As demand for urban living continues to increase, developers are faced with a dichotomy: developing in an infill community is almost certain to be a sound investment, but the process presents a unique set of challenges. While it is an appealing tool for community redevelopment and growth, urban infill development is usually costly, considering land will be more expensive, and properties will need to be extensively rehabbed and tested for environmental contamination. Urban infill development is also difficult to finance and manage, with lenders shying away from small-scale projects and city regulations keeping developers buried under paperwork and bureaucracy.

However, a rising class of government officials and developers across Florida, attuned to the acute challenges limiting urban infill development, are attempting to remedy these obstacles and have found some success. They shared their insights during a discussion at the recent ULI Florida Summit, held in Tampa.

Tampa, in particular, was driven to turn to urban infill development as an economic driver, since city property taxes have diminished significantly over the last decade. “We’ve lost about $280 million in revenue, and that’s had a dramatic effect on the city,” says Bob McDonaugh, the economic opportunity administrator for the city of Tampa. “We made as many cuts as we could, and finally the mayor [Bob Buckhorn] said we would need to build our way out of it.”

To incentivize urban infill development, city officials decided to ease some of the more cumbersome city regulations blocking infill development. “We convened with a ULI panel and essentially what we did was process improvement,” says McDonaugh.

“We bought a software program called Accela, so developers can submit plans electronically—which is greener, faster, and lets developers track the status. We also implemented a pre-submittal process, where the fire marshal reviews plans and gives critiques before developers formally submit, so they only have to do so once. We also brought all of our zoning, planning, and permitting officials under one roof, so you can reach one staff person and get access to any question you may have.”

One of the best examples of the process improvement’s success is the Le Méridien Tampa Hotel, a once-historic federal courthouse that was recently transformed into a hotel property, and recently won an award from Condé Nast Traveler.

Across the bay, Steve Gianfilippo notes that infill development is both aesthetically pleasing and financially rewarding, despite financing hurdles. “A beautiful conversion like Le Méridien Tampa excites me and gets me pumped to look for new acquisitions,” he says. “It adds so much character to a city, so my focus in particular has been buying and investing in these types of assets.”

A partner and investor in Gries Investment Fund, Gianfilippo creates projects that range from a complete renovation of the historic Piers Hotel, to the Station House, a mixed-use coworking hub that Gianfilippo says stands out for its synergistic design. He notes, however, that getting Station House off the ground was anything but seamless.

“The building was empty when we bought it, and it was a very challenging renovation, even for an infill development,” says Gianfilippo. “The Station House project was especially difficult because we had no financial takers, no banks would finance. I had to put my own capital into it, and get the concept approved and stabilized before I could nab investor financing to replace my capital.”

“Small-scale infill is not for the faint of heart,” says Edmundo Gonzalez, the managing member of Urban Partners Construction, a firm that focuses on development and construction management for infill projects. Drawing on Gianfilippo’s experience, Gonzalez stressed that financing infill projects is often the biggest hurdle to getting them completed. Instead of going to institutional investors and regional banks, Gonzalez suggests tapping a smaller sect of financiers.

“We’re going to high-net-worth individuals more and more, especially with the advent of the self-directed IRA, and these relationships are cultivated over time,” he says. “Another new source is crowdfunding. Platforms such as Crowdstreet and RealtyShares are beginning to allow more diversity—before, they wouldn’t enter a market this small.”

While infill projects are generally more difficult to manage, a West Palm Beach official says that infill development presents the greatest economic development opportunity. “Most development opportunity is on the infill side,” says Chris Roog, the director of economic development for West Palm Beach, noting that planned projects like the new Brightline rail train is enhancing the area’s interconnectivity. Office vacancy rates are historically low, and local developers are focusing on infill projects that tie in the city’s financial centers with a community-focused feel. “We study people’s habits and have a lot of data about how people are interacting with downtown West Palm Beach, so innovation districts are the next wave to our development approach.”

In fact, all developers agree that working with the local community is key to successful infill development. “A developer from south Florida wanted to build over parking lots and the neighborhood rose up and said no. They hadn’t really worked out a collaboration plan prior to going to city council, and were denied,” says McDonaugh. “After that, they went back and listened to the restaurants and shop owners, changed their design, added parking, made it more interactive, and were successful. So it’s an example of people not listening going in, and thinking they would get it done.”

“We made the mistake once of waiting too long to reach out to the public, and it was a huge crash and burn,” says Gonzalez. “We had to go back, engage the community, and retool our efforts before we were able to get the project off the ground.”

While it is true that urban infill development presents a greater risk of obstacles, Florida developers seem convinced that infill development is the key to ultimate economic growth. Says Roog: “Urban infill development is about transformation, and turning a city into a place where people want to live.”