Ghost Town 

What if they built the development of the future and no one came?

Ten days before Christmas, the four-foot-tall Santa Claus in the doorway of Minda Dudley's chiropractic office giggled and danced, moving spasmodically to the Christmas carols emanating from its guts. The lampposts in the central plaza were wrapped in red and green ribbon, and the fountain at the middle of the plaza splashed pleasantly. It was a tidy, agreeable scene at the Fruitvale Village, the one-year-old cluster of retail shops, offices, and apartments near the Fruitvale BART station. The only missing element was customers.

Nearby church bells struck noon, but the Burger One restaurant was empty, its Formica tables glistening forlornly. At the shoe store next door, the lone salesgirl swept the floor. And inside Dudley's office, the chiropractor vented the frustration she has held in check for more than a year.

"There's a huge problem for merchants here," said Dudley, a tall woman in earth tones who perched on the gray chiropractic table in the back room. "It's time to face up to facts. The reality is, it's not working. The plaza isn't working."

Dudley's stark assessment may surprise many people. When Fruitvale Village opened in May 2004, newspapers, environmental groups, and government officials all lined up to hail the project as a national model for "smart growth." By clustering moderately priced housing near BART stations, such so-called "transit villages" would increase mass transit use and cut down on the number of cars on already clogged highways. By building in densely populated quadrants of the city, they would reduce suburban sprawl, and therefore help preserve open space. And by combining housing with retail and community services, they would create walkable neighborhoods, street life, and a sense of community.

Fruitvale Village was so well received that the Sierra Club lauded it last month as one of the nation's twelve best new development projects. Officials have come to study the project "from across the country and around the world," according to its developer, a nonprofit organization called the Unity Council. And other Bay Area government agencies are so enamored of the model that they've made future transit extensions contingent on planning such transit-oriented developments.

Almost every BART station throughout the Bay Area has a transit village project in some stage of planning or development. Four are already partially completed -- in Fruitvale, Castro Valley, Hayward, and Richmond -- and plans have been approved or partially approved at seven other stations, including Ashby, Dublin/Pleasanton, and Pleasant Hill. At 25 other locations, the process is one or more steps behind. Bay Area governments are preparing to spend tens of millions of dollars on a development model that has not been studied, tested, or proven.

Yet the many boosters of smart growth have been too busy applauding the concept to notice that back at Fruitvale Village, the movement's flagship is taking on water. The first 47 apartments were rented quickly, and community-oriented tenants such as the public library branch and the Head Start program have had plenty of clients. But many of the merchants who serve as the village's public face are growing increasingly desperate. Already, a restaurant and a Curves fitness center have closed. At least six other merchants say they are struggling, and two of those will likely shutter their shops in the next few months. If retail doesn't succeed at Fruitvale Village, it could bring down the whole project.

Fruitvale Village depends on rental income from three main sources: residences, offices, and retail storefronts. "In terms of basic, functioning economics, the retail component is critical," conceded Jeff Pace, the Unity Council's vice president of finance and business operations. "The project is mortgaged as a whole, so all the revenues go to pay the same loans. If any component doesn't succeed, the whole project is at risk."

As with most developments, retail tenants at Fruitvale Village generate higher revenues than either residential or office tenants. Most of the apartment dwellers pay around $1.10 per square foot in monthly rent, except for the ten renters who occupy the affordable-housing units and pay less. In the office sector, the Unity Council pays itself about $2 per square foot, but still hasn't found any other office tenants willing to pay that rate; a 21,000-square-foot office is still empty after two years. Retail was intended to do the heavy lifting, with rates around $2.20 per square foot.

If retail tenants were important to the economics of Fruitvale Village, they will be absolutely essential to many of the Bay Area's other proposed transit villages. Unlike the Fruitvale project, which was developed by a nonprofit with a deep and abiding interest in the overall health of its neighborhood, most other projects will be spearheaded by private developers with a deep and abiding interest in making a profit. "Therein lies the difference between the Fruitvale transit village and most other transit villages that I'm aware of," said Scott Harriman, a senior planner at Walnut Creek's community development department. "It was a unique beast in that it was driven by a nonprofit whose goal was to revitalize the neighborhood."

Private developers also can't count on the same level of federal and local government support that the Unity Council received. As a nonprofit launching a test case for a new type of development, the Unity Council received about $10 million in grant money. But as similar proposals from private developers pile up, the government's largesse is likely to decrease.

Such "mixed-use development" projects have been a popular recent trend in city planning. The idea is that combining retail and residential creates a lively streetscape and an improved quality of life for residents. "The whole motif is retail on the bottom, residential units up," Harriman said. "They serve each other, they feed on each other." But this scenario may be imperiled if other developers are spooked by the Fruitvale Village example.

Dudley believes the problem with Fruitvale Village is a layout that allows BART commuters to go straight from the trains to their cars in the parking garage without passing through the plaza. She thinks there aren't enough attractions to entice customers to the plaza, a problem exacerbated by stores that have been slow to open and others that are still vacant. While a bit of foot traffic trickles in from bustling International Boulevard one block away, the tastes of those shoppers differ significantly from those of the BART commuters the merchants expected to cater to. "We feel misled," Dudley said. "When I talked to the Realtor about opening up here, they promised there would be six thousand people coming through here per day to shop. It was supposed to be this booming place."


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