Site-Built Affordable Housing - A Primer
© Bradford Hatcher, 2008
Version 08.3
Contents
Introduction
Bust Economy Housing
Boom Economy Housing
Rental Property Development
Starter Home Development
Private-Sector, Free-Market Housing
Public-Sector, Deed-Restricted Housing
Part One: Free-Market Housing and Affordable Construction
Public-Private Cooperation is Limited
Codes
Standards
Fees
Life-Cycle Cost Analysis.
Economy of Scale
Building Size and Shape
Type of Construction
Aesthetics
Site-Specific Design
Square Foot Costs
The Design Team
The General Contractor or Project Manager
Program Development
Building Height
Rood Pitch
Garages
Pre-Designing with Sub-Contractors.
Purchasing Materials.
Site Work
Foundations
Framing
Enclosure
Doors and Windows
Plumbing and Electrical
HVAC.
Solar
Appliances
Cabinetry
Finishes
Sweat Equity
Part Two: Public-Private Partnerships
Public Housing, or The Wrong Path to Take
Incentives for the Private Sector
Preliminaries
The Marginal Value of Land
Motivating the Public Entities
Getting Local Governments to Initiate Affordable Housing Ordinances
State of Colorado Smart Growth Housing Task Force Recommendations
Dimensions of the Problem
Part Three: Deed-Restricted Housing
Affordable Housing Planned Unit Developments
Statements of Purpose, Intent, Goals and Objectives
Introduction to Performance Zoning
Variations in Zoning Standards Allowed
Variations in Improvements Standards Allowed
Variances in Regulatory Obstacles to Affordable Construction Allowed
The Plat of Record and the P.U.D. Agreement
Covenants, Conditions ad Restrictions
The Deed Restriction
Four Examples
Appendices
Appendix One: A Sample "Alternative Owner-Builder Code"
Appendix Two: The State of Colorado Planned Unit Development Act of 1972
Introduction
The subject of housing affordability divides itself naturally along several different axes of analysis: 1) Bust-economy housing vs. boom-economy housing, 2) Rental property development vs. Starter home development, 3) Private-sector, free-market housing vs. public-sector, deed-restricted housing.
Bust-Economy Housing
Bust-economy housing issues involve a growing supply of existing structures in increasing states of disrepair, little new construction, and decreasing demand for purchase due to diminished earning potential and the unavailability of financing options. Even the inability to pay property taxes may lead to seizure and loss of housing. In the U.S. and Canada the "affordability line" is often taken to mean housing costs of less than 30% of a household's gross income, including taxes and insurance, and sometimes it is regarded as 35%, including utilities. Low-income housing costs are calculated at an average of 65% of the Area Median Income. In a depressed economy, even with diminished raw land values, the costs of minimum infrastructure and even frugal construction practices, when done according to adopted building codes and standards, place new construction out of economic reach for many if not most of the population. The usual options are government subsidies (that least efficient of all of the uses of money), sweat equity, wherein renters and buyers contribute their labor to housing value, creative financing, and residential parks with utility hookups for semi-permanent mobile homes and recreational vehicles. A little-used device is the conversion of the spaces in these parks into resident ownership. Of further help might be the tax exemption of a minimum level of housing and property, much as a standard deduction works on income taxes. For example: the first 400 square feet of house and 1000 square feet of property each for homeowner, spouse and children might be exempted from property taxes. Another useful tool might be a revolving public housing fund or bank, but it might be a challenge for any public entity to keep the costs of maintaining and administering such a fund below its income from a reasonable interest, so that it wouldn't become a liability to the public treasury. As usual, such management would be more responsible in private hands. But the more fundamental, underlying needs remain to be addressed by the entire community with comprehensive economic redevelopment programs, such as the models developed by the Rocky Mountain Institute. Even here, the community has the uphill task of overcoming the general climate of apathy and inertia that accompanies economic depression. Luckily there are success stories for inspiration, like the community-wide development of low-tech solar energy in the San Luis Valley of Colorado during the energy crunch of the 1970's. Since this booklet will concentrate more on the development of new, site-built housing instead of rehabilitation, most of this time will be spent on:
Boom-Economy Housing
Boom-economy housing is a different animal entirely. The problems here start to take form when the demand for housing begins to exceed supply and the public begins to see uncontrolled growth as a threat to the local quality of life. Meanwhile, those with vested interests in real property wish to see their property values continue to climb, often at an accelerated rate. These are the preconditions, not the cause of housing problems. The causes tend to be twofold, and both are a direct, but unintended consequence of the local government's response to these preconditions, even though the people involved will stubbornly disclaim any responsibility for housing prices. The first cause is the tightening of the number of total residential units allowed on a given piece of residential property, accomplished through zoning laws by requiring increasingly larger minimum lot sizes per unit and then increasingly larger minimum residential unit sizes. As the prices for these properties are bid upwards, it becomes increasingly necessary for investors to develop each property to its "highest and best use," which is almost always understood