this, there are few people who really feel invited to sit and interact.
people walking, but not sitting
The contact between interior and exterior has a decisive role in a city, making the experience more interesting and enriched for the one inside, as well as for those outside. The commercial windows usually have a positive effect in this sense, creating visual connections that activate the city.
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The windows on the analyzed walkway are open towards the exterior, establishing, with some few exceptions, good visual connections. They are diverse and seem to attract people walk along them. Lately, many of the small boutiques and cafes were replaced by big companies and banks, which have much limited program with the public and after 4 pm. the activity on this walkway starts to go down. A barrier in creating more visual contact and more face to face communication is the high sound level caused by the high amount of traffic. A background noise of 60 dB is considered the maximum value that people can stand to, when trying to keep up a normal conversation, at a normal distance. In our case, on a normal day, the traffic noise doesn’t reach such high levels, but people still don’t feel invited to sit, spend time and interact.
Play, relax and self-expression
The playing of children has always been an integrant activity in a city. In the past, children used to play around the places that their parents worked in. But the modernist planning started the rethinking of games and sports zones as dedicated spots in the city. If the city is seen as having the people at its roots, it is not necessary to divide the activities of children from the one of their parents. Quality cities have incorporated solutions for play, outside activities and self-expression, so as families can enjoy their free time together. In Bacau, on the main walkway, children are not encouraged to play or do any kind of activity. The closeness to car traffic scares parents to leave their children free and have fun. There are no kinds of facilities that invite children to play with or around them. There are no ways in which adults are encouraged to make some outside exercise and enjoy their free time. Every adult just transits the zone and doesn’t get engaged in any kind of local outside activity. It would be better if there were some inside and outside destination points, dedicated to create a route for art, culture and relaxation activities, in which people could get involved in their free time. This way, locals, as well as tourists can discover and rediscover the less known places in town, which would be in a better way valued. For example, Bacovia Theatre can be restored and its XVIIth century facade can be appreciated by people; the Art Gallery can be renovated and attributed an outside space where artists can present their works closer to the passer-by; the Central Library, whose basic activity was recently moved in a park, can make place for a Cultural Center. These buildings can play a decisive positive role in creating a strong identity for the city and encouraging interaction and self-expression.
The human scale
In urbanism as well as in architecture the most important vantage point is the eye level. What we create around us and that which we perceive is a landscape that gets smaller as we progress from childhood to adult. Children see spaces much larger than they appear to us. Their eye height lends great size to the architecture around them, which progressively diminishes as we get older. As adults, when asked how far we are willing to walk to get to a desired place, the answers are usually around 500m. But this distance is highly relative and is susceptible to warping due to several psychological factors. Obstacles, overcrowding, sequential sidewalks short-circuited by driveways, parking meters and the occasional misbehaved bike rider make our pedestrian lives long and frustrating. In order to create a human friendly environment, a special care must be taken in order for the public space to become an inviting and inspiring experience. In the case study, the central street of Bacau holds many opportunities for creating an organic expression platform. The ways through which this can be realized are various and offer multiple means of exploring.
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Sustainability
Urban space and social sustainability Social sustainability is a vast and provocative concept. One of its most important aspects regards providing an equal chance to all social categories to have access to the common space within a city and to its modes of transport. This equality rests on the possibility of having the option of walking or biking in a combination with public transport systems. Pedestrians, or people who don’t possess cars, must have access to what the city has to offer as opposed to living a life hindered by unsatisfactory means of transport. If a city is to be permeable to new citizens, it must adopt strategies that allow newcomers or those socially challenged to have access to both public areas of social interaction and administrative and social services quarters. Social sustainability possesses a democratic significance which prioritizes an equality of chance for all to meet “others” in a public space. This is conveyed through an inviting and easily accessible public space, which serves as an attractive venue for informal and organized social gatherings. In the case study, Bacau’s infrastructure provides a reasonable amount of public transport routes that link the outskirts of the city to the center. Although the 6 numbers of buss-routes can usually handle the demanded loads, pollution associated with the diesel engines used inside the busses themselves hinders the sustainable aspects of using public transit. Four major buss-routes where proposed to switch to electric power in 2008 but the project is still on hold (in spite of the installed concrete columns that were supposed to carry the electric cables needed for the system). A much deeper concern regards bike lanes which are basically missing even though a large proportion of the socially challenged use them as their main means of transport around town. Bicycle riders are forced to ride either on sidewalks (where they are persecuted by pedestrians) or on the main streets (where they are neglected and often injured by drivers). Teenagers use the broad sidewalks of the studied site as a makeshift bike course. This is met with mixed feelings among passers-by, some being annoyed others tolerating their presence. They are amongst the few to try and make use of their public space, and find new ways in which the space can be activated. During the warm seasons, social gatherings of usually young people give life to the site. They are the generation that will benefit the most from strategies implemented in the mid-term. The measures required for social equilibrium involve not only the reshaping and refunctioning of available public space, nor through a just good practice of urbanism and architecture. The cultural aspect of the city and its community weigh heavily in the development of a sustainable urban environment. This implies that, within our case study, the cultural community of Bacau will have to be involved from the beginning. Through the expression of art in all its forms, the site can re-spirit the urban dwellers. The project must act as a platform of free interpretation of space and its uses. The economic power of a city dictates the measures it can afford. In most circumstances, be it powerful or weak economic systems, the openness of a system such as a city is one of its most important strengths in order to attract different potential inhabitants which can contribute to the overall wellbeing and growth. An accessible city center with plenty of space for public gathering, urban loisir, art and cultural manifestations that is tailored to the needs of its citizens is a fragile but potentially beneficial step towards a sustainable urban environment. Page | 52
