Vacancies Rise in Luxury Apartments--Boom and Bust? And Tax Incentives for Apartment Buildings in Our Future?

In my June 7 post, Macro Trends in Apartment Buildings Points to Oversupply, I explained why current economic conditions have generated an overabundance of luxury apartments. The Mid-South area is not a trend setter, but a trend follower; therefore, by paying close attention to nationwide trends, we can avoid the pitfalls that have beset other markets. If, on the other hand, we ignore the signals and turning points in the macro trends, we will be acting foolishly. I have recently looked at some new data on vacancy rates, and it confirms my June 7 assertion that there is a nationwide trend of luxury-apartments overbuilding.

There is indeed a housing shortage in certain parts of the country. This shortage, however, is not in luxury apartments; rather, it is in lower-cost apartments.   

One would think, therefore, that developers would be building lower-cost apartments. Instead, however, they are flooding the market with luxury apartments. As I explained in my June 7 post, this is because developers are focusing too much on costs and paying too little attention to actual demand. 

This is not "Field of Dreams". Developers cannot economically proceed on the premise that, if they simply build luxury apartments, "the renters will come." Have those taking the risk in luxury-apartment projects (not always the developer) forgotten the housing crash of 2007 and, in particular, the false over-confidence that triggered it.    

Long Term Trends in Vacancy Rates Suggest A Bust is Coming 

I recommend you take a look at Ian Ippolito's recent article, How Will All the Apartment Overbuilding End?  Although Mr. Ippolito's purpose is to offer investment advice, his views are germane to the question of whether continuing to build luxury apartments is economically sensible.

Mr. Ippolito's opinions are based on his review of concrete data on vacancy rates. He points out that, in contrast to the historical norm, vacancy rates for luxury and low-cost apartments are moving in opposite directions and that a bust-inducing glut of luxury apartments looms ahead. Traditionally, vacancy rates for luxury apartments have been lower than those for "middle class" apartments, and vacancy rates for "middle class" apartments have been lower than those of "lower rent" units. Tradition, however, no longer holds today. Now, luxury apartments have the highest vacancy rate. Not only that, both the vacancy rate itself and the gap between the luxury and the other two rates are increasing. This is illustrated by the following graph:

The dark blue line is luxury Apartments, the red line "middle" level, and the gray line, lower rent apartments. 

Whenever you see a graph like this, showing that long-term trends have shifted dramatically, you know there are significant dysfunctions in the marketplace.  

Are Millennials the New Baby Boomers?

Mr. Ippolito sees similarities between today's conditions and those existing in 1969-1972: Today's fad investment is luxury apartments; back then it was apartments in general.  As Mr. Ippolito explains, the fad investment of five decades ago did not fare well: 

"But then, it all came to a very quick and catastrophic end. Boomers got tired of apartment life, wanted to start families or were sick of paying rent. So they moved to single-family homes."    

My take on his comparison is that the "millennials" of today are akin to the "baby boomers" of that earlier period. As did boomers, today's millennials will likely tire of luxury-apartment life. Developers are, in my view, incorrectly assuming there are more millennials seeking luxury apartments than is actually the case. 

Please see Millenials are Buying a Lot More Homes Than You Think (discussing the popular myth that millennials are destined to be a generation of renters).

And, see also the following excerpt from  From Their Parent's Basements to Dream Homes; Millenials are Skipping Starter Houses:   

By renting or living with their parents for years, many Millennials in their mid-30s can now afford pricier houses because they’ve socked away more money and moved up to better jobs, Swonk says. And they need the extra space because they’re finally getting married and having kids after deferring those transforming events. Also nudging them into more lavish houses is a severe shortage of lower-priced starter homes.

If you are interested in reading more on the 1969-1972 period see National Real Estate Investor link).  


Mr. Ippolito, I should point out, does not contend that the current overabundance of luxury apartments has reached the crisis glut of the "baby boom" period. He does believe, however, that, if the trend depicted in the above graph continues, a "major adjustment" is likely in the 2022-25 time frame.

When investment projects fail, the communities in which their projects are located suffer.  If Memphis and Collierville, two cities in which luxury apartments are being fast-tracked, want to risk a luxury apartment glut, so be it. Let's at least keep it from happening here.  

PILOTS and Other Tax Incentives Now Allowed in Shelby County

Just recently, the Tennessee General Assembly passed a law that extends to apartment projects located in Shelby County the benefits of PILOTS and TIFs -- two forms of tax rebates/tax incentives that incentivize development.  The addition of these taxpayer-funded benefits will likely exacerbate the oversupply of luxury apartments in Shelby County.

In its May 31 edition, the Memphis Business Journal, quoting an official familiar with the legislative process, points out that this legislation, which was sponsored by Brian Kelsey (Germantown) and Kevin Vaughn (Collierville), most likely  "was not carried for just an exercise. I’m sure there is a project out there that will utilize it.” 

