Central City Planning & Development Committee

Downtown Development Process Report March 16, 2020

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Table of Contents

Introduction

Background on Analysis

Analysis/Themes

Executive Summary – The Big Ideas

Conclusion

Appendix A – The 14 Challenges

Appendix B – Downtown Development Analysis Survey

Introduction

For the past few years, cranes have dominated Downtown Phoenix’s skyline. Development of the Downtown core is ushering in an era of increased vibrancy, with new commercial buildings, high-rise multi-family housing, educational entities and even Downtown’s first supermarket. Local developers are participating in the rapid expansion, but so are national firms. Downtown Phoenix is becoming more vertical, welcoming new storefronts, experiencing an enhanced streetscape, and witnessing innovative industries, art and nightlife. New and renovated buildings of all sizes and uses signal the next phase in Downtown’s history and growth. And, this geographically small region of the City is generating an outsized impact on the City’s economy, boosting property and sales taxes. As with other busy development phases, growth comes with challenges, for the City teams working on zoning, inspections and other aspects of the process, and for the developers, architects, attorneys and builders investing in Downtown. Phoenix Community Alliance (PCA) is the premier nonprofit business-leadership organization that has worked to create a stronger Downtown for more than 36 years. PCA’s membership consists of companies of all sizes, retail establishments, private professionals, nonprofits, governments and community groups. Since PCA’s inception in 1983, the organization’s Central City Planning and Development (CCPD) Committee has helped usher in catalytic public-private partnerships, processes and incentives to help make new development projects possible. The Committee acts as a liaison between developers, community groups and City departments for the purposes of advocacy.

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One of the Committee’s objectives over the past year has been to work with the City to detail recurring challenges developers are encountering. The Committee advocates a solution-oriented approach to simplify the development process, saving time and money.

Committee meetings included presentations and discussions highlighting what worked — a “the good, the bad, the what-we-wish-was-better” discussion.

An email survey was distributed in person and emailed to Committee Members (Appendix B).

The group held a “development roundtable,” with input from private sector professionals with decades of experience working through the Downtown development process.

Key information is gathered into this report to provide the City, specifically the Planning & Development Department, with an overview of potential areas of improvement and specific recommendations. Recommendations also provide feedback for developers. The report is organized by common themes from the presentations and other feedback:

Pre-Development & Development Code Processes Permitting Utilities & Infrastructure Staffing & City Departments Data/Quality Management Miscellaneous

Phoenix Community Alliance will be a voice for its Members and advocate for improvements in the Downtown development process. The recommendations included in this document will help the City save time and money by boosting efficiency, relieving developers from issues hindering their bottom line, and strengthening public-private collaboration in the development of quality projects in our growing Downtown.

This report is the first installment in what will be an ongoing process of information gathering and feedback, with regular check-

ins from the Committee. The next step is to create an action plan for implementation.

“A great year hearing from a diverse selection of people who are involved in development and real estate development in

Downtown Phoenix.” – Survey Respondent

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Background on Analysis Throughout 2019, the Central City Planning and Development Committee held six meetings, with attendance of approximately 230 – mostly PCA Members who work in various sectors of development industries. City staff members from the Planning & Development Department also attended. The firms below presented their feedback and input on Downtown development processes and answered questions:

CCBG Architects : CCBG Architects, Inc. has a diverse architectural profile including residential and multifamily residences, adaptive reuse building projects, religious sanctuaries, urban infill projects, movie theaters, and various other commercial project types.

Clearway Energy: Clearway Energy provides energy-efficient and environmentally sound district energy and/or combined heat and power services to buildings in Downtown Phoenix and other areas of Arizona.

Habitat Metro : Habitat Metro, LLC is a real estate development firm focused on infill development involving multifamily and hospitality components.

Harder Development : Harder Development began focusing on historic neighborhoods that retain the city's character while providing opportunities for newcomers to establish their businesses downtown, and is committed to honing the historic beauty of Phoenix and building with intention.

Katerra: Katerra has many high-rise vertical construction and urban projects in Phoenix. The company is putting modern technology to work at all levels of building design and construction to help address some of the industry’s most entrenched challenges.

