John "Johnny V" Vassallo to build 28-story middle finger in Wauwatosa
I.
Neighborhood residents were almost universally opposed to plans for a 20-story apartment building on a pair of empty lots at 10845 West Blue Mound Road and 301 North Mayfair Road, and a necessary zoning amendment for the site was unanimously denied, 6-0, by the Community Affairs Committee in early-2021. Now, they’re going to get an even larger, and some might say more flippant, 28-story mixed-use commercial building with an above-ground parking structure, several levels of office space, and 65 apartments, and there’s not much they can do about it. What went wrong?
Almost as loathed by neighborhood residents as the building itself, is its developer John “Johnny V” Vassallo. Among his admirers, the moniker “Johnny V” functions as a term of playful endearment, evoking the folksy aw-shucks appeal of a small-town boy made good. And indeed, Johnny V does have that kind of story. He was born in Racine, grew up in Milwaukee, and dropped out of Marquette High School. Thereafter, he started a series of businesses and restaurants, some of which failed miserably, in the late-80s and 90s until he found considerable success with Mo’s, A Place for Steaks in downtown Milwaukee in 1999. He’s since opened a string of successful restaurants in and around the city and purchased a lot of property—he said during a Community Affairs meeting that he owns 17 of 25 properties in the immediate area around the proposed site of Drew Tower—as he looks to leverage his past success as a restauranteur into real estate development.
But to his detractors, the nickname is spoken with a sort of oozing contempt. He is not John Vassallo, the professional developer, but “Johnny V” that slick guy from out of town (he now resides in Texas) that seems hell-bent on pulling one over on the community. As a few concerned citizens noted in their opposition via email and during public comment:
As to the impact to the neighborhood, I feel it’s too tall of a building. It doesn't coincide with any type of diversity plan. I don't know who can afford to live there—I certainly can't. I put all my eggs in one little basket here. So it's not a diverse plan, it's not a Wauwatosa plan, it's a Johnny V plan.
And:
The 28 story project on Bluemound Rd is ridiculous! Makes no sense whatsoever in this neighborhood. The owner of the land is a very, very bad person to initiate such a damaging thing on our neighborhood.
II.
But is he?
It helps somewhat, I think, to understand how a developer who wants to build something on property that he owns actually goes about doing so, because although he does own the land, zoning regulations restrict the size and function of the buildings he can put there.
The proposal itself goes back at least to early-2021 (and I think, even earlier), when in a January Community Affairs meeting he requested a zoning map amendment from Commercial (C2) to Commercial with Planned Unit Development overlay (C2/PUD) for his lots so that he could build a higher-density apartment building than would be allowed under the existing zoning.
Unfortunately for Johnny V, a zoning amendment to add a PUD overlay requires, according to the Wauwatosa Municipal Code, a preapplication process where among other things, “The applicant must also hold a neighborhood meeting, with invitations mailed to all property owners within 200 feet of the subject property, alderpersons of the district, and the zoning administrator.” (See Section 24.16.050). Further, preliminary plans must be submitted and reviewed by the Plans Commission who then recommend the project to the Common Council by simple majority vote. After a public hearing, the preliminary plan and the zoning amendment are ultimately approved by the Common Council by either a simple majority vote or a 60% vote if a protest petition is filed.1 If it is approved, the developer has one year to submit final plans for approval, first by the Design Review Board and then by the Common Council.
According to the minutes from the January Community Affairs meeting, 600 people signed a petition against this project, and the proposal was ultimately denied by the Community Affairs committee on February 9, 2021. Before his request was denied, Johnny Vassallo said something very important (emphasis mine):
We really want to build a spectacular product here and be a big asset to the area. But to be clear, we'd love to build this, we think it fits, we think it brings a great amount of tax base, and be a wonderful place to live, and I think the people that live there will become great assets to the community. But if this doesn't get approved, we will build something. And I think that was spoke to by Ms. Szudy. And whether that's a taller building with much less units, or anything we could build within the current zoning, we'll end up building something. And I'd like to just suggest that I really believe that this is the best option.