as its maximum use, in order to maximize the return on their investments. It quickly becomes less attractive financially to build smaller homes with fewer bedrooms, even on smaller lots. The area's demographic profile gradually shifts to favor the more affluent economic strata, which drives the election of public officials, and this cycle begins to compound the problems with nimby-ism, the wish to keep the view from the grand picture windows clear of any evidence of the existence of lower economic strata and service personnel. The second cause involves the gradual raising of construction standards to insure that higher quality structures are built and higher resale values are maintained. This is accomplished through the adoption of building codes and local prescriptive standards, and also the unofficial development of standards which are then enforced by planning departments and building officials. The problem with this raising of standards was summarized by Philip K. Howard in The Death of Common Sense: "The law, aspiring to the perfect housing abode, has accumulated so many good ideas that the only type of new building that is permitted must satisfy middle-class standards. A law that dictates either a model home or no home is probably fine for some, but what about those trying to provide housing for the poor?" Sometimes there is a third cause added to his mix: the local chamber of commerce or resort association begins to actively promote the area and its real estate, further accelerating growth pressures and artificially driving up the demand for residential property.
In sum, the entrenched population gains control of the housing supply. Virginia Postrel writes "Instead of inviting newcomers, this approach rewards longtime residents with big capital gains and the political clout to block projects they don’t like." [The Atlantic, "A Tale of Two Town Houses," Nov, 2007]. Having priority in time of arrival wants to translate into having priority in all things. When government begins to fight free-market housing, it does so exuberantly, every step of the way, driving prices up not only with standards, but with bureaucratic delays, review fees, impact exactions and, for the exasperated, court costs.
Rental Property Development
As problems with boom-economy housing develop, socioeconomic stratification begins to push the workforce outwards - into industrial zones and bedroom communities, sited on the least or less valued lands - and seldom into ownership opportunities. Rentals begin to tighten up. In the next stage some sort of class competition begins to fester and the "losers" begin to petition their local government for some kind of help, redress or intervention. The term "housing crisis" begins to appear shortly after its driving force, "growth management," is adopted as policy. But the connection between them is seldom acknowledged. More free-market rentals are built, but the higher standards and the costs of approvals and construction drive the rents upward. Since ownership opportunities are increasingly scarce because modest housing is so financially unattractive, the young couples and professionals, such as school teachers and nurses, who should by now be buying or building starter homes, face a ladder with all of the bottom rungs gone - and so they stay within the rental market, doubling the strain on this market segment.
As the schism widens the government is pressed to "do something." Now the working renters begin to crowd the highways in their daily commutes, polluting the sky and enhancing somebody else's economy. Pent-up demand builds and emergency measures are studied, Most are heavy-handed, coercive, socialistic, bureaucratic and adversarial - and are never productive of voluntary solutions. From developers are taken inclusionary exactions (e.g. 15% of all units shall be affordable, pursuant to adopted definitions). Potential free-market rental developers are scared into the next county the moment "rent stabilization" is mentioned. Blindly assumed is some need for subsidies and grants, which inflate rents, depress wages and double the real construction costs. The cry goes out to spend a year's wages for some out-of-town expert to do a "housing needs assessment" to tell those "in charge" what common sense wants to tell them for free. All of these solutions are failures of imagination and failures of community spirit. The free lunch is a big part of most government thinking, but only the hyenas, the consultants specially adapted to scavenge on this sort of thinking, will get one. Few people in the public sector seem capable of perceiving that at least half of the problem with shortages in rental housing comes from the bottleneck created by the lack of starter homes. In the healthiest communities, rentals are temporary - people moving permanently into the region will eventually find themselves able to start building equity. And yet the initial response of the public entity to a housing crisis is to relax the zoning just a little to allow granny flats or garage apartments, which only leads to several more years of smug complacency and even more pent-up housing demand, And when the projected crisis finally does become a true crisis, the emergency measures taken in haste usually involve the hasty copying of a handful of unsuccessful solutions from neighbors with problems only a few years more advanced. It is seldom noted or remarked that these "solutions" have track records of failure - but at least the public entity isn't risking the perceived liability involved in trying something new and visionary. Despite the more fundamental importance of ownership opportunities, rental property development has an important place in a broad housing solution. Most of the approaches to be offered here apply equally well to rental and owner-occupied housing, with a few exceptions to be noted as they surface.
