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I can’t recall a time when a ULI program simultaneously got my heart pumping and moved me emotionally to tears, but that’s exactly what happened during the New Housing Paradigms Forum on Tuesday afternoon at the ULI Fall Conference in Dallas. What an amazing group of passionate, purposeful, and deeply community-focused providers of unique forms of housing. I came away deeply inspired, pumped up, and eagerly seeking to become a part of this think tank with ULI.
While the general array of projects was targeted at the most entry-level end of the housing spectrum, the program included market-driven communities as well. A series of presenters ranged from providers of pre-fabricated kit-type “emergency” shelters and conventionally built for-sale tiny homes to non-subsidized “electively affordable” traditional walkup apartments. From a tiny home transitional housing community on a challenging site in Los Angeles (arguably the unsheltered capital of the country) to a minuscule petite home community in Atlanta, it was crazy satisfying to see projects brought to reality that can inform and inspire many followers who can collectively alter the dominant paradigm.
All the speakers had great content and wonderful ideas, but it was Pastor Wayne Walker of OurCalling in Dallas that held me riveted as he walked (charged?) through his proposed large village providing permanent housing plus all the desperately required services to care for the least of the least—our formerly unsheltered neighbors who are ill, feeble, aged, and mobility impaired. Wayne talks the talk like a street fighter and has definitely walked the walk—he was able to graphically and persuasively illustrate what unsheltered life is really like for those other than the “hip homeless,” and his group was willing to stand in the gap for them. It was amazing. When he finished his presentation, I wanted to stand up and shout “Amen!” and I now kind of regret I didn’t.
Before I could settle down much, Will Johnston from MicroLife Institute launched into his presentation. With passion and conviction to rival Wayne’s, Will took us on a journey through the development of a tiny home-for-sale community in Atlanta, where he has produced a handful of adorable five hundred-square-foot dwellings in a bungalow court arrangement. There were no subsidies at all in his project, and he provided below-market ownership opportunities for people inclined to pursue a simplified lifestyle in order to own some property that could help build wealth over time. It was so all engaging when Will concluded, I was so exhausted by this point in the day I practically needed a nap!
Following this series of awesome presentations, all participants engaged in a group “information harvest” of ideas related to specific questions, the focus of which emerged as:
“How can we carry this message to our own communities and really begin to move the needle in terms of what can be done? How can we impact our agencies and drive real reform of discriminatory regulations?”
The New Housing Paradigms Forum was a great afternoon of conversation, with voices from across the country weighing in. Collectively, we were all thinking (and saying) “We need a lot more of this.” Shoutouts to Amy King from Pallet, Dan Bodner from Quickhaven, Madeline Reedy from City Square, and Beth Silverman and Philip Payne from Lotus Campaign—all great people doing great work. Also, many thanks to the Forum Leadership: Tom Hester, Charly Ligety, and Dennis Steigerwalt. I’m already thinking about and looking forward to the ULI Spring Meeting in Toronto, and gathering again with this extraordinary group of people, and keeping the heat on these critical issues.
Noble Pursuits: Attainable Housing Without Subsidy
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*Original article was written by Daniel Gehman, AIA, LEED AP and published in Green Home Builder Magazine.
Production of dwellings whose rent or mortgage can be managed by individuals earning modest incomes is hardly a new idea, but in this present moment it has attained a new urgency. To fulfill this noble pursuit, it may sometimes be beneficial to get back to the basics and remind ourselves of what it takes to make it work.
A little over forty years ago, Danielian Associates ’ founder and chairman Arthur Danielian, who is himself a legend in the housing universe as well as an indefatigable mover and shaker, was a BIA board member on the Housing Committee. Relentlessly housing-oriented and mission-driven, he took it upon himself to lead a demonstration project which could deliver modest yet dignified homes to folks with moderate incomes who were otherwise shut out of the marketplace.
He did this by assembling a team of like-minded providers in design, engineering, and construction who worked together to analyze what unseen building costs could be practically avoided, and what living features were essential for dignity and comfort within the price point, and then pursue that with unflappable rigor. What resulted from this at-the-time heroic effort was the Benchmark Villas project in El Toro, California which provided dwelling opportunities for 124 families, which due to the extraordinary team effort, was delivered for significantly less than prevailing construction costs.
It is said, of course, that history repeats itself. Here we are today with unprecedented demand for both “Big ‘A’ Affordable” (subsidized) and “little ‘a’ attainable” (market driven) housing. Everyone seems to be talking about it, and, thankfully, some socially minded entrepreneurs are succeeding in doing something about it.
Here’s a big secret: the recipe for how to do it hasn’t much changed over four decades; the context in which it is being attempted has become considerably more challenging, due to continued stiffening of government fees and approval processes, the huge increase in land prices, plus an unprecedented explosion in the cost of materials due to pandemic-driven supply chain issues. If there’s a secret sauce to get these homes out of the ground, it is surely a combination of intention and discipline, along with a little touch of perspective shift and expectations management.
What does it take to squeeze costs out of new residential construction? There are many elements that comprise the answer, but they generally tend to operate under the guise of three guiding principles: to the greatest extent possible, everything should be simple, modest, and repetitive. For starters, the accommodations are more diminutive in size than “regular” market rate dwellings. As one developer describes their attainable brand, the community gives each resident “everything you need, and nothing you don’t.” This also typically means that project amenities are scaled back accordingly; there’s no room for an “arms race” here.