Smart City Memphis Article  

Memphis Daily News Link 

Memphis Business Journal Link 

WREG Link

Two likely candidates for this newly enacted preferential treatment are, I believe, the Carrefour project and the Arthur property.  

Massive Mixed Use Project Tabled Until After the Election  

Carrefour at Kirby Woods Asks to be Exempt from Apartment Moratorium

Population Decreasing in Shelby County

And, here's another thing. We are losing population in Shelby County. Do we need a plethora of apartment buildings, luxury or otherwise, in Germantown when our county's population is declining?  

Since 2012, the population in Shelby County has decreased from 939,425 to 936,961. Because births in the county exceed deaths, the population decline is attributed to movement of people away from the Memphis area. I don't see how can we count on millennials to satisfy the influx of luxury apartments when there is net population migration from our area. Because of this population decline, the luxury-apartment bust, when it comes, will likely hit our area harder than others.

Commercial Appeal Article   

Given an overestimated forecast of millennial demand, new tax incentives that will increase supply elsewhere in the County, and a declining population, does it really make sense to continue building luxury apartments in Germantown?

Facebook Posts Reported Anonymously, Out of Context, Torpedo Two Nominations to Public Safety Education Commission

Just when I think the drama of the Public Safety Education Commission is over, a new chapter begins. The resignations of the Chair, Al Gabriel, who failed in his attempt to remove Alderman Massey from his liaison position, and the Secretary, Denise Walls, who destroyed a public document, led to two openings on the Commission (see Commission Members Indefinitely Table Motion to Request Removal of Alderman Massey as Liaison). The BMA, in in its August 13 meeting, rejected the applications of two citizens, John Peyton and John Riley, who were seeking to serve on the PSEC. The vote was the usual 3-2 vote, with Rocky Janda, Forrest Owens, and Mary Anne Gibson voting against the appointments, and Dean Massey and John Barzizza voting for the applicants. Mr. Massey had encouraged both Mr. Riley and Mr. Peyton to apply for membership on the Commission. 

Mr. Riley, the recipient of multiple decorations in his combat service, has law enforcement experience both in and out of the military. Mr. Peyton has performed a service for the City by starting a webpage entitled Developments in Germantown, TN and a Facebook group by the same name. Their applications and bios can be found here (click on agenda item 17). 

The applicants were done in by an anonymous letter that transmitted to the BMA screenshots of remarks that they each had made in the closed Facebook Group, "Germantown, TN Bulletin Board" (hereinafter called the BB).  The screenshots included only their remarks, not the bulk of the conversations that led to the remarks. The aldermen who voted to reject these applicants expressed the view that the intemperate nature of their Facebook remarks  disqualified them from volunteer service on the PSE Commission. I placed the link to the BMA meeting and the notes I made of the aldermens' remarks at the end of this post. I also include Mr. Peyton's reaction to the events at the BMA meeting.

I am not able to quote the comments that these men made on the Facebook group, because the rules of the BB prohibit me from doing so. Every member of the group agrees to abide by the rules, which bans quoting remarks made within the group or taking screenshots of conversations and reporting them outside the group. This rule is strictly enforced. Their remarks were indeed intemperate, the kind of insensitive remarks that social media users, myself included, have occasionally made during heated discussions. Undoubtedly Messrs. Riley and Peyton wish they could claw back their remarks, and I know that feeling. Although it does not excuse the language, each was baited by individuals whom a number of people have blocked because of their behavior on social media. In fact, I never saw the remarks in the Facebook group because I have each of these members blocked because of past online behavior (and the total number of Facebook users I have blocked is only three). Each of these applicants also reasonably believed that, in keeping with the group's rules, his remarks would not be transmitted to third parties, much less sent anonymously to the BMA for the purpose of torpedoing their efforts to serve the community. Still, I am not denying that their remarks were inappropriate. Let this be a lesson to all of us. Keep those lips zipped, and those fingers away from the keyboard when provoked. 

Notwithstanding the inappropriate remarks, I detect more than a tad bit of political hypocrisy in the 'holier than thou' attitude expressed at the August 13 BMA meeting. Messrs. Riley's and Peyton's real sin, I submit, is not their intemperate Facebook remarks, but the political positions they have taken. Both are vocal opponents of the overbuilding of apartment complexes. Opponents of the Mayor are not welcome on the commissions. Both of these men are vocal supporters of Mr. Barzizza's mayoral candidacy. Mr. Peyton recently filed a police report regarding the political signs that were stolen from his yard. (The  Neshoba North neighborhood had Barzizza, Sanders, and Brown signs stolen one night last week. Sarah Freeman, another active administration opponent, also filed a police report for the same offense. In her case, her garage was entered and a magnetic sign stolen from her car. I seriously doubt that it was a coincidence that their two homes were targeted in this criminal act.)   

