What is the role politicians play in real estate? I currently teach a course called private public real estate projects. In that course, a topic which is often discussed is the interplay between the political stakeholders in the community and private developers/investors. Each has an important role to play in cities. They often have different goals, not always opposing goals. Finding the happy middle ground is what the private partners are often trying to solve for.
Zoning
Public officials often steer their community growth through the zoning laws. Working in tandem with the city planning department, districts can be designated for growth, preservation or both.
Within districts, the use in spaces can be tailored. In New York City, a liquor license is a coveted commodity. But local community members may not want a loud bar or restaurant on their street. Existing businesses with long histories in those communities may not want the new competition. Political figures can
The height of buildings is an ongoing debate within cities across America. In cities such as Washington DC, it is accepted that all buildings have a certain cap. San Francisco has its own set of restrictions which regulate height, this also created a scarcity of space driving up prices. In Atlanta, up and coming areas such as Buckhead have tall towers rising in formerly low scale residential areas. In New York City, East Harlem has been given a height boost similar to Chelsea decades ago, all signs say the area will soon be home to tall buildings changing the area from a mostly lower income demographic, this is by design from the public arena. Private developers could potentially come into these areas and follow or exceed the zoning heights in place.
How big is the building? The floor area ration of the building is also determined in the zoning guidelines. Most cities have in place rules that determine how much building can be placed on the grounds, how close can the structure approach the street, how much square feet should be in the side yard and how much in the rear year. These rules have varied drastically depending on locality.
Real Estate Taxes
Real Estate Taxes are a major income stream for many cities. Driving economic development is also the job of elected officials in a district, in particular, the mayor. Bring new business into an area driving up jobs and employment is one way. Creating tax havens and stability to encourage new homeowner residents to move into the city is another way.
Rent regulations
In major cities, the protection of venerable residents is an ongoing task. Creating rules that protect the elderly and lower-income residents is a job local elected officials feel in real time. There are federal and state programs which encourage provide investment for affordable housing. There are also subsidies provided which encourage the preservation of existing affordable housing stock. The local politicians work tirelessly to ensure that their constituents have every resource possible to remain residents in their district.
In Closing
As you can see political participants have a tangible role in the real estate industry. It will behoove developers and investors to learn the goals and needs of the politics stockholders. Private parties should find ways to incorporate those elements into their business model, the politicians often have a firm sense of the needs of that community.
