What the developers are saying ...
Cape Business recently sat down with three local developers: Chuck Carey, owner of Carey Commercial Real Estate; Douglas Storrs, planner and developer of Mashpee Commons; and Don Megathlin, vice president of Talanian Realty and developer of South Cape Village in Mashpee. The goal was to gain their perspective on the Cape Cod Commission and its role in regulating the Cape’s development. A transcript of the conversation is below.
Do you think current regulations are stifling the Cape’s ability to attract development?
Chuck Carey: Without question. The regulations are prohibitive and the enforcers, the Cape Cod Commission staff, are surly and onerous in their responses to proposals. This stifles natural progress even more than the regulations. As a result, commercial property on the Cape is a test tube experiment – let’s see what happens when you freeze it solid and don’t allow it to change with the times.
Douglas Storrs: Appropriate development, yes. Currently the state of Massachusetts, the Cape Cod Commission’s Regional Policy Plan and most towns’ Local Comprehensive Plans are calling for mixed-use, mixed-income, higher-density development to occur in designated regional and village centers. It is clear that this is the most environmentally and fiscally correct approach to new development and redevelopment on the Cape. However, the regulations governing development do not allow this to occur. Current zoning in virtually every town on the Cape does not allow this form of growth to occur. Even though the Regional Policy Plan calls for this, the commission’s technical bulletins often work against these goals. Unless and until changes are made in the regulatory process, we will continue to create incentives for sprawl and disincentives for mixed use, town-center development patterns. This will stifle the best forms of economic growth.
Don Megathlin: Absolutely. Only large commercial landowners with vacant land, supermarkets or large institutions can possibly afford Cape Cod Commission review; and even then any development is cost and time prohibitive due to the onerous regulations. For a small business owner, who represents the majority of Cape Cod businesses, the commission review is out of the question. Worse still is that many owner/developers who are environmentally sensitive and recognized for tasteful development, stay away from Cape Cod due to the commission. These are owners who believe in public/private partnerships and who are respected, civic-minded and philanthropic in their communities.
Which regulations are the most restrictive and damaging to economic development?
Carey: Any change of use for a building of any size is subject to the review of the Cape Cod Commission. As a practical matter, they choose which projects to “process,” but the fact that they voted themselves the right to review a change of use of any size building very effectively stops a lot of new users. They will tell you with only a slight twinkle in their eye that they approve most of the projects that come before them. In reality, they scare most of them away. The businesspeople and developers view the approval process as not being worth it because it’s unpredictable and expensive. So they don’t bother applying, which is exactly what the CCC intended. The towns should be able to take care of their own property in their own way.
Megathlin: The most restrictive regulations are the DRI [Development of Regional Impact] process and the Regional Policy Plan. Both are restrictive, unreasonable and requiring exhaustive studies and open-ended schedules. Equally damaging is the commission’s use of the “benefits and detriments” test, by which it can reject a project without using any standard for judgment. These restrictive regulations show up in the precipitous drop of nonresidential permits. In 2005, there were less than 20 nonresidential permits from May to August in Barnstable, and most were for renovations under $500,000. Another example of their restrictive regulations is the Sagamore flyover, which was approved by the entire Cape Cod legislative delegation, state and regional transportation agencies, chambers of commerce and municipal officials, but not the commission.
Storrs: Local zoning bylaws and Cape Cod Commission technical memoranda. There currently exists a climate that encourages new development proposals to do whatever they can to avoid the Cape Cod Commission and to follow existing zoning bylaws. This creates an incentive to produce more highway-oriented sprawl and residential development that is a large consumer of land. There clearly needs to be an incentive to create new development and redevelopment in centralized locations that can support such growth. However, until and unless the rules that govern development are altered, we will continue to restrict smart growth and perpetuate growth that is damaging to the economy and the environment.
Are these regulations successfully protecting the Cape’s fragile environment?
Storrs: No. They create incentives for development to occur in a pattern that avoids the commission (producing single-story buildings of less than 10,000 square feet). They also mandate that new commercial development patterns will occur spread along the roadway frontages chewing up land and that are not connected to wastewater treatment facilities. Current zoning requires more roadway/parking paved surfaces – and mandates more vehicle trips on the roadways that waste gasoline and create more pollutants. The regulations do not promote higher-density, mixed-use development patterns that inherently create less impact on the environment by creating town and village centers where people can walk to meet all of their needs, including walking to work, where buildings are connected to wastewater treatment plants and where all ages interact in a socially dynamic setting. It continues to be a major concern that, although the average citizen is very clear that they want to see traditional village forms of development on the Cape, they do not understand this is not what is allowed. Effective regulatory change must occur to enable village and town centers to be built for the Cape’s natural and human environment to be protected and enhanced.