Two Massey-supported applicants for a volunteer service position get way-laid by an anonymous letter and, voila, Massey's opponents on the BMA are given a free pass to thwart their nemesis, in the process invoking high-minded appeals to the "community of kindness." Give me a break. What happened to these and other lofty ideals when Mr. Palazzolo, in his alderman race in 2008, used a sample ballot that falsely indicated that he was endorsed by the Republican party (see my 4-22-17 blog post)? And somehow I must have missed the aldermen's praise of civic virtue when the City Administrator, after it was discovered that he had been receiving a car allowance while simultaneously using a city-owned vehicle, was allowed to keep his job without a proper investigation. (see October 20, 2016 blog post). And let's not forget that the City staff purposely hid from the neighbors a covenant on a parcel in the Forest Hill Heights area, failing even to take the simple step of checking with the City Attorney (see 4-13-18 blog post) to ask about its enforceability. Is this the "community of kindness" Alderman Janda is talking about? I could go on, but I think you get the drift. Bottom line: These applicants would not have been turned down if they had been supporters of the Administration.

What else will the citizens' have to endure before November 6?  

Before signing off, I would like to make what ought to be an easily heeded appeal: Please, can we stop the practice of anonymous mailings and postings? For those who may have forgotten, we have seen this play before. Recall for example that the employer of Roland Mittag (administrator of the BB Facebook group) received the following anonymous email:  

 
This anonymous email sought to muzzle the Facebook group by intimidating Mr. Mittag's employer. REALLY!!~

I had to roll my eyes at that. 🙄 Never have I observed any "antic" on the part of the very able Mr. Mittag.  I am sure Mr. Mittag is thankful for having an understanding boss.

The BMA Discussion of the Nominations

And, as promised, below is the discussion in the meeting yesterday.  

Forrest Owens said that he had been “provided some information tonight” and he preferred not to get into the deep discussion, and requested that Alderman Massey consider making two different appointments. 

“not the type of behavior that we would like to see a volunteer  of the City exhibit” “It begs the question of whether they can work well with commission members.”

Janda in reviewing many comments he has seen them make, he does not consider them part of the “community of kindness.”

Barzizza—“It goes both ways. Both sides made disparaging remarks to one another. I think the entire issue is blown out of proportion.” Calls for everyone to please settle down, we have a long way to go until November 6.

Massey- Blindsided that his appointments would not be approved, The Mayor’s appointees decided to resign “They destroyed the public record and that was a problem. “It is dangerous for us to base our decisions on political discussions that occur among individuals in the community……….(snip)………..it is a slippery slope.?  He lists all the medals and awards (Army Achievement Medal, Army good conduct medal, etc.) of Mr. Riley ”He served our country proudly”.  Year after year people put the same people on commissions, their friends and family  The information--“It was from an anonymous person who selectively took quotes from a Facebook page, and these quotes are fairly mundane. It was an argument between two citizens about politics”  He notes that aldermen only got these quotes and not the entire conversation, this came too late in the afternoon to look up the entire threads that led up to the quotes. What is going on is attacking these people for expressing viewpoints that are unfavorable to the three aldermen.

Barzizza “I look at this whole matter as political hype and I think it needs to cease.” “I agree with Alderman Massey on his comments. We do not even know where this came from and that should not have any bearing on the merit of the individuals. “Who are we to judge what really happened in that thread, throughout the entire thread.” Tone down the rhetoric, speaks of signs that suddenly appear, and suddenly disappear. 

*******

Subsequent to the BMA meeting, I asked Mr. Peyton about what had taken place. He stated that he no longer felt like volunteering for the City and that he had rescinded his application. He gave me a copy of his letter.

Chancery Court Finds Owen Trust Case against Germantown Premature

Here I discussed Planning Commission Decides to Return Cordova Triangle to Residential Zoning . On August 3, the Commerical Appeal reported-- Germantown Sued Over Proposed Rezoning of Cordova Triangle 

And now, just yesterday, the Court has ruled in favor of Germantown:  

Commercial Appeal Article 

The Court dismissed the lawsuit, which had been filed by the Owen Trust, because it was premature. The lawsuit was aimed at overturning a decision by the Planning Commission, rather than an action taken by the BMA. When the lawsuit was filed, I was surprised it had been filed before the BMA had approved the removal of the T4 overlay on the Triangle. If, as expected, the BMA votes to remove the T4 overlay, the Owen Trust likely will refile its lawsuit. 


The petition is short and I recommend that you read (or at least skim) it if you are interested in this subject.  

Link to Petition   

In its August 3 article, the CA highlights two specific parts of the Owen Trust's petition-- namely, paragraphs 13 and 20-21.  

