Economic redevelopment of small-city downtowns: options and considerations for the practitioner.

• Author: Hipler, Harry M.
• Position: Part 1

Downtowns play an important part in the strength of most cities in the U.S. From its inception, the downtown has served as the gathering place for processions and celebrations of community events. Downtown epitomizes the heart and soul of most cities. (1) For the past 20 years, there has been a rebirth in small cities and their downtowns. These areas are considered to be nonprimary and noncentral cities located within metropolitan areas with populations between 15,000 and 110,000. Many small-city downtowns have experienced increases in the number of households in downtown and commercial businesses, in spite of zoning laws that have encouraged suburban sprawl. The fact that many downtowns have experienced such growth and development demonstrates a commitment to create a vibrant place to live and work in an urban environment. (2)

This article discusses alternatives and methods that can be used by real estate attorneys, developers, and planners to enhance a small-city downtown while representing their respective public or private sector client in developing an economic revitalization plan.

Economic Development in Small-city Downtowns in the Latter Half of the 20th Century

Small-city downtowns across the U.S. have been swamped with economic development problems since the 1950s. Encouraged by the passage of the Interstate Highway Act of 1956, development friendly tax policies, municipal desire for revenue-generating commercial property, and growth of such discount superstores as Wal-Mart and Target, commercial real estate development has substantially increased in recent years. The new commercial space, which came in the form of shopping centers, discount superstores, and shopping malls, transferred sales and jobs from downtown cities to another retail area: the strip. The strip took sales away from downtown and caused its businesses to move to the suburbs or go out of business.

With fewer businesses, downtown became poorly maintained and rundown. Retailing, professional offices (i.e., medical, legal, financial), movie theaters, hotels, and government activities in facilities such as libraries, post offices, and city halls were once dominant forces in downtown cities, but the movement of these entities to the suburbs made downtowns less desirable places to experience. As such, the centrality of functions that used to be offered by downtowns became less important and a vicious cycle arose in which remaining businesses were forced to close or relocate elsewhere as the number of downtown visitors declined. The image of downtown as an outmoded place with vacant storefronts, poorly maintained buildings and sidewalks, and empty streets began to stick in the minds of many individuals as the city's tax base decreased and development slowed. (3)

These forces and interrelated problems that added to the decline of downtowns help to explain the dilemmas facing current small-city downtowns--difficulty in appealing to and drawing new development. (4) Factors that contributed to the decline of downtowns include their small size and small market area demands; a sense of a "malaise" due to the perception that large- and medium-sized city downtowns with their larger workforces, market areas, and attractions have better available options to make downtowns more exciting; the difficulty in attracting people to small-city downtowns on weekends and evenings while large-city downtown counterparts often attract an active nightlife; and emerging competition from discount stores and suburban malls outside downtown--Wal-Mart, Target, Kmart, and regional shopping malls on the edge of the city. Additionally, the fear of an economic disaster caused by underused retail space--a "white elephant"--can destroy any simulation of vital street life in the...