Megathlin: The commission is not protecting the Cape’s fragile environment of open space, wastewater and sprawl. It processes only 3 percent of all development on the Cape. Many open space acquisitions occurs through the Land Bank, private 501C3 open space organizations such as Barnstable Land Trust or the new Community Preservation Act – not the commission. It is involved only peripherally in wastewater issues. Prime responsibility for wastewater treatment lies with the Wastewater Collaborative, Barnstable County Board of Health, town boards of health and/or sewer commissions and, of course, the Department of Environmental Protection, which regulates and monitors wastewater treatment above certain thresholds. Commission thresholds exempt commercial development under 10,000 square feet, and our highways are unfortunately lined with 9,999-square-foot businesses, contributing to unplanned sprawl and incremental creep. Likewise, most residential development, which has enjoyed robust growth, is exempt from the commission, which only reviews projects more than 30 acres or 30 units. There is very little land over 30 acres to subdivide on Cape Cod.
Carey: The environment has been damaged by the residential population explosion. The regulations are neither as stringent nor effective in blocking residential development as they are with commercial property. For example, there were 2,000 commercial buildings in the town of Barnstable 20 years ago. Today, there are thousands more homes, but there are still 2,000 commercial buildings.
Is there a formula to better stimulate economic development while protecting the environment?
Megathlin: In many parts of the country, economic development and environmental protection can and do co-exist, but not on Cape Cod. Equal footing for stimulating economic development is needed, including surgically amending the Regional Policy Plan, adopting Growth Incentive Zones on the Upper Cape, transferring powers to the towns – especially mitigation – and developing predictability, consistency and reasonable standards for the commission. Adopting time limits for regulatory review of 180 days is proposed at the state level, less than most commission reviews. The commission is fond of complaining about the lower wages in tourism, retail and hospitality, even when it is and will continue to be the most important economic engine on the Cape. More importantly, what have they done to promote economic development on the Cape, including marine and environmental technology, health services and home services – all niche growth opportunities with high wages? There are several economic development agencies that are working to promote economic diversification on the Cape.
Storrs: The formula is to promote smart growth, mixed-use town centers at much higher densities than are currently allowed. This is clearly the most successful model from both the standpoint of economic development as well as environmental protection.
Carey: The question assumes that economic development threatens the environment. This is only true in certain cases. Waterfront houses are probably more of a threat.
What is your assessment of the Cape Cod Commission?
Carey: It’s a placebo that the Cape took 15 years ago. It has allowed the Cape to approach “build-out” while appearing to be doing something by blocking national retailers.
Storrs: That is a very multifaceted question. Mashpee Commons has been a supporter of the commission from its inception, even though this was a very unpopular position amongst many of our peers in the development community. One of my principal concerns is that in the past few years it has become more of a regulatory agency and less and less of a planning agency. The approval process has become more of a mathematical exercise in negotiating mitigation (taxation) costs than a true planning review.
Megathlin: I voted for the CCC in 1990, and it is still a good idea, but an idea gone terribly wrong. Of course Cape Cod needs strong environmental and growth management controls, but they must be reasonable. At least five towns have threatened to withdraw from the commission. For almost eight years, I have directed the South Cape Village project in Mashpee. The process has been time-consuming, frustrating, costly, lacking in fairness and adversarial, despite strong community support and being located in a growth activity center. Our company has produced more than two feet of paper at a cost of $3 million. In addition, [the commission’s] fees are exorbitant. Imagine if Mashpee could have had that money for schoolteachers, police officers and planning staff. For a small business like ours, predictability, reasonable standards and consistency are important, and the commission lacks all three. If an owner changes a plan, be prepared for an expensive modification process. If all of the details aren’t worked out prior to an occupancy permit, be prepared for an onerous and costly escrow account for 150 percent of value.
What specific standards for development need to be altered?
Storrs: The thresholds need to be reversed. If someone is promoting what is called for in the Regional Policy Plan and it is located in a growth center, then the thresholds for a Development of Regional Impact, as well as the criteria for review and approval, should be significantly less onerous. For all proposals outside of a growth center, the thresholds for DRI review and approval should be much higher. This would create an economic incentive to develop and redevelop within the growth centers. Currently it is skewed in the wrong direction.
Megathlin: Commission mechanisms need to be streamlined, especially the RPP and DRI, but also the development agreements, thresholds, design and infrastructure plan, growth incentive zones, and all within a specified time limit, as proposed throughout the rest of the state. Their fee schedule also should be substantially reduced.