Click to enlarge

As can be seen, Paragraph 13 alleges that the Planning Commission made a political decision motivated by the effect that removing the T4 zoning overlay would have on the results of the upcoming November municipal election. Again, this is the plaintiff's allegation, not my assertion. It is worth noting, however, that, as I pointed out in my July 14 post, the Planning Commission's decision can be reversed after the election. Indeed, the Commissioners themselves made this clear at their July 10 meeting. If the Owen Trust's allegation in Paragraph 13 is correct, the T4 overlay removal could be, depending on the results of the election, much ado about nothing. 

Paragraph's 20 and 21 allege that the Planning Commission's removal of the T4 overlay violated a city ordinance because it was not supported by a sketch plan.

Click to Enlarge

I am advised that the plaintiff's lawsuit may be deficient on the grounds that the Planning Commission's action did not constitute a zoning change covered by the ordinance. The zoning for the Triangle has always been residential, and it would continue to be regardless of whether the T4 overlay is removed. Whether the mere removal of the T4 overlay can be successfully challenged by the Owen Trust is a legal issue that would have to be addressed by a court in the event  the lawsuit is refiled.

Watermark Project Voted Down by BMA

The audience was riveted as we watched what one observer called "Kabuki Theater" play out at the BMA meeting. In a 4-1 vote, the BMA unexpectedly gave a thumbs down to the Watermark apartment project last night. Rocky Janda was the only alderman voting "yes".  

Echoing the unanimous sentiments made by the "Citizens to Be Heard" at the meeting, Aldermen Massey and Barzizza stated that they had always voted against the project and would again. They noted that people of Germantown have consistently made it clear that that they are against dense residential development. 

Oddly enough, it was not the issues of school overcrowding, capital costs, increased traffic, the density of the project, or a host of other issues the citizens addressed that guided the "no" votes of Mary Ann Gibson and Forrest Owens. They had both strongly supported the project in all earlier votes and did not back off from the sentiments expressed in past meetings. Instead, their votes hinged on the content of an affidavit filed by Jaime Picunko in the unsuccessful lawsuit against the City challenging the density of the project. The lawsuit was described in You Can't Fight City Hall, or Can You?  and Another Watermark Vote by the BMA.   

Ms. Picunko's affidavit was filed in court in conjunction with a motion for continuance by the plaintiff. It describes a conversation that she had with Mr. Thrift, the developer, who was exploring the possibility of getting the case settled:  

Click to enlarge.

The Mayor read the entire affidavit into the record of the meeting. He stated that because Mr. Thrift had offered to fund part of a lawsuit against the City, he no longer looked at him as a "trusted partner" with the City. Therefore the Mayor  stated that, in the event his vote was needed to break a tie, he would vote "no" for the project. It was this same line of reasoning that guided the votes of Aldermen Gibson and Owens.

For his part, Mr. Thrift claimed that Ms. Picunko had misstated some of what was discussed in the conversation, and he was simply trying to get the case settled. He said that the attorney's fees that he might be willing to pay were for past attorneys' fees and were not for a continuing lawsuit against the City. He was trying to settle the case and had no interest in pursuing a continuing lawsuit. He also characterized his call to Ms. Picunko as a "mistake", and he realized it halfway through the call. He continued the conversation to be polite. (At the time he was unaware that Ms. Picunko and Mr. Conner were representing themselves). 

Although citizens at the meeting who were unanimously opposed to the Watermark project were delighted with the outcome, most were disappointed that Ms. Gibson and Mr. Owens failed to acknowledge the citizen concerns about the project, and instead based their vote solely on a conversation the developer had in an effort to settle a lawsuit. The citizens realize that the apartment moratorium will end in one year, and they want their voices heard loud and clear. Notwithstanding the favorable outcome, that did not happen last night.

*************************

For those wanting more than the above thumbnail version, here is the meeting in its entirety, and links are given to some of the action:  



Citizens to Be Heard  The citizens were persuasive in listing the reasons for being against apartment development that was labeled as too dense, too fast, not following the Small Area Plan and exceeding the number of apartments in the plan, not Smart Growth, an example of illegal spot zoning, bad precedent set, bad for overcrowding of schools, proximity to problematic Memphis apartment complexes, etc.  

All speakers are worth hearing, but I am specifically linking Jaime Picunko's comments since she  mentioned her conversation with Mr. Thrift. She also stated that it was the Planning Commission rather than the developer that wanted the density of the project increased. Her conversation with the developer led her to believe that the developer would be quite willing to decrease the density of the project, as he  only wanted it increased to satisfy the Planning Commission.

William Strong, Maryann Holman, Jaime Picunko, Ted Peppin, John Peyton, Pauline Lathram, Zoe Fleming, Brian Curry, Phil Conner, Jane Glenn

*****************

Cameron Ross discusses the Watermark agenda item 43:20 

The Applicant, Mr. Thrift, knowing what is coming, disputes some of Jaime Picunko's characterization of their conversation. 45:20 

Mayor Palazzolo reads Ms. Picunko's affadavit and ultimately concludes that he would vote against the project based on the developer not being a "trusted partner." He questions Mr. Thrift, who reiterated that Ms. Picunko had mischaracterized their conversation. 