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Conclusions The city needs a reinforcement of its identity, as most of the people have forgotten what that is. The great demolishes in the communist times succeeded to erase the connection of the city with its past, with its valuable traditions, monuments and heritage. Because of those sad events and because of no recent urban regeneration to revive the town, people are used to this state of being and find it normal one. An important issue that is not operated and could be is the positioning of the city on the route towards the monasteries of Moldavia, which are classed, according to UNESCO, as a heritage of worldwide interest. Many foreign travelers pass through, sleep here, but don’t explore the city. Consulting some travel site forums, like tripadvisor.com, we find out that visitors think there is nothing to be done in the city, but the reality is that interesting activities are not promoted, as there is no integrated program regarding tourism. The authorities are busy in finding ways to invest money in big useless construction projects, but the way those public buildings work afterwards is left underdeveloped, so they usually remain empty. Strategies having at their starting point the wellbeing of locals are totally missing. There is a serious necessity of redefining the identity of the city, reconnect people within a sense of community, make a better living environment for locals and create an image for the city at a national and international level. The current representation space of the city, the walkway adjacent to the main street, doesn’t manage to bring improvements in this sense. This has to be transformed into a spinal column of the city, which offers quality public space to the people, links the most important attractions, creates new destinations, revives the urban life and offers the city a strong image. One way to do it is by splitting the city centre in partial zones for intervention, so as people can get used to the change and the authorities can have better control over the management of the project. The final goal is to enlarge the pedestrian zone from the Cathedral to the Tricolor Square, increasing the sense of identity of the place, creating comforting public spaces along the way and integrate this with street sharing solutions. The most important attractions in the city are on this street, but they are separated by four lanes of car traffic and there is a serious lack of good public space for them to be enjoyed. The new public space would offer value to these attractions, providing the necessary space in front of them, so that they can be observed and enjoyed. It would also provide more green spaces, water, fountains, statues, cozy sitting and standing places, which would increase the vitality of the town. It would also increase the sense of community, as people would be aware of their city, of their common heritage and would start seeing the city as their common ground for self-expression and interaction. The process can take place in three steps, reaching the final point through three projects, which would develop one at a time.
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Step 1 -enlarge the pedestrian zone of the street between Luceafarul Complex Store and Decebal Hotel; - create quality urban spaces along the street, taking care of the human scale; -offer rhythm to the walking path through trees, fountains, statues; -create comfortable, protected and inviting sitting places and where is possible create standing and pausing places; -a part of the cars will go round on the parallel streets, Mihai Viteazul and Razboieni, which are now not very used; on the main street use: people priority, limited speed, time framing, space sharing; -move the parking spots along the main street to a different location, in front of Decebal Hotel;
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-create destinations, which people can go to and spend time or just pass by and enjoy the view of interesting architecture which is also offered more value; -create outside spaces dedicated for activities that are now inside, but can be taken outside when good weather, like art gallery, cafes and restaurants; -restore and renovate the oldest historical monument in the city centre, Bacovia Theatre, and the buildings that act as magnets through the activities they provide, like Luceafarule Complex Store, Adal Galleries, The Art Galleries, Cinema Central; revive these buildings, creating programs that help them organize events more often; support high quality public activities for the community;
Step 2 - enlarge the pedestrian zone of the the Nicolae Balcescu Street from Luceafarul Complex Store to the Statue of Stefan cel Mare; - unite the new public space with Trandafirilor Park and with the Cathedral Park; - offer the main view of the Cathedral to the people, as the main perspective view of the walkway, seen from far away; offer the statue of Stefan Cel Mare to the people as a close view seen from nearby; they mark the beginning of the walkway; - offer more representativeness to the city centre and main walkway with the cathedral closing the perspective and being perceived as a continue presence, as one strolls through the city centre; - reorganize the intersection at the Cathedral, so as the street in the back of the main street can enter the roundabout; - create new parking places under the parking places of Hotel Moldova; - unite the walkway with the cafe zone along Unirii Bdl. by marking the route between them with alignment trees, good lighting and other public space accessories;
Step 3 - enlarge the pedestrian zone on the Nicolae Balcescu Street from Deceban Hotel to Tricolorului Square, freeing it to the people; - unite the walkway with the single usable square the city has, Tricolorului Square; Page | 55
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- improve the quality of the public facilities in the square: create objects to lean on, stand next to, direct the eye to interesting views, use water and green spaces, create protection from unpleasant sensory experiences, ensure good lighting etc.; - renovate the Culture House and the Prefecture House, two of the most representative buildings of the city; - make the Culture House more active, with more programs for the community sustained by the authorities; create more outside activities in the square and programmed events, concerts, fairs; - analyze deeply the car traffic and come with solutions so as drivers can manage without using the main street; for example: unite the street Ionita Sandu Sturza with the street Vasile Alecsandri, through the back of the Prefecture, so that cars can avoid the centre of the city; or: remove the parking places along Razboieni street and move them on a new parking in front of Hotel Decebal, so that cars can drive both ways on Razboieni Street; this issue is to be examined more; - extend the outside spaces for cafes that are now on one side of the square; make summer terraces in the square; - encourage the appearance of street entertainment, performers and street art produced by individuals; free the right to self-expression in public, with free of charge authorization, of portretists, painters and other artists in the square; the authorization can be issued free of charge through a contract which states the identity of the performer and that he/she would engage in artistic performances that do not violate the rules implied by the law; art can play an important role in public space, encouraging people to interact and exchange ideas, which is the ideal sense of public space; - create a Community Hub or a Mediatheque, or a Cultural Center in the building of the Central Library, as the books have been moved to another place, which is more far away, in a new very big building, where nobody goes to; it would be better if the books were brought back and continue the initial function of the building, creating a new part of building, for modern reading experiences and public interaction; - connect the Park of G. Bacovia with the new walkway; - improve the value of the Statue of G. Bacovia, by removing the fence that separates it from the new walkway; This is a type of project that plays a vital role in increasing the community sense among people, connecting them with each other and with the city. With this intervention, the authorities show that they turn their thinking towards the needs of the locals and understand that the quality of life can be changed along with the reputation of the city, through integrated strategies which have the people as a pivot.
