Collaboration, creativity, and infrastructure were the themes of the event hosted by the ULI Infrastructure Initiative and ULI Minnesota on October 10 and 11, 2011. Titled “Compact Development in the Suburbs: Solving Infrastructure and Financing Challenges,” the event featured a wide variety of speakers from around the country, who focused on how to overcome the challenges associated with creating more density in suburbs.

Many of the examples cited at the forum featured redevelopment of aging commercial properties in established suburban locations. These properties were transformed into marketable projects with increased density, a wider mix of uses, and improved options for transit, bicycles, and/or pedestrians.

West End Project, Minnesota. The recently opened West End project in suburban Minneapolis was the first case study discussed. Developed by Indianapolis, Indiana–based Duke Realty, the West End consists of a 380,000-square-foot (35,340-sq-m) lifestyle center, existing and planned Class A office, and a 120-unit apartment project set to start construction in early 2012. It is located adjacent a key freeway interchange in St. Louis Park, four miles (6.4 km) west of downtown Minneapolis.

The major takeaway from the West End project was the importance of collaboration. The Duke team met with municipal staff on a weekly basis for nearly three years. The city of St. Louis Park contributed $21 million in tax increment financing (TIF) and park dedication fees, entering into the development agreement prior to the 2008 real estate crash. Kevin Locke, community development director for the city, made it was clear that if the city was trying to put this deal together today, it would have fewer tools with which to work-—most notably, greater difficulty in utilizing TIF.

Although opening and leasing a 380,000-square-foot retail lifestyle center in a recession was challenge enough, infrastructure was another issue that the developers needed to address. The designers worked to ensure that streets for internal circulation were pedestrian-friendly, and that the redesign of the major roadway bisecting the site would be both more pedestrian-friendly and able to handle increased traffic. The city’s bicycle/pedestrian trail system was extended to reach the site. A sewer interceptor running under the site was rebuilt, and stormwater mitigation on-site seeks to reduce pollution at a nearby lake.

Finally, the 42-acre (17-ha) site spans two cities, significantly adding to complexity of the entitlements process. None of these infrastructure issues could be resolved without creativity and collaboration between the developer and one or more municipal entities. On the plus side of the ledger, there was little neighborhood opposition to the West End project, due to fact that the site was far from existing residences.

BelMar Project, Lakewood, Colorado. Another project discussed at the forum was BelMar in Lakewood, Colorado, a Denver suburb. The infrastructure component of the BelMar project was significant. For the project, developers and the city had to address how to construct and maintain a new 22-block grid of streets. These streets are designed to a higher standard than other city streets. Larry Dorr, director of finance and city treasurer for the city of Lakewood, Colorado, noted that the streets are city-owned but a cost-sharing agreement is in place for the development and ownership entity at BelMar to handle maintenance and snow removal .

CITYCENTRE, Houston. A major attractor for BelMar is its public realm—not just streets and sidewalks, but also its gathering places. This is common among recent suburban infill projects. The CITYCENTRE project in Houston, Texas, developed by Midway Companies, was also developed around a new town center, or public square, at its core, which plays host to major events throughout the year, as well as everyday gatherings. Jonathan Brinsden, CEO and executive vice president for Midway Companies, emphasizes that getting the mix of uses—hotel, apartments, offices, fitness center—right is important, but the town center is the DNA of the project and perhaps most critical for its success .

The project was able to amplify design and other elements by saving money on constructing structured parking facilities. The developers utilized the parking garages that were pre-existing on the site, saving an estimated $40 million. “We either got the land for free or the parking lot for free,” Brinsden said. “We aren’t sure which.”

Aurora Corridor, Washington. Another strategy for compact suburban development is rebuilding corridors to support multimodal transportation options. In Shoreline, Washington, an inner-ring Seattle suburb, the city is pursuing a strategy that has already created a safer, more pedestrian-friendly arterial. Along Route 99, a 40,000-vehicle-per-day arterial known as the Aurora Corridor in the area, the city is adding sidewalks, trees, and planted medians and is encouraging mixed-use infill along the corridor at densities not previously seen in the city.

Rebuilding a street to be more pedestrian- and transit-friendly alone won’t necessarily encourage the private market to increase density. Dan Eernissee, economic development manager for the city of Shoreline, used gardening as a metaphor for encouraging the type of growth and development the city wants to see. He believes the municipal government can’t really tell property owners when to sell, exactly what to develop, or what businesses should open, but it can create the right “soil.” “The key to good gardening is to create healthy soil rather than feed individual plants,” he explained.

The city must also help change the economic calculus of landowners in order to spur land use change, by upgrading the public realm and dealing with utility infrastructure as well as adding the right zoning and tax incentives. Adding in the city’s planned bus rapid transit (BRT), and landlords are able to see that the value created by redevelopment outweighs the net present value of their property as is. Just a few dollars of increased rent per unit can drive significant gains in the value of redevelopment, tipping the scales and creating a “former landlord and new investor .”

One example of a former landlord and new investor is evident in the Echo Lake project, a project developed by Spokane-based Inland Corporation that contains several components, including affordable housing for seniors, market-rate apartments, a YMCA facility, and retail space on a five-acre (2-ha) site.

State Route 7, Florida. The Route 7 Corridor in Broward County, Florida, is planning for a transformed future as well. The stretch of Route 7 targeted encompasses 32 miles (52 km) and stretches through 11 cities, complicating the process. Gary Rogers, executive director of the city of Lauderdale Lakes’ community redevelopment agency, explained that early improvements included the replacement of 12 bus shelters along the corridor. Development challenges abound along the corridor, due to narrow lots and land assembly difficulties. Despite this, a new library has opened and developers are interested in pursuing additional projects.

Funding and Financing. Financing and approvals continue to pose challenges to redevelopment. Ranadip Bose, a consultant with Chicago-based S.B. Friedman Companies, provided an overview of value capture strategies, where the cost of infrastructure is borrowed against future increases in property value. Bose pointed to Atlanta, where TIF is being used to spur redevelopment along the city’s Beltline, and Portland, where TIF and a special assessment raised 40 percent of the $100 million needed to build that city’s famed streetcar. Other strategies include a land value tax, joint development agreements, transit reinvestment zones, and transportation and/or development impact fees.

Jay Lindgren, an attorney with Dorsey & Whitney in Minneapolis, suggested that cities and other agencies offer incentives and policy assistance for site assembly, including removing barriers, strengthening eminent domain laws, and creating new funding sources. Lindgren also noted that cities need to be more proactive about development.

Prospects. Market conditions—including changing preferences—mean that continued redevelopment and intensification of suburban infill sites are likely. However, mixed-use infill projects are difficult—they can encompass the rebuilding of public streets, adding transit, replacing aging infrastructure with greener solutions, dealing with adjacent property owners, and working across jurisdictional boundaries. Understanding these issues and solving them through collaboration and new financing and regulatory tools will be key.