Next, the number of options within the design needs to be minimal—say limiting the number of both unit and building types to fewer than can be counted on one hand. Finally, the architectural shaping and skin of the buildings requires a tremendous amount of restraint to avoid the maximum number of cost-accretive elements. Naturally, this makes the architect’s task more challenging, but it is entirely possible to craft handsome if modest form and finish solutions that avoid the expensive bells and whistles associated with higher end dwellings. Think of it as the “little black dress” of architectural expressions. The real curb appeal (which can be assessed by the hordes of future residents in line to lease when the community opens) lies in the relatively lower rents or sales prices.
Repetition becomes a tremendous value not only in the simplification of the building designs, but in an overall development approach that begins to resemble a manufacturing paradigm. Once the formula for the community (units, buildings, construction details) are worked out, they can be locked in and ideally used over and over, so the production of new housing becomes its own assembly line.
The trick then is to scout for development sites which are about the right size and proportion to graciously accommodate the prototypical structures that have been developed, and even beta-tested through the first few actual construction processes. Once the delivery system is truly well-oiled, it should ideally lead to even greater efficiencies in the overall production of this much-needed housing.
It will be necessary along the way for the team to repeatedly explain itself to local jurisdictions, Design Review Committees, lenders, and communities resistant to change; robust outreach and advocacy for these projects becomes an essential component of the overall delivery strategy. It’s times like these when we really need the indomitable spirit of an Art Danielian, to keep us energized and attentive to the noble pursuit.
Bracing for SB9: What Will it Mean for Me?
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*Original article was written by Daniel Gehman, AIA, LEED AP and published in Builder and Developer Magazine.
One must hand it to the California State Legislature for its earnest attempts to pass laws that create exciting new opportunities for the production of housing, by right, within existing developed areas. In 2016 the State passed a law to facilitate the production of Accessory Dwelling Units (ADUs) and went back for seconds in 2017 to enact additional legislation that removed significant inherent roadblocks that had stifled the hoped-for results of the original bill. Following those amendments, the application of the law finally caught on. In 2018 about 7,500 ADUs were completed in Los Angeles and in 2019, the number doubled to nearly 15,000. This data confirms that it takes a while for the new legislation to filter down to the people who actually design, finance, and construct these dwellings, but once it has been figured out, the numbers climb dramatically.
SB 9 can be regarded as a follow-on to the ADU laws as a tool intended to produce more housing units, including ownership opportunities, for California’s desperately undersupplied communities. Note that the new legislation does not go into effect until January 1, 2022. A caveat to comprehending this bill is that it will take a while for it to be understood broadly enough so that folks spring into action to take advantage of it. It may end up being necessary for the state to enact even more legislation once again to remove the hurdles and roadblocks inherent in the law as currently written that stymy the production of the desired new units.
What will it allow today?
I recently spoke at a meeting that was advertised with the headline “are you going to have a fourplex next to you?” To cut to the chase, the answer is unequivocally “No.” This is at least in part true because the semantics of that headline are inaccurate. A “fourplex,” by definition, is four conjoined units. SB 9 doesn’t allow that. It does allow up to four dwellings on a property that started as a single-family lot, but it must go through a couple of steps to get to the quad of units. Namely, it must be subdivided into two parcels, each one of which may be developed with a duplex and perhaps an ADU, if space allows. This “lot split” is allowed under the law with only a “ministerial” approval, which means no public hearings. This combination of lot split plus new construction is the only pathway to the production of four dwelling units on an existing single-family lot.
Will your neighbor’s property qualify for redevelopment of this nature?
It depends. The adjacent lot needs to be a minimum of 2,400 square feet for the lot split to even be undertaken. While it may be hypothetically possible to split it, it is not practical given the circulation and parking constraints of a site this size. Also, the economics at this scale will likely not make sense. There is a certain parcel size required to make the lot split and resulting units viable, and it is much larger than the minimum the law allows.
Any existing single-family parcel with one residence could be remodeled (within certain proscriptions of the law) to add a second attached but fully autonomous dwelling of at least 800 square feet. Because the lot hasn’t been split, either a Detached Accessory Dwelling Unit (DADU) or an attached Junior Accessory Dwelling Unit (JADU) could accompany this newly generated duplex, leading to a total of three residences on the property. So, in response to the question posed by the headline quoted above, the answer is “No, but you could end up with as many as three units next door, or six if the lot is split.”
In addition to the practical limitations of lot size, SB 9 includes a menu of limitations that could prevent your neighbor from doing this. If their home is in a coastal zone, high fire hazard area, historic district, or on farmland or other sensitive habitat, forget about using the law because it is forbidden. Furthermore, their property needs to be located in a Census Bureau “urbanized area” zone. That combination of factors removes about nineteen percent of California’s 7.5 million single family lots from eligibility. Of those that remain, a multitude of factors influence whether the redevelopment of an existing single-family home to produce the additional units is financially feasible, and where there is not demonstrable financial feasibility, there is no investment.
Naturally there are questions and tensions that arise when single family residents are made aware of the provisions of the law, and the concerns are easy to comprehend. There’s even a movement afoot to qualify a ballot measure that would essentially override SB 9 by returning land use decisions to the local level exclusively through a Constitutional Amendment. Battle lines are being drawn for a skirmish over property rights across the state. As we all wait for the beta applications of the law, watching the evolving controversy will be exciting, and we will continue to learn from and respond to it.