Mr. Vassallo kept his word, and in November, 2021, he submitted plans for a much different building. One that was taller—at 28-stories—but had many fewer apartments and more commercial space, and for exactly the reasons he stated above. If he is building something within current zoning, he doesn’t need to file for an amendment, and he doesn’t need approval of the Common Council. If you look at the last column in the table below for the allowed uses for C2 zoned lots, one possibility is what’s called a Mixed-use Building, Vertical where commercial uses occupy the ground floor and dwelling units occupy one or more upper floors. (Section 24.08.020)
The “P” means it is a permitted use, or one that the owner has “as-of-right in the subject zoning district” (Section 24.07.020). Importantly, C2 has no height restrictions. It only has density restrictions. The minimum per unit lot area must be greater than 1000 sq. ft.
So it turns out that there are actually more hurdles to building many smaller apartments in a smaller building than there are to putting fewer larger apartments in a larger building.
For the larger but less-dense building, the only approval required for a permitted use is from the Design Review Board (Section 15.10.010):
B. No building permit for any nonresidential structure for which a building permit is required shall be issued unless it has received the approval of the design review board.
C. The design review board shall consider the exterior architectural appeal, the site location and proposed location of the structure on the building site, the landscaping, topography and whether the structure to be altered or constructed shall be so similar to, or so at variance from, other structures already constructed or under construction in the immediate neighborhood of the applicable district if, in the board's opinion, it causes a substantial depreciation in the property value of the neighborhood within the applicable district.
Importantly, the Design Review Board can consider how the building looks in its approval process, and they can reject it based on potential negative impacts to property values. However, according to the City Attorney in the February, 2021, Community Affairs meeting, comparable projects like this tend to increase rather than decrease property values. And so the Design Review Board, after several meetings where they suggested changes to the design of the parking structure and landscaping, approved the preliminary plans by a vote of 4-2 in March, 2022.
III.
A developer wants to build something on property he owns, and the community finds a way to stop him. He then decides to build something that is easier to approve but that residents consider even worse in important ways. Many feel that the developer has exploited a loophole or done an "end around" the community. But I’d like to make a few points. One technical, one ethical, and one strategic.
IIIa.
A common complaint based on the thirty or so pages of letters submitted prior to the Design Review Board meeting in November, 2021, when his new proposal was considered, is that they support development but that this is too big and that they would much prefer something smaller. The modal suggestion for an adequately-sized building seemed to be between 8 and 12 stories.
This suggestion perhaps seems reasonable, but I think it’s useful to understand the economics of multi-family unit construction. The most common apartment building people tend to see being built today is the venerable 5-over-1:
The 5-over-1 is named because it has up to five wood-framed levels over (generally) one concrete or steel ground floor. This is about as tall as you can actually make a wood-framed building in the United States. Wood is desirable because it’s cheaper to build with than steel or concrete. When building an apartment, one economizes on the fixed price of land, design, permitting, and other factors that don’t vary much by the size of the project by spreading that cost over as many floors as possible. It’s cheaper to build one 4-floor building than two 2-floor buildings. However, once you get above 5 floors, you have to switch to using steel or concrete and suddenly it is less cost effective to add an additional floor, because you have to change how the entire building is constructed. It is, of course, possible to find economies of scale if you continue adding more floors, but you need to build quite a few more floors, not just 2, or 3, or 4.
It may very well be possible to make a profit on steel framed multi-family buildings that are less than 20 stories. Some residents, in their emails, specifically mentioned the St. Camillus senior apartment building in Wauwatosa which is 15 stories. However, it is likely less profitable and less cost effective and probably not worth building at 8 or 10 or 12 stories as many suggested.
IIIb.
I will admit that I tend to be sympathetic to the idea that we just need to increase housing density and that there should be fewer zoning restrictions to encourage this. Across the United States there is an undersupply of homes, already existing homes are becoming increasingly costly, and a straightforward way to fix this would be to remove barriers to construction that make it more difficult or costly to build them.
But I also think that one should try to understand people’s preferences and take their objections seriously, as well as recognize the larger institutional forces at play. In places like San Francisco where a wide array of regulations exist to impede development, people tend to view those who oppose such development as selfishly guarding the value of their multi-million dollar homes or attempting to keep the poor or minorities out of their neighborhood even if they publicly state less incendiary and more pro-social reasons for doing so.