Metrowest Development: Metrowest works on new development and adaptive reuse projects, and prides itself in establishing neighborhoods with a strong sense of community.

Trammell Crow Company : Trammell Crow Company is a commercial real estate firm that provides quality real estate development and investment solutions to property owners, investors, and tenants in Phoenix.

True North Studio: True North approaches urban development projects with the goal of creating experiential developments; drawing on the senses and the fabric of the existing culture.

Analysis/Themes

Input and feedback from the Central City Planning and Development presentations, surveys and the development roundtable is organized in this section by key topics, citing “The Good,” “Challenges,” and “Recommendations.” The Committee identified 14 challenges and targeted action recommendations.

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Topic: Pre-Development & Development Code Processes THE GOOD

The development submittal process is clear and concise, and typically reviewed in a consistent manner in accordance with scheduled timelines.

The process permits independent submittals of different project components and expedited reviews independently, allowing components of projects to start prior to approval of full design.

CHALLENGE 1 – Code Interpretation The Downtown Form-Based Code makes it challenging for project teams to

understand complex development requirements and processes. Both the development industry and City department staff are on a constant learning curve to keep up with new building codes. Sometimes, new City staff members have different interpretations of the intent of the Downtown Form-Based Code. Their policy interpretations can change at times even though the zoning code does not, which may surprise developers. These issues can make estimation of project costs difficult.

RECOMMENDATION

Create consistent internal policies and processes so developers know the rules before entering pre-development.

CHALLENGE 2 – Project Comments It is common for the City to provide new comments on projects after initial and

second reviews. There is no limit on additional project comments. RECOMMENDATIONS

While the submittal process is clear, depth of review and communications between City staff and developers can be improved. Staff should consider a more detailed application and submittal process to allow for a more thorough initial staff project review. This step should reduce the number of changes and subsequent reviews. Following initial and second reviews, City staff should not give further comments unless the developer has failed to adequately address the City’s prior comments, and if the comments are absolutely necessary.

Ensure a clear route early in the submittal process for approvals, whether through Design Review Committee (DRC) or the Zoning Adjustment process. When possible, staff should provide developers a preview even prior to submittal, to help answer questions and prevent unnecessary confusion with submittals.

“I think the pre-application process is excellent… compared to other places in the country.” – Meeting Participant

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CHALLENGE 3 – Consistency The inspection process and requirements for evaluating code compliance on

projects are inconsistent and can appear to be subjective. Issues not identified during initial standard approval processes can cause delays and add expenses to a project.

RECOMMENDATIONS

City staff should revisit the work that the Design Standards Committee (DSC) had initiated and update it with additional changes that have occurred since. Amend the zoning code to reflect the DSC-proposed changes. Identifying potential inconsistencies in the Downtown Form-Based code will save time for staff and project teams.

City staff should coordinate and amend zoning and building code to remove inconsistencies.

Topic: Permitting

THE GOOD Hard costs for permits are clear and simple to understand. The permit renewal process, as outlined, is easy to follow.

CHALLENGE 4 – Complexity & Redundancy of Permits, Inter-Departmental Conflict

Projects often require redundant permits and project teams spend many hours applying for each permit. There is an inconsistent method for reviewing permits and projects between departments. Many City departments require different permits for an individual project, and that conflict is a challenge developers face with the permitting process. Examples:

o The permitting processes for sidewalk access and for alley vehicle access are difficult to navigate.

o A requirement from Street Transportation may be completed and then later have to be reworked because it is not up to standard for the Fire Department.

One developer reported spending more than $75,000 in labor for a project that included more than 50 permits. This does not include

costs the City incurs managing and reviewing the permits. Excessive permitting creates unforeseen costs.

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RECOMMENDATIONS Identify at the beginning of the permitting process all of the permits needed for

a project and combine as many permits as possible and logical for a specific project, to decrease complexity and save time for City staff and developers, extra trips to City Hall, etc.

Tie the duration of permits to the date of the last inspection so permits don’t expire while the project is still “live” and if construction is ongoing.

As permits are combined, adjust and simplify the permitting process, and consider a new and simplified fee structure.