Affordable Housing Takeaways From Bisnow’s BMAC Event
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It was truly an inspiration for me to moderate the Affordable Housing panel at Bisnow’s annual BMAC West event in Los Angeles on November 2. Three of the four panelists were developers and the fourth a banker. Why put a banker on an affordable housing panel? Anybody operating in this space knows how painfully complicated it can be to assemble the “capital stack” necessary to put the “affordable” into affordable housing, and it requires a financial partner with equal conviction. While we spent time lightly discussing the finance side of things, the panel got really compelling when the speakers stepped into the potentially emotionally charged arena of social impact investing and community building.
All of these individuals are extremely passionate about what they do, which is really a prerequisite mindset for either preserving or producing these communities that provide critical shelter for our neighbors who are less financially blessed. Some of the most powerful statements of the day came when I asked the speakers to share the counter-narratives they have crafted in response to the hostile negative feedback that springs from opposing voices in their public hearings, which often is built around some variant of “we don’t want those people living in our neighborhood,” because the affordable projects become “low-income slums,” (which is an actual quote from an anti-SB 9 flyer.) Answers to the question all involved explanations of the importance of social connection in creating relationships with other neighbors, and how this leads to a kind of “pride of place,” in which residents strive to take care of the property—both its people and its buildings.
This mutually caring behavior is reinforced by the developers through the provision of a host of supportive services for residents, such as after-school programs for children of two-working-parent families who might otherwise end up “latchkey kids.” In every answer, there was a strong case made for investing in the residents, to give them a “step up,” which is really investing in the greater community at the end of the day and ultimately, investing in ourselves. These attitudes and policies are reflective of a significant driving motivation built on an ethos of caring.
When we discuss subsidized (“Big A Affordable”) housing, it is important to understand that residents at many income levels, from extremely low to moderate, are eligible to live in these communities. These are our neighbors who teach our children, care for us at the local Urgent Care, fix our cars, defend us from criminals, put out fires, and serve us meals at our favorite restaurants. We want these people in our neighborhoods, and we’re not going to have them if we don’t produce dwellings that only require a manageable portion of their income to afford every month without going into “severe housing stress.” Don’t miss that when these residents are able to spend less on rent, they have more resources to buy food, clothing, and other necessities, which contributes to the overall economic health of the larger community.
My absolute favorite moment of the day came when panelist Michael Costa answered the question of why he does what he does and was moved nearly to tears in the process. “When I see the look on a young mom’s face when we turn over the keys to a place where she and her children can live in safety and security, and see the gratitude, it hits me right here,” he said, thumping his hand on his chest. It was a magic moment. I am super thankful for Mike, and also for Daryl Carter, Malcom Johnson, and Matt Haas for doing what they do to make the world a better place, one community at a time.
Comfort, Meet Economy
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Comfort, Meet Economy – The High Performance Imperative For New Homes
*Original article was written by Daniel Gehman, AIA, LEED AP and published in Green Home Builder Magazine.
There is a switch in many electric vehicles that allows drivers to toggle between performance modes–one direction is “comfort” and the other “economy.” I’m sure the UX Designers didn’t intend any irony with those identifiers, but it struck me that they are (perhaps unconsciously) highlighting a long-held suspicion or expectation that comfort and economy are at odds with each other or at least at different ends of the scale. On a personal level, I typically keep this setting safely in the middle, where I can offset increased battery life with decreased top speeds and a more moderate interior climate, all of which I can live with and feel pretty comfortable while being slightly more mindful about resources. I’m doing well by doing good, as Ben Franklin was believed to have said. “High performance” in the automotive world typically conjures roaring engines and screeching tires, but in my case it means going just a little further on the same amount of charging.
Merriam Webster defines high performance as “better, faster, or more efficient than others.” Note the significant inclusion of enhanced efficiency as an earmark of high performance. This must certainly apply to homes. I don’t know of many people who would request their home to be faster than others, though I think many would desire a “better” home based on a comparison sample. Everybody wants a more efficient home, a “need” that lands somewhere between levels one and two of Maslow’s hierarchy. Some of this desire could hypothetically be driven by an altruistic appeal to be kinder to the planet through resource conservation, which is great, but in actuality, the more powerful motivator, typically, is a desire to get a better deal: to get more and pay less.
This premise is the basis of the most successful strategies for high performance in a home. There is a hierarchy of returns at work when sifting through a multitude of options to find the low hanging fruit. Over time, the low-hanging fruit gets codified, and one’s reach must extend a bit further. To illustrate, improvements to building envelopes in an effort to better manage a home’s interior climate really got rolling about fifty years ago, so there has been plenty of time for those who write codes to make it a standard, so that it would never be considered an option today. Houses are so tightly controlled for air leakage these days, precautions have to be taken to assure that at least some fresh air is entering the home—just when and where we want it instead of randomly. This is an easy concept to reason through: my house leaks less, my heating bill is lower, because I’m using less energy imported from outside sources to make me comfortable—a marriage of comfort and economy! Once we got the bug for lowering energy consumption through heating and cooling, we applied that reasoning to every power consumer in the home, from lights to appliances. These days we still give ourselves a gold star when we achieve minimum levels of compliance with the established high performance standards.
Water conservation has usually gone hand in hand with energy conservation, though the motivation may not have been quite as piqued because water for a very long time was relatively cheap. Then we began to worry about supply issues, particularly in the arid southwest. Of course, when the supply of anything diminishes, the market price increases, and we don’t need a bigger water bill. So after replacing the plumbing fixtures in our homes with low-flow everything and going to drip irrigation outside with possible harvesting of rainwater, we took it up a notch, ripping out miles of manicured lawns to replace them with xeriscape and synthetic turf. Note that the motivation here began to be mixed—it was no longer just about wanting to save money on a commodity; it began to include some element of anxiety about running out of a basic need or having someone else ration it for us. In other words, the cause began to be a bit more global, though self-interest was still alive and well.
