By Josh Brown
ars
lined up outside the new Starbucks in downtown San Bernardino on a recent
morning. Inside, customers sat on plush chairs, sipped lattes and typed on
laptop computers.
Across the street, the massive parking lot of the Carousel Mall was
mostly empty.
While the bustling new café is a baby step forward in the city's efforts
to revitalize downtown, the 35-year-old mall represents its biggest hurdle.
The housing market is in its biggest slump in a decade. And for city
officials, who hoped to pull the city's core out of its malaise by building
hundreds of homes where the mall is now, skyrocketing foreclosure rates and
falling home prices could set their plans back years.
"One of our real challenges right now is the economy," said Emil Marzullo,
the mayor's economic development adviser. "All of the developers are in a
'slow down and wait-and-see' mode."
The city has tried for decades to breathe life back into its downtown
after three major regional employers -- Kaiser Steel, Norton Air Force Base
and Santa Fe railroad -- cleared out.
The Carousel Mall redevelopment, the centerpiece of that plan, hit a snag
this month when LNR Property Corp., a Miami Beach, Fla.-based developer that
had signed on to the town homes and condominiums development, expressed
doubts that such a project would work in the current housing market.
"Right now high density is risky for developers, not just for our city
but for all of Southern California," Marzullo said.
Bubble-Born Idea
Joel Kotkin, an expert on California's cities and a presidential fellow
at Chapman University in Orange, said the cooling housing market makes dense
residential developments difficult to carry out.
"There were assumptions that came out of the housing bubble that people
would run out of land, and they would have no choice but to buy a dense
product," he said. "But if the market goes down, there are a lot of
foreclosed houses that are on sale for cheap."
It would not make sense for a homebuyer to buy a new, expensive condo
when they could purchase a foreclosed home for half the price, Kotkin said.
Marzullo said in a good economy, developers and city planners often have
an easier time agreeing on what kinds of projects to push forward. "Everyone
is looking at the long term because it also means they can make money in the
short term."
Several development efforts have focused on other parts of the city, such
as Hospitality Lane and the area near Cal State San Bernardino. But delays
continue on a decade-old plan, known as Lakes and Streams, to bulldoze 350
homes and businesses for a 42-acre reservoir in an effort to rejuvenate the
downtown.
Funding shortfalls have forced city leaders to consider halving the
current 16-block proposal for 72 homes, 12 acres of commercial properties, a
lake and a boat ramp.
Developer Jim Watson said despite the current housing slump, the city
should continue trying to get homeowners downtown.
"It's going to take a little bit of time before the market will turn
around," he said. "But I think it's going to be difficult to have downtown
make a significant return without having either a significant number of new
housing downtown, or bringing in a significant amount of jobs."
Kotkin said dense residential components work well in environments with
lots of amenities, like restaurants and shops -- a dearth of which exist in
the city's core.
Government Buildings
It isn't all bad news for city planners. Across town from the mall,
county officials are working on plans for the new county government complex,
a $300 million project approved in July to help ease the space crunch for
the San Bernardino County government's work force.
In the meantime, work continues on plans to build a transit transfer
station at E Street and Rialto Avenue. Officials have identified the station
as key to efforts to make the city more pedestrian and public-transit
friendly.
And city development officials say the new Starbucks, which opened this
month, could attract more businesses.
"I don't believe just sitting a Starbucks will spur activity downtown,"
Marzullo said. "But it causes people to feel like something is happening
downtown."
Officials struggled for years to persuade Starbucks to build a coffee
shop downtown. The city originally encouraged the coffee company to build a
restaurant on the corner of Fourth and E streets, within walking distance of
thousands of government workers.
Jim Delehoy, Inland Empire development manager for Starbucks, said the
corner of Second and F streets was more attractive because the company could
build a drive-through and be on the main entry corridor for downtown.
"We felt that this location would allow us to enter the market about two
years before we could have at other locations," he said.
The coffee shop is one of the few Starbucks in the country where the
Seattle-based company owns and developed the property itself, Delehoy said.
The company bought the property and tore down the building that used to
house a Long John Silver's.
"That represents a significant commitment to this location and the city,"
Delehoy said.