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Summary SUSTAINABILITY AND SUSTAINABLE DEVELOPMENTS A Real Estate Analysis and Real Estate Valuation Approach By: Cornelia Dragomir Ovidiu Ion Florin Ianculescu-Popa Professor: Edgar Kiviet
Nowadays, we have substantial evidence that confirms the more and more important impact of sustainability upon real estate valuation. The concept of sustainability impacts the activity of the valuers, who must take into consideration the fact that vacancy rates and operation costs could be more reduced in the case of green buildings. Also, the expected increase of the sustainability recognition will lead to a reduced capitalization rate when selling a real estate and, implicitly, to a higher resale value compared to the traditional buildings. In Romania there is an incipient green building market, considering that there are only five green buildings, which hold a BREEAM certification and are located in Bucharest. On the other hand, the perception of the professions in the real estate industry does not always reflect reality; 41% of the architects wrongly consider that the green buildings’ cost is 11- 20% higher compared to the traditional buildings’ cost, and 26% of the architects believe that its level is even over 21% higher. There is an important number of reasons for the immediate and rigorous consideration of sustainability in the valuation practice, but also in the “toolkit” of the other professions in the real estate industry. It is impossible to ignore sustainability as some issues are embedded within legislation such as planning and building regulations, for example energy efficiency and water economy. However, developers should be aware that these regulations represent the minimum allowable standards and not best practice. Developers should adopt best practice wherever possible. The standards and quality of the built environment should be improved for both inter and intra-generational benefits. Sustainability can be embedded throughout the development process, from inception to site selection and acquisition to the financing of the scheme. The design and procurement phase is another key area where decisions will have a substantial impact on the sustainability of a project. Environmental assessment tools are growing in their scope and enable benchmarks to be set, which the market recognizes and acknowledges. In all areas of property development and at all stages in the process the trends are for more sustainability. Over time the tools adopted in industry are modified and improved thereby allowing developers to deliver buildings to the market that are more sustainable than previously.
What is Sustainability? There could be as many definitions of sustainability and sustainable development as there are groups trying to define it. To a large extent all the definitions are concerned with: • comprehension of the relationships between economy, environment and society; • equitable distribution of resources and opportunities; • reduce negative environmental impacts of development and guarantee quality of life. To some degree, different ways of defining sustainability are useful for different situations and different purposes and, for this reason, various groups have created definitions. The definition most frequently referred to is the one established by the United Nations World Commission on Environment and Development report, “Our Common Future”, in 1987. This definition states that: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Page | 57
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Impact on Property Development process Property development has some very significant impacts on sustainability issues: • Development land and sustainability • Development finance and sustainability • Planning and sustainability • Sustainable design and construction
Development land and sustainability The sustainability issues that affect land include loss of habitat and biodiversity, and contamination of land either by natural causes or as a result of a previous use. Development of land with contamination can add significantly to costs and developers need to take appropriate steps to reduce their risks when acquiring land that has been previously used. Development finance and sustainability As well as the traditional sources of finance for property development, new areas are emerging as financial institutions and lenders adopt and promote Corporate Social Responsibility and risk management strategies. These developing forms of finance either make sustainability a requirement of the finance package and/or offer incentives and discounts on finance for sustainable developments. To reduce the exposure of commercial loans, banks place importance on businesses’ ability to manage environmental liabilities. Environmental consultants estimate the nature and likelihood of risks and their advice informs the bank’s decisions on whether to accept, avoid, manage or mitigate risks, or to seek insurance cover. This works when risks are quantifiable and there is certainty; however, the qualitative nature of many risks generates ambiguity. The banks identify clients’ environmental risks and help to reduce exposure. Where necessary, loans are made conditional on clients taking measures to reduce risks. Loan decisions are informed by three risk considerations: direct, dominated by land contamination; indirect, including regulatory impacts and changes; and reputational. Thus, larger development schemes may be considered by the banks under these provisions as well as smaller property development schemes that are on land previously used or contaminated. Planning and sustainability The key sustainability issues that relate to planning are: • transport • ecology and site conditions • zoning and land-use issues. • resources • community Transport impacts on work, leisure and recreation patterns and on the environment in which we live. The increasing dependence on cars and road freight has significant environmental, social and economic impacts. Carbon emissions from transport accounts for a quarter of total carbon emissions for a developed nation. The social impacts revolve around the frequency and severity of accidents, the impacts on health from inhaling emissions, whilst the economic impacts revolve around the costs of social and environmental impacts. For a sustainable environment we need to provide access in a way that has less impact. Page | 58
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In planning terms this can be achieved by developing and implementing policies that: • improve and promote walking, cycling and public transport and changing habits to reduce car use; • manage freight transport by moving more by rail and reducing heavy truck traffic; • make streets, bus stops and tram stops safer, including lower traffic speeds and better security; • reduce oil dependence and shifting to cleaner, renewable energy for transport; • ensuring transport impacts are reflected in investment decisions and the costs that users pay; • plan in a more integrated way to involve the community and link land use and transport. Sustainability on a regional and local level can be affected by which land is zoned for different uses. Clearly, the property developer has less influence individually on the regional plans. However, they should identify the prevailing trends in the locations or regions in which they operate. Consultation with the local authority plans will highlight authorities’ intentions with respect to zoning and land-use issues.
