[Massplanners] [EXTERNAL]Mandatory Mixed Use - 3A Zoning Question

Tue Jul 16 16:46:15 EDT 2024

Old retiree here, going to follow up on Amy and Bill’s comments, probably with stories, apologize in advance.

Market is everything, but financing trends also throw a monkey wrench in the equation at times as well. Going back to 2006 or so, had a commercial project, proposed with plenty of extra height and vacant attic space to be above 9,000 sf of commercial space. I had just had a talk with two local banks who were noting that commercial vacancy rates were climbing and they were afraid to lend to commercial projects without more rental housing being built. The Dennis Affordable Housing By-law was drafted to promote top of the shop housing, which the banks wanted to help us promote. Project got approved as 100% commercial even after I had advised the developer to consider second story housing. As his permit neared lapsing he came back to tell me I was right, he applied for the same building, with 8 rental units above. He had all 8 units rented before he had a single commercial tenant. Lesson, if there is no housing for employees, commercial floor space makes no sense and banks won’t provide funding. The follow-up, after he could only get two commercial units leased, and one skipped town sticking Subway with a franchisee mess, he came back and converted the entire building to residential, 18 units, under a different provision of the affordable housing by-law.

Obviously, in 2008 we had the financial collapse. Markets had to readjust. As we were working on a proposal that never got beyond the Economic Development Committee, the financial picture had changed. Banks were having even more difficulty justifying commercial loans with the amount of vacant commercial space. This was well before COVID. As we tried to craft a “mandatory’ mixed use district it became clear that we needed to be careful in the approach. The ultimate decision was for a Planned Unit Development approach to the entire district. If the three major land owners, all who were working with us, could get together and file a single master plan for the district (roads, utilities, greenways, approximate building footprints and architectural concepts) then they could construct based upon market demands and financing considerations, as long as the PUD was built out to not exceed the floorspace maximums for each type of use in the district. This was probably around 2015 or 2016, at that point a couple federal entities backing loans were not supporting loans to mixed use buildings for fear that vacant commercial space could harm the financial viability of a residential structure.

On this topic, I had provided my committee with a few business journal articles highlighting the evolving financing situation. Since we were zoning for an area that last had any real change in zoning in 1973 (which really just locked into place the approach for the area that dated back to the 1950’s) we figured that what we zoned had to adjust to market and financial approaches that might be in place long after we were all gone.

Finally, in Dennis Port and West Dennis, which have 3 story in the core, we only insisted that the frontage that faced Main Street (Route 28) be commercial, allowing residential to possibly include the ground floor behind the store fronts or fully residential elsewhere in the district.

I know none of these are in MBTA communities, but, all have built in flexibility to adjust to market conditions. 

Dan Fortier, AICP

Retired Planner 

From: MassPlanners <massplanners-bounces at masscptc.org> On Behalf Of Amy Dain via MassPlanners
Sent: Tuesday, July 16, 2024 3:12 PM
To: Ryan, Christopher <cryan at belmont-ma.gov>
Cc: Mass Planners <massplanners at masscptc.org>
Subject: Re: [Massplanners] [EXTERNAL]Mandatory Mixed Use - 3A Zoning Question

One thing I heard from a mixed-use developer recently who has been working in an area with a strong market for street-level retail is that the zoning for mixed use typically goes where there already is existing retail that has value... and owners don't find, very often, that there is enough new value created with a 3-story limit, to take on the costs and risks of redevelopment, including tearing down existing buildings that now generate revenue. He said that once you get to four stories or more, the financial rewards of redevelopment start to entice owners to do this. This is a slightly different framing from the question of whether 3-story mixed use is financially feasible. In this telling, it might be "feasible" but you won't see much redevelopment and gain much housing with a three-story limit. I guess this is a hypothesis to interrogate as you discuss this question with mixed-use developers. 

On Tue, Jul 16, 2024 at 3:26 PM Ryan, Christopher via MassPlanners <massplanners at masscptc.org <mailto:massplanners at masscptc.org> > wrote:

Thanks, will do.

One issue has been the assertion that at some point, the market will change and 3 stories will be feasible again…..maybe, maybe not.

So logically, we zone for a desired outcome, not a market condition. But who knows if the state might balk at 3 story MMU based on development feasibility. I wonder if they’ve had the opportunity to evaluate this as yet.

Chris

From: Richard McCarthy <rmccarthy at norfolk.ma.us <mailto:rmccarthy at norfolk.ma.us> > 
Sent: Tuesday, July 16, 2024 2:01 PM
To: Ryan, Christopher <cryan at belmont-ma.gov <mailto:cryan at belmont-ma.gov> >
Cc: Mass Planners <massplanners at masscptc.org <mailto:massplanners at masscptc.org> >
Subject: [EXTERNAL]Mandatory Mixed Use - 3A Zoning Question

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Chris,

It’s a challenging question to answer.  I’m sure you know there are so many variables in doing mixed use.   We struggle with the same questions here. I remember 3 years ago when we working on increasing building height from 2 ½ stories to  3 stories people were very concerned.  We have a great mixed use building in town center that is 2 ½ stories that is fully occupied. We explained how that project at 2 ½ stories was pretty unique  in that that a local bank owned the property received site plan approval couldn’t afford to build a standalone bank. The bank partnered bank with a local developer to build a mixed use building which they are a tenant with other tenants. 

We are tackling this topic again if I have anything I will share.

Please share what you have.

Thanks.     

Richard J. McCarthy, Jr.

Town Planner

1 Liberty Lane

Norfolk, MA 02056

508-440-2807

Office Hours- Monday through Thursday 9am to 6pm

Closed Fridays

As a reminder, please do not reply all to this email. If you have any questions or comments, email me directly. 

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From: MassPlanners <massplanners-bounces at masscptc.org <mailto:massplanners-bounces at masscptc.org> > On Behalf Of Ryan, Christopher via MassPlanners
Sent: Tuesday, July 16, 2024 10:55 AM
To: massplanners at masscptc.org <mailto:massplanners at masscptc.org> 
Subject: [Massplanners] Mandatory Mixed Use - 3A Zoning Question

Good morning planners

I am having a lot of trouble finding resources to verify an assumption that mixed use buildings are generally not viable at 3 stories and require at least 3 stories of residential in addition to the ground floor commercial to be feasible to develop in the current market. We’ve been counseled on this by several consultants but have not been able to find any journal articles, newspaper pieces, memos, white papers, or anything else that definitively provides evidence for this.

Since we are seeking to establish a mandatory mixed use zoning subdistrict in Belmont, we’d like to be able to provide information to our citizens who are skeptical about this assumption and would rather we limit MMU to 3 stories total. Does anyone have information which could help us with our outreach for this provision?

Thanks in advance,

Chris R.

====================================================

Christopher J. Ryan, AICP, Ph.D.

Director of Planning & Building

Town of Belmont

19 Moore Street

Belmont, MA 02478-0900

Tel: 617.993.2658

Email: cryan at belmont-ma.gov <mailto:cryan at belmont-ma.gov> 

Web: https://www.belmont-ma.gov/office-of-planning-building 

===================================================

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