"The greatest challenge of developing mixed-income, mixed-use projects is convincing investors that each component can stand on its own. You also need a very experienced development team. This is no place for on-the-job training," says Joshua Simon of East Bay Asian Local Development Corporation (EBALDC). Simon speaks from experience. EBALDC, a private nonprofit developer in Oakland, California, recently transformed a historic landmark, Swan's Market, into a vibrant city block with shops, restaurants, art galleries, and affordable and market-rate housing. EBALDC also manages the facility.

Redevelopment of Swan's Market began in 1996, when the Oakland Redevelopment Agency selected EBALDC to renovate the Swan's Market block as part of the Old Oakland neighborhood revitalization. The city of Oakland bought the property, valued at $2.4 million, in 1994 and sold it to EBALDC for $4. In December 2000, EBALDC completed a 2-year renovation of the original 1917 Swan's Marketplace into three buildings around a courtyard.

Vacant for 15 years, Swan's Market now draws people with its lively array of places to live, shop, work, and dine. There are 2 housing options: 18 one- and two-bedroom apartments with affordable rents and 20 market-rate, cohousing condominiums. Located in a new building, the apartments share a ground-floor community room that opens onto a courtyard. Low-income housing tax credits keep rents affordable to families with incomes below 60 percent of the area median income. The condominium lofts, located within the original market, combine homeownership and cohousing that allows potential buyers to invest in the development in exchange for approval rights over design. Cohousing combines private dwellings, each with its own kitchen and living area, with extensive common facilities and a strong sense of community. Swan's 24 commercial spaces house restaurants, fresh food vendors, offices, art galleries, and the Museum of Children's Art. Community areas include an outdoor arts courtyard and a parking garage.

Swan's celebrates 2 successful years. During Swan's first 2 years, housing and retail uses showed strong performances, including low turnover rates and good cash flows, according to Nancy Canady, EBALDC's facilities manager. The apartments and condominiums are fully occupied. All 20 households that originally reserved a condominium purchased the unit, moved in, and have no plans to leave.

EBALDC received more than 400 applications for the 8 one-bedroom and 10 two-bedroom affordable apartments. Ten residents already lived in the neighborhood, and 8 relocated from other areas of Oakland. The low-income housing tax credits allocated to Swan's Market are keeping rents generally affordable without additional rental subsidies. Only 2 of the 18 current residents have Section 8 vouchers. EBALDC maintains a long waiting list for the apartments.

EBALDC is also meeting its commitment to generate employment opportunities for local residents at the marketplace. Each retail lease requires the business to notify EBALDC management if there is a job vacancy. To date, four apartment residents have secured retail jobs at the marketplace, and Canady expects resident employment to increase in the future.

EBALDC's experience points to the challenges of mixed-use developments. "It is very important to plan ahead, because it is harder to reconfigure spaces in mixed-use developments," Simon comments. Whatever is above and beside a particular store, apartment, or office will restrict future use of that space. For example, Swan's Market has a first-floor dry goods store located below a second-floor condominium. If the dry goods store were to move out, EBALDC could not lease the vacant space to a restaurant because this would require installing a flue through the condominium, and the restaurant traffic would present a nuisance to second-floor residents.

Canady has altered some of the commercial leases to give her more flexibility in attracting new businesses. Some of Swan's leases contain exclusivity clauses giving a particular merchant the sole right to sell an item, such as imports from one country. However, these exclusivity clauses occasionally become too restrictive when Canady tries to find a new retail tenant. Therefore, EBALDC management has the authority to rewrite leases, if needed, to attract new businesses and maintain high occupancy levels.

Unique financing and ownership structure. "Developing Swan's Market, including assembling a $20 million financial package, was so complicated that only a nonprofit developer such as EBALDC was willing to tackle the project without demolishing the original building," says Simon. Swan's Market was actually four separate projects: the commercial parcels, community areas, rental housing, and condominiums.

Also, EBALDC created a unique ownership structure for the project. Swan's Marketplace Limited Partnership, with Swan's Marketplace, Inc., as a nonprofit general partner, owns two parcels—the commercial-retail parcel and the EDA-funded courtyard. A second limited partnership owns the rental apartments. The owner of the condominium parcel is Innovations for Home Ownership, a for-profit organization. Potential future condominium residents formed a California limited-liability corporation (LLC) to make a loan to Innovations for Home Ownership. Many of the LLC participants eventually purchased units. Four of the homebuyers purchased homes with assistance from the city's first-time homebuyers' program.

Returning to the original challenge—is each component of Swan's Market standing on its own? "So far, so good," replies Simon. Not only is Swan's a success in its own right, but the project also is helping to revitalize the entire Old Oakland community by bringing in significant investment capital. Swan's Market has received national recognition, including the 2001 Rudy Bruner Award for Urban Excellence as an adaptive reuse of a historic building incorporating residential, commercial, and arts-related uses.

For more information, contact: Joshua Simon, The East Bay Asian Local Development Corporation, 310 Eighth Street, Suite 200, Oakland, CA 94607, e-mail: JSimon@ebaldc.com, Web: www.ebaldc.com/organization.

Or visit: Swan's Market Internet site: www.swansmarket.com, The Bruner Foundation: www.brunerfoundation.org, or The Cohousing Network: www.cohousing.org.