Carey: Several of the downtowns are past their prime and cannot “turn the page” unless they find a way to disconnect from the commission. It is not any one parameter of development; it’s the myriad of Byzantine minutiae.
Can the growing call for village center development become the trigger for positive change?
Carey: I hope so. But it will only work if the commission will let go of the village centers. Consider Dennisport. In an effort to encourage a revival of business and improve the properties, the town created very generous zoning with a high-density rate for second- and third-floor apartments. A 10,000-square-foot building owner set out to modernize and expand the building under the new zoning. The town inquired to the commission to see if they ruled over this particular case. The commission said no. The property owner went forward with the legal and engineering work to apply to the town. The town essentially granted the permit. Then the commission stepped in and overruled them.
Storrs: Absolutely. However we must move beyond a ‘call’ and institute positive actions that will make the call become a reality. Currently this is not happening fast enough. Without clear economic and regulatory incentives, this will not happen in enough locations to make a significant difference in development patterns and redevelopment throughout the Cape. It is easy to call for it, but without following through with the mandate to effect real change in the regulations governing development and redevelopment, the call is of no value whatsoever. Let’s stop calling for change and actually work together to implement change. We have heard the call for a long time but have not seen the follow-through that is necessary to realize the change. Every day that we allow regulation to perpetuate sprawl is a significant lost opportunity and negative impact on the Cape that will last for years.
Megathlin: Village center development is supported by most organizations, including the commission. But once again, the commission presents barriers to change. Hyannis has worked for two years with the commission to create a growth incentive zone in downtown Hyannis, and it’s still under review, even though the town made the appropriate zoning changes some time ago. The commission is a deterrent to downtown growth until the growth incentive zone is approved.
How will this change come about?
Storrs: Village center development is clearly the trigger for positive change, environmentally, socioeconomically and culturally. This is why the state, the commission and most towns call for it. It is the most viable approach to sustainable development on the Cape and can go a long way toward solving the housing crisis that is occurring across the housing spectrum, without the need for deed restricted affordable housing. It can provide for housing for all incomes, within walking distance of jobs, entertainment and civic uses.
This is the manner in which all of our historic traditional villages on the Cape were developed and why they are so sought after as places to live and work today. It is simply shocking that we do not allow this to occur, much less create an incentive for it to occur across the Cape.
Carey: Through exposure in the press. The commission has an image of protecting the Cape from overdevelopment. In reality, they never were able to stop the explosion of new homes, which has led to serious year-round traffic problems. They have fiddled with Home Depot while the Cape burned.
Are there facets currently under commission jurisdiction that should be waived – for example, aesthetics?
Megathlin: The commission controls design and aesthetics, but they have no staff architect. Developers bring nationally acclaimed architects to the table, only to be rejected by commission staff. Just examine the commission-approved buildings across the Cape; many look the same. They also have limited expertise in economic or fiscal policy.
Carey: Well, I hope to see a non-shingle-style, non-seagull-gray building built someday.
Storrs: Yes, however, I would not waive aesthetics. I would however, mandate that those who are charged with aesthetic review, at a minimum, have a degree in planning and classical architecture.
Has technology improved sufficiently that density limits on the Cape can be modified? For example, tertiary waste treatment technology can eliminate nitrogen loading and thus tolerate higher density for downtown development.
Storrs: Absolutely. Onsite septic systems produce in excess of 35 milligrams of nitrogen per liter. Wastewater treatment plants such as the one serving Mashpee Commons (and we have now tied in some of the municipal buildings that used to have onsite septic systems) produce on average less than 3 mg/liter. By directing development to villages and growth centers, we can provide for new growth with a significant reduction in nitrogen as opposed to new growth supported by onsite septic systems. This is also true in terms of reducing vehicle trips on the roadways as well as improving the health and well-being of the residents, as they tend to walk much more and have a reduced need for cars.
Megathlin: Yes. At South Cape Village, we offered to reduce nitrogen levels with the provision of a wastewater treatment plant, vegetated wetlands, irrigation well, bioswales, storm water management, reduction of fertilizers and all kinds of monitoring to assure reduced nitrogen levels. But the commission did not allow for a modification of density, as permitted by zoning in the town. In fact, the commission reduced the density of the project that is in a growth activity center.
With Plymouth and Wareham welcoming large-scale commercial and retail development, will we see business rejecting the Cape and current Cape business leaving for more a more favorable climate?
