Page B1.2 . 04 June 2003                     
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    Smarter Building in Denver


    Other central elements of Rose and Perry's idea included demonstrating the cost effectiveness of green building, revitalizing the role of public space in a community, and integrating living and working. They hoped the development would function as a model for other large mixed-use infill projects, such as abandoned malls and military bases.

    Although conventional thinking says that mixing expensive and affordable housing in the same neighborhood doesn't work, Perry and Rose have successfully sold market-rate houses at prices above their own projections some at more than $300,000. Most houses in the area sell for closer to $125,000. But this success has not come easily.

    Financing Difficulties

    The search for market comparables (or "comps") is central to property assessments and therefore to banks' underwriting process. But when a project is innovative and there is nothing comparable, or when the nearest comp is in another state, banks are unlikely to underwrite loans. This can make financing unconventional development projects like Highlands' Garden Village more difficult and expensive.

    The lack of comps, however, may be a temporary problem. "Once you build one project," says Rose, "you create a market comparable, and it becomes much easier going forward."

    A more significant stumbling block for developers trying to obtain loans is that lenders are simply unwilling or unable to underwrite mixed-use projects. Perry grouses, "Lenders just don't get it. They don't know how to underwrite a shopping center and an apartment building together."

    With persistence and creativity, however, developers can obtain the necessary loans. One way to do this is toreduce the apparent complexity of their projects by dividing a large mixed-use loan request into multiple single-use loans. In Highlands' Garden Village, Rose and Perry obtained separate loans for single-family houses, senior housing, and commercial space.

    Return on Investment

    Perry is devastatingly direct about the profitability of smart growth projects: "You're not going to make as much money in the same timeframe as you would by building all single-family homes or a power center [a development that includes several big-box retailers]. The premise that socially good building can compete with mass production is false. It can't, it won't, it never will."

    Rose, however, is more sanguine. "While you could make more money with a power center, it wasn't an option. The community turned it down." What a segment of the community wanted, however — single-family houses only — was also undesirable from the smart-growth perspective which prefers diversity in use and demographics. Such community preferences can create a real conundrum for the smart-growth movement.

    If the market rewards developers who are willing to build power centers or forgo diversity in housing, the potential of smart growth as a force in the market is lessened. This gloomy outlook is compounded by Perry's contention that "the larger the site, the greater the incentive to do a conventional project."

    For long-term investors, developments with real quality may provide particular rewards. For instance, in a weakening rental environment in which over 10 percent of the Denver's apartments are vacant, Highlands' Garden Village boasts an occupancy rate of 98 percent.

    Community Concerns

    Community reaction of the Not-in-my-back-yard (or NIMBY) kind can be the bane of a developer's efforts, regardless of whether the developer has proposed a big-box retailer, affordable housing, or a bucolic mixed-use neighborhood. Perry and Rose explain that they took pains to acknowledge community concerns from the outset. And while they eventually gained overwhelming community support and participation in the planning process, there was plenty of controversy.

    One resident described the opposition of a small but vocal contingent: "One minute they criticized the scary experimentalness [sic] of the plan and the next, they went after its 'obsolete, old-fashioned' mix of income and living styles. None could explain why a derelict, graffiti-ridden eyesore (or in fact, a likely strip mall) was preferable to an integrated neighborhood."

    The Highlands' Garden Village site plan was eventually approved by the neighborhood and adopted by the city, but the intensity of the debate — in an environment in which the development team worked hard to allay the fears of local residents — gives a reminder that community opposition can be a potentially serious impediment to almost any development effort.

    Zoning and Building Codes

    Rigid zoning regulations and building codes can also present serious impediments to the creation of pedestrian-oriented mixed-use communities. Perry Rose faced a city requirement that roads be 32 feet (9.8 meters) wide — far wider than streets in many of Denver's existing neighborhoods.

    Although these proposed "neighborhood" streets would be as wide as country highways, the city was only willing to bend so far: intense negotiations led to 30-foot (9.1-meter) wide streets in Highlands' Garden Village. The continual need for negotiation over minute details can add difficulty to building smart-growth projects.

    The Denver project still faces challenges. Construction of the retail component — so essential to the mix of uses that is the hallmark of classic, walkable neighborhoods — has not yet begun. While the project appears profitable, long-term success depends on continuing to build a strong community that engenders loyalty and popularity, keeping prices up. This is a factor that even the best developers and planners may not be able to fully control.

    Nevertheless, Rose and Perry should be commended for their effort. While a few developers pursue similar projects, others build thousands of conventional suburban single-family houses each year in the Denver area with relative ease.

    Without major changes in loan underwriting, building codes, and government approval processes, however, the few innovative subdivisions built by unusually motivated developers will likely be the smart-growth movement's only response to ever-widening sprawl.

    Discuss this article in the Architecture Forum...

    Seth A. Brown is publisher of The Next American City, a quarterly magazine about the future of cities that Architecture calls "a panoptic review of city issues."

    An expanded version of this article appeared in the premiere issue of The Next American City.



    ArchWeek Image

    Site plan for Highlands' Garden Village.
    Image: Calthorpe Associates

    ArchWeek Image

    Apartments surrounding a shared courtyard in the "smart-growth" development of Highlands' Garden Village in Denver.
    Photo: Seth A. Brown

    ArchWeek Image

    Rental apartments, under construction, are one portion of the housing mix.
    Photo: Seth A. Brown

    ArchWeek Image

    Cooperative housing surrounds a grassy shared courtyard and playground.
    Photo: Seth A. Brown

    ArchWeek Image

    Elitch's historic outdoor pavilion was restored and incorporated as a public space.
    Photo: Seth A. Brown

    ArchWeek Image

    View from inside the pavilion out to the Highlands' Garden Village.
    Photo: Seth A. Brown

    ArchWeek Image

    A creative solution to the on-site parking requirements.
    Photo: Seth A. Brown


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