Starter Home Development
Two very different species of site-built affordable housing will be discussed here as viable solutions to local housing crises. They will be termed "Private-Sector, Free-Market Housing" and "Public-Sector, Deed-Restricted Housing." A third, "Public Housing," or housing built primarily with public funds and subsidies, and managed by public entities, will be briefly discussed for the lessons it has to teach, but this kind of housing development is such a bad idea that it should be dismissed with some force. Government has no business in the housing business. It might even be impossible for a government to spend a dollar with greater than 50% of the efficiency of the private sector, largely for the reason that nobody in the public sector will be held accountable for error - and all they are spending is free money from the taxpayers, who have come to expect this sort of waste and don't seem inclined enough to rebel against it. For a fourth approach, typified by Habitat for Humanity, the reader is simply referred to: Habitat-Wikipecia and here: Habitat-Home
Private-Sector, Free-Market Housing will be discussed first. This process involves maximizing value for cost, maintaining fiscal responsibility, and the personal accountability of real persons who have their life savings to lose. Because of this, it seems to be the area least understood by the public sector and its architects. The public sector approach to affordable housing, in other words, only rarely if ever asks the question: how do we construct affordable housing affordably? Fiscal responsibility is not a big part of its thinking.
Private-Sector, Free-Market Housing
The first large section will concentrate on what can be done to minimize building costs and maximize profitability within the constraints imposed by the purchasing power of the target buyer demographic. It will thus address the provision of housing for a slightly higher income bracket than that demographic targeted by the Public-Sector, Deed-Restricted Housing methods to follow in the next section.
Most of the principles involved in both the Private- and Public-Sector solutions apply equally well to the development of rental housing and starter housing, to stand-alone, single-family homes and to multi-family apartments and condominiums. They also apply to an enormous surge in demand now coming the market's way from the baby boomers, in the form of retiring seniors and empty-nesters, especially those with a combination of some modest equity and modest fixed incomes. The biggest difference between the owners and renters will be in the provisions made for building sweat equity. The biggest difference between the young families and the retiring seniors will be in the provisions made for the eventual physical expansion or enlargement of residential units.
There will be somewhat more public and political wariness of rental housing being developed by the private sector, even for agencies which naively assume that rentals are where all the solutions to housing problems lie. This is particularly true for the larger, multi-family apartment complexes. Some of this is due to stigma following the debacles in large, public housing projects, and some to our own cherished memories of the wild scenes and behavior in off-campus student housing. It is true that it will be in just such a complex that your debutante daughter will lose her virginity to the biker friend of the boy selling pot to your son. But that's life - suck it up and get past it. Approvals for rental projects will come easier, however, if some of the issues and stigma can be addressed in the development proposal, such as security issues, and easier approvals will translate ultimately into lower rents, since these costs are passed along and ultimately incorporated into rents. There is a frustration that accompanies the monthly vanishing of a hard-earned paycheck, there is a lack of the pride of place that comes with ownership, there is a sense of entitlement to more licentious and libertine fun and irresponsibility due to the high cost of rent, and there is in fact a somewhat higher rate for certain types of crime. Little can be done about these necessary social costs, except to either export them to distant bedroom communities or to weight the public favor towards the provision of starter homes to ease the pressure on the rental market and give renters more hope of eventual ownership and thus a longer-term sense of commitment to the community.
Public-Sector, Deed-Restricted Housing
This second section, Public-Private Partnerships, opens the discussion about what can be done to develop housing in a partnership, with each side doing what it does best and restraining itself from doing what it does badly. If the public sector has any sense, it will carry forward the affordable construction methods recommended for the private sector. It will then further reduce the overall unit costs with savings in the per-unit costs of land and infrastructure by using its discretionary powers in the modification of its own zoning laws. It might even further reduce the costs of unit construction using its ability to relax its own adopted construction standards. It is frequently suggested that the public entity take another step and waive such public charges as utility tap and use fees. This will not be recommended here as it constitutes a subsidy. The whole point of housing affordability should apply to all of the concerned parties, public and private, and projects which can demonstrate an ability to pay their own way will be the most likely models for long-range policy success.
