The First Year of Small Developer Activity

duncanville boot camp
Attendees; First Small Developer Boot Camp in Duncanville, TX August, 2015

 

I tend to let too many files accumulate on my computer desktop.  As I was clearing out files today I came across the photo above and the text below.  As you can see from the photo, we did manage to put on the first boot camp in Duncanville.  By the end of 2015 we had done six bootcamps and workshops and launched non-profit to coordinate the effort to cultivate Small Developers around the US, the Incremental Development Alliance (IDA).  Next Tuesday, June 7th in Hamtramck, Michigan we will running the 7th event of 2016 the day before the 24th gathering of the Congress of the New Urbanism starts up on June 8th.

In addition to running the one day and three day training events, IDA along with Midtown, Inc has been awarded a Knight Foundation grant to do a deeper diver into the Midtown neighborhoods of Columbus Georgia, providing 18 months of extended training and mentoring for local small developers.

None of this would have been possible without the hustle and hard work of local sponsors and volunteers in each of the cities that hosted us and the ongoing efforts of the IDA staff and board.  Strong Towns helped us get started, hosting the boot camp registration for the first couple events on their website.  Lynn Richards and the staff at CNU have been tremendously supportive as we continue to figure out how to scale up the Small/Incremental Development Effort.  The CNU’s Project for Lean Urbanism was the genesis of this entire effort.  The time we spent with the Lean Urbanism Working Group exploring what it would take to Make Small Possible made it very clear that we need a new business model for development, That shifting the scale of the development enterprise was going to be critical to building better places.   Thank you everyone.

 

June 5, 2015

Things are moving FAST with the rapidly expanding Small Developer/Builders Facebook group that we set up last April prior to CNU 23 in Dallas.

I have heard from a number of group members via email and phone calls that they would be interested in a hands-on workshop on basic skills needed as a small developer builder. There is an effort percolating to hold a one day workshop for Small Builders in Atlanta the day before the National Town Builders Association (NTBA) Fall Roundtable October 16-18.

But that’s all the way into late October and folks are pressing for something much sooner.

I think we can put this together in the Dallas area rather inexpensively. If the folks attending cover their own travel, lodging and meals, if we can find a venue at modest cost. It could be a very Lean affair.  A meet-up with other folks considering or practicing as Small Developer/Builders. Connect with some mentors, roll up our sleeves and get some skills.

Here’s what we are thinking for content:

  • BUILDING FOR-RENT VS. BUILDING FOR SALE PROJECTS.
  • HOW TO DO BASIC MARKET RESEARCH.
  • PRO FORMA BASICS, SORTING OUT YOUR DEAL ON PAPER.
  • HOW TO BUDGET FOR HARD AND SOFT COSTS.
  • OPERATING EXPENSE BUDGETS AND THE PROPERTY MANAGEMENT BASICS.
  • SITE SELECTION – EVALUATE SEVERAL SITES TO FIND THE BEST ONE TO START ON.
  • HOW YOUR FINANCING REQUEST LOOKS TO YOUR BANKER.
  • NAVIGATING THE APPRAISAL PROCESS.
  • HOW TO PITCH A DEAL TO AN INVESTOR.
  • DEAL STRUCTURES; ALIGNING THE INTERESTS OF PARTNERS.
  • POP-UP RETAIL AND STREET MARKETS; HOW TO CULTIVATE TENANTS (WHEN YOU HAVE NO MONEY).
  • UNDERSTANDING FHA LOAN PROGRAMS 203(B) AND 203(K) FOR 4 UNIT PROJECTS.
  • DEALING WITH CONSTRUCTION IF YOU DON’T HAVE A CONSTRUCTION BACKGROUND (AND EVEN IF YOU DO).
  • COMMON SENSE DESIGN STRATEGIES AND WORKING WITH ARCHITECTS AND ENGINEERS.
  • MULTIPLE ON-RAMPS, SCENARIOS FOR HOW TO GET STARTED AS A DEVELOPER/BUILDER.
  • A STANDARD 4-PLEX DEAL; ALL RESIDENTIAL OR SMALL MIXED USE BUILDING.
  • A STANDARD COTTAGE COURT DEAL.

What other content should we cover?