Mr. Palazzolo said Mr. Thrift offered to side with a citizen in the citizen's fight against City Hall and on the City's decision to increase the density in the Small Area Plan.

You will probably want to watch this whole section of the meeting.

At this point, Forrest Owens echoes the sentiments of the Mayor at 1.04:46. 

Alderman Massey questions Mr. Thrift and reads some comments for the record at 1.06:46. He states that he believes that the changing of the density in the Small Area Plan was done for the benefit of a handful of developers to the detriment of the community. That is why he opposes the project. One of Smart Growth's goals is to provide affordable housing, but there are many other options for affordable housing in the area. He connects the school site selection to the changes in density of the area. At 1.13:08 Mr. Massey states that City officials were in talks with Forest Hill Associates (who own the property which Watermark wants to develop) to purchase about four acres of land for one million dollars for a park in the area, plus pay for roads to the area to help the developers. (My aside: That is a LOT of money for four acres of land in that area. I need to ask him about this). He continues to talk about the infrastructure costs in the area that will benefit the landowners. The developer's representative states that there is not a signed agreement (my aside: obviously no signed agreement, that would require a BMA vote) about a park, and that the developer and landowner are responsible for the costs of the road in the area. Mr. Massey questions the cost of widening the water pipe for the area, and the Mayor states that the water pipe is for the entire area, not just the new developments. Mr. Lawton says this is standard long-range capital improvement planning. 

Alderman Janda speaks, defending the developer re: the affidavit. The developer admits that he was naive. He had no intentions of funding the citizens' future lawsuit against the City. Mr. Janda states that this is a great project and that citizens like it and he hears no complaints about apartments. He says that what you read on social media is not fact. There is fear mongering that is divisive. States that GMSD is not going to be overcrowded. Says he is torn re: the affidavit issue. Says some people against all development. 

In response to a question by Mr. Janda, Mr. Thrift at 1.27:19 explains in detail why he made the call to Ms. Picunko. It was to try to settle the case so that the project could move forward. They had spent over a million dollars on the design. 

At 1.29:50 Alderman Barzizza begins speaking. The average rent is $1550, and a rent for the smallest unit is $1100. Developer states this is in line with Miller Farms and to the east. Mr. Barzizza states that the complexes west of Germantown have gone "down, down, down" in their pricing. He brings up the crime issue. The developer says they give an officer a break on rent to live at their developments, and they do not have a crime problem in upscale areas where they build. Mr. Barzizza states that Lincoln on the Green near Southwind started off as a top-notch development but now has crime issues. Crime comes from outside, not from within the apartments. At 1.33:08 Mr. Barzizza asks the attorney for developer about the reason for the dismissal of the lawsuit, which he stated was for a technicality. Mr. Wardlow answered that there were issues of procedure and it was dismissed with prejudice. Various legal issues were discussed, including whether or not the developer should have intervened in the lawsuit. Worked lockstep with the City of Germantown, not the plaintiffs. Never an instance where the City and Watermark were at odds with each other.

Mr. Conner, co-plaintiff with Ms. Picunko, at the request of Mr. Barzizza, begins speaking at 1.37:33. He defends Ms. Picunko's affidavit. The City at first wanted the Watermark out of the proceedings, but later that changed. The lawsuit was dismissed by the judge because of "lack of swearing" (failure to notarize) but not for substantive arguments. Mr. Conner claims that the area was sold "a bill of goods" in the Small Area Plan". 

At 1.43:31 Alderman Massey notes that in the packet, the fire and police say that the development will affect their ability to protect the area. Also in the packet was the statement that a new sewer line would be needed. Massey notes that he opposed the project from the beginning. He stated that there was confusion about the application 

This is key, re: last December BMA meeting: "The application represented that the vote pertained to 17.69 acres within Phase 19 but part of the vote was to remove the unit limitations in almost the entire 278 acre planned development."

(My note: I admit to having been confused about this particular issue since December so I am glad to have it cleared up now! The City apparently slipped in the removal of the 12 unit per acre limitation for development not just for Watermark, but for the entire 278 acre planned development. Is this the reason that they insisted that Watermark have more density than the developer desired, so that they could use this one development as the pretext for the need to remove the unit limitation?? It appears that way to me!)  

Mr. Massey says that documents pertaining to votes were withheld by the administration at various points. Economic development was cited as the reason for the development but the costs and benefits of the development were never presented. Requests for that information from the aldermen were ignored. Watermark should have been part of the apartment moratorium. There is too much development near single family neighborhoods. This deviates substantially from small area plan. Goes against City goals of enhancing quality of life (2030 plan quotes Aristotle on happiness). Citizens have been fleeced by public officials to use public money to subsidize the developers. 

