Thinking small can make a big imprint

With one eye on the residential towers rising into the city’s skyline and the other on new mixed-use plans hatching outside the urban core in Bellevue and Cool Springs, many Nashvillians are waiting for big-name projects to inject the region with a jolt of economic activity.

However, often outside the public’s prime-time attention span, the city's infill districts offer an opportunity for quiet but substantial economic development. A well-placed corner store or restaurant not only revitalizes a blighted neighborhood; it also adds a healthy business to a city in increasing need of new taxpayers.

In East Nashville’s Inglewood neighborhood, Dan Heller's Riverside Village is a textbook example of a small-scale project making a large impact. Before Heller bought the buildings at Riverside Drive and McGavock Pike in 2006, the intersection was a barren strip of stores backed up against a junkyard, the scene of frequent violence, drug busts and the site of the recording studio where Adam ‘Pacman’ Jones reportedly dabbled in music.

Today, the scene is considerably different. Since purchasing the structures and pumping more than $900,000 into the development, Heller has helped transform the neighborhood by adding Mitchell's Deli, coffeehouse and bakery Sip, dessert maker Mike's Ice Cream Factory, and others.

A few miles south, developer March Egerton is in the middle of a similar neighborhood transformation. His building, Walden, is a sleek modern structure featuring several shops and gallery space, all topped with condos. Nestled on a plot of land that once housed an abandoned nursing home, the structure is the first in a planned seven-building facelift of the area.

Although both men have been successful so far in revitalizing once-blighted neighborhoods, they say they can't imagine moving forward with similar projects in other parts of the city today — even though they say such projects are needed now more than ever.

“I want to do this in other parts of town,” Heller told The City Paper. “I'm looking at other areas that I think could be very good if not for the onerous process that you have to get involved with.”

Small developers have long complained about the building process in Nashville, charging that Metro’s fees and Byzantine approval processes discourage individual investors or a small development group working on a tight budget or timeline. And while such gripes have long been the standard refrain from developers, the impediments have taken on a greater significance today, developers say.

Whereas procedural headaches and expensive fees were merely troublesome when times were good, most now believe that in a recessed climate, they can mean the difference between getting a project done or not.

“The barriers to entry for small developers seem to reflect that the city to a certain extent is not really acknowledging the market realities and the market implications of how things are structured right now,” Egerton said.

Heller and Egerton are among a growing group of developers and city officials pressing Metro government to change the development processes for infill projects in order to encourage the type of neighborhood revitalization seen in Inglewood and East Nashville.

“We have neighborhoods that can be viable, but the government must take leadership in working with the private sector,” said Metro At-large Councilman Jerry Maynard, who recently organized two meetings to examine ways Metro can improve economic development.

Not much coming from next budget

The economic pressures that may be keeping infill developments from moving forward are pressing on Metro as well. As Metro government launches a new season of budget planning amid Finance Director Rich Riebeling’s call for department cuts of 10 percent, it is questionable whether the city is in a position to offer the type of incentives that could ‘green light’ such projects.

Reducing or waiving fees is the first suggestion developers tend to bring up, and is usually the suggestion the city is quickest to counter.

In 2007, a number of the Planning Department’s application fees were raised. Today, according to the department’s Web site, among the highest common fees developers pay are $1,975 for a Planned Unit Development Application, $6,196 for the Specific Plan Application and $8,845 for an Urban Design Overlay Application.

Heller and Egerton have both suggested that Metro waive or at least lower the fees for infill projects, and the idea has gained traction. At Maynard’s Jan. 6 special meeting on economic development, the suggestion was on the agenda for discussion.

However, in its current budget crunch, Metro doesn't have the flexibility to forfeit an income source, according to Riebeling.

“It's hard to reduce fees at a time when you're having revenue issues and budget concerns,” he said.

But developers believe the city is not properly weighing the long-term tax impact of infill projects.

“The city has taken the ultimate short view of generating revenue,” Egerton said. “If what you do ultimately has a severe dampening effect on development and on small business, then you're just cutting everybody's collective throat.”

Metro stands to earn more off a project by waiving upfront fees so that a development can be completed because it will then collect more property taxes, Egerton said. In blighted areas, new retail or commercial options can generate considerable increases.

Although Riebeling said that he has spoken with members of Metro Council about waiving certain fees — and is considering the option for next year's financials — he cautions that tight budgets don't budge.

“Reducing and eliminating fees are not going to get us out of this economic situation,” he said.

Clearing the clutter

Developers have also suggested that the city work to streamline the approval process for infill projects. The issue of a streamlined process has come to the attention of District 12 Councilman Jim Gotto, a member of the Planning Commission.

“Sometimes, the requirements for the different departments can be somewhat in conflict,” he said. “[Developers] end up getting bounced back and fourth between two or more departments.”

Gotto said he'd like to see the various departments centralized into a ‘clearing house’ or one-stop shop for developers.

Despite the call for Metro’s help in streamlining the process for infill projects, smaller developers maintain that the city lacks a basic distinction in the development process between large- and small-scale projects.

“I understand they need to apply the rules uniformly, but this is not Bellevue. It's an infill area that requires different thought and attention,” Heller said. “They apply the rules as if I'm a huge developer.”

Folks on both sides of the issue say it is likely that the demand for government encouragement for infill development will only increase as the economic situation worsens. And they also agree that, if new developments — both large and small — don’t happen, the lack of new tax revenue will shift the economic burden back to taxpayers. And that won’t make anyone happy.