We are thinking folks would arrive in time for food and drink on Friday evening, leave after lunch on Sunday.  We are doing this on August 14-16,  Who’s in?

 

Asking Nicely for Something that should be Really Obvious —(Again with the Parking Thing)

Providing convenient parallel parking at the curb should not be hard.
Providing convenient parallel parking at the curb should not be hard.

Parallel parking at the curb provides some important and useful things:

  • Slower traffic.
  • A formidable barrier between passing cars and people walking on the sidewalk, so walking feels safer.
  • Parking spaces located close to where people are actually going.
  • Parking spaces without any additional circulation lanes (and additional impervious surface).
  • Greater flexibility for building on private parcels.

So if you want to build in a place that does not allow parallel parking on a public street and requires way too many off-street parking spaces on the private parcel, it is usually worth the hassle to ask for a variance or exception to the rules that are on the books.  Sometimes this decision is made by a municipal staffer like a Zoning Examiner or Planning Director.  Sometimes special permission for something really obvious, (like a better parking arrangement) will require the approval of the Planning Commission or even the City Council.

If you are asking for on-street parking or a reduction in off-street parking It is important to make that ask in the context of a thoughtful project .  When you show the amount of on-street parking being provided, the reduction in the number of off-street spaces seems like housekeeping item and not a big deal exception or some completely exotic one-off variance.

Just to be clear , (since it is often all about how you ask), don’t just ask for a reduction in something that is on the books as a black and white requirement that everyone is supposed to follow. Show the reviewer, commission, or council the whole project and ask for the reduction as part of that larger conversation. When you demonstrate that you are doing more, doing better than a lot of what they are reviewing, relief from a number in the zoning code seems like a minor accommodation needed to get to a good outcome.

Parking Bloat Drives Down the Price of Land in Desirable Neighborhoods (which is really dumb).

Parking in Downtown Buffalo, NY.  A stark example of a city that has prioritized affordable places to house cars (--regardless of the cost or consequence).
Parking in Downtown Buffalo, NY. A stark example of a city that has prioritized affordable places to house cars (–regardless of the cost or consequence).

In an email exchange with my Architect friend (and aspiring developer) Sara Hines in Massachusetts, she asked “Okay, so I really want to build better places.  What towns in New England are going to let you build small scale walk-up buildings as-of-right, without requiring a lot of off-street parking?”

Good question.  More likely than not, you will have to satisfy some local version of a dumb minimum off-street parking requirement. This is particularly unfortunate and wasteful, since municipalities are genuinely terrible at guessing how much parking is actually needed.  Let’s just call it what it is.  Parking Bloat.

With off-street minimums, parking becomes the driver of what can be built and what a developer can afford to pay for land.  (also called the “land residual” in finance speak).  Simply put –you can only build what you can park according to the rules. That drives down the price you can afford to pay for the land.
There is some minor good news if you have an appetite for parking reform.  Since the requirement for off-street parking just reduces what can be paid for the land, you may have an opportunity for some arbitrage as a small developer. Think of excessive off-street parking as a land bank.  A piece of the parcel that needs to be set aside in the right configuration so that it might be built upon later, (after the rules change).   The strategy to deal with this is to provide the unessessary surface parking so that it is configured to be converted to building pads later.  To do this you need to keep the utilities out of the future pad and watch out for how the site drains.
Another strategy is to build actual garages to provide some of the required off-street parking.  You can rent out garages at the same rate per SF as local self-storage (or more).  Let’s face it.  They will end up being used as self storage anyway, but in the mean time they are a rent paying work around for Parking Bloat.
If a municipality is serious about the economic and cultural benefits of places worth caring about and they want to provide a greater range of options for where people can live and work, they will eliminate off-street parking requirements.  If they won’t take that step, I wouldn’t trust their well-intentioned planning efforts. It is clear that they are somehow just not equipped to do the most basic thing.   Parking Bloat is a telling metric for figuring out how a town works.  It could mean the elected officials and staff may not know what they are doing.  It could also mean that they know what needs to get done, but for some reason, cannot get it done.  Either way, the effect is the same.  The small developer/builder should watch out for surprises in dealing with the planning staff and elected officials. If the community is crippled by Parking Bloat, land will cost less and you will have to build less initially.  So don’t overpay for land and start working on getting rid of the regulations that require Parking Bloat.
Don Shoup’s book   The High Cost of Free Parking is out in paper back for $28.  Make sure your local public library has several copies.  Give copies to the leadership of your town’s various neighborhood associations and to the prime movers at the local chamber of commerce. With a little luck, the Town will do the right thing and you may create a couple of building sites down the line within the projects you built under the old bloated rules.