Sustainable design and construction There are numerous ways the construction phase of property development can be environmentally friendly. Firstly, there is the selection of the contractors on the tender list, secondly, the procurement process and, finally, the activities during construction itself. Some contractors are committed to reducing environmental impact and adopting social responsibility in their business operations. Frequently, case studies of sustainable building projects illustrate the contractor’s expertise in these types of development. Other ways of selecting contractors would be on past performance in respect of the construction of sustainable buildings. Developers can also build up a list of contractors with whom they work well on certain projects and this list may form the basis of selection for a project. Design and build issues will depend on the property type and location. Key sustainability areas that impact on property development are: • reducing carbon dioxide emissions; • minimizing pollution; • using resources efficiency. Building Materials Embodied energy is the energy that it takes to create the materials used in construction. Materials such as brick or concrete have a high embodied energy because the manufacturing process has a very high energy demand. However, offset against this must be the capacity for a material to retain heat, which will then be released back into a building. It is necessary to work out what is the best combination of materials for a project. The intended use has to be taken into account, along with the heating system and other installations to be used, not just the construction technique and materials. Pollution from the construction process can take many forms other than the pollution into the atmosphere of greenhouse gasses; fuel spillages, fly tipping and mud/silt from sites or lorry wheels are the most common. In addition, many construction materials can pose a pollution risk in their manufacture or in use. Although using resources to their maximum efficiency is a good mechanism for achieving increased sustainability, it may not always deliver the best product for end-users. It is important to look to the end-users and make decisions based on utility, not only efficiency. The design and construction phases of development schemes are important here. Waste management during construction can increase profitability and lower construction costs as wasted materials are paid when purchased and disposed of. Sustainable property developers need to consider waste to save money and reduce environmental impact. Developers pay to dispose of construction waste, and landfill taxes and costs are increasing. A waste management strategy can help to design out waste, minimize waste creation on site and ensure any resulting waste is dealt with appropriately and this results in a tidier, safer site. Where developments involve demolition, a pre-demolition audit is necessary for effective waste management. Contractors and/or developers need to identify the type and amount of waste generated on site. Firms can locate nearby recycling sites, reclamation companies, composting facilities, manufacturer take-back schemes, transfer stations, landfill sites and incinerators. This is an emerging area and it is vital for contractors to measure and benchmark construction, refurbishment and demolition waste. The construction industry needs to establish minimum reporting requirements for construction, refurbishment and demolition waste and to generate appropriate performance indicators and benchmarking figures. Page | 59
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Another way in which developers can increase the sustainability of a development project is to require the designers to specify the reuse of materials if the development involves the partial or complete demolition of a building. Also, the designer can specify recycled materials such as recycled concrete for hardcore or recycled timber. Reuse is better than recycling as no further embodied energy is used to transform the materials from one form to another. However, the use of recycled materials is preferable to the consumption of raw resources and materials. Environmental assessment methods such as BREEAM give credits to projects that incorporate recycled materials. In respect of materials the following should be considered during property development: • Environmental impact of materials. All materials have varying levels of environmental impact, for example excessive logging of timber can lead to deforestation and loss of the carbon sink. • Responsible sourcing of materials, for example timber that comes from a sustainable source. • Provision of recycling facilities for materials used within buildings during their life cycle; includes internal storage and provision for external collection.
Water Water shortages are becoming increasingly common in different locations and water needs to be used. This reduction in supply has coincided with increases in consumption. Developers can influence users to reduce consumption and running costs by including such measures as water efficient appliances (low flush toilets), water metering, leak detection systems and water butts. Environmental assessment schemes quantify what is considered reasonable consumption levels for the different property types. Health and well-being Sustainable buildings are promoted on the basis of benefits to health and consideration is given to optimizing the health of occupants in the design of a project. These reasons are frequently cited as a good rationale for sustainability in buildings. In this respect developers should consider such features as: • maximizing natural day lighting; • sound insulation to reduce the transmission of airborne and impact sound; • in residential property, provision of adequate private space for occupants; • not using materials containing VOCs; • decreasing the amount of air conditioning and/or use of recycled air in large commercial buildings to reduce the likelihood of sick building syndrome.
Property Market Vision Market research and sustainability There has been a significant change in attitudes towards sustainability since the early 2000s. Surveys show that many people believe the environment to be very important. Marketing firms conduct primary consumer research to investigate the percentage of the population for whom environmental, social and healthy lifestyle values play an important role in purchasing decisions. Such research concludes that there is a shift in consumer attitudes towards sustainability and it is these general trends and shifts that filter down to property development. Property developers need to keep abreast of social and cultural trends, especially relating to sustainability, to ensure that their properties meet market requirements, reduce environmental impacts and are future-proofed to some extent. Developers need to be aware of these changing attitudes and perceptions to sustainability in order to ensure their products meet market expectations and do not become victims of a new type of building obsolescence: environmental obsolescence.
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Marketing sustainable developments Developers need to identify their target market, work out the optimum ways of reaching that market and include the features that are attractive to that section of the market. It is not uncommon now to have two-tier marketing for residential projects where one set of brochures and campaign adverts is targeted at a more mature purchaser and another set that are focused on a younger, singles household group. Generally speaking, marketing campaigns focused on sustainable schemes will seek to highlight the social and economic and environmental benefits of buying or renting the particular property. Furthermore, marketing campaigns might seek to infer that sustainable buildings will hold their value more as time goes by. Promoting and selling sustainability Increasingly, property developments are being promoted to the market and sold on their sustainability credentials. For example, in the residential sector, the volume house builders are selling developments as being sustainable because they are close to the city centre, energy and water efficient and so forth. Equally, with the commercial sectors such as offices, developments are promoted on the basis of their BREEAM assessment ratings. One of the stated aims of the BREEAM was to promote sustainable buildings in the marketplace. It has been argued previously that selling sustainability features like energy efficiency was difficult because consumers were unable to physically see the features being promoted, whereas kitchens and bathrooms were very tangible to people. This appears to be diminishing as levels of awareness are increased about the benefits of low running costs. Sustainability Appraisals “Sustainability Appraisal” is a tool that provides for the identification and evaluation of the economic, social and environmental impacts of a proposal. A Sustainability Appraisal is used by planning authorities to assess whether proposed plans and policies meet sustainable development objectives. Sustainability Appraisal should: • take a long-term view of the expected social, economic and environmental effects of a proposed plan; • check that sustainability objectives are turned into sustainable planning policies; • reflect global, national, regional and local concerns; • form an integral part of all stages of plan preparation. Sustainability and Environmental Appraisals are processes that allow some or all sustainable development objectives to be integrated into policies, programmes, projects, activities and decision making at an early stage. They are designed to help identify potential environmental, social and economic effects and issues as early as possible, allowing alternative solutions or mitigation measures to be explored. Alternatively, positive effects and opportunities for performance enhancement can also be identified and promoted. These methods allow sustainability and environmental issues to be considered in a systematic, transparent and auditable way.
