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Before The Boom 

by Ted S. McGregor, Jr.


If the past 10 years have been spent saving downtown Spokane, what will be the mission for the coming decade? If a cadre of downtown developers gets its way, the answer will be housing -- lots and lots of housing.


Across the nation, downtowns are among the fastest-growing neighborhoods, from obvious places like Denver and Seattle to surprising ones like Louisville and Cleveland. But housing only comes after a downtown reaches a certain maturity. In Seattle, a revitalized Pike Place Market led to a massive boom in the Belltown district just north of downtown. In Denver, it's been the Coors Field baseball stadium that has brought old warehouses to life. In Cleveland, the waterfront has provided the spark, and in Louisville, it has taken a lot of hard work from downtown boosters -- hard work that's starting to pay off.


In Spokane, the number of attractions may have reached the kind of critical mass necessary to attract the kinds of people who can choose to live where they want. Retail has at least stabilized, restaurants have multiplied and the streets are safer and cleaner. Amenities like Riverfront Park, the Davenport Hotel and the Met offer a concentration of recreational opportunities unmatched, well, you know, between Seattle and Minneapolis.


"It's an exciting time for downtown Spokane," says Greg Green, a partner on the Montvale project in downtown Spokane, which aims to bring 20 apartments to market in 2003. "We're starting to see the benefits of the past 10 years coming to life."


While the national trend toward downtown living is notable, it's by no means taking the place of the ever-expanding suburbs. Downtown living is definitely a niche -- but it can be a significant niche.


"Taste is funny," says Charles Royer, the mayor of Seattle when the Belltown housing boom took off. "After World War II, everybody wanted out of town and a cul-de-sac. But after a while of having to drive everywhere and not knowing your neighbors and not having a nightlife, people have acquired a taste for downtown living that didn't exist back in the '60s or '70s."


When you mention the Seattles, the Portlands, the Denvers, Rob Brewster starts finishing your sentences for you. I ask the developer of the Montvale project, the Holley-Mason and the Catacombs restaurant: Is Spokane on a roll?


"I think downtown is so much greater than it was just a year ago," says Brewster, mentioning 90-minute waits for tables at his just-opened restaurant. "Yeah, Spokane could be on that scale [of a Seattle or Portland]; it's one of the most intact and incredible downtowns anywhere."


But Brewster sees a deeper purpose, as well -- making Spokane a place young people will choose to stay


"In cities like San Francisco or Washington, D.C., you look at where young people live," he continues. "They live in urban settings, and we don't have that here. We need to bring young people back to Spokane by making it a fun place to work, to live and to party."


If developing a good place to party with lots of revelers within walking distance isn't enough, consider that downtown housing even satisfies the Growth Management Act, which encourages infill rather than continuing sprawl.





Mixed, Complex, Dense -- Aside from at least slowing sprawl, the reurbanization of cities can help restore some of the sense of community that was lost in the years when suburbs ruled. Marty Demarest is a correspondent for The Inlander and a producer for KPBX who has lived in downtown Spokane for a year now. For downtown to prosper, he thinks people's attitudes need to change.


"If Spokane intends to grow as a city, it is going to have to make a certain peace with the elements that come with a city," he says. "Spreading people out onto the fringes does nothing but make core-city dwellers feel more disenfranchised than before."


James Howard Kunstler is the author of The Geography of Nowhere, perhaps the most potent indictment of the evils of sprawl. Not surprisingly, he's a big fan of downtown living.


"Because people live there at a high density, the city can support a variety of eating places, bars, cafes, clubs," Kunstler writes. "The rich, up in their sky-high condos, live around the corner from the middle class, who live up the street from the not-doing-so-well. The important thing is that they all live together in proximity, not as though their worlds were separate, dirty secrets. The texture of life is mixed, complex and dense, as a city ought to be, the way all cities used to be before the automobile and the curse of Modernist planning."