On-site energy generation has also been struggling to get traction since about the nineteen-seventies, but lately, thanks to Elon Musk and the rapid development of high-capacity batteries, the trajectory is changing. Solar panels were once primarily thought of as a way to lower our electricity bills, which they did. Then home storage systems, led by technology from our long-range EVs, began to come onto the scene, changing the calculus again. Adapting these home systems could potentially lead to being “off the grid” of whatever utility monopoly has been providing our domestic electricity. Not only does this eliminate the monthly power bill altogether, but it helps everyone else by reducing demand on the existing grid, which can get over-taxed in periods of peak demand leading to rolling blackouts, which nobody wants. Hmmm . . . can you begin to see a pattern of doing well by doing good?
Going off-grid electrically eliminates one outside resource being pushed into our homes. Up next for consideration is water. How would it ever be possible to go off-grid for water? Growing up in rural Michigan, my home was serviced by a well and a septic system; we were off grid for both water and sewer. This was long before off-grid living was cool or trendy—the home was off-grid simply because it worked. Major systems were installed once, typically when the house was built, and functioned largely without issues for years. Neither one was perfect, but neither one required a massive system of municipal infrastructure to keep our showers flowing and our toilets flushing. Necessity was the mother of both those “primitive” systems.
What if we could produce our own potable water by pulling it out of the air? David Herz, an architect/inventor in Venice, California, used existing technology to create a solar powered “point-of-use atmospheric water station” to provide drinking water to individuals experiencing homelessness in an alley near his studio. This endeavor didn’t save anybody any money, but it helped a lot of thirsty folks. Given some more advanced technology and scaling, this system could be adapted to a single-family dwelling to become a modern version of a well. If successful one could produce their own water, which is no small feat. The next step here is addressing waste water–how can somehow avoid flushing a big portion of that precious home-grown water down toilets to carry our waste away? Enter grey- and black-water systems. For decades we’ve had the technology to capture greywater from everything that has a drain except the commode, treat it a little, and use it to flush the toilet when it is finally necessary or water the home vegetable garden. That allows us to use the water a minimum of twice. Advanced technology systems exist that can actually re-claim and turn both of these sources into potable water, creating, in essence, a closed water loop.
What is the common characteristic of the systems described above? They are all most easily deployed in single family homes. We’ve seen these sophisticated systems in space stations and nature conservancy facilities, but that’s an extremely tiny sample, and really, they don’t benefit many people in these “demonstration” applications. It makes all the sense in the world to get these systems into new build homes as quickly as possible. Mass deployment in single family neighborhoods will lead to more rapid widespread embrace of these technologies, particularly by first time Millennial homebuyers who already happen to be early adapters of environmentally conscious practices. It will be far, far, easier to incorporate systems into newly built homes, which can be marketed not only for their earth consciousness, but for the simple reason that they make sense financially in the long run. It’s the ultimate expression of “doing well by doing good.” ESG-oriented lenders may find high performance homes increasingly in line with their corporate values, and therefore prefer to make loans on these types of properties.
Energy from non-renewable sources contributes significantly to climate change. The American west is experiencing extraordinary heat waves accompanied by raging wildfires in places one doesn’t expect them, together with the worst drought in 1200 years. For every one degree Celsius increase in global temperatures, the volume of the Colorado River reduces by ten percent, which has staggering implications. Residential high performance systems are not a boutique item; they are part of a survival strategy. It is time to expect high performance technologies to be included in every new home, just as much as we’d expect insulation. Then they won’t be regarded as an “add-on,” but as standard equipment, especially by young first-time buyers, who will appropriate the expectation and carry it forward to the next generation. We build about 700,000 houses a year; each is an opportunity to move in the direction of meaningful resource management, an opportunity to do well by doing good.
Outrageous Ideas for Market Driven Attainable Housing
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Everyone has an eye on the housing crisis, and an opinion to go with it. At this moment there doesn’t appear to be any “magic bullet” solution to the problem, even though many are being proposed, including legislative initiatives imagined to streamline the approval process and open more existing properties to redevelopment with multifamily communities. We’ve also been casting a watchful eye toward California cities as they update their Housing Elements to demonstrate how they will accommodate their Regional Housing Needs Assessment—the number of homes they are expected to produce over the next eight years. Many of these efforts include overlay zones that make it easier to develop housing and mixed-use projects on underperforming retail sites, for example. The keyword here is “easier.”
There are many fine non-profit developers who are producing housing for families at the lowest reaches of the income spectrum, using subsidies or tax credits to offset the cost of constructing the buildings so that the rents needed to cover operating expenses can be significantly below market. These developers are doing wonderful work that is absolutely essential as a part of the overall housing food chain; however, it is really only addressing a small part. There are a vast number of somewhat higher-wage earners who don’t qualify for subsidized housing, yet are greatly stressed by skyrocketing rents. This “middle” market, which is bottomless, has been largely overlooked in recent construction cycles. The number of units required to trim the housing deficit is at a scale that can only be satisfied with a market driven solution.
There is a change afoot. A number of for-profit developers have begun to embrace a starkly different model for producing apartments that can hit the market at rents noticeably below prevailing, and future residents have been lining up around the block to lease them. This is an excellent emerging trend, on which we would do well to double down.