But when someone stands up and says:
I was born and raised in Wauwatosa, I loved it so much I literally came back here to be a STEM teacher for the Wauwatosa school district. I used virtually my entire first year’s salary as a down payment on a home […] for my wife and I. It took us a long time to find the perfect place [….] and our hard work and dedication to this community is being spit on when we may literally have to live in a shadow of a tower rising out of a quiet community of single family homes. During this covid-19 pandemic period, my wife and I have done our part to be safe and still support local businesses. We’ve ordered from many local restaurants including Mo’s Irish Pub, and I’m revolted to know that my hard earned money is being used to finance this abomination to our neighborhood. As a young person who has literally invested all of my savings and my life into this neighborhood, I feel like I’m being disenfranchised by Johnny V. And if this council agrees, I feel like they’re taking money over the well-being of the residents that have built our lives around here.
I believe them.
People choose their neighborhood based on what it is at the moment. They enjoy quiet streets, sparse traffic, a community of like-minded people who share their values, open space, and aesthetically pleasing homes and buildings. And it is reasonable that people would act in the ways available to them to maintain those qualities. At the same time, most people in the community recognize the need for additional housing within the city, re-elect alders that propose and approve city-wide comprehensive plans that act on this need, and tend to support ideas like affordable housing.
What keeps people from working toward the greater good?
It’s probably more complicated than people being short-sighted and selfish, because people have always been short-sighted and selfish, and somehow we manage to send people to the moon, create Social Security, and accomplish any of a hundred complicated things with large social benefits and that require lots of cooperation. But I’ll mention three issues. Two pertain to this situation in particular and one is more general.
Humans tend to be both loss- and risk-averse. Even if they could be convinced that, on average, the effects of development are positive—suppose, for instance, that building a giant combination apartment and office building nearby generally raised property values (and this does seem to be the case, at least according to the City Attorney) and reduced traffic congestion because it allowed people to work closer to where they lived—there will inevitably be times where it makes the situation decidedly worse. And one’s tendency to focus on the worst-case scenario is compounded by the fact that buying and selling a house is expensive, moving is a huge pain, and a home is often a person’s single-largest asset2. They don’t have a diversified portfolio of investments such that if one individual investment does poorly, they can rely on other ones to keep them afloat. They just have a house.
There aren’t simple solutions to these problems. In some ways, they’re not even necessarily problems. The more people invest in their community, the bigger stake they have in it, and the more they’ll care about it. In general this seems like a good thing, but it does sometimes induce counter-productive dynamics that are difficult to eliminate.
Narrow costs and diffuse benefits: People do need sunshine and rightly prefer not to have large shadows cast over their homes by giant buildings that weren’t there when they bought it. Increased traffic is aggravating and reduces people’s quality of life in meaningful ways. These are real costs borne by the people that live nearby.
The problem is that someone will always have plausible sounding arguments for why a proposed change will make their life worse, and the individual will always have an incentive to oppose any development or change in his neighborhood even if in the abstract he or she realizes the need for, and indeed supports, more housing (as many residents did).
One reason for this is that the costs are disproportionately borne by a few people. In the case of Drew Tower, it is literally those in it's shadow. And this applies equally to most of the other complaints like traffic or aesthetics. This fact—that costs tend to bear on those in the immediate surroundings—is even recognized in municipal codes that require neighbors to be notified when such development is proposed.
Conversely, the benefits of any particular change are often diffuse. These benefits might be increased tax revenues that are then re-distributed across the city in the form of better maintained roads or a more reliable fire department on the other side of town. And because the costs disproportionately affect a few people, they have a greater incentive to object, while any individual in the rest of the city has only a small incentive to support it. And so for any proposed change, you’ll attract a lot of people to oppose it and relatively few to support it, even if in aggregate those benefits for the community as a whole far outweigh the costs.
Coordination problems: While each objection seems individually defensible, the effect on the community is that rent continues to rise, homes become more expensive, and people are priced out of the neighborhoods where they have lived for most of their lives or are priced out of the neighborhood before they ever have a chance to live there at all. Because it is easy to say that a big apartment building would be great, just not here, maybe over there instead. And it is equally easy for the community over there to raise the same objections, and for the process to continue without resolution. Without a way to coordinate their efforts, everyone has an incentive to make the decision that is right for them individually but that makes the larger community suffer as a whole. Over years or decades, a situation develops that nobody really likes but that everyone is stuck in.
