Understanding and Implementing Mixed-Use Development in the West: Case Studies from Bountiful, Utah
100 South Main Street. A traditional, main street oriented, mixed-use development. Photo by Aric Jensen.
by Aric Jensen, AICP, Bountiful, Utah
Contrary to many schools of thought, there isn’t one ‘right way’ to design and build mixed-use developments. This is not to say that anything goes; rather, it is to dispel the notion that all mixed-use developments must be carbon copies of Kentlands, Seaside, or similar master developed communities. The following identifies several principles and concepts key to revitalizing and/or establishing the types of mixed-use development that once filled small town America.
Principles of Successful Mixed-Use Developments
“Mixed-use development” is a development that blends residential, commercial, cultural, institutional, and where appropriate, industrial uses. Mixed-use development:
Allows for greater housing variety and density
Reduces distances between housing, workplaces, retail businesses, and other destination
Encourages more compact development
Strengthens neighborhood character
Promotes pedestrian and bicycle friendly environments1
The uses, forms, and structures in mixed-use development should occur naturally or “organically” based on the unique conditions of each community. What is successful in Portland, Oregon is probably different than Durango, Colorado, but the general principle of creating a built environment that puts community first is the same. Once upon a time it was cool to live on Main Street because it was the center of activity - that should be the ultimate goal of a mixed-use development – creating community.
A mixed-use zoning ordinance should focus on the land use regulations necessary for implementing the community vision.2
The sure sign that a zoning ordinance has failed is the ubiquitous “six-foot masonry wall between commercial and residential uses” requirement. A better solution is creating a zoning ordinance that integrates rather than segregates uses, and that requires developers and property owners to collaborate rather than wall each other off. The Orchard Pines case study in this article illustrates a mixed-use development with no internal fences that is open to the surrounding neighborhood.
A mixed-use zoning ordinance and development approval process should acknowledge and avoid regulatory barriers.
While Ponce de Leon spent much of his life searching for the legendary fountain of youth, I have unintentionally spent much of my life discovering the copious fountains of regulatory barriers. The following are major issues that create challenges for mixed-use developments:
Dependence on Sales Tax Revenue
Politicians and city managers generally focus on short-term revenues to fix current problems instead of looking at the big picture. The emphasis on big box stores and other mega sales tax producers is one of the primary reasons for the decrease in small, locally owned businesses, which are crucial to mixed-use development and keeping money within the community. As evidence of this short-term perspective, in 2013 retail wages on average were approximately 60 percent of manufacturing wages,3,4 and yet communities across the country inadvertently de-incentivized manufacturing and industrial development through zoning ordinances favoring retail development.
NIMBYism (Not In My Backyard)
Poor Communication + Ignorance + Fear = Bad Policy. I also refer to this as the “Downward Spiral to Bad Regulations.” Sometimes it is virtually impossible to convince a group of citizens that there are better choices than what they already have. In those cases, you just have to make your play and hope for the best. But there are other times when a modicum of communication, preparation, and outreach can turn would be antagonists into supporters, and prevent the creation of bad policy and rules.
NIMBYism is especially problematic for mixed-use developments because in many communities the concept is still relatively novel and unproven. Furthermore, mixed-use developments are frequently located adjacent to established single family neighborhoods and by nature employ a mix of commercial and multi-family uses – uses which have been historically opposed by single-family property owners who hold the belief that they generate increased crime and traffic. I cannot overemphasize the importance of education, communication, and preparation in creating a mixed-use development.
Poor Understanding of Development Principles
There is a common misconception that reducing the number of units makes a project better. A lower density does not result in a better project, and, in fact, many times it results in a poorer project because the developer has less money to invest in amenities and/or building upgrades. With few exceptions, the best way for a community to get the best project possible is to make sure the developer makes a profit. And for the doubting Thomas, the old axiom is true: “Most profit is made in the last unit,” just as on airplane flights, most of the profit is made in the handful of first class seats - coach pays the flight costs.
Mixed-use developments cannot be built haphazardly - there are certain rules that need to be followed: First, Location, location, location. Mixed-use developments should occur in locations where they can become an integral part of the community. Second, very few banks and credit unions have programs for funding mixed-use developments - they simply don’t fit within their “boxes.”
As a result, most mixed-use developments that I have observed are built through private funding, redevelopment agencies, and/or building authorities – although once they are built and occupied, it is fairly easy to obtain conventional financing. Third, a developer cannot obtain U.S. Department of Housing and Urban Development (HUD), Freddy Mac, or Fannie Mae financing if too much of the building is in non-residential uses. Unaware of this, I once drafted a mixed-use ordinance that required a minimum of 25 percent non-residential uses within a project (at the request of the city council that was desperately seeking sales tax revenue). When the developer tried to obtain permanent financing, he was denied because his ratio of residential to commercial did not meet lending guidelines. We were ultimately able to work around this issue and get financing, but it was only through some creative collaboration. Fourth, in the mixed-use developments that I have been involved with, there seems to be a magical ratio of 9 sq. ft. of residential uses for every 1 sq. ft. of non-residential uses. I suspect that this phenomenon is due primarily to the strength of the northern Utah housing market and the general overabundance of commercial space due to tax policies, but other factors could include the previously mentioned HUD financing guidelines and the need for a minimum number of rooftops within walking distance (disposable income) to support the commercial component of the development.
