Economic pinch steps up 'rehab' trend inside the cities

Turning a century-old Victorian house into a modern city home was the fashionable thing to do for professional couples a few years ago. Today, the accelerating movement back to the city core is proving to be more than a trend for the trendy.

Several factors -- inflation, the high cost of energy, an aging population, smaller families, and the emphasis on conservation -- are fueling the trend.

Sprawling suburbs with large houses -- expensive to heat and far from the workplace -- have lost some of the appeal of a decade or two ago.

The current trend to community renewal, with home renovations, commercial conversions, and downtown revitalization, is the "harbinger of new economic realities," according to Robert Maffin, executive director of the National Association of housing and Redevelopment Officials.

Mr. Maffin was representing the view from the United States at a comprehensive international forum on community renewal held here recently.

The conference drew 1,500 delegates from Canada, the United States, Australia , Britain, Spain, and Italy.

It was organized by the Ontario Ministry of Housing with the support of more than 20 Canadian and American organizations to assess opportunities in the renewal industry in the decade ahead.

Mr. Maffin, who has been active in urban renewal for more than 25 years, said that the 1980s will be the "consequential decade," when the nations must face the consequences of rapid postwar development.

"After the war, most of our energy was dedicated to producing consumer products," he asserted. "The whole system is now changing. We are in an era when we are desperately concerned with conserving our natural resources."

Renewal activities offer great opportunity to a devastated construction industry, he added, although he questioned whether the industry is prepared to work within the new economic perspective.

"We need new relationships between the private and public sectors, a new range of public policies, and new techniques for facilitating the need for renewing and conserving our communities," he added.

Delegates gathered at the week-long forum for precisely that purpose: to the define the policies and techniques required to develop the potential of an industry that accounts for $4 billion worth of business in Canada annualy and many times that figure in the US.

One of the main requirements for the success of the industry, it was emphasized, is that industry and government support each other in developing policies required in tough economic times. The need to deregulate and cut red tape and to establish building codes that are particularly suited to renovation and conversion also received commitment from government officials at the forum.

Several consultants and representatives from the construction industry complained that lenders were too wary of financing home renovations and conversions, forcing the renovator to borrow at consumer loan rates.

Paul Pfeilsticker, vice-president of the Continental Bank of Chicago, said that lending institutions were too inexperienced in second-mortgage lending, the technique best suited, he said, for financing renovations and conversions. He said this area will grow as banks improve their knowledge about the equity market and learn to master the technique of second-mortgage lending.

A need to retrain skilled people in the special requirements of renovation and conversion work also was identified. Builders were urged to research the field thoroughly before attempting to move into it.

The trend to renovation, along with the movement back to the city, is, in turn, igniting interest in the downtown. A panel of American experts in downtown revitalization warned, however, that many pitfalls await smaller communities in particular when they attempt to upgrade their central business districts.

Mary Means, director for the National Heritage Trust and soon to head up the Main Street Resource Center in Washington, D.C., noted that most planners are trained in "big-city solutions that are inappropriate to the small town."

Towns that are interested in revitalizing their business areas, she added, should be wary of the shopping-center industry -- "a sophisticated group interested in keeping customers within the confines of the center, even those located in the downtown area."

Lawrence Alexander, director of the Downtown Research and Development Center, added that North American cities often copy European techniques, with disastrous results.

A case in point is the pedestrian mall, viewed by many as a cure-all for downtown problems.

But, according to Mr. Alexander, "it is very difficult to ascertain whether a mall is successful or not. It is important to understand that the economic impact of a pedestrian mall is small but positive.

"Often, it will be the final touch, bringing quality and luxury to the downtown."

Margaret Larsen, a New York consultant in downtown revival, said that there is no one solution to community renewal.

Preservation and living downtown are the new cliches, she added, "but they are simply the final two pieces in the puzzle."

The warning to the industry against putting all its eggs into the renovation basket was echoed by Andrew Tait, director-general of the National Building Council of the United Kingdom.

"Don't put too much emphasis on the economic indicators," he urged.

"People here are terrified of paying $4 a gallon for gasoline," he said. "In Britain we pay that now and people still drive. People still live in the suburbs and like it, and there is a strong demand for new houses. As for the baby boom, don't get upset about it. Babies are not very active in the housing market."

At a time, however, when the construction industry is experiencing its worst slump in years, the idea of picking up the slack through renovation had great support among delegates from the industry.

Mr. Tait noted that in North America, the industry will have an edge, since the problem, particularly in Canada, is being tackled before it gets too difficult.

"It may be possible to achieve much more here in renovation with a lot less government money,"