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Waiting Lists For Affordable Housing, But Retail Space Sits Empty

Waiting Lists For Affordable Housing, But Retail Space Sits Empty

GUEST:

Dana Kuhn, real estate lecturer, San Diego State University

Transcript

Mixed-use housing developments are supposed to make dense communities sustainable, convenient and affordable. But that vision is threatened by a trend emerging in some communities: new retail storefronts can’t find tenants.

Mixed-use developments make density more desirable

In Mission Valley, residents walk their dogs across an open space that will one day be a park at Civita, a new mixed-use development.

Mike Stepner, who was once the San Diego city architect and now teaches architecture, tells his students Civita is an example of the kind of community San Diego needs to build in order to house its growing population.

“The idea is that you have a 'complete community,'” Stepner said, pointing to a map of the finished project posted near the park. “Here’s a park that will run through the center, you have your own shopping, you will have office centers that will be going in that will provide jobs.”

Photo by Kris Arciaga

A map of Civita, a mixed-use development in Mission Valley. Jan. 2017

Rather than building just housing, Stepner said, new developments need to have a sustainable mix of homes, offices and shops. That means you don’t always have to get in your car if you need a loaf of bread or a pint of milk.

Stepner's rule of thumb for a complete community is the “popsicle rule."

“Your child can walk and get a popsicle and walk home before the whole thing melts,” he said. “Very few neighborhoods have been built in recent years that provide that sort of situation.”

Stepner pointed to an empty lot across the road from the soon-to-be park, where the developer plans to build a multistory building, with housing above and shops, pubs and restaurants at street level.

“What’s going to happen here will be retail,” Stepner said. "Retail that will begin to serve all the residents in this area. I think you can build higher density housing, but it has to be done right.”

Mixed-use may not always work

Some North County mixed-use developments that have been in the planning stages for years are now running into problems.

In San Marcos, the Promenade at Creekside opened last year with shop fronts at street level and two stories of affordable housing above. While the housing now has a waiting list of 700, most of the storefronts at street level are vacant.

Mayor Jim Desmond said the city is rethinking the project.

“That was the intent, to make this a walkable community so you didn’t have to get into your car to get a gallon of milk or go to a dry cleaner or to a baker," he said. “It was going to be retail on the first floor and maybe professional offices on the next floor, and then residential up above. We actually had plans up to seven stories. But that hasn’t really worked.”

Desmond said the city is now reviewing the whole project and considering reducing the retail to perhaps just a corner store, because the retail space is simply not finding tenants.

“The retail stores — the mom and pop shops — are struggling now,” Desmond said, “primarily because of the online sales. A lot of people — myself included — go to Amazon to buy things. It’s sometimes quicker and easier to buy things online than it is to go to the store.”

Photo by Alison St John

Shops in the mixed-use development at Breeze Hill in Vista sit empty due to a lack of tenants. The building will be torn down and replaced with housing, January 2017.

San Marcos is not the only city rethinking its mixed-use projects.

Vista’s Paseo Point opened last year with nearly 70 affordable housing units. But “available for lease” signs are still plastered on the windows of the shop fronts below.

At Breeze Hill, a relatively new shopping center in Vista, the shop windows are all dark. The city council has granted the developer a permit to knock it down and start again with 88 housing units instead.

Cities lose sales tax

There’s another reason this trend is important. San Marcos Mayor Jim Desmond said cities simply cannot pay for essential services with property taxes alone.

“Property taxes don’t even pay for police and fire,” he said. “Sales tax is king — that’s where we get most of our dollars to pay for the general fund.”

Proposition 13 in the 1970s limited how fast property taxes could rise. Now, Desmond said, cities rely more and more on building new shops and retail to generate the sales tax they need to balance their budgets.

“You saw in the last decade or two — all the big boxes,” Desmond said. “We were all clamoring to get those to get sales tax dollars to help offset our costs.”

Now even some of the big box stores are closing, as online shopping takes over.

In California, online stores have to pay sales tax to the city where their customers made the purchase. So far, the evidence suggests sales tax revenues have continued to increase gradually in the past few years since the economic downtown.

A comparison of North County city budgets now and in 2009 shows sales taxes make up about the same share of city budget now as they did then.

But the projected increase from the new mixed-use developments has not materialized as expected.

In these North County communities, the model of sustainable communities — where families could run out to the store or get a haircut without getting in the car — is not working out as planners had hoped.

“It’s something that cities have to grapple with,” Desmond said, “because it’s a paradigm shift.”

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