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Give It Up for John Kane: His Downtown South Plan is a Power Grab, Money Grab and Tax Grab

What do we know about Kane Realty’s Downtown South (DTS) plan after a 3-hour long Planning Commission meeting on Friday? The answer is, we didn’t learn one thing on Friday that we didn’t already know; and going into Friday, all we knew about developer John Kane’s intentions is that he’s not telling — and doesn’t think he has to. (As we told you last week.)

What did become clear on Friday, after the fog of verbiage generated by Kane’s spokespeople dispersed under some withering questions from Planning Commission members, is that Kane’s upzoning application, Z-13-20 in City of Raleigh jargon, is:

          • A raw Power Grab.
          • A huge Money Grab.
          • A Tax Grab with the potential to take hundreds of millions of dollars from city taxpayers. 

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Click on image for Walnut Creek Flooding details

The three tracts of land that comprise Downtown South are important sites for Raleigh, and have the potential to be a great complement to our Downtown if built to the right scale with careful, inclusive design. The design must take into account the character of the surrounding neighborhoods and the fact that the DTS site straddles Walnut Creek, where major floods are frequent and sometimes devastating. It must make room for low-income as well as high-income residents. Given the water on site, it ought to be a place that is free for all to enjoy.

Kane, however, wants the right to build whatever he wants, to whatever scale he wants, as massive as he wants with only minimal flood controls. If he gets his way, the City — its residents, its Planning Commission, even its elected City Council — will be by-standers only.

Who needs City Planning when we have John Kane to do it for us? 

Incredibly, Mayor Mary-Ann Baldwin seems ready to turn Kane loose and hand him a huge tax break to boot. It remains to be seen whether a majority of City Council will be equally submissive.

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How Is This a Power Grab?

Put simply, Kane is insisting that he doesn’t need to say what he intends to build in order to justify a rezoning application that would allow 40-story buildings on nearly all of a 145-acre site in South Raleigh.

Nor does he need to show how a massive project in a flood-prone area of the city will not make the flooding worse in downstream neighborhoods like Rochester Heights, an historic African-American community.

Nor does he need to state whether he intends to include any affordable housing in his project, and if so, where it would go.

Click on image for details of who has the power in Raleigh

Nor how he would mitigate the dislocation and gentrification impacts of his project on adjoining neighborhoods like Caraleigh, Fuller Heights and South Park, which are situated between the actual Downtown Raleigh and Kane’s putative Downtown South.

These are the normal elements of a rezoning application: What are you going to build? How big is it? What are its impacts on the surrounding neighborhoods? How will you mitigate any negative impacts? And, since this site is on a future Bus Rapid Transit (BRT) route down South Wilmington Street, will you offer to include affordable-housing units near the BRT stop as called for in the city Planning Department’s new Equitable Development Around Transit proposal?

But none of these elements are in Kane’s proposal, with two exceptions: (1) a relatively trivial amount of park space (2.5 acres out of the 145-acre total); and (2) a last-minute add-on that would strengthen slightly the level of stormwater (flood) controls to which Kane is willing to commit.

Other than that, Kane wants City Council to give him a blank-check rezoning. Only after it is approved — and Council has given away all of its leverage — would he sit down with Council to negotiate the kinds of things that should’ve been assured before the rezoning was approved. 

Kane did not appear before the Planning Commission. Instead, he sent a team of emissaries led by former City Councilor Bonner Gaylord, who worked for him when he was on the Council and still works for him. They spoke at great length about what the project could be, might be, even oughta be. But they committed to nothing.

Gaylord, on Kane’s behalf, warned that Kane is in a hurry to get his application approved, though Gaylord also says that this project will unfold over decades, not just years. Neither the PC nor Council should do anything to slow Kane down — is Gaylord’s message. 

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How Is This a Money Grab? 

So here are a couple of numbers from the Raleigh Planning Department’s analysis of Z-20-13. If approved as it stands, it would allow:

          • Up to 32,000 new housing units.
          • Up to 38 million square feet of commercial and office space.
          • Resulting in 150,000 additional car trips to and from the site every day

The TOTAL commercial space in our current downtown is 32 million s.f.

