Mixed-income, mixed-use: more than a dream

If CNU has its way, developers of the future will be building mixed-income, mixed-use projects as a matter of course. When that day comes, they may look back at a September 2000 meeting at the Seaside Institute in Seaside, Florida, as a seminal moment. The meeting brought together 37 leaders from the worlds of design, finance, development, community organizing, and marketing to discuss how to bring mixed-use, mixed-income communities into the mainstream. The forum was sponsored by the US Department of Housing and Urban Development (HUD), the Urban Land Institute (ULI), the Congress for the New Urbanism (CNU), and the Seaside Institute. The location of the conference was symbolic. An excellent mix of land uses and housing types, Seaside is an icon of the New Urbanism. Its one oft-described failing is its lack of affordable housing. The town founder, CNU board member Robert Davis, told the meeting that he had hoped that a mix of housing types alone would provide affordable housing. One lesson he has learned is that it takes policies, as well as design, to provide affordable housing. Mixed-income communities accommodate a broad range of income, often including low-, moderate-, and middle-income residents, and in some cases, wealthy residents as well. Mixed-use communities, which received much less attention at the conference, harmoniously integrate residential, retail, civic, and office uses. A model for mixed-income communities is HUD’s Hope VI program, which is redeveloping public housing projects by introducing market rate housing and new urbanist design. As a holistic attempt to build communities and change lives of public housing residents, Hope VI goes beyond any previous government housing program. Case studies of Hope VI communities in Atlanta, Louisville, Boston, and Baltimore presented at the conference show the program has been enormously successful. However, participants agreed that it is time to take the lessons of Hope VI and apply them to development more generally. Mixed-use development has many models to draw from, especially in traditional towns and new urbanist development. As with mixed-income development, participants agreed that it’s time for mixed-use development to join the mainstream. Strategies for Change Participants in the Seaside discussions generally agreed on several points, reaffirming New Urbanism but also adding to it. 1) Good design is critical for the success of mixed-income communities. Housing occupied by lower-income residents must look as good as what their middle-income neighbors are occupying. 2) Good design is not enough by itself. It must be backed by training, education, health care, and other services that lift lower-income people into the ranks of the middle class. Standards of appearance and behavior must be enforced to reassure market-rate residents. 3) The private sector is the only entity capable of producing mixed-income housing in communities everywhere. Government, however, must provide incentives. 4) Every level of government must be involved. The federal government should adopt a national housing policy or neighborhood development and redevelopment policy and pay for services needed to lift low-income residents into the mainstream. 5) States should require local communities to accommodate inclusionary housing, and penalize those that don’t. 6) Financial resources for mixed-income housing need to be expanded, and more sophisticated underwriting procedures need to be promoted. 7) Communities benefit from having ownership housing (for stability) and rental housing (for a long-term supply of moderate-priced units). Both kinds of housing are needed. 8) Community leaders, the news media, elected officials, and developers must be educated about the value of mixed-income, mixed-use neighborhoods. Attracting real diversity In order to create truly diverse communities, marketing, design, and policy strategies are needed. Participants have found that providing income, racial, and social diversity is the toughest challenge in neighborhood development. They evaluated case studies to learn how different neighborhoods have succeeded. On the marketing front, Park DuValle, a Hope VI project in Louisville, Kentucky, gave the neighborhood a more positive public image. To market the development, the developers got the most expensive houses occupied first. “We gave them a [building] lot for $1,000 and gave them a $27,500 subsidy just to move in and to be present, water their lawns, and do that stuff that rich people do in $250,000 houses,” said Willie Jones, senior vice president of The Community Builders. “And that turned out to be absolutely critical in order to sell the core products, which are essentially $100,000 to $120,000 houses targeted to middle-income families.” Harbor Point was an almost entirely African American housing project in historically segregated Boston. When HUD redeveloped the property, it made a conscious effort to ensure racial diversity at all income levels. In particular, the marketers aimed to attract middle-class African American households to head off a possibility that the subsidized units might end up overwhelmingly African American, and the market-rate units overwhelmingly white. Egbert Perry, CEO of the Integral Group in Atlanta, suggested that “if what you're attracting is DINKs (double-income, no kids), singles,” and different races but no families with children, you're still not getting a fundamentally diverse population. Larry Beasley, co-director of planning for Vancouver, British Columbia, insisted that “social diversity may ultimately be more powerful than racial diversity” in contributing to a high-quality environment. “You've actually got to design family housing,” he said. Financing: The Real Trick Though most of the participants have managed to develop mixed-income housing, obtaining financing is rarely easy. Lenders, appraisers, and investors are accustomed to simple, standardized products such as market-rate apartment complexes. Presented with mixed-income proposals, financiers frequently reject them or offer less money than the developments need. Foundations, pension funds, and state investment capital were all suggested as possible new sources for mixed-income housing investment. Chris Leinberger and Robert Davis, partners in Arcadia Land Company, argued that traditional urbanism, including mixed-income neighborhoods, generates enormous increases in real estate values after the first several years. The eventual prospect of large profits could lure investors and underwrite a commitment to low- and moderate- income housing. Design for Durable Diversity One of the main lessons that CNU has imparted to the world of mixed-use, mixed-income development is that a traditional fabric of streets and buildings is necessary. The Hope VI program has shown that middle- and upper-income Americans will share neighborhoods with subsidized housing. To attract them, the low-income housing must look at least as good as the rest of the neighborhood — both in design and in materials. “This gains greater acceptance from the entire community,” said Laurie Volk of Zimmerman/Volk Associates, a specialist in the finance and marketing of new urbanist developments. Participants supported the new urbanist principle that planning and zoning should stop limiting large areas to just one use. Stores, restaurants, and workplaces, in addition to living quarters, make an area more economically vital. Stanton Eckstut of Ehrenkrantz, Eckstut & Kuhn Architects said that even though it may not be feasible to develop a nonresidential use at the outset, “don't preclude it.” In the long run, mixed uses reinforce the appeal of mixed-income neighborhoods. The Policies for Change Participants at the session said that government policy must play a role in building and maintaining mixed-income developments. “The market can’t be in the business of worrying about redistribution of dollars from rich to poor for housing,” said New Orleans renovator and rehabilitator Pres Kabacoff. “That’s got to be a government function.” Devising effective public policies is an endeavor that must be done “locally, regionally, statewide, and nationally,” said Ronald Terwilliger, national managing partner of Trammel Crow Residential. “We can’t just go at one level.” Participants suggested a number of national policies that could make mixed-income, mixed-use housing the norm: 1) Adopting a national housing policy or a national neighborhood development and redevelopment policy. 2) Punishing states that fail to pursue smart growth and the development of diverse, transit-accessible communities. 3) Providing incentives for owners of rental housing to make some of their Section 8 units affordable permanently. With a “very simple, elegant combination of carrot and stick,” the US eventually could have what Toronto designer Ken Greenberg said exists in Canada: “a largely invisible, ubiquitous, scattered strategy of affordable housing stock appearing in cities, towns, suburbs, everywhere.” CNU will soon make ideas and images from the meeting available on-line at www.cnu.org/mixed_income.pdf.