The Ground Floor

Beautiful and Sustainable at a Surprising Price

Buildings can be judged successful thanks to good architecture, sustainable design, or a positive social impact. San Francisco's Plaza Apartments is a rare example of one that succeeds at all three.

A nine-story mixed-use building near downtown San Francisco, the Plaza Apartments contains 106 rental housing units, 1,000 square feet (93 sq m) of retail space, and a 99 seat performing arts venue. Not a conventional urban apartment building -- all 106 units are reserved for the previously chronically homeless. Developed by the nonprofit Public Initiatives Development Corporation on a $22 million budget, the project also contains services for building tenants, which include on-site case managers, a psychiatrist, and a nurse practitioner.

The project is part of a nationwide trend of "housing first" when dealing with homeless. New approaches recognize that securing housing is the first step to independent living. Cities across the country are finding that providing housing first and then treating underlying causes -- such as mental illness or drug addiction -- reduces the overall costs to taxpayers and social service agencies. Tenants of the Plaza Apartments pay half their income in rent, $410 on average.

In addition to the social mission, the structure also features cutting-edge LEED Silver environmental design. The roof sports both a sundeck and 26-kilowatt photovoltaic system. The creative facade is fine-tuned to maximize winter sun on one side and provide summer shade on another. The San Francisco Chronicle raved that the "designers crafted a structure of lasting warmth and presence," concluding the design features a "creative depth you don't find in most residential projects, including condominium complexes stuffed with seven-figure units."

Although the project wasn't developed for a profit, it has taken over a hundred of formerly homeless off the street and improved the character of the neighborhood. With city residents and officials pushing hard for community benefits, particularly in return for allowing lucrative investments in urban neighborhoods, the Plaza Apartments could contain ideas useful elsewhere. Instead of writing a check to a faceless housing fund, a donation towards a facility like the one described here could improve the neighborhood and set formerly homeless people on a path to recovery.

A complete case study of this project can be found on ULI's Development Case Studies web site, which features detailed descriptions of urban development projects around the world updated each quarter.

Only subscribers can access the complete case studies, but short descriptions are available to all. The complete case study for Plaza Apartments includes floor plans, contact information of the development team, description of building features, and a summary of important lessons learned.

Not Enough Homes in the Market

This post was written for The Ground Floor by Robert Krueger, communications associate at the Urban Land Institute.

A few weeks ago, Brookings Institution scholar Chris Leinberger, said that the real "supply side problem" with the market is not a flood of homes, but rather not enough walkable urban places.  According to the scholar, there is a current price premium for walkable urban homes.

On June 11 and 12, the Brookings Institution held a summit in Washington, D.C. to launch the next phase of the Metropolitan Policy Program's "Blue Print for American Prosperity:  Unleashing the Potential of a Metropolitan Nation."  The three-year initiative, which began last year, promotes a federal economic agenda for the U.S. focusing on the health and vitality of metropolitan areas.  The initiative went live on November 6, exactly one year before the 2008 Presidential election.

Bruce Katz, vice president and director of the Metropolitan Policy Program at Brookings, seeks a way for cities and metro areas to advocate and think about their challenges in a unified way.  For one of the panels, "Creating Quality Places: Making Housing Part of the Sustainable Solution," Katz posed a few questions for the land use and housing.  Katz asked, "How do we think about sustainability and affordability together?  How do we think about this in an affirmative way so that pieces of legislation move forward?  Finally, how do we think of these in a unified way so that each of these legislative vehicles moves through?"

Katz called this a challenge for leaders in the industry as well as for the Brookings Institution, since the government is "compartmentalized."  He emphasized that the federal government could take a leading role by describing the problem by linking transportation, housing, and energy together.

"What the federal government needs to do is create a new kind of affordability calculus so that it is more transparent to policy makers and others how dramatic of an issue this is," stated Katz.

One panel member, Doris Koo, president and CEO, Enterprise Community Partners, who said that is essential for the federal government to address green and affordability as one and the same.  Koo talked about how such world class cities such as Tokyo, Beijing, and London have seen more public and government amenities integrated, such as buses and public spaces, as the cities become denser.

In response to Leinberger's common reference to the "Back to the Future" movie trilogy, Koo commented, "We have seen the future and it is smart land use, public transportation, and public amenities."