Unrealistic Expectations
Another observation is the seemingly inevitable creep away from adopted standards to dreams and wishes – we don’t live in Disneyland and sewer lines don’t need to be gold plated. Asking for improvements or changes that only marginally improve a project but that carry substantial costs can have the following effects: First, rents or sales prices must increase. Second, if rents or prices can’t increase, then the developer must reduce costs (cut corners) somewhere. Third, if rents or prices can’t increase and the developer can’t cut enough corners, then the project fails and the city gets stuck with a white elephant and a black eye, which doesn’t benefit anyone. As mentioned previously, the best thing a city can do is make sure a project is successful. This doesn’t mean rolling over and giving up the farm, but once the zoning rules are established, and the approvals granted, the city needs to accomplish a paradigm shift from regulator to advocate (or at least problem solver).
Self-Inflicted
Also known as, “People behaving badly,” or as an unidentified developer once told me, “Most of the stupid things that the cities are requiring us to do are because somebody screwed up somewhere.” One of the biggest challenges for a city staff and council is to understand when one bad actor is spoiling what is otherwise a fine barrel of apples, and to resist overreacting and creating rules and regulations that hurt more than they help.
The Changing American Dream
The American Dream is no longer to own a nice home; it is to rent a nice home.5,6,7,8 There is a long-held perception that homeownership is the American Dream and that apartments, townhomes, condos, and other multi-family developments are for second class citizens. However, with the rise of a global economy, rapidly changing job markets, and the graying of America, people are finding home ownership to be more of a liability than a blessing. As a result, there is a pent-up demand for non-single-family development that is artificially held in check by outdated regulations and policies favoring single-family residences.
CASE STUDIES
The following projects are located in Bountiful, Utah, a community of 43,000 people located about 10 miles north of Salt Lake City, Utah. Bountiful was founded by Mormon settlers in 1847 and was originally a prototypical, main street community. In the 1960s an extension of Interstate 15 was built about a half mile west of Main Street, which eventually led to the construction of strip malls and power centers near the interchanges, and the decline of Main Street as the regional center of commerce.
Orchard Pines. A hybrid mixed-use development. Photo by Aric Jensen.
Project - Orchard Pines
Location: 2200 South Orchard Drive, Bountiful, Utah
Size: 4.75 acres +/-
Built: 2008 - 2014
Details: 47 Residential Townhomes, 4 Apartments/Flats, 3,000 sq. ft. commercial, 3,000 sq. ft. office, 5,000 sq. ft. bank
STORE LOCATED IN ORCHARD PINES. A hybrid mixed-use development. Photos by Aric Jensen.
Orchard Pines is a hybrid mixed-use development in that it mixes commercial, office, service, and residential uses throughout the site and within a building. The site is approximately 5 acres in size and was originally developed as a grocery store. As development patterns changed, the grocery store moved to a location closer to Interstate 15, and then a series of tenants occupied the property until it became vacant for years. A local developer eventually put the property under contract and approached the city about developing the site with residential uses. The city council was reticent to give up any potential sales tax, but also realized that this property was no longer desirable for significant commercial uses. At the time, the city had recently adopted a mixed-use zoning ordinance, and the developer chose to design a project under those standards.
The project is completely situated within the “Mixed-Use Residential (MXD-R)” zone, a zoning district created specifically for individual development sites, and not for entire neighborhoods. The MXD zone generally anticipates developments that encompass a minimum of five acres, but can be applied to smaller developments at the discretion of the City Council. Within the zone are several sub-classifications depending on ratios of uses proposed by the developer. In the Orchard Pines development, the project was primarily residential and, therefore, was classified “MXD-R.” If the property had been primarily commercial, it would have been classified “MXD-C.” As the approval process incorporates a rezoning of the property, the sub-classification process allows the Council to maintain relative control over the mix of uses.
Key Aspects:
STORE LOCATED IN ORCHARD PINES. A hybrid mixed-use development. Photos by Aric Jensen.
Although not technically part of the property, the development also incorporates an existing gas station and mini-mart, and approximately 3,000 square feet of commercial on adjacent properties.
There are no fences or walls separating the commercial, residential, office, bank, gas station, and inline commercial uses within the project.
The main building is three stories high with commercial on the main level, office on the second level, and (4) 2 bedroom flats on the third floor.
The main building is under one ownership, and all units are for-lease while the townhomes and the bank were all for-sale products. The city provided a $200,000 low-interest loan to help finance the main building (because of the challenges funding mixed-use buildings with commercial financing), but otherwise provided no incentives other than the flexible zoning.
Analysis: High traffic, prime commercial locations are generally not the best place for mixed-use developments, simply because land costs are too high, and national tenants don’t like to share parking stalls. Older power centers and strip malls that have gone dark are prime candidates for mixed-use developments because they are large enough to allow creativity, the land costs are lower, and they are usually adjacent to mature housing.