In order to be motivated to implement an effective solution, however, the public entity will likely need to come either to a housing crisis or else to an emotionally mature understanding of its role in creating the crisis to come. The latter, of course, is preferable, and will lead to more reasoned and mature solutions. For a public entity to accept accountability for creating a problem is a rare thing indeed, and half of the budget of local governments seems spent on avoiding accountability, under its bafflegab alias of liability. But such an understanding and assumption of responsibility might bring the requisite courage to institute change, leaving only the problem of finding a workable vision.
The workable vision must first of all concern and address the community's long-term socioeconomic health. Since a community is in a very real sense an ecosystem, many of the laws of ecology apply, and one of the best known of these is that the health and resilience of a system is directly proportionate to its diversity. You will of course find the same high value given to diversity or diversification in the fields of both sociology and economics. Socioeconomic diversity is the complex integration within a community of multiple levels of economic strata, lifestyles, points of view and cultural backgrounds. This is not the same as homogeneity - these elements are not just mixed or jumbled together in a textureless social mass, but they are in a dynamic proximity, interacting in a lively and productive manner, including arguing about the community's primary goals. In fact, it is the downfall of many a community when it does reach a consensus about what it is and where it is going - dissent is stifled, peer pressure is writ large into the law, and the right questions are no longer asked.
The method best suited to this public-private partnership uses a zoning category and process known as a Planned Unit Development, or P.U.D., to alter or vary the normal set of zoning standards in order to attain publicly acknowledged community goals and objectives. The laws enabling local governments to use local P.U.D.'s begin at the state level in state statutes, vary from state to state, and allow each local government its own wide latitude in interpreting the purpose, content and scope of this freedom to bend its own rules. Where I live, in Colorado, they are found in CRS Title 24, Article 67, the Planned Unit Development Act of 1972. See Appendix Two. Unfortunately, these state laws are often understood and implemented locally with a very limited vision of the potential of P.U.D's to solve a wide range of planning and design problems. A P.U.D. in many locales is little more than a sleazy excuse to subdivide, and sometimes upzone, in exchange for some open space. In fact, many of the ideas presented here are a little more visionary than most local P.U.D ordinances anticipate and would require a local government to modify its laws or to institute special P.U.D. legislation that specifically enables such public benefits as affordable housing. This is easy to do with the right combination of public pressure and public understanding, the latter being the rub.
Another key to the success of this public-private program is that the government must know when to stop governing. There is a point in the process where the government needs to turn things over to its partners in the private sector, to do what it does best, to wit, build housing units affordably in exchange for a reasonable profit. Beyond this point, the continued government management, micromanagement or interference rapidly becomes both counterproductive and needlessly expensive. To this end, contracts are written, called P.U.D. Agreements and Deed Restrictions, insuring that agreed upon terms, conditions and impact mitigation measures are performed and governing who owns or occupies these residential units and how ownership may be transferred. These are intended to secure the government and community objectives with a minimum of public cost and oversight. A government, in effect, grants a "redefinition" of allowable density and required costs and assessments in exchange for certain enforceable promises. The deed restriction, which runs with the title to the land until revoked or expired, might state, for example, that any new units created by this process will be occupied only by persons who have resided in the region for a year, who earn their primary incomes as hourly wages from businesses situated within the region, and who own no other property. Other criteria would qualify retired seniors on fixed incomes. The intent is to disqualify those who would merely invest in the project for profit, thereby eliminating much of the speculative demand which drives accelerated resale price increases. But the goals of this are primarily to keep the local workforce within the community and to maintain socioeconomic diversity, which must be seen as public benefits for the government to take special action. The goals of the local master plan, a prominent feature of most local political archives, and the threat of disintegration of communities that fail to solve diversity problems can be cited here as rational bass of action.
