Defining Mixed-Use

In Anchorage, we’re hearing more and more about the opportunities for mixed-use developments but what exactly does it mean for consumers and tax payers? According to a recent report published by the Building Owners Managers Association (BOMA), mixed use is defined as ‘a real estate project with a planned integration of some combination of retail, office, residential, hotel, recreation or other functions. It is pedestrian-oriented and contains the elements of a live-work-play environment. It maximizes space usage, has amenities and architectural expression and tends to mitigate traffic and sprawl.” Anchorage has seen elements of these concepts in a handful of developments, dating back to the Petersen Towers, which to my memory is one of the first mixed-use buildings in Anchorage, and where I once owned a condominium. To my knowledge, Petersen Towers was a privately financed development but in today’s world a mixed-use project may need state and local real estate tax credits and funding may need to come from both private and institutional investors. Live-work-play sounds like a carefree environment but, in most cases, it is not without tax payer subsidies.  
 
In its simplest form, mixed-use has a single building ownership. A good example is first floor retail with three or four stories of rental housing above—all owned by the same entity. Mixed-use gets complicated when there is a variety of uses and ownerships. That type of structure may require easements that allows one party to lawfully use the land of another which may include drainage, utility, ingress, egress, elevators, foundations and structure of one section of the project to other sections, according to the BOMA report. After development issues, segregating common area maintenance and expenses is probably one of the most challenging aspects of mixed-use. How much should each individual owner pay for janitorial, snow plowing and removal, and utility costs to identify just a few. It becomes particularly difficult when residences, offices, retail are all residing in the same structure. Medical condos are fast growing developments but even the medical sub-specialties should require different allocation of expenses. When a retail condo ‘marries’ into a building of subsidized rental apartments how is the common exterior light bill pro-rated? And will that pro-ration affect the mortgage cost and interest rate of the condo owner?
 
Anchorage’s lack of land and its high cost to develop due to wetlands, poor soils and drainage issues, to name a few of the issues facing both residential and commercial developers, makes mixed-use appear attractive. Unfortunately, any re-development usually costs more on a price per square foot than new. There is always the tear down cost, the issue of asbestos and whether or not the existing utilities are the right sized pipe. Like any ‘mix-up’, it is always complicated. But I can’t help but wonder if there are enough Anchorage residents who want to go home on an elevator when it comes to the residential portion of mixed use. It wasn’t my idea of home but with Anchorage’s housing shortage that may be a change whose time has arrived.