As Kunstler and Royer suggest, new ways of thinking about planning are needed to bring success.


"The city government can help in not leveling the playing field, but to tip the playing field in favor of that kind of construction," says Royer. "It's in the best interest of the whole city. I don't know a single city that's worth a damn that doesn't have a strong downtown.


"I used to get accused of trying to stuff everything I could into downtown," Royer continues, "and I'm guilty as charged. You want a downtown that is packed with people as much as you can get it."


Already, Spokane planners have embraced the need for higher density living in the comprehensive plan that was adopted last year. And in the Spokane Building Department, Building Official Dave Nakagawara says the city is eager to be a partner in developing this new frontier.


"The paradigm shift is that we can't just think about development happening in open fields," says Nakagawara. "We have challenging, confined sites, and we have to recognize that. We know that this is going to be the wave of the future. If we're truly pointing growth inward, we need to make it successful."


So downtown living sounds like a no-brainer, huh? Of course there's a catch: Somebody has to build it.





Who Wants a Lawn? -- In every city where downtown housing had to make a comeback -- some, like San Francisco and New York, have always had it -- a handful of developers have had to pioneer the concept. Along with people like Ron and Julie Wells and Jim Kolva and Pat Sullivan, one such pioneer in Spokane is homebuilder Steve Thosath (pronounced "tow-set"), who laughs at the pioneer label, adding, "We've been reminded about that [label] at every bank in town. All the major players couldn't get away from us fast enough."


Thosath is a partner in the Blue Chip Loft condo project set in a circa 1910 warehouse near the railroad between Jefferson and Adams. Thosath says it's been a learning experience -- for him and for the financiers he has approached. While he is confident a financing package for the project is very close, he admits it hasn't been easy. Still, the reception to the idea from buyers has been overwhelmingly positive.


"We've had a lot of interest because it's something different," he says. "This hasn't been done in Spokane on this scale. It's really kind of refreshing to see something the rest of the world has really embraced finally come to Spokane."


Thosath's partner in the project is Susie Luby, a realtor with John L. Scott. "We definitely are working outside the box, and we need to find people who recognize the viability of this project," she says. "The city is very open to it, and the lending world is recognizing that it's needed. We're starting to get over those hurdles."


The 12 lofts offer indoor parking, hookups for a washer and dryer, individual heating and air conditioning units and a security system. The condos run between 750 and 1,500 square feet and are selling for between $125,000 and $190,000. Already their plans have won an American Institute of Architects award; no two units are the same, says Luby, and the seven buyers already committed come from all walks of life, too. Some are empty nesters, some are young professionals, but all are active, preferring travel to yardwork. And all want to be near the activities that downtown has to offer.


"As our community grows, it is getting a little more hectic to get across town," says Luby. "People are valuing their life-stlye and quality of life, and are recognizing that doesn't necessarily mean a large lot in the suburbs."


As a mid-sized city that has been successful in building downtown housing, Louisville has attracted local attention. Barry Alberts, the executive director of Louisville's Downtown Development Corporation, says Luby and Thosath have the right idea by offering a variety of units.


"You want the kind of unit buyers want and can afford," he says. "You never want to say, 'We have nothing like that.' "


While larger than Spokane, Louisville has a mix of high-tech and financial firms along with a major medical center not far from downtown. It perhaps offers Spokane a better comparison than even Seattle. (Downtown Louisville has about 60,000 workers every day; Spokane has about 25,000.) After starting a downtown housing initiative a decade ago, there have been 700 new units built or planned for downtown Louisville. Officials there ultimately hope to reach 2,000 units.


"The Louisville saga is no different [than other cities']," says Alberts. "The core are young workers -- knowledge workers. They like the urban lifestyle. They grew up in the suburbs, and they're sick of that. But there's been surprising interest from empty-nesters, too."