CHALLENGE 5 – Permitting Renewal Process While the permit renewal process is clear on paper, in practice, it can be

cumbersome, and can lead, at times, to unnecessary construction pauses. RECOMMENDATIONS

Automate permit renewals, when possible, for projects in active status, so permits will renew more efficiently and last longer.

Provide the ability to extend certain permits online at no additional charge. Staff should prioritize and expedite the acceptance and review of field changes

or plan amendments by utilizing the hourly review process. City staff should provide a clearer process with standards and explanations

regarding the types of permitting changes that can be efficiently completed in the field versus changes when a full amendment process is required from staff.

Topic: Utilities & Infrastructure THE GOOD

The City and utility companies convene for regularly scheduled meetings to discuss problems, concerns and issues.

The City is moving forward on utility capital improvement projects, such as downtown water and sewer line upgrades and communication infrastructure improvements.

CHALLENGE 6 – Unknown Infrastructure in Older Neighborhoods

This can burden developers with requirements to upgrade infrastructure, undertakings that may be better suited as City-funded capital improvement projects. The issue can cause confusion in City plan review and inspections, especially in historic neighborhoods.

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RECOMMENDATIONS Study the possibility of utility corridors or re-evaluate both horizontal and

vertical utility clearances that currently exist in the right of way. Implement shared utility trench designs.

Establish a space in the right of way for utilities, so streets are not constantly disturbed, increasing costs and leading to individual utility lines for each project.

Better promote and integrate the role of the Street Transportation Department Utility Coordinator position, and boost visibility of this key role that acts as the liaison with SRP, APS, Southwest Gas and other utilities, to ensure better understanding of requirements and a more seamless process.

Staff should request a submittal and review checklist from private utility companies, to be delivered to the applicant.

Developers, as part of their preliminary submittal application, should demonstrate to the City that they have initiated the utility design process.

Developers should attend relevant utility coordination meetings, to hear feedback and requirements firsthand.

CHALLENGE 7 – Utility Requirements – Separation

Utility requirements for separation between wet and dry utilities can create difficult scenarios in the right of way.

RECOMMENDATIONS If City staff and utility companies have different interpretations of utility or

building code requirements, the City and the utility companies should jointly adopt an expedited process to quickly resolve conflicts, starting with discussion at the regularly scheduled meetings between the City and utility companies.

CHALLENGE 8 – Utility Upgrades

Utility upgrades at times place inappropriate burden on small developers for infrastructure that may not be necessary for small-scale, adjacent uses.

RECOMMENDATIONS

Encourage utility companies outside of City government to make developers of all sizes aware of necessary infrastructure improvements early in pre-development efforts.

Staff should implement a review and approval process that accommodates a “hardship” procedure for burdensome utility upgrade requirements.

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Topic: Staffing & City Departments

THE GOOD City departments have friendly and professional staff members who build positive

working relationships with developers and those in the field. The City team focusing on Downtown is well-informed, with helpful supervisors who

understand the unique needs of development projects in the urban core.

CHALLENGE 9 – Communications

Contacts between developers and City staff can be unnecessarily lengthy. City staff appears to be spread thin and to lack the ability to respond in a timely fashion. Communications issues also include staff not turning on out-of-office emails and voicemails during absences, and not sending a brief response acknowledging that staff has received a communication and will work on the issue. With staff absences, other team members do not necessarily have the authority to act.

RECOMMENDATIONS

Analyze the current cycle of communication and work across departments to streamline communication between developers and City departments/ personnel. o Examples could include:

Creating a database to share information with multiple staff members. This will help staff be more responsive to project teams

Facilitating ongoing collaborative dialogue between diverse stakeholders and City departments

Including all City departments in initial project kick-off meetings for adaptive reuse, complex, large or mixed-used projects

Advise staff to acknowledge receipt of emails and voicemails, to provide email and voicemail alerts when out of the office, and to indicate the name and contact information of the Planning & Development Department staff member who should be contacted in the event of an absence. Even if answers are not yet available, a brief email or returned call acknowledging receipt lets the applicant know City staff is working on the issue.

A local land-use attorney remarked that the City’s staff is “… the best in the state.”

Experienced development professionals participating in this report urged City staff to be straightforward and reasonable, saying they can handle waits of up to a week, but want to know the status in a more timely fashion, as opposed to the frustration of not knowing

if their request has been received.