To be successful in this endeavor, there are some key fundamentals to embrace. Below are seven ideas to help boost the viability of these “market driven attainable solutions,” ranging from entry-level to brazen; some might even be considered outrageous.
Creative, equitable thinking is what’s called for now. Understanding there are many factors not considered in this argument but it is a start. More and more developers are awakening to the appeal of producing new housing communities that accommodate, comfortably, scores of people who have been overlooked for a long time by the development community. The zeitgeist of the current housing predicament demands that we, as an industry, “Hospice the Old Paradigm, and Midwife the New.” Let’s house America.
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Throughout California, and probably most of the country, underperforming regional malls and shopping centers are being surveyed for their redevelopment potential, particularly as they deteriorate into a distressed status. The critical element that makes these projects similar is that they take advantage of the real estate available on expansive existing fields of surface parking. This one aspect is the key ingredient in finding an existing retail/commercial center that will be a good candidate for redevelopment. As these “greyfields,” as they are often known, function like open land from a planning perspective, they are what makes the opportunities so attractive.
Redeveloping an aging or dying mall or shopping center is hardly a fresh idea, but it remains a good one. Today there are a number of significant such projects in the development pipeline, including Main Place Mall in Santa Ana, California, where a very ambitious program of hotels, offices, apartments, and other uses is proposed, or the former Laguna Hills Mall, also in California, where a similar blend of ingredients is anticipated. Placing denser housing on these properties makes complete sense because many of them are already near better performing commercial centers, and the resulting “village” should be able to provide some of the benefits of a traditional town center if it includes sufficient resident serving amenities, such as bars and restaurants, among other services. Constructing new housing on underused surface parking is just a good idea, almost no matter how you slice it.
The mall redevelopment projects cited here, in addition to many others, are substantial undertakings, but they’re not the only opportunities. There are many smaller retail centers on properties that are equally attractive due to their proximity to other shopping, jobs, and resident services that might be in easy walking distance or have convenient access to transit; not every redevelopment needs to focus on a seventy-acre regional mall in order to help whittle away at the seemingly intractable undersupply of housing. These locations have access to existing infrastructure and services, so arrive at the starting line with more going for them than a traditional green field. What is the obstacle to the widespread implementation of this strategy?
Perhaps the biggest problem with the wide-scale redevelopment of retail/commercial properties is what used to be known as the “fiscalization of land use.” That’s a fancy way to say it’s politically hard to change a use on a site from one which produces a generous income stream for the municipality to one that doesn’t—such as changing from a retail center, or worse yet, an outdated auto dealership, to multifamily housing, which generates far fewer dollars for the City coffers. This underlying dilemma is a consistent fly in the ointment of proposed commercial-to-residential or mixed-use redevelopments. Main Place, because of its sheer mass, was probably able to navigate that income stream quandary by including a ton of commercial space and hotel rooms, both of which generate cash flow. A cooperative approach is suggested here—that the developer and the City meet extremely early in the process to discuss the mix of uses that would not only provide the desired housing, but also include ingredients that could continue to generate tax and fee income, and hence make the project approvable.
Do we need new laws to help make the process easier? A California State Senator recently proposed a bill that would theoretically make it easier for developers to propose major makeovers to existing underperforming or dying malls and shopping centers, provided the final mix included some affordable housing. Seems to make sense, but it also came with a bunch of strings attached, which is a standard issue with many government-initiated “incentives.” At the end of the day, after all the community stakeholders had been satisfied, the underlying zoning requirements met, and the subs lined up to do the construction were receiving prevailing wages, the apparent benefits available felt overshadowed, outweighed by the other obligations.
It appears the projects mentioned above, in addition to some in the Bay Area, LA, and Inland Empire, accomplished their development objectives through the existing zone change and municipal review process. Main Place Mall, with its proposed program of 1,900 dwellings, 400 hotel keys, 750,000 square feet of office space, and nearly a million and a half square feet of commercial uses, was of such a mass that it needed to generate its own Specific Plan. While this thorough entitlement process can be a grind, in the end there tend to be fewer problematic add-on requirements, such as would come along with the supposedly helpful state law, and they can all be negotiated along the way.
While the proposed State law started with a good intention, it just got burdened by bureaucracy, and by the potential to tread on the sacred ground of loss of local control, which is one of the threats of the RHNA (Regional Housing Needs Assessment) process. How could municipalities possibly have their cake and eat it too with regard to these retail and commercial redevelopments? Creating an overlay zone that could be generously applied over existing commercial properties would accomplish a couple of things. First and foremost, if it were straightforward enough, it would provide that elusive assurance developers always seek—predictability. That is, the overlay zone would make it “by-right” to develop multifamily housing on a retail site, even if it includes guidelines and policies to encourage harmony with the existing community context. Perhaps if the project includes attainable housing, it becomes a ministerial review, which would be a tremendous time-saver. In other words, the cities and counties take from the State what it otherwise intends to impose on them, and just do it themselves. The combination of defined parameters of the overlay zone plus the ministerial review would have the guaranteed effect of expediting the delivery of desperately needed housing while enhancing the built environment, all under local control.