Leinberger said that Congress needs to pay attention to market demands and learn what the cost savings will have on federal programs.  He added, the neighborhoods that are disconnected from urban amenities will continue to suffer.  The urban housing market is now in high demand and there is a limited supply. 

In most metro areas, the amount of housing that can be considered "walkable urban" is less than 10 percent.  At the same time, he cited that if a typical household got rid of one car, that household can increase their mortgage capacity by $150,000.  It will take a home from a depreciable asset to an appreciable asset.

Leinberger emphasizes that developers must respond by building more urban homes that have public amenities.  This will take significant federal investment in pubic infrastructure that will be met once the federal government acknowledges the links between housing and transportation costs.

"We are in the middle of a market change.  The pendulum is swinging and it is up to us to take advantage of it."

Collateral Damage: Squeezing Out Affordable Housing

While everyone's attention is focused on market gyrations, credit squeezes and the housing melt down, not to mention the latest sex scandal and—remember—the endless Democratic Presidential campaign, the affordable housing industry is being quietly closed down.  Look at what has happened:

• Low income housing tax credits—the price for these credits has fallen in the past few months from over $1 per dollar of credit to 80 to 82 cents to the dollar—a 20% decline that is making new deals unworkable.  The main reason for this meltdown is what has happened to Fannie Mae and Freddie Mac; their accounting scandals resulting in the new restrictions on their mortgage purchases as well as the decline in housing prices and the mortgage-backed securities markets all have combined to reduce or eliminate their profits.  Thus the biggest market maker for the tax credits, Fannie Mae, has reduced its purchases of credits from over $2 billion in 2006 to $1.1 billion in 2007 and is now reportedly a net seller of credits.  Freddie Mac has also reduced its purchases as well.  The major banks that were also buyers are now struggling with loses and don't need or want credits.  While the new pricing makes credits attractive investments to the corporations that used be in the market for credits, it will take months or years to get them back in as active buyers.

Compact Communities - Is Density Incompatible With Safety?

Reducing the carbon footprint of metropolitan areas will require making them more compact in order to reduce driving or vehicle miles traveled (VMTs). Forgive me for saying this (density being a four letter word) but this will require increasing the density of existing communities and building new ones with appropriate density. 

So what are the best ways to design compact, densely populated, walkable communities which are attractive, safe and lively? One thing clearly needed is enough housing so people live in the community; this is what creates the "24/7" communities which have been shown to be most successful over time. What are the best ways to do this while reducing crime and enhancing public safety?

Farewell, Johnny Grant

This post was written by ULI Los Angeles Executive Director, Phil Hart.

Hollywood Mayor Johnny Grant passed away on Wednesday, January 9, 2008, in his penthouse suite at the Hollywood Roosevelt Hotel. I knew Johnny for nearly 30 years. Johnny was a friend to many, including ULI. When I proposed to Hollywood Chamber of Commerce CEO Leron Gubler in late 2000 that the ULI Advisory Services Program could assist that community with its revitalization planning and development efforts, Johnny Grant was the first to support this initiative. With the support of my urban planning foundation, The American City Coalition (which Joe Corcoran, Chairman of ULI Sustaining Member Corcoran Jennison Companies, and I govern), the Hollywood Chamber of Commerce, and the ULI Foundation, we brought in a ULI expert panel chaired by Carl Weisbrod in March 2001. This panel's report "A Strategy for Hollywood's Comeback" is helping guide the redevelopment of perhaps the most famous neighborhood in the world.

I first met Johnny in the late 1970s when I was with The Hollywood Group. Our offices were on the second floor of the Pantages Office Building on Hollywood Boulevard. Johnny was championing Hollywood's comeback while we were mapping out how to accomplish such a comeback. The Hollywood Group's efforts paved the way for the CRA Hollywood Economic Development Plan that was approved by the LA City Council in 1986.

Hollywood, and ULI, are fortunate to have had such a friend as Johnny Grant.

The Fire Next Time

The San Diego and Los Angeles areas are hit by a raging series of high-impact wildfires -- the worst in the state's history. Many of the blazes coincide with areas already scorched in 2003 by fires that themselves were declared California's worst ever.

But is there any move to move homes away from the areas where a century of firefighting has left many forests choked and overgrown, thick underbrush creating tinder-box conditions? Apparently not. Most homeowners vow that they'll stay in the fire-prone areas, or return to rebuild on the charred foundations of their former homes.

