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• • <br />^ Need to account for increasing construction costs. Density often is used as an answer for <br />increasing costs, but often costs more due to the expense of accommodating parking and more <br />complex construction types. <br />- Rents and prices are not going up at the same rate of costs; main squeeze comes out of <br />the land value. <br />- Important to select developers who have implemented projects like these before. <br />^ Building housing over retail is expensive. Housing usually subsidizes the cost of retail <br />development. <br />What to Think About As Market Conditions Are Changing <br />^ Now is the time to start master planning for next real estate cycle; none of the prototype <br />projects would work today, but may have potential in the economic conditions 18 months <br />from now. <br />- Planning for the next cycle (design, permitting, etc.) includes looking at parking <br />ratios, financial assistance. Plan infrastructure, streetscape improvements, mitigate <br />traffic issues, etc. <br />- Start now, pick developer to participate in predevelopment expenses to hold or plan <br />properties so they're ready to go when construction costs are feasible again. <br />- Be flexible about final product. <br />- Assemble land so you can offer prepared sites ready for development. <br />- Don't wait for the market to come back! <br />^ Downtown San Jose is an example of successful strategic planning. The City subsidized <br />downtown residential over a 20 year period, over time creating a market and proving financial <br />feasibility for high density products. This was facilitated by the very large budget of that <br />redevelopment agency. <br />^ Some of the prototype projects may not hit the next cycle; they look like longer-term projects. <br />^ Town Hall Square project is not starting with a clean slate; it's faced with both land and <br />business acquisition challenges, including the successful gas station. <br />^ When increasing densities, one must consider absorption rates when it comes online -how <br />much can the market absorb at one time. <br />^ Look for creative options, use community input. Be aware of things not in our control, such <br />as the potential impact of Proposition 90 (eminent domain, land use regulations) on the Fall <br />ballot. <br />^ Be in it for the long haul -Union City's transit village is currently going through its third <br />developer now. <br />^ Seek out creative financing: public-private partnerships, bonds, tax increment funding, impact <br />fee mitigation. Equity can be patient, but "time is money..." <br />^ Affordable housing and use of redevelopment agency housing set-aside funds can be a catalyst <br />during down-markets for development that wouldn't happen otherwise. <br />- Helps build up downtown before market-rate projects become feasible again. <br />2 <br />