Those who live and work in downtown are the prime targets, however, and Chris O'Harra offers a good example here in Spokane. Co-owner of Auntie's bookstore, O'Harra moved into an apartment in the Liberty Building when her bookstore moved there in 1994.


"I always had this dream of living this way," says O'Harra. "I'd always read stories about people living above their grocery store. But I guess," she adds with a laugh, "I work too much since I started living in the building."


Even noisy moments when the bars let out hasn't soured her on her choice, and with a view of the Clock Tower and the Red Wagon out her front window, it's easy to see why.


"I love living down here," she says, "but it would be great to get more people living down here."





Risky Business -- To allow more people to join O'Harra, Demarest and the others who currently live and work downtown, the Downtown Spokane Partnership plans to make housing its top priority for 2003. The DSP, along with Washington Trust Bank, US Bank, Fannie Mae and the City of Spokane, is beginning a fact-gathering phase for a major housing initiative early next month, when urban consultants will visit Spokane to quantify the demand for downtown housing. And that's just the start, says DSP President Michael Edwards.


"We're at the door, and a breakthrough is coming," he predicts. "But we have to solve this chicken-and-egg thing about financing."


Edwards refers to the biggest problem every developer across the country has faced as downtown housing gathered steam in his or her city.


"There are no comparables," says Brewster of attempts to get accurate appraisals of his Montvale project, which is at Monroe and First. While he and Green plan to charge between $800-$1,200 a month in rent, when appraisers look at their plans, they white out that figure and pencil in something like $550, since that's what the current market bears. As a result, financial pictures grow bleaker, development is stymied and lenders look for safe bets out in the suburbs. Brewster is quick to add that some lenders are "getting it," including Global Federal Credit Union and America West Bank. But his partner Green adds that the tricky financing picture may require them to act as their own contractors on the job.


Part of what Edwards hopes to accomplish is to educate lenders in Spokane about mixed-use projects, like the Montvale, which has a pool hall and restaurant on the main floor and basement, with apartments planned for upstairs.


"But in America, that's not what we finance," says Edwards. "We finance single-purpose buildings."


The good news is that once Spokane gets past its pioneering phase, the outlook should improve. Both Royer and Alberts report that bankers' reluctance was a serious problem early on, but that as time went by and success piled up, there was actually competition to finance such projects.


"With product on the street and people moving in, the question of why downtown housing [makes sense] -- we don't even hear those questions any more," says Alberts.


But Louisville had to use it wits to get the ball rolling, and its approach is one that Edwards would like to bring to Spokane. Since most bankers were reluctant to lend to the first downtown housing developments, Louisville's Downtown Development Corporation convinced 14 banks and corporations to join together to create a downtown housing loan fund. The city of Louisville also matched their contribution, bringing the total to $5.5 million. The city sweetened the pot by offering some city land for projects, too. Under this system, no one bank had to assume all the risk. Also, the fund's directors, representatives of the 14 institutions, became experts on downtown housing, as they had to judge the various loan requests that came to them. The fund was used to fund around 15 percent of a given project, with a traditional lender handling the rest. That amount seemed to be enough to move a project from marginal to under-construction.


But, Alberts warns, it didn't happen overnight. It took a year to convince bankers to join the project. But all that pent-up demand they had forecast did materialize, and that first batch of seed money was gone in 14 months. The fund has since been refilled, offering the next wave of downtown developers in Louisville the chance to add even more units to the mix.





Public Assistance -- But financing isn't the only challenge. Many developers have looked to their local government for a helping hand. And while cities are limited in how they can participate, Royer says Seattle found ways to get involved. The city actually won some federal assistance to develop low-income housing alongside the rest of what was going up in Belltown. Royer convened a design commission to comb through the city's codes and regulations to make redeveloping old buildings easier and to make new construction more affordable. The biggest change was to allow wood-frame construction in downtown, something that has been outlawed in many Western cities that experienced devastating fires in their early years. And finally, Royer says, one of the first things he did was to make sure street trees were planted and a couple of pocket parks were added to the neighborhood -- not a huge amount of green space, but enough to make a difference.