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Provide a thorough, easy to follow Frequently Asked Questions (FAQ) document online and a hand-out that addresses the most common questions, leading to fewer calls and emails to City staff.

CHALLENGE 10 – Coordination/Work Volume-Bandwidth

With multiple City departments involved to coordinate on the same project, developers often have trouble getting the departments to work together. Implementation and interpretation of codes and policies is often undertaken by a “revolving door” of employees, in many cases leading to conflicting feedback. Developers perceive that staff changes can cause them to have to “start over” with new City project team reviewers.

RECOMMENDATIONS

Supervisors should be given greater authority to make decisions, solve problems and work through issues with employees in other City departments. Empower City field teams with flexibility in interpretations to not impede construction timeframes.

To take pressure off City management and executives, empower Development Services Team Leaders with authority to make binding decisions.

Assign a project manager/liaison/team leader at the City for each project, who can communicate between multiple City departments, attend project kick-off meetings and stay involved throughout the inspections and construction process.

Add more staff focused on infill and Downtown projects. These teams should

have the skillset to manage the size and complexity of current projects. A dedicated team also could handle complicated projects like high rises and those with internal parking.

Create more staffing consistency, with building code officials represented in planning discussion pre-application meetings. This can help solve problems of building code inconsistencies and better clarify what the zoning code allows.

Cross train planning and inspection staff on a regular basis, so all staff members understand the full scope of the development process.

Due to staffing challenges, there does not appear to be enough bandwidth at the City to handle overall load in an efficient amount

of time. This can place an inordinate amount of pressure on the Planning & Development management team, with executives

receiving constant communications and having to “put out fires” on a regular basis.

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Topic: Data/Quality Management THE GOOD

The “Development Center Wait Times” application and online plan review, permitting and payment options on the Planning & Development Department website are useful, time-saving tools.

The current Downtown development phase provides an excellent opportunity to gather data through surveys and audits, resulting in ongoing positive and constructive feedback and continuous improvement.

CHALLENGE 11 – Quality Management System A comprehensive, quality management system is needed to gather and analyze

key data. RECOMMENDATIONS

Enhance an accountability system to improve communication between City staff and development teams. For example, the Planning & Development Department can contract with a quality management consultant to create a feedback system and/or hire staff with expertise in data collection and quality management, similar to continuous improvement processes adopted in other City departments.

Seek current solutions to development issues that will remain relevant as development technologies and methods grow and evolve.

CHALLENGE 12 – Analysis

Robust data analysis is needed to aid staff with identifying trends and consistent problems.

RECOMMENDATIONS

Survey customers on a regular basis to provide anonymous, useful feedback. Development teams may be hesitant to share information directly with City staff for fear of harming relationships – anonymous surveys alleviate this concern. Surveys should seek feedback on how to reduce delays and unnecessary costs.

A local development professional said a survey/audit process would provide “… the ongoing ability for constructive feedback, including what’s going right,” and would help foster the feeling that the City and development teams are working together on

constantly improving the system.

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Topic: Miscellaneous

THE GOOD The current adaptive reuse program addresses complex code issues

encountered when working in the built environment and is designed as a wraparound service providing problem-solving techniques for the commercial user.

The Office of Customer Advocacy is an excellent customer service element that is helpful to small businesses.

CHALLENGE 13 – Wider Incorporation & Interpretation of Adaptive Reuse Adaptive reuse programs do not always apply to other City departments like

Street Transportation and Fire. Also, inspectors and planners often interpret adaptive reuse permits differently without communicating their individual interpretations with each other and with developers.

RECOMMENDATIONS

Create one team that handles all adaptive reuse projects for the City to promote consistent development requirements.

Adapt the Office of Customer Advocacy’s (OCA) efficient program for additional participation in more planning and development projects. For example, the OCA Program Manager could be involved in every pre-application meeting that requires a change of use, to help boost consistency and project efficiency. One example would be development of a small restaurant or retail space by an inexperienced development team. OCA participation can help clarify the process and improve outcomes during the entire pre-development stage.

