October 7, 2004
Mixed feelings about mixed-use
By BRYAN E. POWELL
Lane Powell Spears Lubersky
Portland has been lauded by many as a model for urban renewal and mixed-use development.
The Pearl District, Belmont Dairy, Rose Garden Arena, Museum Place, University District, North Macadam District and the Memorial Coliseum are only several of the many past and future redevelopment projects and neighborhoods that come to mind. Some projects have succeeded while others have struggled.
For those undertaking urban redevelopment projects, only one thing is certain: there is no clear-cut recipe for success.
Urban redevelopment especially mixed-use projects is not for the faint of heart. Indeed, some developers avoid these projects altogether. So why go through all the brain overload and attempt a project that is likely to fail? In order to answer this question, we must first peel back the layers of the project onion to understand what's inside.
A typical mixed-use project often consists of ground floor retail with either housing or office space above. In some cases, such as the Rose Garden Arena or the Memorial Coliseum, many uses will be mixed together in one or more buildings at the project site.
Some mixed-use projects are not limited to uses within one building and may include entire neighborhoods where different uses are mixed together in close proximity. Many planners see mixed-use projects that have a housing component as an important factor in reviving decaying urban and industrial areas.
Mixed-use sometimes gets confused with development objectives such as increasing density, reducing the number of vehicles, creating localized employment, gentrification of urban neighborhoods, and providing dynamic living environments. In this sense, mixed-use is often associated with terms like "smart growth," "new urbanism," "transportation-oriented development" and "traditional neighborhood development." Keep in mind, however, that mixed-use is merely one possible component found in these development concepts.
Most local municipalities and agencies are now encouraging mixed-use redevelopment.
Because of increased costs of this type of development, government agencies' involvement is necessary and their participation is often quite helpful. For example, incentives from Metro's transit oriented development program, and various partnership arrangements with the city of Portland or the Portland Development Commission, can allow development of mixed-use projects that otherwise wouldn't get done because of concerns about unfavorable economic returns.
For affordable housing components of mixed-use, subsidies can help the financial returns for the developer and make a project more economically viable. Some developers shy away from mixed-use because of the unpredictable economic return, especially if governmental support and subsidies are uncertain or too expensive or time consuming to obtain. In short, mixed-used development often requires long-term perspective, especially when trying to do it on a large scale.
If governmental financial incentives are not available, sometimes government agencies may include nonmonetary incentives to encourage mixed-use, such as an increase of the floor area ratio in the downtown zone for including a residential element, or permitting neighborhood zones that make it a lot easier to build commercial and office services in the neighborhood.
Another challenge in mixed-use developments involves market economics, which may govern the predominant use for the project, such as office or multi-family. Some retail use at the ground floor is often successful, especially when the demand is high. One rule of thumb is that when it costs more to buy land than it costs to add vertical improvements, then you build up.
So what are some key questions to ask before the project gets under way?
Consider the following:
There are, of course, numerous other questions that will need to be answered and issues to resolve as the framework for the redevelopment gets under way. Constant tension will surface as competing priorities become apparent, and as the parties attempt to answer these questions and resolve pressing issues.
Portland's experience with mixed-use development shows that success is often determined through balancing various priorities, be they legal, political, economic, or social. By way of example:
As you can see from the above sampling of competing priorities, any number of challenges confront the developer and planner proposing mixed-use projects, including added complexity because of the multiple uses, restrictive zoning codes, increased construction costs, difficult-to-obtain financing, wary equity investors, and a lack of suitable locations. Market readiness for unique and tough-to-locate projects is another real concern for the developer.
To illustrate these challenges, take a look at one redevelopment project currently being considered by the Portland City Council the Memorial Coliseum. Last year a group of community-spirited businesses, along with neighborhood leaders, sports enthusiasts and a forward-looking developer, got together and developed a proposal to convert the coliseum into the Memorial Athletic and Recreation Complex.
One of the greatest challenges for the coliseum project is to meld successfully the objectives of a very diverse group of stakeholders, including the veterans, residents, neighborhood and community organizations, and businesses. All of these objectives must be intertwined with the overall objective of having a landmark building provide endless years of service to the community.
A project like the Memorial Coliseum, estimated to cost nearly $100 million to redevelop, will likely require financing from multiple sources, including both public and private money. That fact alone would give mixed feelings to any developer or planner. But think of the outcome a new regional facility at the centerpiece of inner eastside Portland, which would include such things as an aquatic center, a skating rink, a series of gymnasiums, public recreational facilities, community service areas, and other sports-related health and educational services.
With the right group of partners, focused positive energy, and lots of creativity, this landmark project would likely keep Portland at the forefront of being known for innovative redevelopment projects for years to come.
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