Thursday, February 10, 2011
For a long time, one of the biggest hurdles to building a mixed-use project were zoning codes that segregated uses by type and, generally, did not allow the mixture of compatible uses.
To a large degree, even cities with Euclidean-focused codes have begun to allow these mixed-use developments. Thus, the regulatory challenge has been mitigated to a degree.
However, another challenge remains: financing mixed-use projects. With Fannie and Freddie essentially funding so many projects these days (through their purchases of MBS-type instruments), these two housing giants really drive housing policy.
That's why this proposed change to allow a greater mix of compatible uses within a single project would be a key policy change by Fannie and Freddie that would further enable this sustainable form of development:
The Congress for the New Urbanism and the National Association of Home Builders are calling for politicians to spur policy change for government-sponsored entities Fannie Mae and Freddie Mac. The groups want both organizations to be able to purchase mortgages for mixed-use projects with greater amounts of commercial square footage. Local professionals believe the policy change would open doors for more projects.
Fannie Mae and Freddie Mac, which purchase residential mortgages from loan originators, are restricted. Fannie Mae can’t purchase the mortgage of any mixed-use project where commercial space totals more than 20 percent of the overall square footage. Freddie Mac’s limit for commercial space is 25 percent.
“These rules are hurting the progress of sustainable urban development across the country,” said John Norquist, president and CEO of the Congress for the New Urbanism, a Chicago-based nonprofit committed to smart planning and growth. “It’s leading developers away from the concept of housing above commercial space in urban environments and towards suburban sprawl.”
The Congress for New Urbanism is calling for both Fannie Mae and Freddie Mac to either increase the maximum square footage of commercial space to 50 percent of the overall project, or remove the limits entirely. The National Association of Home Builders is asking for the maximum to be increased to 45 percent.
Read the entire article, here.