Royer says he realized the city had turned the corner in the early '80s when a handful of prominent business leaders moved their homes from Bellevue to downtown Seattle.


"The restaurant boom happened, and then suddenly we got to a tipping point and people started building housing," Royer recalls. "At some point, you get a critical mass of housing, and the next thing you know it's taken off. Now [Belltown] is just a heck of a neighborhood. People want to live there."


In Spokane, however, there are some complaints that code enforcement is making downtown housing harder to build.


"The city hasn't addressed [codes related to renovations] to the degree they need to," says Brewster. "We live and work by many of the same codes as Washington, D.C., and New York, but we don't get the same rents."


Brewster says he can't understand why cool old timber beams need to be covered over by new drywall, but he is thankful that one of the Montvale's stairways was allowed to stand -- although that is only because of the building's designation as historic.


Thosath says the city's Building Department has been a big help -- "it has bent over backwards for us" he says, "but there's a lot of bureaucracy attached to the rest."


With a mish-mash of old railroad land involved in his project, the whole area had to be replatted. The "fast-track" process took five months. "I guess the paperwork machine doesn't know how to work any faster," he says.


And O'Harra recalls the disputes with the city over her apartment. "There are so many codes," she says. "I couldn't believe all the things we had to do."


All her windows had to be replaced with glass that had chicken wire in it, and the door to her porch had to have a huge metal, roll-down covering for fire protection.


Nakagawara, the city's building official, recalls O'Harra's project, and says his department has come a long way in the 12 years he's been there. Today, he says, the city is much better prepared to work with tricky projects. "We've got some wiggle room as long as the developer can give us something else that will raise the level of safety to today's code."


Nakagawara says his department is looking at new ways to reach the goals of making downtown living more engaging and affordable. There are tax credits that can be applied, and some new ordinances for mixed-use projects could be on the horizon. His department is now working with the DSP and the Spokane Fire Department on the wood-frame issue that was a problem in Seattle.


"We're open to looking at each building on a case-by-case basis," he says.


Beyond securing financing, winning the city's help and offering the right kinds of units, the final piece of the puzzle is to make downtown Spokane the kind of place people will move to.


"We may not have a 24-hour downtown," says Edwards, "but River Park Square has created at least an 18-hour downtown, with the dining and the movies."


"People want to be a part of the excitement," adds Alberts.


Still, the cultural amenities are only half the battle. Other issues are important to people, including parking -- yes, downtown residents keep at least one car -- and public safety.


"As someone who's actually lived here and not just wandered through," says Demarest, "the reality of the situation is that it's much safer than people would like to dramatize. And quite frankly, the grittier edges of downtown have their own aesthetic charms."


O'Harra agrees, saying that when Auntie's first moved, there were often transients sleeping in their doorway, but no more. For this she credits the DSP's clean team and security ambassadors, programs borrowed from the playbook developed in other cities that wanted to clean up their act.


"Downtown is safer and cleaner than it was a few years ago," says Edwards. "Those are issues that are very personal to people."





That Pioneering Spirit -- If the experience of other cities is any indication, there is already a demand for downtown housing among young professionals and empty nesters. The only thing keeping 500, 1,000 or 2,000 people from moving downtown is the lack of acceptable units on the street. Again, the only answer appears to be in local entrepreneurs pioneering by adding a handful of apartments here and a batch of condos there. Perhaps a real shot in the arm could come from a moderate-sized new residential tower, putting 100 units on the street all at once.


"We need a massive infill," says Brewster. "You've got to build it first. Demand may be there, but you've got to build the infrastructure prior to any real commitment from renters or buyers. There's no way to really assess the market without doing that."


Green, who plans to start living in another building he owns downtown next year, agrees: "This is going to be the first test. We are going to prove a concept and change the paradigm of what people feel about downtown living."

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