Finding the right density and product for a greyfield site of any size is key to success. The state law had a complicated formula for requiring certain minimum densities which were theoretically driven by the fabric of the surrounding context, with the intent of developing something not wildly out of proportion or character with its surroundings. While the search for the proper formula is driven by proximity, land values, and achievable rents, it is also generally true that the closer a property is to an urban core, the bigger the proposed buildings will be. Placing new apartment buildings around Main Place Mall while structuring thousands of parking spaces to compensate for those lost demands large buildings. However, in less urban or even suburban redevelopment opportunities—areas where projected rents are lower—it may be best to pursue less expensive, and hence less dense wood-framed dwelling units. I’ve seen instances where a site seemed to demand at least wrap density, but actually penciled better with a four-story town-over-flat scenario or even 3-story stacked flats. Creativity in imagining what solutions would best bring these smaller properties back to life is critical.
For the State to consider a tool to help achieve many of the goals discussed here is a very good thing. However, reclaiming control of the process for the local jurisdiction seems to be a more promising pathway, where the development team can work directly with City staff to achieve a win-win outcome. Thoughtful overlay zones that can be broadly applied across a City can help to resuscitate even the properties that are of a more modest scale.
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Adaptation of new technologies for apartment leasing and management is driven largely by residents’ habits, preferences, and lifestyles. Today’s residents are also, quite literally, driving technology as more and more consumers are opting for the purchase or lease of an all-electric vehicle. These cars, while lower in emissions, place increased demands on the community’s infrastructure—as their paradigm for re-fueling is not to visit the local gas station, but to plug in at home and “fill up” in the evenings. Now is the time to begin to consider how to plan your multifamily residential community to maintain resilience as the world changes around us, to strategize ways to avoid becoming less desirable as a resident option long before the useful life of the building has reached an end. It is necessary to plan for a gradual, then rapid shift to all-electric vehicles, which means the criteria by which residents will choose homes will include the availability of charging facilities that exceed the capacity of a 110 plug. Planning ahead now to anticipate and accommodate this increased demand will help avert the need for an extraordinarily expensive and disruptive renovation down the road.
California is leading the way nationally to a less fossil-fuel-reliant/lower greenhouse gas future. Governor Gavin Newsom recently issued an executive order requiring that by 2035, all new cars and passenger trucks sold in the state must be zero-emission vehicles (the corollary here, of course, is that electric vehicles must be using clean power / green energy so we are not trading one problem for another). While that theoretically includes fuel cell vehicles, they still account for only a tiny percentage of current ZEVs. This target date, only roughly as far in the future as the 2008 recession is in the past, demands some serious consideration of what this trajectory implies.
Californians purchase nearly 900,000 personal vehicles in a typical year; the state has about 27.7 million registered vehicles, of which approximately 1,300,000 are “retired” every year—so roughly 1,000,000 units are cycled through annually, equal to about 3.5% of the existing stock. Today the common lifespan of a car is estimated to be about 8 years or 150,000 miles. Gratefully, advances in automotive engineering have expanded that timeframe over the last couple of decades, to give cars a longer life; furthermore, it is estimated that electric vehicles can be expected to last around 12 years or about 200,000 miles. For the sake of simplifying the math, let’s just take the average of those spans and declare that the typical reliable life of a car in the sunshine state is about 10 years. So, every year about a million go away, and another million are added to the fleet—out with the old, in with the new. At these numbers, the complete cycling out of the system of all the cars on the road today would take about 28 years. Mark your calendars: by about 2048, there will be virtually no combustion engine vehicles on California’s roads. While it might be anticipated that sales of gas-powered vehicles may surge in the couple years leading up to 2035, after that it will be only electrical vehicles replenishing the fleet at a million units/year, leading to a tremendous acceleration of the statewide conversion.
If you were to begin planning today to develop and construct a denser, urban infill residential building with structured parking in Los Angeles, the total length of the entitlement/drawing/construction phase could easily amount to 5 years, plus perhaps another year to lease-up and stabilize. Your sparkling new property might be up and running by 2026. Before it celebrates its tenth year of operation, sales of combustion engine vehicles in California will have ceased. Another ten million or so older, mostly combustion engine vehicles will have been retired. Meanwhile, the sales growth of EVs has been continuous; perhaps even logarithmic. A reasonable estimate of the EV share of the total California fleet in 2036 would be perhaps around 25%, or nearly seven million cars.
Not all of these environmentally-friendly vehicles will be parked in suburban garages; an increasing number will also populate denser urban residential communities, and they’re going to want to charge up at home, even if their overnight parking space is in a structure. So, conservatively, one might speculate that by 2036, fifteen years from now, any urban community could have up to 15% EVs. Do you see where I’m going with this? That’s not very long from now, and the building will be perhaps 15% into its projected useful life. As the community matures, the demand for vehicle charging stations will continue to increase. Those communities with insufficient charging facilities for the growing electric fleet will begin to be “unchosen” by discriminating renters.
Luxury apartment buildings coming online in the very near future may debut with up to 5-10% of their parking spaces equipped with charging stations; many have pre-wired for a larger number, even up to 20%. I believe it is time to ramp up the consideration of what may need to be provided in the not-so-distant future as the percentage of EVs grows, and the demand for charging stations right along with it. What’s a reasonable number to aim for? How about pre-wired for 50%, with an initial buildout of 15-20%? Having the infrastructure in place is really the backbone to avoid painful and costly future renovations; maybe the smart move is to go all in and pre-wire for 100% of the spaces. No matter what, you won’t want to have to install the infrastructure as a renovation project; it will be outrageously expensive. Better to overreach now and have a cushion than to go back tomorrow and tear things apart to re-tool.