While government has no business in the housing business, there are six useful services that it can perform: 1) Acknowledge its role in creating the housing problem in the first place and affirm the need to provide a relief valve for the pressures of pent-up housing demand, in a way that favors new housing for those members of the community most likely to contribute to the community's overall socioeconomic health; 2) Declare socioeconomic diversity to be in the public interest, necessary to community health and worthy of instituting special zoning and standards considerations, 3) Reduce the cost of residential units by relaxing or modifying density and other zoning and building constraints, 4) Modify and/or finance tap fees and other impact exactions, perhaps to make them reflect lowered actual impacts (rather than waiving them), 5) Secure and guarantee these and other cost reductions to both the community and to its qualified members by contract and deed restriction, and 6) Step back and stop meddling when the proper time has come, relying on contracts and deed restrictions to take most of the place of micromanagement and oversight.
Part One: Free-Market Housing and Affordable Construction
Free-market housing is developed by private entrepreneurs as a response to market demand, usually with little or no cooperation from the municipality or county in which the project sits. It is more likely, in fact, that a free-market project will encounter adversarialism and even hostility from the local governing bodies if it threatens to house lower-income residents anywhere near the more upscale neighborhoods, or even to lower the mean appraised value of local housing units in the region. Whether the units are for rental or for sale, they must be constructed for, at most, a reasonable profit margin less than what renters and buyers can afford. To qualify as affordable, this in turn means housing costs below 30% of gross household income. Land, infrastructure and utility taps must be acquired at the same costs as those paid by higher-end projects, although affordable projects will likely be sited on smaller lots and lots in somewhat less demand. All of this puts the burden of affordability squarely on the shoulders of the design-build team.
Public-Private Cooperation is Limited. There are a few points of public-private contact where some savings may be found, but cooperation from the public sector will be unlikely unless public officials are under a great deal of political pressure to accommodate affordability issues. It should be understood that the public sector is by law forbidden from extending special privileges and deals which are not extended to all persons equally, and from making any special arrangements or agreements with favored parties. If a proposal is made to modify or reinterpret existing standards and rules, then the public entity must be explicitly willing to set a precedent in this direction. But it is also possible to design unassailable land use ordinances that allow review of projects on a case-by-case basis, on the specific merits of a project. I will touch briefly upon these points before proceeding to areas of guaranteed savings based solely upon private decisions. For more detail, see my somewhat angrier article Local Regulatory Obstacles to Affordable and Green Construction.
Codes. The adopted building codes often allow for "alternative materials, design and methods of construction," subject to the approval of the building official, who will almost invariably require a fairly costly certification of the alternative by a licensed architect or engineer. On rare occasions, a community may adopt a standard or uniform building code with exceptions made for violations of common sense, or an Alternative Owner-Builder Code, see Appendix One for a sample, allowing construction which "does not abnormally endanger health or safety," usually provided that the developer is willing to sign a liability waiver. Unfortunately, the carefully cultivated lack of accountability in public office very often attracts "public servants" with marked passive-aggressive personality disorders, who will quickly turn every empowering May into a Shall, and then lean back and enjoy telling the supplicants seeking permits what he "cannot" permit him to do. What is little understood by those who vote to adopt these codes is: a) there is no public liability for unsafe construction until the codes are adopted and enforced, b) these codes can me modified at the time of adoption, or at any time later, to broadly exclude any or all violations of common sense, c) the codes normally address generalized design solutions to worst-case-scenarios which may not even exist, occur or be possible in the local region, and d) the structural values adopted in these codes are frequently only half of the real structural values of the building materials so rated, or conversely, the required design loads are double the maximum loads which might reasonably be expected. Safety factors of 100% are routinely built into these codes, but are completely unnecessary from the standpoint of sound engineering and public safety, let alone public liability. Safety margins of 25 to 50% are normally perfectly adequate.