Downtown South could have more.

Or consider this: Raleigh’s new director of Planning and Development, Patrick Young, says that Raleigh’s growth is generating a need for 7-8 new housing units a day. That’s 3,000 a year — citywide.

Thus, Kane is grabbing for the right to control 10 years worth of new housing demand in Raleigh in a single location, and be the sole planner of a new downtown plopped squarely onto flood-prone land.  

Now, the numbers in the staff report are estimates and probably greatly exaggerate what Kane, or other developers that Kane sells to, could actually build. Still, even half of that amount would represent a corner on the market for new housing and commercial development in South Raleigh, with Kane in complete control of the form, price and whether surrounding communities benefit or get pushed out. 

Interestingly, Gaylord says that the Downtown South project will not be 40 stories (or won’t be ALL 40-story buildings) even as Kane Realty applies for a rezoning that would ENTITLE each future element to rise to 40 stories. 

Huh?

It may be that Kane thinks that the City’s Comprehensive Plan should not apply to him, though it does — so far — apply to every other development in Raleigh.

The point of the Comp Plan is to define the desirable scale of development in every community and neighborhood by neighborhood, taking into account the character of the place and the available capacity of roads and other infrastructure.

For this South Raleigh location, the Plan suggests heights up to 12 stories and perhaps 20 if close to a BRT stop. But not 40.

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How It This a Tax Grab?

Again, simple. Kane is proposing that he (and anyone he sells to) be allowed to pay property taxes on this site for the next 30 years as if it hadn’t been developed. Actually, it’s a little more convoluted than that, and much worse: He’ll pay the property taxes as they’re assessed, but wants them given back.

And not just as he pays them, but up-front.

No kidding, he wants 30 years worth of the additional property taxes that this site will generate paid to him before he even starts. The City would have to borrow against future revenues so Kane could have his money now. It’s called Tax-Increment Financing, or as Gaylord referred to it in this case, a “Tax-Increment Grant.”

It’s legal in North Carolina, has been for almost 20 years. I believe it is also true that no municipality has been talked into doing it.

So how much would Kane’s grant be?

Hard to say since the scale — and future success — of Kane’s development plans are a complete unknown.

But for starters, Kane wants to use his TIG — the taxpayers’ money — to pay for a new stadium or entertainment venue of some kind as the anchor for all that would follow.

So that’s your first, what, $200 million? More? From incremental property taxes.

Anything after that could pay for affordable housing in the Kane project, because — while he would “love to” include some affordable units (per Gaylord) — he’s not gonna pay for them. We will.

If he has his way. 

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By the way, this is the same sports venue Kane used to call a soccer stadium with 20,000 seats, big enough for a Major Leader Soccer franchise. But of course, we don’t have a MLS franchise. It went to Charlotte.

We do  have a terrific women’s team, the N.C. Courage, arguably the best women’s franchise in the world, and a minor-league men’s team, the NCFC, and both of them fit very comfortably in the stadium built for them — by Wake County and Raleigh taxpayers — in Cary.

But Kane has not given up, and is now pitching his 20,000 seat venue as a home for Shaw University sports, a replacement for the Red Hat Amphitheater (wasn’t that supposed to go to Dix Park?) and/or the Walnut Creek Amphitheater, and/or maybe in the future for the PNC Arena that is home to the Carolina Hurricanes and N.C. State men’s basketball. 

Anyway, this entertainment / sports venue continues to be the shiny object that Kane shows whenever he’s asked what the Downtown South project will be, even though the stadium is not specified in any way in the rezoning application.

But Gaylord, Kane’s spokesman, is quick to say that without the venue, the project won’t happen. And without a TIG that puts the cost of the venue and the cost of all other community benefits onto the taxpayers, it won’t happen. According to Gaylord.

OK, then. Maybe it shouldn’t happen.

Because there are a lot of other, more pressing needs at this time in our community for that $200 million (or more) than another sports venue.