Nicole Bennett - Community Affairs Analyst
Published November 1, 1999 | November 1999 issue
In the next three to five years, market demand for mixed-use development projects will increase significantly.
Ninety-six percent of participants at "Back to the Future: Mixed-Use Development," an event sponsored in April by the Minneapolis Fed, agreed with this statement. The conference served as a forum for more than 250 lenders, developers, planners, local government staff, nonprofit and neighborhood representatives, consultants, lawyers and others to discuss issues surrounding mixed-use development. (For more information on mixed-use development, see the Winter 1998-99 Community Dividend.)
In addition to speakers and panel members sharing their insights on mixed-use, the conference offered participants the opportunity to use individual electronic keypads to generate and respond to questions on key issues.
Ted Mondale, at podium, chair of the Metropolitan Council, concluded the conference with an overview of his vision for the Twin Cities region. JoAnne Lewellen, assistant vice president, and Gary Stern, president, of the Federal Reserve Bank of Minneapolis provided introductions.
To set the stage for discussions of mixed-use development during the conference, David Fey, executive director of Seward Redesign, presented the following themes.
Ten themes: a framework for mixed-use development
Developed by the conference advisory task force, this framework outlines ten key issues for consideration when developing mixed-use projects.
Keeping this framework in mind, developers, lenders and local government staff provided valuable insight into real-world issues and lessons they learned in doing mixed-use projects. Concurrent breakout sessions spotlighted four mixed-use developments from the Twin Cities metropolitan area: the Marquette Block on East Hennepin Avenue in Minneapolis, Edinborough and Centennial Lakes in Edina, the Phalen Corridor Initiative in St. Paul, and River City Centre in Shakopee. These projects illustrate vast differences in location, design, scale, ownership structure, and mixed-use orientation, yet they are all examples of mixed-use development.
Conference attendees also heard from panelists with expertise in creating public/private/nonprofit partnerships; financing mixed-use developments; and dealing with planning, zoning, property management and other legal issues affecting mixed-use projects.
Throughout the day, case study presenters and panelists emphasized two important lessons they learned from completing mixed-use development projects. First, government support and involvement through public/private/nonprofit partnerships is critical to project success.
The creation of strong partnerships is a common element in most successful mixed-use projects. Presenters emphasized that local government plays an important role in providing ongoing support, zoning flexibility, and/or creative financing for mixed-use projects.
For example, the Minneapolis Community Development Agency took an active role in redevelopment of the Marquette Block by providing funding assistance and partnering with the nonprofit developer of the project. Similarly, the Phalen Corridor Initiative relies on the cooperation of more than 50 partners including local government, private corporations, business associations, foundations, schools, churches, social service agencies, and community organizations all working together to redevelop 100 acres of industrial land on St. Paul's East Side.
Second, financing mixed-use projects can be complicated and requires a working knowledge and understanding of all the project components.
To finance a mixed-use project, lenders may need to draw expertise from residential mortgage banking, commercial real estate and/or small business lending. A lender from U.S. Bank N.A., who has financed several mixed-use projects including redevelopment of the Creamette building in Minneapolis, noted that he used a combination of projected rental rates and business tenant income to analyze projected revenues for this mixed-use building. Other panelists, representing other lending institutions, indicated that the development team must help bankers and investors feel comfortable with the project and how its various components will fit together to create a successful development.
Mixed-use development is not a new concept, but it has gained popularity as a development and revitalization strategy in recent years. John Kari, senior policy planner at the Metropolitan Council, emphasized that while factors such as the scale of the project or the mix of uses may vary, mixed-use development projects can benefit a community by:
These benefits often provide an added incentive for developers, neighborhood and local government representatives, and lenders to pursue mixed-use projects despite the added complexity of this kind of development. Coupled with the increasing market demand anticipated by conference participants, we can expect to see much more mixed-use development in the Twin Cities metropolitan area in the coming years.
What does "mixed-use development" mean?
The term "mixed-use development" holds a variety of meanings and can be applied to a wide range of community development projects.
Development projects may be classified as "mixed-use" if they provide more than one use or purpose within a shared building or development area. Mixed-use projects may include any combination of housing, office, retail, medical, recreational, commercial or industrial components.
These projects may vary in scale from a single building occupied by a retail shop on the ground floor with an upstairs apartment to a comprehensive "urban village" development with multiple buildings containing separate but compatible uses such as a retail center, office building and medical clinic located adjacent to a multifamily housing complex.
A single owner and business operator might occupy a mixed-use building, or multiple housing and commercial tenants could lease space within a mixed-use development project. Mixed-use projects often involve the redevelopment of buildings and blocks located in aging inner-city commercial districts. However, new construction of mixed-use development is occurring in urban and suburban communities as well.
Regardless of the form it takes, mixed-use development is an integral part of most communities, creating unique places where people can live, work, play and meet everyday shopping and lifestyle needs within a single neighborhood.