Lesson: A mixed-use development can effectively “rebalance” an area by removing outdated, surplus commercial space, by providing more rooftops (discretionary income), and by replacing automobile-oriented commercial development with neighborhood-oriented commercial development.
100 South Main Street. A traditional, main street oriented, mixed-use development. Photo by Aric Jensen.
Project - 100 South Main
Location: NW and SW Corners of 100 South and Main Street, Bountiful, Utah
Size: 0.80 +/- acres
Built: 2011 - 2012
Details: 14 Residential Flats, 11,000 sq. ft. commercial
100 South Main is a traditional, main street oriented, mixed-use development. The project is composed of two buildings, each built to the front property line with commercial entrances facing the sidewalk and residential entrances to the rear. As previously mentioned, Main Street was once the historic center of commerce and activity for Bountiful but had gone into serious decline after the construction of Interstate 15 in the 1960s. This development is effectively the physical manifestation of Main Street’s rebirth as Bountiful’s community center – although in reality it is a small component in a multi-faceted approach discussed in the Analysis section below.
The project is situated within the downtown zone, a zoning designation created specifically for the 18 blocks adjoining Main Street between 500 South and 400 North Streets. The downtown zone is a precursor to form-based codes and could be classified as a hybrid between Euclidean zoning and a typical form-based zoning system. The downtown zone emphasizes building form and street presence, allows a wide variety of commercial, office, residential, and similar uses, does not dictate maximum densities or the ratio of uses within a mixed-use development, and allows shared parking.
Key Aspects:
While 100 South Main is completely new construction, the buildings imitate the form and massing of buildings that existed along Main Street in prior times.
There are no fences or walls associated with these buildings and the future apartment buildings on the adjacent property.
Both buildings are three stories high, with commercial on the main floor and residential apartments on the second and third floors.
All of the units are for-lease.
The city offered a $1 million low-interest loan to help finance the project (because of the challenges funding mixed-use buildings with commercial financing), but the loan was unclaimed as the developer was able to obtain private financing.
The city also assisted in assembling the parcels of land including a small property write-down, but otherwise provided no incentives other than the flexible provisions of the downtown zone and the proffered loan.
Analysis: The American Dream is changing. Shifting demographics, a global economy, and the relative sterility of the suburbs is driving people back to historic community centers that offer diversity and social interaction. “Historic Downtown” Bountiful offers a weekly farmers market, “Summerfest,” “Handcart Days,” “The Chalk Art Festival,” local businesses, several parades, and an extension of the University of Utah - not to mention a comfortable place for the whole family to take an evening stroll and visit with neighbors.
Lesson: Early leasing results indicate that mostly young couples, empty nesters, and single adults are willing to pay the premium to live immediately adjacent to Main Street and experience a truly urban development form. However, the more traditional apartments, duplexes, and small lot homes just off Main Street are very popular with families who want the benefits of Main Street, but either can’t afford it or still desire a backyard. The downtown zone has proven to be extremely serviceable and continues to produce quality developments. A new mixed-use building near the corner of 300 South Main Street is scheduled to be constructed and an existing commercial/office building at approximately 250 South Main Street is in the process of being expanded and converted to a mixed-use development. The city is currently considering an amendment to the zone which would allow offsite parking within a certain radius of a development to encourage more density immediately adjacent to Main Street.
Conclusion
Mixed-use development is not a fad - it is the physical manifestation of a return to traditional values of community and social interaction that existed prior to the post World War II suburban boom. But it isn’t a panacea for all community ills, nor should city officials fear a mass exodus from the suburbs any time soon. Rather, it is a form of development that generates superior tax/service-cost ratios than typical suburban development, primarily because of shared parking, compact form, multiple uses, and reduced public infrastructure. As such, community leaders shouldn’t be afraid of mixed-use development, rather they should embrace it for what it is: a means to diversify a community’s development portfolio, to encourage the redevelopment of underutilized or distressed properties, to address the unmet housing needs of a significant portion of the population, and to revitalize historic community centers.
Aric A. Jensen, AICP, is the Director of Planning and Acquisitions for Knowlton General, a portfolio development and construction company that specializes in neighborhood scale mixed-use development. Jensen served ten years as the Director of Planning and Economic Development for Bountiful City. He also recently formed Main Street Design and Development, a private consulting firm dedicated to helping communities revitalize and create community oriented downtowns. He currently serves as the Past President of APA-Utah.
ENDNOTES
https://www.planning.org/nationalcenters/health/mixedusedevelopment.htm
PAS QuickNotesNo. 6; https://www.planning.org/pas/quicknotes/pdf/QN6.pdf
http://www.tradingeconomics.com/united-states/wages-in-manufacturing
http://money.cnn.com/2014/06/04/real_estate/american-dream-homes/
http://fortune.com/2014/07/08/millennials-home-ownership-renting/
Nelson, Arthur C.; Reshaping Metropolitan America; ISBN: 9781610910330; Published January 2013
Published in the July/August 2015 Issue