For your amusement, this is history's first building code, and a model of simplicity: "If a builder build a house for someone and complete it, he shall give him a fee of two shekels in money for each sar of surface. If a builder build a house for some one, and does not construct it properly, and the house which he built fall in and kill its owner, then that builder shall be put to death. If it kill the son of the owner the son of that builder shall be put to death. If it kill a slave of the owner, then he shall pay slave for slave to the owner of the house. If it ruin goods, he shall make compensation for all that has been ruined, and inasmuch as he did not construct properly this house which he built and it fell, he shall re-erect the house from his own means. If a builder build a house for some one, even though he has not yet completed it; if then the walls seem toppling, the builder must make the walls solid from his own means." Code of Hammurabi, King of Babylon, c. 1810 BCE – 1750 BCE
Standards. Those standards which are not officially adopted, but are enforced by planning and building officials add another layer of "protection" and regulation to the adopted codes. Unfortunately these are often simply boilerplate items lifted from the codes of neighboring communities and more often than not are left unexamined for their scientific merits or sound engineering principles. Further, they will often compound extreme safety factors already built into the adopted codes, leading to absurd degrees of overbuilding. Good examples in southwest Colorado tend to be extreme frost depth specifications for soils in which the frost heave phenomenon, for which they are instituted, cannot physically occur, and design requirements for de facto snow depths, when all inter-multiplied safety factors are accounted for, in excess of thirty feet, or eight times anticipated maximums. It may be possible to have these standards modified locally, upon a petition from a number of architects, engineers and professional builders, but this may require that local officials admit that they have been in error. It should be noted here, however, that some of these standards tend to be more area-specific and reasonable than others: these more realistic numbers often include wind speeds, design temperatures, and flood elevations.
Fees. Tap and impact fees might be somewhat modifiable with sufficient justification. Although many subsidized housing programs request such waivers, often waivers of such fees in full, this will not be recommended here, even for public-private partnerships and deed-restricted housing. True affordable housing should pay its way or fair share and not burden the public, or create the kind of resentments that subsidies might bring. That said, it might be plausibly or cogently argued that a small or modest house, or one with fewer than the average number of occupants, or one with strict regulations favoring water conservation, does in fact have a lesser impact on public infrastructure and many public services. Some fair fee modifications, based solely upon these considerations, might be negotiated.
Given the above constraints, the private-sector developer is left with the task of constructing acceptable residential properties at the lowest possible cost. The first dilemma to face, or choice to be made, is between site-built and manufactured housing. Clearly, if a developer wants to simply get in and out, and the success of subsequent projects will not rely on the appearance, or the neighborhood character, or the aesthetic appeal of what went before, then the "upscale trailer park" with modular housing might be the choice. But this quickest solution is not necessarily the least expensive or the most profitable path. Design limitations imposed by the dimensional constraints of unit transport across state highways, and redundant structures required by the stresses of transport, will always mean greater consumption of building materials and much less design flexibility. Standard construction details and aesthetically deficient design sense in the manufacturer's mindset may reduce both curb appeal and buyer demand for the property. Shipping, extra site and foundation preparation, taxes and seller commissions must all be included in the budget. It may well be that site-built housing is cheaper, better looking and better for the local economy than manufactured housing. It engages the local work force and those wages are spent back into the local economy.
Life-Cycle Cost Analysis. To complicate matters, there are a handful of economic principles which, if applied in the interest of saving the renters or homeowners money over the life of the building, or even over their term of occupancy, will add significantly to the initial costs and purchase price of housing. The developer is put in the challenging position of having to educate the buyer and make a higher initial bottom line look more attractive and sensible. Building to reduce maintenance costs is one good example. If a builder spends X dollars more on fiber-cement siding to avoid an X dollar paint job every six years, the ultimate savings will be immense, but the house merely looks more expensive to the uneducated buyer. Life-cycle cost savings have this problem as well - an appliance that costs twice as much, but lasts three times as long as another, is actually more affordable in the long run. A site-built solar collector that is only half as efficient as a manufactured panel is in fact half-again more efficient if it only costs a third as much. An analysis of payback periods is advisable, and this may need to be made explicit and written down for the buyer and his banker. This can sometimes be most easily understood in terms of interest rates, or rates of return on investment: an expense with a seven-year payback can be viewed as having a fourteen percent annual return. That's an extremely attractive investment, worthy of savvy venture capitalists. In fact, any interest rate greater than the prime lending rate should be taken very seriously.
Economy of Scale. This is is another important early consideration. While site-built housing might still be made competitive with modular housing on a unit-to-unit basis, the real competitiveness begins with the construction of multiple units, preferably six or more at a time, with staggered starts and dates of completion to keep smaller groups of sub-contractors happily moving in an orderly sequence through the project. Big savings can be had in purchasing six to twelve identical appliances. A little expertise in timing can help here as well - for example, pouring foundations in late fall when foundation contractors are running out of work, and then framing in early spring while most of the framing contractors are waiting in line behind concrete contractors who are waiting for the ground to thaw. It may pay to have such thoughts as "snow is easier to sweep than rain." With economy of scale it isn't necessary to build all units alike, but it will certainly help if a design solution can be applied in multiple places - the time-consuming head scratching happens only once and then the builder is wise to the problem. Custom options on spec-built units should be kept to a very simple set of easily interchangeable ideas, and signs should even be made that tell waiting buyers that these are the only options. You can have any color you want on the Model T, as long as it's black. This is not custom home building that we are describing or doing here.