Changes in Real Estate Analysis and Valuation Sustainability in Real Estate Analysis and Real Estate Valuation Sustainability has become important to the real estate industry. Today, words such as green buildings, sustainable buildings, corporate social responsibility and others, are more and more present in the real estate research, as well as in the real estate practice. A sustainable building can be defined as a building with good planning, design, construction, operation and management practices, which reduce the negative impact upon the environment. Also, a sustainable building is economically viable and contributes to the increase of the satisfaction degree of its occupants, as well as of the community it belongs to.
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A recent study highlighted the fact that the first five components of sustainability are (RICS Green Gauge 2010): • Energy efficiency (73%) • Waste management (43%) • Energy supply (32%) • Transport issues (30%) • Land contamination (30%) The same study highlighted the fact that sustainability is nowadays “guided” by three major factors: • the customers’ demand, • the legal requirements and • the responsibility towards the environment.
Definition of a Green Building A green building represents a building which is designed from the structural point of view, built, modernized, operated and re-used in an environment friendly manner which assures an efficient utilization of the resources. The green building is a building with high energy efficiency (A class or upper class) and which has a reduced impact upon the environment. The main elements taken into consideration in the analysis and valuation of a green building are: • Location sustainability • Energy efficiency • Water efficient utilization • Occupants’ health and safety • Building operation and maintenance • Innovation degree In Europe, several sustainability evaluation and certification methods or tools were developed at international level, of which most well-known are BREEAM and LEED. In the United Kingdom, Building Research Establishment developed a widely used calculation instrument called BREEAM (Building Research Establishment Environmental Assessment Method), and in the USA, Green Building Council developed the LEED (Leadership in Energy and Environmental Design) system. Although there are other systems as well, these three obtained the international recognition. The BREEAM system classifies and certifies a building from “Acceptable”, “Good”, to “Very Good”, “Excellent” and “Exceptional”; the LEED system classifies a building as “Certified”, “Silver”, “Gold” or “Platinum”, and the DGNB system awards a “Bronze”, “Silver” or “Gold” certificate. Each system analyses a building with its own method, according to several criteria, not only based on the energy and carbon releases, including issues such as management, health and safety, transport, water, materials used, land utilization and environment. All the schemes provide rigorous training to assessors, who thus become officially authorized, acquiring competences for the performance of analyses and being informed regarding the points that can be awarded. Thus, a well-trained valuer will be able to provide counselling regarding the points acquiring and maximization, and to guide the customer and the design team towards the best possible classification. Although these schemes are not obligatory, we cannot underestimate their importance. Buildings with low references will be considered as obsolete and inadequate, affecting the owner’s financial interests. The Impact of Sustainability upon Real Estate We expect the elements that compose sustainability to affect the value of real estate in several ways. The additional value can result from utilities cost savings, from the additional rent income, from the reduced vacancy rate or from the reduced capitalization rate. The costs related to the development of sustainable buildings are not inefficient expenses; they are rather investments that create cost savings or an income premium. A series of global studies performed especially on mature and transparent markets highlighted the idea that the effort to meet the sustainability requirements has the characteristics of an investment in the real estate field.
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The main conclusions of this research were the following: • The increase rate of the green buildings segment is much higher than the average, and the vacancy rate is more reduced than the average. • The “green offices” market increased in 2007 by over 7%, and the vacancy rate reached 4.6%; in 2009 the increase was 14.9%, while the vacancy rate was 9.3%. • The return on investment in green buildings was not significantly affected by the crisis, the risk related to these investments being lower than the market average. The surprising side of this study was that, in a period of strong recession, the green buildings’ return on investment rate was not significantly affected, unlike the investment in other high quality properties. • The rent from the green buildings show a premium (Green Premium) and the sale price of the assets represented by the green buildings is higher; • “Green Premium” resisted in a crisis period and reached an average of 6 percentage points for the LEED certified properties; • Energy efficiency is almost entirely taken over by the market rent. The energy efficiency was highlighted by the fact that for 1$ of energy cost saving the rent increased by 0.95$; • The “green buildings” price confirms the market’s “goodwill” by the fact that the price of these properties was approximately 11-13 % higher.
The Impact of Sustainability upon the Valuation More and more research confirmed the significant impact of sustainability upon the real estate value, which will force valuers to take this aspect into consideration in the valuation process. Real estate markets will most likely become progressively sensitive to sustainability issues, and this is the reason why valuers must be informed and aware of this when they inspect the properties. Under the given circumstances, the valuation activity will be affected in the following manner: • In order to be able to identify and value sustainability elements, valuers will have to develop their knowledge and expertise by understanding the new technologies, the specific legislation, the public and fiscal policies, as well as the market’s attitude towards sustainability; • Valuers will have to identify the sustainability elements and, if these elements are recognized by the market as having an impact upon the value, these shall be taken in account when estimating the market value; • When collecting information regarding a property, valuers must also include information related to sustainability issues, even if no direct impact upon the property value is indicated at the analysis date. This can be an important issue in the valuation of new properties that normally have higher sustainability performances than older comparable properties. • New questions the valuer can ask himself/herself during the valuation process: • Is there an energy certificate for the building? • What are the sustainability characteristics of the subject property compared to most properties on the market or to comparable properties? • Are there any sustainability deficiencies that can be recovered? • Does the building have sustainability elements that could affect tenants’ or investors’ perception in the future? • Is it likely for the subject property to attract customers with sustainability responsibilities (multinational companies, etc.)? • Is the building likely to depreciate following the sustainability characteristics thus leading to more modernization costs that will affect the future cash flow? • Are there any regulation proposals that could affect the rents, vacancy rates or generated cash flows? • Does the state of the building, from the sustainability point of view, affect the risk rate perceived on the market? The valuer profession was involved in achieving the sustainability-valuation link through The Vancouver Valuation Accord project, which established a formal framework in order to highlight the link between sustainability and property value. The desiderate regarding the access to information, education and resources was mentioned for the valuers, in order to help include sustainability in the valuation process.