Incidentally, to allay concerns about how this many EV charging stations will swell the anticipated electrical loads of the building, there are software applications that cleverly gauge the demand and distribute charging in a managed manner so that the fundamental electrical service of the building doesn’t need to increase beyond reason. Besides that, there are third-party providers who coordinate with building owners to supply and manage the stations, collect the fees, and return an income stream to the property, usually with low to no start-up costs to the building owner. The vendor can even make recommendations for the number of chargers to be installed at the time of the project’s grand opening and will drive the build-out of additional charging stations as the demonstrated need increases.
So, please anticipate the all-electric future, and design the infrastructure into your projects today. Your future investment committee will thank you.
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Above Image Shows An iDA Lab Low-Density Redevelopment Concept – 10 Homes On 2 Lots With A Community Room.
We, the residential development community at large, are entering an unprecedented season of public/private partnership with an unassailably noble goal of housing everybody in our beloved and beleaguered California. Forces of supply, demand, and policy are aligning at a moment in history when it could not be more sorely needed. At the center of this perfect storm? RHNA, the Regional Housing Needs Assessment.
The Regional Housing Needs Assessment is a tool used by the California State Department of Housing and Community Development to establish the quantity of additional housing units presumed to be needed throughout the state using the criteria of population, jobs base, transportation, and other factors. Numbers are established on a regional basis, and the local Council of Governments (COG) assigns a share to each city within the region. Cities respond by updating their Housing Element, a component of the city’s General Plan that demonstrates how sufficient potential building sites are available in the jurisdiction and zoned to accommodate the designated allotment of new homes, at a range of affordability levels. The current assessment, coming in the midst of an intractable housing crisis, allots a very high proportion of the total number to units affordable to extremely low- and very low-income households.
A housing element is updated about every 8 years. From the previous cycle to the current, the leap in required allotments was substantial for most municipalities, and many are reeling from the load they are being requested to carry. To put that into perspective, the updated RHNA number for SOUTHERN California is 1,342,827 new dwellings spread over 191 cities. On a practical level, it is necessary to produce 180,000 units annually in California to keep up with demand; since the financial crisis, the pace has been about 100,000 per year, so supply continues to fall behind. It would take nearly 170,000 unit deliveries per year over the cycle period to produce the assigned number.
Nearly 50 cities in the region have appealed to the State to challenge their allotments; almost all have been denied. In the previous RHNA cycle, only a tiny percentage of municipalities delivered on their numbers, and it is generally observed there was no real penalty for missing them. In the current cycle, that has changed; cities now face consequences from the State if they fail to produce, by the deadline in October, an updated Housing Element certifiable by the HCD. These consequences can include the changing of the City’s RHNA cycle from 8 years to 4, which would impose a horrendous workload on the Planning Department, or the imposition of moratoria on the issuing of ANY building permits, or even the mandated approval of proposed housing developments. In other words, California State law has grown teeth.
Demand for housing continually increases in California, even in spite of the State’s much-lamented recent net out-migration of households. It is difficult to ignore the underlying fundamentals of supply and demand, and the more than 40% of existing households who are “housing stressed,” devoting more than 35% of their monthly household income to cover their housing costs. These households comprise the majority of those leaving the state in search of more affordable living situations. Thus, the RHNA numbers emphasize the production of housing that will encourage more of these folks to stay.
As the demand for housing, particularly affordable housing grows continually, available land for housing development, of course, is decreasing. This imbalance sets up a fundamental tension for most cities, particularly those who already feel they are “built out.” In the City where I work, the RHNA requirement would demand enough dwelling units to accommodate over 20% of the existing population based on the City’s average household size. That is a major load, by anyone’s estimation. Of those, nearly half are earmarked to be affordable to households earning between 0 – 80% AMI.
Many Cities are holding public workshops to consider plausible alternative approaches to possibly reach these intimidating numbers. Unless a City happens to be surrounded by vast tracts of open land that are not already dedicated to public open space, and therefore inviolable, the search for developable parcels to hit the allotted numbers will be a scrappy affair. Thankfully, with the State’s new ADU law, there’s a resource hiding in plain sight, which is existing backyards of single family dwellings. That’s a start, and it’s a bonus that most accessory dwelling units, or “granny flats” tend to be more affordable than an apartment in a managed community with amenities. If there is any undeveloped land large enough to support a neighborhood of single family detached housing, then to improve it with a design that incorporates both an ADU and perhaps a Junior ADU on each lot would yield more than double the density for that neighborhood that one might normally expect from SFD tracts.
But ADUs, great as they are, will ultimately represent only the tiniest little trickle of production. It is obviously necessary to scout locations for multifamily projects at varying ranges of density, and that’s really where the rub is, as those properties are in extremely short supply; that is, at least under the current zoning. The State has recognized that developments up to 30 dwelling units per acre are considered affordable and can count toward the designated total. At a recent City Housing Element update workshop, I posed a question about the need for re-zoning and up-zoning of entire swaths of the City, particularly large lots, in order to reach the RHNA numbers. The response was quite encouraging; it was agreed that yes, in order to have a prayer at identifying sufficient sites with adequate capacity for new housing, it would be necessary to amend underlying zoning, either by overlay, such as a Conditional Use Permit (CUP), or by outright zone changes. If new zoning is proposed, it would also require an update of the City’s General Plan, so the assumptions made in the Housing Element could legally be supported and encouraged by City policy. It was evident the City was seeking help from its citizens to identify such potential sites, as they indicated that if a participant owned land that needed a re-zone, and they were considering housing, they should approach the planning staff with a proposal, which would be given serious consideration.