Grim Arterial Street or a Multi-way Boulevard ?

The Grim Arterial Street 150' ROW.
The Grim Arterial Street 150′ ROW.

The most challenging piece of the Amador Proximo charrette with Placemakers was figuring out how to deal with an unfortunate arterial street bordering the 60+ acre infill site on the West. This street could be anywhere in the US.  Chuck Marohn calls these unlovable high speed thoroughfares “Stroads”.  Neither a road between towns or a street in town.

Link to “Stroads” at StrongTowns.org

Our proposed solution was two  11′ through lanes in each direction with a center median with turn pockets and two low speed side drives providing access to the parcels along the boulevard with a median separating the through lanes from the side drives.  The side drives would allow businesses along the boulevard to stay in operation while the center lanes and medians were being constructed.

Illustration by Andrew von Maur.  Walking down the side drive of the proposed Multi-way Boulevard.
Illustration by Andrew von Maur. Walking down the side drive of the proposed Multi-way Boulevard.

We heard from serious local cyclists that a dedicated cycle track in the side drive median would be preferred over cyclists sharing the slower speed side drive, so we modified the section.

Proposed section redlined after meeting with local cyclists.
Proposed section redlined after meeting with local cyclists.

This approach has a shot at getting built, as the state DOT is in the process of negotiating an agreement with the city of Las Cruces to turn this section of the State Highway over to the city and the DOT has allocated funds to do some improvements to the current “stroad before turning it over.    A good deal for everyone.  The Boulevard will produce much higher economic value for the adjoining properties and the traffic capacity and safety of the arterial street will be significantly improved.

Plan view of the proposed Boulevard section, Existing Buildings in Black.
Plan view of the proposed Boulevard section, Existing Buildings in Black.

If you are interested in this approach to taming unfortunate streets, I recommend The Boulevard Book by Allen Jacobs and Elizabeth McDonald.

Link to the Boulevard Book on Amazon

August Small Developer Boot Camp Registration is Full

"Whadda mean we have 100 people aready??"
“Whadda mean we have 100 people already??”

The August Boot Camp is full and we are closing the Registration.  Monte Anderson has a great venue for us in the heart of Duncanville’s Main Street, but we are limited to 100 people.  Folks who have registered will be receiving advance materials via email (homework).  We will post that material on the CNU Incremental Development Resources webpage so others can get get a flavor of things as we head into the first of what looks like 6 Boot Camps this year.  Many thanks to the local crew of Wana Smith, Cindy Copeland, Donna Harris, Daniel Flores, and Monte Anderson for pulling the logistics of the Duncanville effort together, and to Chuck Marohn and Jim Kumon at Strong Towns.org.

Small Developer Boot Camp Registration is filling up fast. Better get on it.

Membership is open to people with and without hair.
Membership is open to people with and without hair.

The Small Developer/Builders Group on Facebook now has over 600 members. Small Developer/Builders Group

Some members are curious lurkers, some are practicing developers, and many are on the fence trying to figure out what it would take to make the move from their current day job into developing small scale, incremental projects. We have seen several clusters of folks connect through the group and decide to meet up in person.  It’s been quite marvelous to watch the group grow in number and see the discussion move past daily posts of whatever is on my mind that I think might be useful.  Click the link above and ask to be added to the group if this sounds like something you want to explore.

The August Small Developer Bootcamp in Duncanville has been capped at 75 participants.  There were 56 people registered as of lunch time Friday.  So just 19 spots are left.  If you were intending to join us in Duncanville, now is the time to go over to the registration page and sign up.  It looks like the event will fill up at the early bird registration price of $100.

