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Credit crunch leaves trendy mixed-use developments on shaky ground

Published: Sunday, April 12 2009 12:00 a.m. MDT

A TGI Friday's restaurant sits vacant at the Cottonwood Mall. Thursday, April 9, 2009. Michael Brandy, Deseret News      (Michael Brandy, Deseret News) A TGI Friday's restaurant sits vacant at the Cottonwood Mall. Thursday, April 9, 2009. Michael Brandy, Deseret News (Michael Brandy, Deseret News)

HOLLADAY — On a drizzly day last spring, the mayor of Holladay climbed into an immense yellow tractor to help break ground at the site of the Cottonwood Mall.

Accompanied by bombastic symphonic music and the cheers of construction workers and local dignitaries, Mayor Dennis Webb then overturned a load of rocky soil, signifying renewal of the mall property into a walkable "European village."

Almost a year later, the dead of winter is again sprouting into a verdant spring but the mixed-use project on the eastern foothills hasn't taken root.

The fenced lot is now blocked off to the public. Its 57 acres are devoid even of tractors, footprints or "coming soon" signs.

"It's sad they haven't built it," said Ellie Drees, who was shopping recently in Macy's department store, the only business open on the block. "I was looking forward to it."

Drees, a German immigrant, used to shop Cottonwood Mall from end to end, she said. She now misses the bustling of customers in the almost-empty Macy's and fears the store could go out of business, like the nearby T.G.I. Friday's restaurant.

Similar scenarios have played out across the Wasatch Front, from Layton to Orem. The largest projects all have stalled, with the exception of The Church of Jesus Christ of Latter-day Saints' City Creek Center development in downtown Salt Lake City.

Smaller projects financed prior to last year's credit crunch are moving forward, but few if any mixed-use ventures — those featuring residential, retail and office space — are seeing the light of day.

Many of the largest projects were billed as one-of-a-kind proposals that would put their respective cities on the map by using New Urbanism trends such as "walkability" and structures built to "human scale."

Some, such as Sandy's high-rise Proscenium, did feature unique architectural plans. But taken as a whole, the trend toward mixed-use projects is more like a flavor-of-the-decade than a novel notion.

"Where it is a problem is where this has become formulaic," said Stephen Goldsmith, a professor of urban planning at the University of Utah. "These are so scientifically produced — housing and retail for a target market (of 13- to 30-year-olds) and a splash of Coldwater Creek. That's what removes the vibrancy. Instead of these organic, self-organizing streets, they might as well become Disneyland."

But Goldsmith was quick to add that he isn't against mixed-use development.

"As long as mixed-use development is understood for its real value, there are only things to be gained from that," the former Salt Lake City planner said.

Fellow academic James Wood, director of the University of Utah Bureau of Economic and Business Research, has researched Utah development extensively.

"Those massive projects, they're all, I think right now, in a holding pattern to see how this (recession) all shakes out," Wood said. "Consumer business is going to be very different once we get through this."

Large projects that have been interrupted statewide include Market Station in South Salt Lake, Station Park in Farmington and Midtown Village in Orem. Other projects, such as a new West Valley City center and redevelopment of Valley Fair Mall, have seen work slowed but not stopped completely.

Most of the projects have been promised future property-tax breaks and infrastructure help from the municipalities in which they are located.

For spots such as the former Cottonwood Mall, where profitable buildings once stood, stalled projects are hurting those same municipalities by depriving them of a commercial tax base.

Wood said he believes some of the largest projects could be forever halted.

"People tend to spend when they feel like they have a lot of wealth," he said. "When markets go south, everyone suffers. There is just too much in the macro market."

When cities approve these large developments and agree to tax-increment financing, they don't look at the "market mosaic" in the valley, Wood said. Elected officials instead rely on property developers to gauge the playing field.

Contributing; Aaron Falk. E-MAIL: rpalmer@desnews.com

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