CHALLENGE 14 – Community Input Consistent balance can be difficult to achieve regarding the influence of

neighborhood groups and developers, especially with contentious zoning cases.

RECOMMENDATIONS

The City can help facilitate communication between developers, interested residents and neighborhood groups with the goal of consensus. The City should communicate to both the development community and neighborhood organizations that codified character areas and standards are based on previous neighborhood input and comprehensive City planning processes.

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Executive Summary – The Big Ideas The “Big Ideas” listed below are those most consistently mentioned throughout the PCA Central City Planning and Development process – and address many of the 14 identified challenges. These include short-term, mid-range and longer-term fixes that could enhance the Downtown development process for all parties.

Communication – the most common issue mentioned was a lack of timely communication from City staff. A brief response acknowledging receipt of a communication and stating that the City team is working on it would alleviate significant frustration and uncertainty, and likely take stress off City supervisors, management and executives. Making sure out-of-office voicemails and emails, with contact information for alternative staff members, are always set is a valuable best practice.

Staffing – development in Central Phoenix is different and more complex than in other parts of the City. The team currently managing projects Downtown has a good understanding of the Downtown Form-Based Code. Downtown’s rapid development, density and verticality means that this smaller geographical area is generating much more tax revenue for its size compared to other parts of the City. Staffing should reflect this, with additional teams more formally cross-trained on Downtown development processes. Faster, more efficient completion of projects would alleviate construction congestion, save time and money for all parties, and bring revenue-generating projects online sooner.

Consistency and Accountability – establishing “Team Leaders” to help navigate the entire development process from start to finish would create a more seamless experience. The “maze” of development includes multiple divisions of the Planning & Development Department, multiple Planning Committees, and staff from Street Transportation, Fire, utility companies and, at times, other City departments and agencies. This process can be confusing and bewildering even for seasoned development professionals. A single, dedicated contact/advocate on a project would ease communications and increase accountability.

Decision Making – City staff working directly with development professionals need license to make decisions and innovate for the customer. Empowering staff, providing increased training and cross-training, and ensuring that staff recommendations are followed can lead to major enhancements for the development process.

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Data Collection/Quality Management – anonymous surveys and audits create

a system of constant feedback and continuous improvement. Ongoing surveys should assess all contact points throughout the process, including utility companies and other outside agencies. Additionally, the City should contract with and/or hire experts in quality management and continuous improvement to analyze systems, processes and results. This approach would lead to significant improvements and savings over time, engender best practices locally and nationally, and allow the City of Phoenix to continue to be a leader and innovator in urban development.

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This report is the first installment in what will be an ongoing process of information gathering and feedback, with regular

check-ins from the PCA Central City Planning & Development Committee. PCA and the Committee are committed to working

with the City to identify and implement solutions that will enhance

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Conclusion

Phoenix Community Alliance would like to thank its Members and the City of Phoenix for their willingness to participate in these discussions and for being partners to advocate solutions to development challenges Downtown. PCA strongly encourages the City to implement the recommendations contained in this document, to create more efficient procedures. Doing so will eliminate unnecessary steps in the development process, increasing efficiency and boosting bandwidth for City staff. Improvements made to development processes Downtown also can be a blueprint for other areas in Phoenix with urban characteristics, such as the Light Rail Corridor, Uptown and McDowell Road. Downtown Phoenix is busy with construction activity on a variety of projects. With so many cranes in the air and so much development progress on the ground, effective communication and coordination and best-practice processes are critical to ensuring the continued flow of great projects into Downtown Phoenix.

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Appendix A – The 14 Challenges

Pre-Development & Development Code Processes 1. Code Interpretation 2. Project Comments 3. Consistency

Permitting

4. Complexity & Redundancy of Permits, Inter-Departmental Conflict 5. Permitting Renewal Process

Utilities & Infrastructure

6. Unknown Infrastructure in Older Neighborhoods 7. Utility Requirements – Separation 8. Utility Upgrades

Staffing & City Departments

9. Communications 10. Coordination/Work Volume-Bandwidth

Data/Quality Management

11. Quality Management System 12. Analysis

Miscellaneous

13. Wider Incorporation & Interpretation of Adaptive Reuse 14. Community Input

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Appendix