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Comparison Approach The adjustment of comparable for sustainability differences requires careful analysis. It is not always enough to consider an adjustment based on costs, because sometimes the market is not ready to recognize those costs. Income Approach The capitalization rate can be affected by the buyers’ perceptions of sustainability. It is likely that, in time, the buildings that do not meet the sustainability criteria, become less attractive and lose their value faster compared to sustainable buildings. The sustainability-related issues that may affect investors’ perceptions are: • The impact of the operation costs evolution (including energy) • The impact upon rent and net income • The property ability to attract tenants with a good reputation, with long contract terms • Obtaining of an advantage by using the opportunity created by the environment changes and social perception. The awaited increase of the sustainability recognition will create the gain of a reduced capitalization rate at the property sale, and, implicitly, a higher resale value compared to the traditional buildings.
Current Status in Romania How is seen the Building Sustainability in Romania? The European Energy Performance of Buildings Directive (EPBD) was adopted at European level, with minimum building performance requirements. The directive was implemented starting with January 2006. The most common regulation form adopted by the member states is the thermal insulation of the exterior of the building. Several countries also established restrictions related to the lighting and cooling system. The European Energy Performance of Buildings Directive (EPBD), also known as “EU legislation for green buildings” was adopted in Romania through Law No. 372/2005, which took effect on 1 January 2007. The general framework of Law No. 372/2005 includes the following: • The general framework for the calculation of the building energy performance; • The application of a series of minimum requirements related to the energy performance of the new buildings; • The application of a series of minimum energy performance requirements for the existing buildings and which enter in a modernization process; • The energy certificate of the buildings; • The inspection and valuation of the heating/cooling systems; The building energy performance certificate is a technical document which has an informative character, certifies the energy performance of a building with a view to declaring and displaying the energy performance of the building, and has a 10-year validity period. At European level there is no strong mechanism for the implementation of the EPBD, therefore the building sustainability issue was rediscussed. Among other issues, all member states must make sure, until 31 December 2015 at the latest, that the new public buildings have a zero or smaller energy consumption, as per the European Parliament Directive No. 2010/31/EU of 19 May 2010. The durable plan does not only refer to the reduction of the energy and carbon consumption. The so-called Triple Bottom Line philosophy suggests that the real durable development takes into consideration environmental issues, together with the economic and social impact. Page | 64
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Based on the available data, in Romania there are currently 8 existing green buildings, BREEAM or LEED certified, 4 are under construction and 1 is just a project, most of them being office developments.
Regarding the perception of sustainability in Romania, a relatively recent study performed by The Romania Green Building Council provides a clearer image of sustainability’s perception in the local real estate industry. The study was based on a sample of 363 potential respondents and 66 answers were received, representing the equivalent of a response rate of approximately 18%. On the local market there is an obvious concern regarding the green buildings, the trend being very clear: • 44% of the developers declared they were involved in green buildings development in Romania or abroad and 89% affirmed that they plan to develop green buildings in the near future. • 56% of the architects declared they were involved in green buildings projects, and 89% of them affirmed they were ready to incorporate green materials and technologies in their projects. The main impediment in developing green buildings was considered to be, both by developers and architects, the high cost of these buildings. To the question “from your experience, what is the cost of green buildings?” • 44% of the developers answered that the cost is 1-10% higher compared to the traditional buildings; • 41% of the architects consider the cost is 11-20% higher compared to the traditional buildings, and • 26% of them believe that the cost is even over 21% higher. It is obvious that the architects overestimated the construction costs. The official data provided by the US Green Building Council shows an additional cost for the development of a LEED certified green building of 0% – 4% compared to the similar cost of a traditional building belonging to the same category which does not provide high energy efficiency or does not meet environment standards.
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Conclusions Sustainability is already part of the thinking of an important number of players on the real estate market and regulations tend to be more oriented towards this new dimension of the social and economic reality. A large number of studies showed the impact of sustainability upon the real estate value, confirming the idea that sustainability in the real estate industry is not a cost but an investment. The valuation activity must extend its interest and knowledge borders by considering the sustainability issues during the valuation process. Therefore, the main reasons for the immediate and rigorous consideration of sustainability in the valuation practice would be: • Priority orientation of investors towards sustainability; • Sustainable buildings’ performance exceeds the performance of the traditional buildings (socially, economically and financially); • Neglecting sustainability will reduce the quality of the valuation services; • There is a growing interest in for consulting services and investment in sustainable properties; • Reflection of sustainability in real estate valuation is already possible; validation of such a decision depends only on the valuer’s ability to explain and justify the assumptions used in the valuation report.
Bibliography 1. Wilkinson, S. and Reed, R., (2008) Property Development 5th edition, Routledge. 2. Anghel I. şi M. Onofrei (2009), “Sustainability Issues in Property Valuation”, Theoretical and Applied Economics, supliment, (May 2009). 3. Eichholtz P., N. Nils Kok şi J. Quigley (2010), “Sustainability and the Dynamics of Green Building New Evidence on the Financial Performance of Green Office Buildings in the USA”, RICS (oct.2010). 4. Sustainability and residential property valuation, RICS information paper (2011), Published by: RICS. 5. Valuation Information Paper No. 13, (August 2009) Sustainability and commercial property Valuation, Published by: RICS. 6. RICS Green Gauge (2010), September 2011, Published by: RICS. 7. Romania’s Greenest Buildings Report, 2013, Published by: Romania Green Building Council.