Of note in his discussion with Cameron Ross is that Mr. Massey reiterates the underlined and bolded point made above--that the 12 unit per acre limitation was removed from the entire 278 acres, and did not apply solely to the Watermark complex. Here is the specific exchange on that one point.  Cameron Ross states that this was part of extending the T5 use to the entire area, and that specific limitations will be set for each project as they are presented. 

The vote begins. Mary Anne Gibson states that she is voting against the project because Jaime Picunko's affidavit is credible, and she no longer trusts the developer. Massey votes, no, as does Owens, who agrees with Mary Anne Gibson and the Mayor. Mr. Janda struggles with the decision, especially after the "misinformation" given tonight by Mr. Massey (heated discussion ensues), finally votes yes, Mr. Barzizza votes no due to discomfort with developer but also because people don't want it, the people own the community, not the developers.













   

Another Watermark Vote at the BMA

The agenda for the BMA meeting this Monday shows the following item: 

"10.Project Development Contract No. 1223 and Final Plan – Forest Hill Heights Amended Planned Development – Phase 19 (The District at Watermark)" 

This is surprising because I was under the impression that Watermark Apartments had all the approvals necessary. Last December seven warrants were approved for the project by the BMA, and the density allowable in the area was increased. 

The resolution on the density:  

The resolution to increase the density passed 3-2 with Gibson, Janda and Owens voting yes, and Massey and Barzizza voting no.  

The entire December meeting is described in more depth in Anatomy of the BMA meeting December 11, 2017.

Here is the Agenda Packet for the July 23 meeting. 

Agenda Packet 

One item states the purpose of the agenda item:

The actions taken at the December meeting must have been deemed insufficient to grant full approval to Watermark Apartments.  For the better part of this year, the City has been tied up in a court case over the increased density allowed in the area. This was addressed in You Can't Fight City Hall, or Can You? Two citizens (representing themselves) sued the City. Earlier this summer the judge ruled against the citizens on a technicality-- they had inadvertently failed to notarize the claims they made in the lawsuit. This, of course, was due to their not being able to pay thousands of dollars for retaining an attorney, who would have known about the necessity of getting the statements notarized. I will discuss a bit more about the lawsuit at a later date. 

As I understand it, the Planning Commission requested that the developer increase the density of the Watermark project from 12 units an acre to 17.5 units per acre, and the developer complied. The Planning Commission made this request despite the fact that this action alone caused the number of rental units in the entire Forest Hill Heights area to greatly exceed the total number envisioned by the Forest Hill Heights Small Plan. This was discussed in City Officials Misrepresent and Ignore Forest Hill Heights Small Area Plan. 


I will be listening to the Executive Session and hope to glean an explanation as to why another vote on the Watermark is necessary.  

*Correction July 22, Originally this read "As I understand it, the Planning Commission requested that the developer increase the density of the Watermark project from 12 units an acre to 17 units per acre, and the developer complied." Corrected statement: "As I understand it, the Planning Commission requested that the developer increase the density of the Watermark project from 12 units an acre to 17.5 units per acre, and the developer complied."

Planning Commission Votes to Return Cordova Triangle to Residential Zoning (at least for now)

 

The Commercial Appeal covered the Planning Commission's vote on the Cordova Triangle.

Germantown Planning Commission Votes Cordova Triangle Rezoning    
In a 5-3 vote, the Planning Commission approved the return of R (residential) zoning to the Cordova Triangle. The measure must now pass three readings in the BMA. 

Neighbors and interested observers attended the Planning Commission meeting as citizens, politicians, landowners, and attorneys pitched their cases. Others viewed the meeting live online. Those who payed close attention noted that the Commissioners went to great lengths to state that the decision could be reversed in the future if the "right plan" came along. 

Here is the entire packet of information the City Administration prepared for this vote, including a letter from the Mayor requesting the zoning change, and objections from a landowner's attorney- 

Link

The Cordova Triangle discussion may be viewed beginning at 25:16:   



25:16 Director of Economic Development Cameron Ross-- rezoning requested to be changed from T4 (general urban) to R (residential), and removing it from Central Business District, was zoned T4 in 2007, still single family homes in area, west of Germantown Road has remained single family, not wise to have T4 west of Germantown Rd. now. Legal basis for the change-- public necessity, convenience, general welfare, good zoning practice, existing zoning--unwise, unjust, and mistake in original zoning, or change in neighborhood, needs to retain character and context and continue those kinds of development patterns to continue west of Germantown Rd. 

My Note: It certainly was "unwise" and "unjust" to force this zoning on an unwilling neighborhood in 2007. The Administration only took this position after forced when hundreds of people descended on a BMA meeting last January, demanding that the City not approve apartments in Germantown. In response, in addition to the weak apartment moratorium adopted, the City agreed to look at returning the original zoning to the Triangle. 