Building Size and Shape. Clearly, unit size is one of the single biggest factors in unit cost, and the question to ask is not what people want but what will they accept. A developer needs to understand the difference between the buyers' felt needs and their real needs. Yes, the glamor bath with the separate tub and shower will appeal emotionally to a young couple, but that glamorous tub might only be used a dozen times in twenty years - is it really worth five percent of the house? In cold climates, it is often mistakenly thought that airlock entries are big energy savers, but the fact is, any cold air entering the house still needs to be heated to room temperature whether it's in an airlock or not. Airlocks merely moderate the directness of cold air blasts, and this is at the cost of an extra door and several square feet of building. Getting familiar with space-efficient floor plans will be very helpful. Some of the most efficient plans available can be found across the country in tried-and-true company and military-base housing (we're talking floor plans here, not exteriors). Some very efficient mobile home ideas are also adaptable to squarer shapes. When it comes to absolute minimum residential unit sizes, I have seen habitable efficiency units a low as 336 square feet and comfortable ones at 448. An extremely efficient three bedroom unit can fit within 768 square feet, and they are commonly found in mobile homes at 924. In most cases, given those numbers, I would not really see a need to exceed 1500 gross square feet for the largest affordable unit, a single-family starter home with up to four bedrooms. Two of the most common features of the commonly-found, affordable plans will be a main entry located close to the center of the unit and a minimum of square footage wasted in hallways, stairways or other circulation features. Simplicity of shape and form plays a big part in affordability - the basic box is of course the king of economy, and this rarely takes more than two well-proportioned additional features to make it look not like a box. Every corner and angle costs money, and every edge where materials change, so these should be used carefully; every curve - well, call those learning curves. Shed dormers, for this reason, are cheaper than doghouse or gable dormers. Design dimensions on modules or rhythms which are based on the standard sizes of building materials also play a big part in savings. For structures, these will preferentially use 4 foot, 2 foot and 16 inch increments. A 19 by 23 foot building will likely be more expensive to build than an even larger 20 foot by 24 foot building because the builder isn't cutting off wasted material and then paying to have it hauled away. Designing with other standard dimensions can help as well. A bedroom 12'2" wide will cost a lot more to carpet than 12'0" because carpet comes in 12 foot widths. Linoleum likes increments based on six feet.
Type of Construction. It is not a great cause for happiness and celebration that the conventional way of building is so for the simple reason that it provides acceptable habitable space for the lowest average cost. Numerous alternative and more environmentally friendly methods and materials vie for the developer's attention, but these will rarely offer budgets of less than 15-25% above conventional numbers, an added construction expense that must then be sold to the buyer as either aesthetics or good conscience. Often part of the reason for this is that patent holders want to reap as much profit as they can from their ideas, and a 15% surcharge seems to be what the market will pay for a cleaner conscience. It doesn't help that these newfangled building ideas make the building officials nervous enough to require either expensive engineering or redundant conventional systems. It doesn't help that the prices of mined materials, petroleum products and forest products are kept lower than they would be in a free market by subsidies and public lands resource giveaways - the prices of building materials thus do not reflect their actual scarcity or their strategic value to future generations. Sometimes these alternatives do get built more cheaply, particularly when the alternate methods and materials are very labor intensive, but this is usually with sweat equity programs, or by owner-builders and community efforts, not developers. If this is your case, certain alternatives, particularly unpatented ones like strawbale, cobb, or surface-bonded block, are certainly worth investigating. Also you might look into getting some free labor by turning the project into a hands-on educational class in that type of building. This is a fair trade of knowledge-for-labor. Generally speaking, the most affordable construction is going to roughly approximate conventional methods and materials. There may be some solace in the fact that even the greenest of alternative materials can contain vast amounts of embodied or embedded energy and water, the true environmental costs of materials. But some more satisfaction can also be had in using these conventional materials, and their embodied environmental costs, with a much greater economy and efficiency that business-as-usual construction practices. In fact, if you can build with 20% less material you are probably doing as much for the environment as nearly any of the so-called greener solutions.