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THE PROPERTY DEVELOPMENT PROCESS The Role of the Real Estate Agent in the Property Development Process By: Cornelia Dragomir Ovidiu Ion Florin Ianculescu-Popa Sorin Doru Ciomartan Professor: Edgar Kiviet
The scope of this paper is to describe the role of the real estate agent in the property development process which can be more complex and not just to intermediate or represent a party in a transaction. We started with an overview of the very complex activity of property development, reviewing it as a series of stages involving many actors with different objectives, operating within the overall context of the building cycle and its interaction with the business. Development may be initiated by any of the main actors identified but it can only take place with the consent of the landowner.
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What is a property development? Property development is a process that involves changing or intensifying land use to produce buildings for occupation. Real estate development is a high risk activity which often involves large amount of money tied up in the production process, offering a product that is relatively illiquid and indivisible. Success very often depends on attention to detail and quality of the decision process it leads. Success is cannot be judged only by the size of the profit or loss from a financial standpoint. The property development is a complex process that can be divided into stages and occurs in a considerably interval of time. The final product is unique in terms of physical characteristics and location. What are the stages of a property development process? The main stages of a development process are as follows1: • Initiation • Evaluation • Acquisition • Design and costing • Permissions • Commitment • Implementation • Let/manage/dispose The property development is not entirely sequential activity and phases many times superimpose or repeat. Initiation The development is initiated when a parcel of land or a site is considered suitable for a different use or more intense one, or where demands for a particular use results in a search for the right site. The initiative can come from any of the actors or stakeholders in the development process who are seeking a suitable site in anticipation of demand or need for any use. Alternatively, the initiative may come from stakeholders who anticipate a potentially higher value use for an existing site due to changing in demographic, economic, social, physical or other conditions. In order to identify the most suitable use, the initiator will try to research the market for the potential needs and to obtain the planning consent for change of the current use.
Evaluation One of the most important stages of the development process is evaluation, because it influences the decision of the developer. The assessment includes market research, both general and specific terms and the financial evaluation of the proposal. The financial assessment process must ensure that the cost is reasonable and sustainable. For private developments, the assessment of the potential profit is determined in relation to the risks incurred. Organizations from the public sector and non-profit organizations, it will try to ensure that costs are recovered. An additional objective for the financial assessment is to determine the value of the site. This stage of the development process should be carried out prior to any engagement of the developer. The assessment involves a combined advice from the part of professional team which was hired by the developer, but the decision to continue and take the risk in the end rests with the developer. Page | 67
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Acquisition Once the decision to proceed is taken, there are many other decisions and measures to be taken before the site can be purchased and development began. These steps are listed below: • Legal investigation (a review of all legal issues related to the site, such as ownership, planning permissions and any easements) • Ground investigation (the capacity of the site to accommodate the proposed use) • Finance (the suitable and most favorable financing must be obtained for the proposed development) Design and costing Design is an ongoing process that runs in parallel with other stages, increasingly detailed as the development increases in certainty. Initially, the design work will be kept to a minimum in order to keep the costs down before developer commitment. There should be sufficient details to allow the quantity surveyor to prepare initial cost estimation. Permissions Any development requires planning permission from local authorities before construction starts. In many cases, the developer may apply for an application for an outline approval before getting the full approval. An outline planning agreement establishes the approved use of the site and for the proposed project the size and density. An outline planning agreement does not allow the developer to proceed with the development scheme and a detailed planning consent is required. A detailed application typically involves the submission to the planning authorities of drawings and detailed information on siting, means of access, internal and external design and landscaping. The developer must make initial estimates probably realistic time and cost of obtaining proper permission during the assessment phase. In some cases, there are a variety of other legal approvals that must be obtained before development starts. Commitment A developer must ensure that all required preliminary work has been undertaken before any substantial commitment in terms of development. All entries regarding the land, finance, labor and materials, and the acquisition of statutory permissions must be satisfactorily negotiated before any agreements are signed making the developer responsible for any major expenditure. Implementation The implementation phase can begin once all the raw materials necessary for the development process are in place. At this point there is a commitment to a particular site and to particular buildings at a particular cost spread over a particular time. The developer should have the same interest in running and promoting the project and also the market has to be monitored continuously in order to ensure that the final product is right and if the specifications must be changed. Let/manage/dispose Even this phase of development occurs in the latter stages of development, for the developer must be in mind at the beginning of the development process. In many cases, the tenant or the buyer is secured at the beginning or during the development process. The success of the development will depend on the ability to ensure a willing tenant or at the estimated rent or price. The development process and the responsibility of the developer should not stop with the occupation of the building. The financial success of the development cannot be assessed until the building is complete, let or sold. Who are the main players in the property development process? Within each stage, and over some or all of them, there are a variety of major players who contributes to the property development process and may have very different perspectives and expectations.