Storrs: This is possible, but we have to come to an understanding of what we want on the Cape. I am not a supporter of large-scale single-use, single-story commercial and retail development on the Cape or anywhere else, including Plymouth and Wareham. I think the Cape will do better pursuing smaller local and regional commercial tenants and smaller entrepreneurial-focused offices.
Carey: Ironically, the restrictions have made shabby buildings on the Cape stay shabby and stay rented because they exist, and new construction is pretty well eliminated by regulations at the commission level. They will get shabbier and even more out of date. The question would have been timely 10 years ago. Now it’s already happening.
Megathlin: Big-box stores dot the landscape in Wareham and Plymouth. However, big-box stores have also come to Cape Cod primarily through redevelopment of existing properties, thus avoiding the onerous review of the commission. After seven years of adversarial debate with the commission, the first regulated big-box store came to Cape Cod in Hyannis [BJ’s]. Big-box stores have the financial muscle to take on the commission. Big-box stores are important to Cape Cod, in that they provide diversity of retail choice, particularly for low- and moderate-income families. However, big-box stores should be designed within a village-style center and with square footage limitations so as not to create a visual blight.
Given the fragile environment on the Cape, is there any way we can be competitive with Wareham and Plymouth?
Carey: In volume, no; in quality, yes.
Storrs: Yes, environmental protection and a true mixed-use town center have become economic advantages. Companies that want to move to the Cape will do so to achieve their goals for environmental protection and better socioeconomic environments.
Megathlin: One should recognize that Wareham and Plymouth also have fragile environments, such as pine barrens, state parks, undisturbed uplands, major aquifers, bogs, streams, two major rivers, many ponds, and of course, miles of coastline. They also have award-winning planned developments such as Pinehills. But we lack a visionary commission that would encourage these developments. Cape Cod can be competitive with those communities, but not on the same scale. And smaller development is more suitable for the Cape.
How do you assess general public opinion regarding economic growth and development on the Cape? Do you detect growing anti-business sentiment on the Cape? If so, what impact will this have on further development?
Storrs: I do not think there is growing anti-business sentiment on the Cape. I think people understand the link between commercial development and keeping taxes on residences at acceptable levels. Without growth on the commercial side of the equation, all increases in municipal costs (and these costs have to go up every year) will have to be borne by the residential sector. I believe the majority of people understand this. I do not think that a split tax is a viable approach to managing municipal budgets and places an undue burden on many small and medium-size businesses. Invariably this increased cost gets passed on to the consumer and results in a higher cost for goods and services. This is not a good economic model.
Megathlin: Tax policy (such as split tax rates) will impact on economic growth. Barnstable needs a taxation policy that matches a growth management policy, and that isn’t done by adopting a split tax rate. The town should be advocating residential and small business exemptions, not a split tax rate. A split tax rate penalizes a group of taxpayers (mostly the 2,300 small businesses) who need help. The split rate passed by the narrowest of votes, and the tax shift was small, and it most likely will be reconsidered this fall.
Carey: Most people don’t really know what the businesspeople go through. The mentality of the regulations is decidedly anti-business. It comes from the great arrivals of retired people in the 1970 to 1985 period who became very active on the local boards and committees. They didn’t want the Cape to change. Ironically, the masses of them that continue to come here have overpopulated it, which has caused most of our problems, like traffic. After overregulation, the greatest threat to business property rights is residential neighbors. Very often they will join together to block business property owners’ rights because they live nearby and they don’t want the change.
Commercial property is very interesting. It’s the subject of many, and no one party, not even the owner, is its sole master.
Would higher-level construction begin to resolve the affordable housing crisis? What could happen to galvanize the Cape to permit this in specific development zones?
Carey: One of the greatest needs on the Cape is for dedicated, large apartment complexes. The commission will not allow them. As a result, low-end motels, large old homes and anything with multiple units is pressed into service as housing.
Storrs: Increased height and density should not be viewed as a negative. Height (three and four floors) will use much less land and create less of an impact on the environment. Higher-density mixed-income housing projects proposed in growth centers supported by public transit can and will provide for a wide range of housing options and rental and sales rates without the need for deed restrictions and rent control. Increased density and increased building heights should be utilized as viable tools to help address the workforce housing shortage.
Megathlin: Height really isn’t the issue, but density is. Increased density should be encouraged, particularly in growth activity centers and growth incentive zones where the appropriate infrastructure is provided. Housing affordability is one of the major challenges on the Cape. However, the commission only studies the problem. Agencies like the Housing Assistance Corporation, local housing authorities and nonprofits, and developers actually build affordable housing, but the commission is not involved in reviewing 40B housing.
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