Here were the City leaders in 2007 when the "unwise" Smart Growth designation was put on the Triangle, against the will of the surrounding residents:

At 31:30 The Mayor also supports the change in zoning, reads his letter (included in the packet linked above). No project filed with the City to develop the parcels, which demonstrates that the original 2007 was unwise and erroneous. Traffic from development across the street and need for citizen participation argues against dense development west of Germantown Rd. Will vote in event of a tie.   

38:54 A Planning Commission member asks--"A couple of clarifications, If the Triangle is Rezoned to R that does not prevent a future developer to come back and apply for a PD, correct?" Ross-"No, it doesn't prohibit any property owner or future developer/investor from coming back and applying for a planned development under R zoning, or coming back and utilizing this process we are using tonight to come back and rezone this property to something else to allow them a little bit more flexibility with number of lots per acre if it goes the residential route, or if it goes the commercial route along the Germantown Rd. side."   The tree canopy goes away with R zoning.

My note: The above is the way zoning works. This is also the first of several times at the meeting when the discussion turned to the possibility that the R designation could well be only temporary! It is a reminder that next year after R zoning is restored in the area, election pressures subside and  the apartment moratorium ends. It is quite possible that the landowners and developers will come up with another plan for apartments in the area, and go to the Planning Commission requesting another zoning change, this time in the other direction--R to T4.

49:25 Politicians and residents begin speaking in favor of returning the Triangle to residential zoning. They include Alderman Mary Anne Gibson, Jennifer Baker, Jim Jacobs, Alderman (and candidate for Mayor) John Barzizza, Steve Shields, Alderman Candidate Dr. Jeff Brown (petition creator), Don Lossing.

The above speakers reiterated the reasons to return the Triangle to residential zoning, most saying that it should never have been T4 in the first place. The residents were always opposed. The last speaker stated that everyone was leery of landscaped borders of trees anyway, because the neighborhood was never told how wide the border was. Nor was there any landscaped border left around Thornwood, as was required but did not happen. 

1:11.58 Those against rezoning the area from T4 to R began speaking. I will cover the legal points they make because of the potential for the City to face lawsuits over the rezoning, as the property owners have "lawyered up."   

1:12.10 Rick Winchester, attorney, said only opinions, no facts support the R zoning, no traffic study, no financial study, no sketch plan submitted and that is required for R zoning. Thornwood got awards, now everyone scared instead of embracing Smart Growth. Negative financial impact to Owen family.  Nobody will build a 1/3 acre lot backing up to Germantown Road- bad zoning. Unprecedented to do this type of downzoning, eats up 5% of Smart Growth area, wants six months to study issue. 1:25.03 Laura Trezevant, property owner, owns the point of the Triangle, counted on T4 zoning in her 2017 purchase, potential of $560,000 a year in property taxes for Germantown with T4 on Triangle. 1:29.38 Pat Wilcheck, spouse of property owner, offered compromises to neighbors, deed restrictions and preservation areas were offered. 1:32.40 Woody Welch-- Germantown Rd. is commercial on both sides of street, residents should have realized that. Thornwood has expensive homes right next door. Andy Pouncey showed him plans with development, retail on bottom, expensive condos on top, he has 500+ feet frontage on Germantown Road, he will lose money. Keep it T4,   

Discussion by Planning Commission members begins 1:38.55 Forrest Owens wants an alternative plan to satisfy neighbors, and no development plan in place, absent a plan, nothing concrete to talk about, if a plan was to come forward after changing it to R, we could talk about the plan with residents then (see above underlined comments above). Owens says additional time to discuss would not help, having a particular plan to discuss would. 1:41.42 Commissioner Rick Bennett comments that he has a different take on Smart Growth, was on Vision 2020 Committee in 2004, City landlocked, wants a City like Square in Collierville, NIMBY here, millennials, empty nesters want to walk places, shouldn't be R on Germantown Road side, Thornwood and Travure--everyone excited (laughter from audience), create destination, property zoned properly in the first place, hard work went into it. 1:50.58, Cameron Ross again answered question saying there is always an option to rezone it T3-T6 again, still part of Small Area Plan. Why rezone now? At the direction of BMA, 1:51.54 Mayor Palazzolo speaks about public sentiment and neighborhood input, (see his letter in packet linked above), due diligence of apartment moratorium driving the rezoning, 1:54.20 Commissioner Keith Saunders, proponent of Smart Growth, from 2020, "live, work, play", agrees that Germantown Road unsafe to cross, that should have been the boundary. Need places for people to downsize, the overall decision was good, but may have made errors along the way, Going back to original zoning, should not need a plan to do that, sees both sides. 2:00.07 Commissioner Bacon cites Smart Growth principles, compact building design, lots of housing and transportation choices, contentious piece of property but in heart of City, struggles going back to R, if we rezone it to R it will come back as PD. Wishes we had project to debate. At some point there will be an equitable solution, R is not realistic. 2:04.06 Commissioner Hicks-was on Planning Commission in 2007 and excited about Smart Growth but struggled with this piece of property and felt it probably should not be included. Points out there was no plan when Smart Growth was put in, should not be required to take it away. 2:05.04 Commissioner Hernandez not convinced an error was made or it was unwise, wrestles with the fact that it embraces bicycles and pedestrians, Germantown Road will always be a barrier, would not be a successful Smart Growth project, will vote "yes", 2:07.18 Chairman says Smart Growth is good, R zoning on three sides of this property, lots of options for the property (mentions T3) but better to start all over,   

