Contruction Today - July/August 2017 - 15

CONSTRUCTION LAW

* Subdivision - The subdivision of components within a mixed-use project may
not be necessary when the developer
intends to keep the entire project in
a single ownership as an investment.
When the plan includes a division of
ownership, however, such as selling
residential condominiums or spinning
off a retail component, subdivision of
the separately owned airspace or parcels
is a legal requirement. This may mean
a horizontal or vertical subdivision,
sometimes both, or the creation of one
or more condominium projects. Each of
these types of subdivisions involves its
own state and local approval processes
and, especially with condominium projects, regulatory requirements regarding
operation, management and sale.
* Prevailing Wage - While mixed-use
projects are not necessarily subject to
prevailing wage laws, particularly if they

are not supported by public subsidies or grants, they may not
qualify in some states (like California) for automatic exemptions. A fee credit or other incentive provided by a public agency
could inadvertently trigger prevailing wage requirements for a
mixed-use project, which could impact the bottom line to a far
greater degree than the credit or incentive itself.
* Security - The public access necessary to accommodate
commercial and retail components of a mixed-use community
means the developer must give greater consideration to safety
and security in the design of the entire project. For instance, the
creation of internal plazas and common areas that are not visible
from public streets, but are accessible by the public, can invite
potential squatting and crime. The project design should address secure ingress and egress for residents, including whether
retail and residential components will share elevators, if parking
areas will be segregated or gated, and whether common areas
and amenities will be made available to different project components. In addition, adequate lighting not only makes common
sense, but it may be a legal and risk management necessity to
avoid future design liability.
* Reciprocal Easements and Uses - Generally, all condominium
and other common interest development projects are governed
by declarations of covenants, conditions, and restrictions (CC&Rs)
that contain easements for use of common areas, parking and
paths of access. This is nothing new. Mixed-use, however, brings
with it the potential for incompatible uses and the need for
additional easements. Obviously a nightclub or saloon may not
be suitable immediately below residences. Even quieter retail
uses, such as restaurants, may require special easements through
the building for proper ventilation, odor or pest control. Special
private use restrictions should be created with the CC&Rs or
other agreements that are strict enough to appease residents, but
flexible enough to make commercial/retail spaces marketable.
* Parking - Parking is almost always a concern in new mixeduse developments. It is both a design and operational issue
that should be examined early on. The amount of allowable
parking may be impacted by many factors, including supply and
demand, entitlements and proximity to public transportation.
Whether parking is assigned or unassigned, self-park or valet,
free or fee-based, operated by a private company or an owners'
association, are all questions that should be addressed early in
the planning process. If parking is available for both commercial/retail and residential use, the design ideally should incorporate segregated parking areas for each. Trends toward electric
and driverless vehicles, as well as ride share systems, also need
to be taken into account.
* Organization and Governance - Where commercial and residential components exist in the same building project, orga-

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