Boot Camp Registration / Strong Towns

Time to get signed up for the Small Developer Boot Camp in Dallas August 14-16, 2015

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Many thanks to Chuck Marohn, Jim Kumon and the good folks at StrongTowns.org for putting together the registration set up for the August Boot Camp.

www.strongtowns.us/smallscale-duncanville

We are quite grateful for their help on this, which arrives just in the nick of time.  So for everyone who posted “I’m in ” on the Small Developer/Builders Facebook Group or commented to that effect here on the blog, or sent me an email, text or voice mail, now is the time to get signed up for real.

Later this month we will also be launching a website repository for site plans, pro forma worksheets, etc. so that everyone who has asked for various versions of spreadsheets and step by step help on how to figure out if a building can make money will have a place to go to find the downloadable files.

Tasks to Demonstrate a Town’s Resolve both Essential and Useful

shoup

In a presentation at Build Maine 2015 , I started off this list with these two bullets:

  • Lousy Streets and Lousy Public Spaces make it harder to sell or rent buildings. They drag down the local economy and make the town uncompetitive..
  • Contaminated Sites require a lot of extra work.

The first bit about lousy streets and lousy public spaces should be obvious, but it can be hard to really understand the numbers on this issue, and how you got the lousy streets you have now in some parts of town.  Those lousy streets were built to a very specific set of standards  The wrong stuff built with tremendous precision.  It is mind boggling to find out that lousy streets are built to a legal standard, while the best streets in your town may be illegal to build today.  Which brings us to the second bullet.  Contaminated sites require way more work to build upon.  I’m not referring to chemical contamination.  I’m talking about sites that are contaminated by bogus rules and ordinances that just don’t work any more, but nobody has been willing to clear them out.  Sites that are Administratively Contaminated need to be cleaned up.  If you wait for the individual property owners or developers to do that clean up, it could be a very long time before your town is competitive.  Towns that can show leadership in cleaning up Administrative Contamination will perform better than their neighbors.  So here is the list of stuff a town can step up and do to show their resolve in making their community better:

An added Note. Comments on Twitter described this post as hopping from the Essential to the Useful, So I have annotated each item as Essential or Useful

Dump Functional Classification —Replace with NACTO Replacing the grid or network of streets with the stem and branch system required under Functional Classification was a really bad idea.  It produced high levels of congestion with fairly low volumes of traffic by concentrating trips on a small number of really wide and fast roads.  Providing cyclists and pedestrians with a fighting chance with the stupid Functional Classification requirements still in place is blind and wasteful.  Dump the bad rules and adopt the Design Standards published by the National Association of City Transportation Officials (NACTO).(Essential)

AMEND the International Fire Code for local use–Repeal 20’ Clear and Appendix D  The International Fire Code is hazardous to the communities it is intended to serve, because it is the source of overly-wide streets which promote faster car movement and result in more serious vehicle injury accidents and more people getting hit by cars getting maimed or dead.  Appendix D in the Fire Code requires 26′ clear for streets fronted by a single building greater than 30 feet tall (even when that building has fire sprinklers. (Essential)

Stop Using the Wrong Damned Ambulance –Firefighters should not design streets.  If 80% of emergency responses in your town are medical and only 20% are vehicle and structure fires, why roll fire engines to medical calls (just in case the first responders have to continue on to a fire).  The second part got me into some trouble with local folks.  I am still pissed off that in the town I lived in for 15 years, (Chico, CA) The starting salary for a firefighter with a high school education and some time at the Community College Fire Academy is $90,000 plus pension and benefits.  This is going on in a place where the Area Median Income (AMI) for a household of four is $43,752.  The firefighters I know are operating building companies on the side in addition to their generous salary and benefits.  The last time a position opened up for an entry level firefighter, there were over 600 applications.  I should have checked on the local situation in Maine where firefighters in Auburn and Bangor start at about 70% of AMI.  So I upset some folks by being wrong on the local situation.  We can argue about the pay scale for firefighters  but it is more important to recognize they have done a lousy job designing streets in communities across the country.  Relieving them of that authority will help your town. (Useful.  Be mindful of where you invest your political capital.  Taking on the Fire Department will bring forward all sort of nostalgic and heartfelt -but irrational reactions from the general public.  Get some of the other stuff on this list done first and the problems presented by having the fire marshal control the design of your streets will come into sharper relief).