Final Vote to Return Triangle to R from T4 zoning designation"

No- Bacon, Bennett, Clark 

Yes- Hernandez, Hicks, Owens, Saunders, Harless, 
The Mayor states he would have voted "yes" if it had been a tie. 

The motion passed, and the meeting was adjourned. It now proceeds to the BMA for three readings, where final passage is expected.  Based on the discussion at the meeting, I doubt if this is the last time that zoning for this piece of property is discussed in the Planning Commission. When a plan is submitted that does not fit the R zoning, the ultimate outcome will depend on the the citizens serving on future Planning Commissions and the BMA.

Commission Members "Indefinitely Table" motion to request removal of Massey as Alderman Liaison

The drama that occurred in past meetings of the PSEC concluded this past Monday night, as members of the Commission permanently and/or indefinitely tabled a motion that could have led to Alderman Massey being removed as alderman liaison.  

For reference, please see 

Audio of Public Safety Education Commission Purposely Destroyed, Suggesting Possible Tennessee Sunshine Law Violation 

Why Does the Chair of the PSEC Have a Problem with Alderman Massey? 

and  

Old and New Business Removed from June 4 PSEC Meeting 

As reported, at the May meeting of the PSEC, the Chair asked the Commission to vote to request from the BMA a new alderman liaison. This item was not put on the agenda prior to the meeting. Mayor Palazzolo, who attended the May meeting, witnessed as the Commissioners tabled the discussion and vote until the next meeting. No audio is available for the May meeting because the Secretary destroyed the audio after transcribing the minutes that night, even though Alderman Massey requested that she retain it. Old and new business was removed from the June 4 meeting, and therefore the discussion and vote on Alderman Massey's fate took place July 2. 

The Chair of the PSEC attended neither the June nor July meetings. 

I uploaded the July 2 meeting audio to YouTube. I link the times/location stamps as I take brief notes of the meeting, concentrating on the liaison discussion and vote:  

"Lock it or Lose It"

Link 01:30 The Vice-Chair adds Alderman Massey's report back to the agenda. (per Massey, it had not been an item on the original agenda, and therefore, prior to the meeting, Massey contacted City Attorney David Harris about its absence). 

Link 3:42 The safety camp "Safety City" was a success.

Link 16:05 FYI  (public service announcement)  Please lock your car doors! "Lock it or lose it"  

Link 34:18 Alderman Massey's report-- speaks about various safety issues, people throwing cigarettes out the car windows, starting fires, and the proposed "lock it or lose it" campaign, report from the BMA, email from resident praising police, don't confront thieves, call police.  

The Motion to Request Removal of Massey as Alderman Liaison

Link 42:22 Old Business--This is where the discussion and vote on requesting a new liaison begins.  

Link 46:13 Massey reads comments into record, says he got approximately 10,000 votes in last election, do they want to silence those citizens? Keep Commissions non-partisan and have less cronyism, says he selected each one of Commission members and Chair knowing they are supporters of the Mayor, and knows there will be differences, having all points of views and compromise is good, use different opinions. Chair miscontrued statements, all viewpoints should be heard, Massey wants to postpone the motion indefinitely. 

Alderman Massey's motion not correct procedure. Someone else makes the motion instead. Massey argues that commission member should not have to vote on something like this--yea, or nay, it puts Commission members in a bad position politically, and he wants to avoid that by putting the vote off until the end of the term. If Chair wants Alderman Massey replaced he can go alone to BMA and ask for that to be done without Commission members being put in the difficult position of voting. In response to a comment, Massey says willing to meet with Chair to resolve differences, but Chair so far is not willing. Massey wants to work with Chair, it is up to Chair if he wants to continue, or resign, or go to BMA requesting Alderman Massey's removal. Massey has no intention of requesting Chair's removal.

The vote on Massey was tabled indefinitely, until the term completed, with just one member wanting the issue resolved now. 

Link 1:02:50 Discussion about recordings of meeting and how long they are kept --until minutes are approved at next meeting. (My note: This came about as a result of my complaints to the City that the May meeting recording was destroyed). 

Hopefully the drama is now put to bed, the Chair agrees to resolve issues with Massey, and the citizen-volunteers can stay focused on the job of keeping Germantown safe without having to deal with extraneous "personality conflicts".