Affordable housing developments, working on much tighter cost margins than market-rate, higher-end developments, are particularly sensitive to off-site infrastructure improvement costs, maintained Johnson. In many of its developments, LINC works closely with cities to fund some of these improvement costs to preserve affordability and contribute to the quality of life of the surrounding community, he added. SEASONS at Ontario Gateway Plaza, in Ontario, California, is an example of a shopping center that was converted into a mixed-use community through a public/private partnership. Developed by LINC Housing, the project, which replaces a 40-year-old dilapidated shopping center, combines retail and residential uses in a large-scale urban redevelopment plan in this older suburban city of 146,000 located in the city’s designated redevelopment area. The revitalized property includes 80 units of affordable housing for seniors and 153,000 square feet of retail shopping space.

The network of partnerships and the financing structure to convert shopping centers into mixed-use communities can be intricate. For example, with SEASONS at Ontario, construction financing for the residential component of nearly $3.17 million was provided by Bank of America Community Development Bank with long-term financing through credit-enhanced tax-exempt bonds of $2.3 million; Edison Capital Housing purchased $2.1 million low-income Housing Tax Credits. Overall, the combined project cost approximately $24 million, including $5 million in redevelopment funds, of which $1.5 million was for the commercial side and $3.5 million for the residential. The city purchased the land and leased it to LINC Housing and also made a loan to be repaid by residual receipts from cash flow.

The residential component is an 80-unit one- and two-bedroom apartment community located through the “gateway” at the shopping center. The affordable apartments are home to active seniors (55 years and above) whose incomes are at or below 50% and 60% of the average yearly income for San Bernardino County.

The coming years will be challenging as California’s real estate developers and builders look for new ways to house people, build businesses, accommodate traffic and protect the state's environment. Focusing their creative energies and resources on transforming marginal shopping centers into vibrant suburban villages could be one solutions.

Christine Rombouts is Costa Mesa, California-based freelance writer specializing in the residential and commercial building industries.

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