I will end by saying that it’s very hard to keep a community from changing and that preventing change in one way can often induce changes in ways that are more insidious and difficult to foresee. Two examples:
It makes the housing more expensive as scarcity increases. And although you might live in a community that you can afford because you got there early, the children or young people you might like to see maintain a vibrant feel to the neighborhood are increasingly priced out. Instead of the blue-collar worker who does his 8-hour shift and returns home, you get the doctor who works all the time and moves as soon as his residency or his fellowship is over because those with highly specialized and highly compensated skills must go to where such scarce jobs exist. So, even if the houses don’t change or the physical composition of the city doesn’t change, the people that can afford to live there do. The handyman who you could call to wire a light fixture no longer lives in your neighborhood. Long-term residents are replaced with more transient workers and professionals who cannot afford or do not have time to invest in their communities.
The houses are changing too. Wauwatosa’s housing stock can be quite old. I happen to like it and it is one of the primary reasons I moved here, but it is more expensive to maintain. But the implication is that the empty-nesters who have lived in the community for 50 years no longer live in a 30-year-old home, they live in an 80-year-old home. And the young couple who buys it from them isn’t buying something relatively new and worry-free but something relatively old that will require continuous and expensive upkeep. The consequences of this manifest themselves in interesting ways. Last week, the Common Council approved $1.75M dollars in ARPA funding to help lower income homeowners afford home repairs by providing 0% loans that are repaid upon sale of the home. This expense will become larger as the housing stock continues to age, and it will continue to age as long as people resist the construction of additional housing.
I think these changes are also worth accounting for.
IIIc.
I thought I might have something helpful to say about the clear strategic failure that occurred whereby residents protested a proposed development, got the Community Affairs committee to deny it, and then ended up with something even worse that they could do nothing about. But it seems like they just…should have looked more closely at zoning requirements? While people seemed to mostly be upset about the building’s height, the reason Johnny V had to get common council approval was because he wanted to exceed the density requirements of his current zoning. His constraints were not the same as residents’ constraints, and so subsequent proposals might not vary along the dimensions that they cared about.
He did tell them that if they denied his original proposal, he would need to find something to build that fit within the zoning requirements and that it might be taller, and I’m not sure if maybe they didn’t believe him, thought they would be able to block it anyway, or didn’t understand the implications of what he was telling them.
Through quirks of zoning laws, the community somehow ended up worse-off than if it had approved the project to begin with. Perhaps there are other arcane rules that concerned residents can leverage to stymie his efforts further. But it just seems that, in retrospect, it would have been better for everyone if they had accepted the original proposal, and that this fact was knowable by everyone before they rejected it.
IV.
The principles of justice are chosen behind a veil of ignorance.
- John Rawls
There were a number of claims that Johnny V was exploiting a loophole, or in some way circumventing the rules or the will of the people, by building this tower. But if I’m being honest, he did tell people what he was going to do before he did it, and he is abiding by the restrictions set by the particular zoning rules that governs his property.
The political philosopher John Rawls in his book A Theory of Justice describes3 a system of justice where all the members of a community agree on the rules by which they will be bound before they know what position in that community they will occupy. The idea is that you would want to treat the mentally ill humanely, because for all you know, you could end up mentally ill. You would want minorities and marginalized groups of people to have the same rights as everyone else, because you don’t know if you’ll be part of the marginalized group or the everyone else group. In general, you’d want to maximize the well-being of the worst-off person, because you just might be that worst-off person.
You could imagine a similar mechanism for zoning. You want to create a zoning plan before you know where you’ll ultimately live. You’d want to agree on a zoning plan that even the person closest to the tire factory or the paper mill could be reasonably happy with, because you just might be that person. My point is not that such a thing is actually possible, but that there is something just about deciding on the rules that might be best for the community as a whole before you know how you’ll personally be affected.
The city, in a way I think, does try to do something like this through its Comprehensive Plan which seems intended to guide zoning updates across the city. Ideally, one could use this as a way to equitably spread the costs of new development across the city, and the community would buy into it because they understand that in aggregate it will be good for the city as a whole. I’m not sure how much public input goes into these things, but I think it’s desirable if, as a community, we agree that some development needs to occur and that we try to spread that potential development across the city and set the rules for its construction beforehand. And I think it is just that if people abide by the rules that they get to build things on the land they own without having to worry that the rules will be changed on them.
There was a citizen letter mailed to the Design Review Board prior to their November, 18, 2021 meeting that suggested that this support-majority requirement to approve a development opposed by neighborhood protest had been rescinded, but I still see it in the Municipal Code, so I am not sure what the truth is here.
Honestly, I have never read this book, but I hear about it enough that I feel like articulate some of its main premises.