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The players of a property development are listed below: • Landowners • Developers • Public sector • Planners • Financial institutions • Building contractors • Agents • Planning consultants • Valuation surveyors • Architects • Quantity surveyors • Engineers • Project managers • Lawyers • Accountants • Objectors • Occupiers Landowners Landowners play an important role whether actively or passively. They can actively initiate the development of a desire to sell or improve the value of their land. Developers Developers’ goal is to make a direct financial profit from the development process. The kind of development undertaken varies considerably. Some companies are specialized in a specific type of development, such as office, retail, and also, in particular, geographic locations while other real estate developers prefer to split the risk across types, locations, and countries. Public sector Local authorities are mainly concerned with developments for their own occupation or community and the provision of infrastructure. The involvement of local authorities in the development process will depend on whether they want to encourage development or development control in order to maintain and respect standards. Planners The main purpose of planning is to encourage development and prevent unwanted development. Financial institutions Where development is fully funded by the developer, financial institutions have an important role in the development process. There are two main types of money needed for development: • Financing for Development, which covers development costs during the development process • Funding that covers the cost of holding the completed development as an investment. Building contractors Building contractors are used by developers to build the development scheme and their main objective is direct financial gain. Building contractors operate in a specialist activity in the development process, starting at a time of maximum commitment and risk for the developer. Agents Real estate agents may have a role in the initiation of development process and or bringing together some of the main players in this process. They also form the link between the developer and the occupier. They play a very important role in the development process and are often involved in each stage of the process. Agents are able to fulfil this role due to their detailed knowledge of both the real estate market in terms of demand and current rents or prices, based on their contacts with developers, occupiers, financial institutions and landowners. Page | 69
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Planning consultants Planning consultants negotiate with local authorities to get most valuable permission to development, particularly with the large or sensitive scheme. Valuation surveyors Valuation surveyors are employed at the critical evaluation stage to provide a detailed analysis of the characteristics of the market in terms of the underlying demand and competitive supply. Many financial institutions insist on market analysis when considering a development funding proposal. Architects Architects are employed by developers to design the layout and construction of new buildings or renovating existing buildings. They can also manage the contract on behalf of the developer's construction and certify completion of construction. It is important that the architect is hired at the earliest possible stage to ensure that all design work is done when construction is scheduled to begin. Quantity surveyors Quantity surveyors advice the developer on the likely costs of building contract and its related costs. Their role may include estimation of costs for designs produced by architects, administration of construction contract, construction monitoring and approval of payments to the contractor. Engineers Structural engineers are used to work with the architect and quantity surveyor to advice on the design of the structural elements of the building. They will also participate in the supervision of construction of the structure. Project managers Project managers are used to manage the team of professionals and construction contract on behalf of the developer. Project managers are normally only employed on larger and complicated schemes. They should be appointed before any other professional from the team of the project. Lawyers Lawyers are required at different stages throughout the development process, from site acquisition for development to completion of leases and contracts of sale. They are often involved in legal agreements covering financing arrangement entered into by the developer. Accountants In some cases, expert accountants can be used to provide advice on tax and VAT regulations that can have a major impact on development costs. Objectors There are two categories of objectors that can cause delays and possible abandonment of development projects: • Self-interested neighbors of the proposed development • Well-organized professional bodies, at local or national level Developers must be aware of their interests and be prepared to accommodate or reject their opposition. Ideally, these negotiations should be conducted before making a planning application in order to avoid delays. Occupiers Unless the occupier of a building is the developer or is known at the beginning of the process, then the occupier is not regarded as a key player in the development process as they are often unknown until the development is complete and let or sold. Their request for accommodation triggers the development process and influences both land prices and rents, to which the developers have to respond. The occupier is an actor within the process and his requirements should be investigated at the beginning of the process. If the occupier of the scheme is known early on, then the occupier is the most important player in the process. The building will be constructed in accordance with the requirements of occupier, which can be highly specialized. The developer may need to convince the occupier to compromise on their requirements to provide a standard and flexible type of building, so that the investment market for the building is wider in the event of disposal. The developer is also concerned to protect the value of the building as collateral for loan purposes. Page | 70
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An example of the Real Estate Agent role in the development process As a response to the request of small apartments and reconfiguration of space in order to have residential developments sales, arose a situation when apartment prices exceeded family budgets and thus we had less resilience to market demands. Obvious, the prices must be correlated with population segments, but the minimization of apartment costs by diminishing the apartments through a late redesign is appropriate to the goal. The adapted plans of housing blocks by reducing residential units should be done in order to meet the target population wages. A similar request situation appeared when a Real Estate Agent and consultant for an office building development suggested transforming evacuation cores to main cores providing accesses to each of it. The building becomes a suite of office buildings with smaller offices fit out for smaller business according to market demands. Then in the refining period of the solution (after consultation with another Real Estate Agent) appeared a return to the scheme with a single access hallway and corridors for bigger and smaller rooms, as well as that is much more flexible and permitting an architecture with its own rules of composition, configuration building easier perceived, accessed, managed, etc. We believe that a broader consulting since the initiation phase of urban development, comprising the major stakeholders, including users, is always necessary for an exhaustive description of the requirements of the concept, so we have the necessary criteria. In the particular case of a design, there must be determined criteria in order to take the necessary decisions before the solution to be delivered together with the final expression and not after or during the early stages. That attitude is suitable to achieve the design quality, and we must add also efficiency/effectiveness of the design. However, what prevails in such case is that the project sells. In addition compared to other actors is that the Real Estate Agent can specify the quality of the experience of " what sells " as opposed to " what people want" which makes him to provide infallible economic criteria which we consider essential, as long as the primary principle by which we conduct our work is that the economic value prevails. Conclusions The most important factor in Urban Development Plan lies mainly that the Real Estate Agent is permanently connected with the real estate market. He conducts the business with extensive assessments and is the ideal consultant for the beneficiary. We could extract a definition of Real Estate Agent and I would say that Real Estate Agent is a person very knowledgeable about their local area with the ability of making capital out of a property. That’s the reason why the Real Estate Agent should be involved in the process of Urban Development Plan from the very beginning to the very end. Development is a team effort. The Lenders, contractors, professional consultants, and other specialists described in this paper represent the major players with whom developers must be familiar, but they are not the only ones. As development becomes increasingly complex, other talents and specialists must be found. Successful developments depend on the developer’s ability to manage the many participants in the development process. The developer must be able to recognize quality work and must know when to ask questions, whom to ask, and what to ask.
Bibliography 1. Wilkinson, S. and Reed, R., (2008) Property Development 5th edition, Routledge. 2. Peiser, R. and Frej, A., (2003) Professional real estate development. Washington, D.C.: The Urban Land Institute.
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