-- Nationally syndicated columnist Neal Peirce

There is one lesson all major disasters teach us -- the first and strongest reaction of local residents is to rebuild what was lost in the same way and the same place. Look at New Orleans: residents of the city's low lying areas that flood frequently have raised such a firestorm of protest at the mere suggestion that New Orleans's land use plan might be rethought after Katrina that rational discourse has been impossible.

Now those who have been burnt out in the San Diego fires vow to rebuild despite the obvious danger that the fires will return once again. Their losses have been tragic, but their commitment to return may be more tragic still.

Thinking Outside the Land Use Box

This post was written by The Ground Floor contributor and ULI senior resident fellow, Bill Hudnut.

How about some thinking outside the box...about how to solve some of our serious land use problems? Here are a few suggestions:

• To create more funds for affordable housing, and enable millions of Americans to claim a tax benefit for home mortgage interest for the first time, which would make owning a home more affordable, follow the advice of President Bush's Advisory Panel on Tax Reform, reporting in the fall of 2005, and replace the mortgage interest deductibility on first homes with a "home credit" in the amount of 15 percent of the interest paid on mortgage debt for that home (no credit or interest deductions would be allowed for second homes or home equity loans);
• To fund infrastructure improvements and new construction at the local and state levels, employ more user fees on the assumption that those who use should pay; and at the national level, establish an infrastructure improvement bank backed by a stable revenue source, i.e., an excise tax on automobiles, a national lottery, or government bonds;
• To do a better job with planning for land use and transportation in a metropolitan area, either sunset Metropolitan Planning Organizations and let the states develop new regional authorities, such as Georgia’s Regional Transportation Authority (GRTA) for the 14 counties around Atlanta, or give the states more responsibility for land use planning and more teeth to enforce their plans, even though "all zoning is local;
• To re-use dead retail space, convert obsolete malls into urban villages;
• To curtail sprawl and address escalating energy costs, create higher density development, especially around transit
• To promote sustainable development, find a market for rehabbing and retrofitting buildings with higher energy efficiency, and create "green" infrastructure, particularly on the fringe; and
• To move beyond outmoded Euclidian (single use) zoning toward more flexible regulations, utilize performance based zoning.

Just some ideas. Some may fly, others may not, but we need to begin thinking creatively about the impact of the changing metropolitan form on the way we develop the land and respond to challenges surfacing today.

Making MPOs More Effective

This post was written by The Ground Floor contributor and ULI senior resident fellow, Bill Hudnut.

This country may need a five-cent cigar, but it also needs stronger regional decision-making bodies to deal with growth. A few Metropolitan Planning Organizations (MPOs) have broadened their mission to understand better and even to direct their decisions toward community goals. However, in most communities they have been sleeping giants. To make an MPO's leadership role in a region more effective, several changes in either federal legislation or state requirements could make a significant difference. They are:

1. Require that the voting membership of the MPO reflect the population of the metropolitan area. Presently, a county with 20,000 people has the same voting power as a county with 1,000,000 people within a MPO. Clearly the county with the larger population or a major employment center has relatively more demand for transportation than a smaller county.
2. Elect the membership. All eligible voters in the metro area can participate.
3. Require MPOs in their allocation of funds to pursue a "fix it first" strategy. The availability of transportation funds is shrinking. Without a thoughtful plan to allocate funds, investments in new projects could limit the reinvestment and maintenance of existing infrastructure. Some MPOs are investing as much as 60% of their annual allocation in new projects, when 80% of the allocation should be used for maintenance.
4. Require MPOs to assess the "land use impact" of a proposed development before allocating funds for new projects. Land use is largely determined by transportation, sewers and water. With the concerns over energy costs and sprawl it is irresponsible not to take those issues into account. Density, environmentally sensitive areas, green space generally, brownfields, etc., all need to be in the equation in the determination of where to invest transportation dollars.
5. Give MPOs (or their equivalents if a state creates a similar entity) actual authority and power to control zoning, allocate funds, issue bonds, levy appropriate taxes, and enforce federal and state regulations regarding air and water pollution.

These would be large steps to take, but as has been said, "New occasions teach new duties." We need more regional thinking and acting in our country, since it is regions that compete, not cities. Putting teeth into MPOs would be a step in the right direction.