Overhaul your Off-Street Parking Requirements, Manage your Public Parking Properly,–Dump ITE Manual / Read Don Shoup  Municipalities are tremendously bad at guessing how much off-street parking should be required for a given building.  The closest thing to an object standard they can point to is a collection of tables with decimal points published by the Institute of Transportation Engineers.  Those tables were developed by surveying single use suburban parking lots and are being mistakenly applied to downtown settings which also have on-street parking.  Somebody asked me where spending $1200 would do the most good in Municipal government. It would be a book club formed from the City Council, Planning Commission and Senior staff assigned Donald Shoup’s book The High Cost of Free Parking.  At $30 a copy that’s 40 copies.

For an explanation of why the ITE parking numbers are quite bogus, check out Shoup’s paper Roughly Right or Precisely Wrong? (Essential)

Come to Terms with your Zoning Code. Is your zoning code a collection of amendments and post-it notes that tarted in 1958 with an off the shelf ordinance from some outfit  in Atlanta?  Do it prohibit the worst possible thing from happening and allow the next to the worst possible thing to be built as-of-right?  How many special exceptions and variances does it take to build stuff that you say you want in you Comprehensive Plan? (Useful -but only because as tangled as some zoning codes are changing the rules can be a needlessly drawn out process.  Essential that you get started, but less critical than changing the off-street parking requirements).

Provide an Alternative to your Current Process for Building Permits, Inspections, Plan Check –Self Certification When an Architect or Engineer stamps a set of building plans they are taking personal liability for any failure to meet the building code or established professional standards of practice.  When a municipal plan checker approves a set of plans for construction or if a building inspector approves the building for occupancy, the municipality has no liability.  If you are the architect stamping the drawings and a city staffer tells you to change something or the building permit won’t be approved, what do you do?  What if you know the requested change is outside the requirements of the building code?  Some communities have passed ordinances recognizing where liability for code compliance falls and have allowed Architects and Engineers to certify their work subject to some peer review. This would be a way to reduce the time, expense, and frustration in the building permit processes of many towns. (Useful -but hey come on, as long as you have the hood up do this thing too.)

Be Rigorous about Municipal Finance –Do the Math.  Many towns do their books without considering the cost of repairing and replacing infrastructure that will be wearing out.  They don’t have a good handle on what parts of town generate the most revenue per acre, or the most cost per acre.  Without those numbers, it is hard to see the reality of how the wrong pattern of development can be really expensive.  Take a look at the work that StrongTowns is doing in Lafayette, Louisiana.  See how your town measures up when you do the math.  (Essential)

Build Maine? Hell Yes.

The Build Main Audience in great space at the Bates Mill in Lewiston
The Build Main Audience in great space at the Bates Mill in Lewiston
Kara Wilbur Benson & Vanessa Farr principal wranglers of the Build Maine Event
Kara Wilbur Bensen & Vanessa Farr principal wranglers of the Build Maine Event
Continental Breakfast and Coffee Break Food you actually  wanted to eat.
Continental Breakfast and Coffee Break Food you actually wanted to eat.
The great folks from Forage Market who  fed us.
The great folks from Forage Market who fed us.
The List of Stuff I said I would re-post on the blog in greater detail....
The List of Stuff I said I would re-post on the blog in greater detail….

I just got back from the Build Maine event in Lewiston/Auburn, Maine.  I don’t know what went on behind the scenes to make this happen, but it came off as a very well-planned and well-executed event.  The space at the Bates Mill was soooo much better than the usual hotel venue.  The folks attending and exhibiting were from the full range of folks thinking about making their state a better place.  Chuck Marohn, Mike Lydon, and I were the keynoters from out of town.  I was up first, (I suspect this was make Mike and Chuck appear more grownup by comparison) Conference food is too often something to be tolerated, but breakfast and coffee break fare from Forage Market was great. The organizers put on a Pecha Kucha (multiple short presentations, each limited to 20 slides in 5 minutes) at the local brewery the previous evening.  That’s a great way to kick things off.  Adult beverages and rapid fire provocative ideas -what’s not to like?  If you are thinking about a regional event I would recommend talking to the folks that wrangled this one.  I promised to re-post my list of stuff a municipality can do to demonstrate they are not screwing around with this Place Making stuff.  (which included an item I had to apologize for later). I will get that up tomorrow.