How awesome is that? I know the behavior of brokers and land acquisition people seeking to find deals; they drive by an underutilized site, in a good location, and wonder “Huh; could we make this work?” I believe the position of the City on this is that they will take any reasonably plausible lead that can be brought to their attention. When it is necessary to conjure 20,000+ new dwellings, no reasonable offer will be refused for consideration. Of course, there will still be an entitlement process required to make it possible, but we’re veterans of that process and used to it.
I deeply and sincerely hope this process will usher in a new season of profound cooperation between the Cities and the private developers who will actually produce the dwellings. Remember the City only has to identify the potential sites; they are still almost entirely dependent on the development community to deliver the new homes. In a sense, almost anyone can be a developer at some level, and all are needed—from the typical empty nester, high equity homeowner seeking to increase the value of their investment with an ADU to the large institutional organizations with the clout to produce hundreds of units at a time.
So keep your eyes open for awesome opportunities that didn’t exist yesterday! Working together we can accomplish the impossible.
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Developers everywhere today are searching for ways to lower construction costs for multifamily projects – not just to make them attainable for folks with lower incomes, most often it’s to make projects even pencil out. Many have looked to off-site fabrication solutions, including volumetric modular and panelization in hopes of saving money, but in too many cases, that promise hasn’t been delivered upon. What are the key things to consider in advance when contemplating a modular or prefabricated option?
First, it is necessary to dispel the myth that if your stick-designed project isn’t penciling, shifting to a modular solution will fix it. That is absolutely not the case. Whereas it is plausible to pull the plug on a modular design that isn’t achieving any one of many project objectives and revert to a stick frame with manageable amounts of pain, the reverse situation—ditching a conventional design in favor of modular, will be a disaster, because in virtually every case, all that was drawn in anticipation of a conventional solution will need to be jettisoned and re-conceived.
That said, there are situations in which modular may really be a preferred solution. For example, if you manage to design a modular building you really like and construct it over and over again it gets better, faster, and hence more cost-efficient with every iteration. In other words, to reap the benefits of an essentially mass-produced product, it is the best case to produce it in large numbers. This is the reason you see so much current modular product going into low rise hotel properties where reliable repetition reigns supreme, and everything is done “by the book.”
I offer a fundamental encouragement to anyone considering a modular project: conceive of it as modular or prefabricated from the very word “go.” It helps to have a passionate advocate on the team. Next, it is essential to be as informed as possible about what modular design “likes” in order to play to the strengths of the strategy. In a word: discipline. Successful modular undertakings have extraordinarily disciplined team members—principally with the developer, but extending throughout the design team, including the construction and marketing people! Finally, it is important to get to know the presumed fabricator as early in the process as is humanly possible, because there are design and production nuances that vary from one shop to another, as well as which member of which team draws what in the construction documents.
Simplicity and repetition are the golden values in keeping a modular design on the straight and narrow. Factory fabrication is necessarily a repetitive process—assembly lines thrive on continuing to crank out the same widget over and over again without interruption. Think about the Model T—Ford’s strategy for mass production is what put that rather prosaic vehicle into the driveways of so many Americans. What this means is the project design must be approached with the goal of having the absolute bare minimum number of unit types. It may not be immediately apparent with this mindset that apartment plans are not mirrored in building plate layouts, but rather rotated. Why? Because that eliminates the need to prepare an entirely new set of jigs for a run of boxes with the guts flipped. This simple rule of thumb for design planning is one of a myriad of guidelines, which, if rigorously held to without wavering will produce the optimum results. With wood modular construction, I like to say the best strategy is to design for the minimum number of maximum sized boxes, which also get the most bang for the buck on the shipping expenses. Steel modular is a bit different but the same simplicity rules govern.
From an aesthetic perspective, I like to say that modular buildings like to be “straight, flat, and rational,” meaning they won’t necessarily play nice with fussy forms or gratuitous façade manipulations. In the language of Robert Venturi, these projects definitely want to be a “decorated shed” rather than a “Long Island Duck.” This doesn’t mean ugly; simple geometric forms articulated with color and strategically placed “building jewelry” like eyebrows and awnings can provide a satisfying look while adhering to the rules. Naturally, this may not fly in every jurisdiction or with every taste maker, but clean, modern lines are growing in popularity everywhere.
What does it take to be able to design within the parameters that enhance the chances of a competitive modular project? I’ll say it again: discipline. The team must be prepared to respond to questions that begin with “Wouldn’t it be nice if . . .” with firm resolve to the mission because they will almost always lead to bespoke solutions that frustrate the original intention of simplicity. One or two little customizations along the way can usually be incorporated, but by about the time of the third one, I alert the team it’s time to pull the plug. Also, production lines hate changes, so a firm resolve in decision making long before fabrication begins is vitally important; stopping a production line to make a change will squander the entire advantage of the process.
There’s a place for modular construction to really stand up as the preferred approach. At this time when we need so much attainable housing to dig us out of a massive deficit, it is perfectly reasonable to contemplate a prefabricated solution, especially if you can settle on a desirable design that will be attractive in multiple markets where you can build it over and over again. Culturally, markets with high barriers to entry, especially core coastal markets where land and labor costs are extraordinarily high may be the golden ticket for modular to deliver on the promise, helping to control expenses and shave time off the project delivery schedule.
Now here’s the kicker to this discussion. Even where the basic economics and constraints might not support an off-site fabricated project, there are many fundamental attitudes and approaches in the modular and pre-fabrication world that can be appropriated for stick building, resulting in more efficient, less expensive products. Simplicity, repetition, and an aversion to fussiness will always result in lower construction costs. And who doesn’t want that?