Aesthetics. When a developer is building affordable housing within a larger context of free-market development, as is often the case with inclusionary requirements, it becomes imperative to avoid dragging his own nearby land values down by erecting cheap-looking structures and setting a Dogpatch or Trailer-Park architectural theme. Surprisingly, this may need to be mentioned to some developers. Outside of this condition, curb appeal will at least play a big part later in a project's life, in permitting higher resale values. It will also reduce the developer's interest costs, as he may not have to sit as long on his unsold inventory, waiting for depressing or boring-looking units to sell. Making a project attractive isn't necessarily any more expensive either. Ways of building, and ways of making buildings look, will find their way into the vernacular architecture by satisfying a combination of needs over a long period of time, including both affordability and a sense or feeling of home. It is true that, as H. L. Mencken observed, "Nobody ever went broke underestimating the taste of the American public." One has only to look at what passes for "architecture" in the typical American suburb, or thumb through the weekly "Fine Homes" supplement in the Sunday paper. Yes, these homes were built with the builder's affordability in mind, and sold for what the market would bear. But this is not proof that bad architecture is a necessary component of affordability, any more than the bad architecture that comes to it's foundation by truck and crane. Often that heartbreakingly cute little cottage reflects a winning combination of tried and true design practices; that little victorian row-house reflects a way of building that made exceptionally good use of materials that once had to be tediously milled by hand. I have made a practice recently of photographing the television screen whenever a house is featured in a motion picture. This reflects the taste of the guy in charge of film locations, but it must also be approved or seconded by his creative superiors. I think the result speaks much more to what people want when they fantasize about a home, at least more than the typical suburban home that was used in Poltergeist to show all-around bad judgment. The location people tend to put the criminals in the ugly homes and trailer parks. So guess what styles most of the heroes live in? All of our main historical vernaculars - craftsman, more than any other, then other types of cottages and bungalows, then farmhouses, southwestern adobes and victorian era styles. All but the adobes have the nice, wide eaves with raked soffits, and all but some Craftsman homes have roof slopes above six-in-twelve, features that you just don't see on a tract home, or that you just can't get on a modular home without paying prohibitive premiums.
Site-Specific Design. One of the biggest disadvantage of modular housing is that the basic house plans are designed without any regard for a specific location or orientation, although some flexibility is still possible with mirror-plans, and north-facing windows can be shortened within the limits imposed by egress requirements. With a known site you can still customize repeatable designs and design features for multiple locations and orientations, while taking much better advantages of such variables as street orientation, site slope, solar exposure, neighborhood and views. In areas where there are mountains, great views or long winters, it is a good thing to do for the resident's state of mind to set the window rough opening heights as high as 8.5" below the top of wall, even if this doesn't align with the tops of the doors - this allows for a 5.5" header and a much better view of the horizon from deep within the room. This helps a lot with claustrophobia and seasonal affective disorder.
Square-Foot Costs. In shopping for both designers and builders, it's important to examine their abilities and track records in terms of cost per unit of building. In order to do this correctly it is equally important to ask how this is measured, to get an apples-to-apples consistency. I prefer to use the least flattering number. For a design-build team, I want to look at the cost of everything but the raw land, including the design, engineering and approval fees, tap fees and local taxes, all the way through the final landscaping. This is especially important if one is considering modular homes. If I am just looking at builders, I might leave out the design, engineering and approval fees, tap fees and local taxes, but I will do this consistently. Further, I like to make this reflect the actual costs of building a little more accurately by counting only finished habitable spaces (including exterior walls) at their full value. I will count garages, useable floor area under five feet high and unfinished basement and attic spaces at half of their actual size and porches and decks at one-fourth. When asked to bid a design, I will use a square foot number based on these figures.
The Design Team. As a self-taught building designer, I have to admit that I have no particular reason to recommend licensed architects over self-taught building designers. At eighteen I did take one semester in college as an architecture major, under Richard Neutra, but I was already earning my way through college by designing medical centers and remodeling a large hospital, with no more help than a boiler engineer and a cabinet full of old plans for reference. Like any guild monopoly, architects have their secret handshakes and bigger secrets as well. They want you to think that the educational process and apprenticeship they go through is the only way to acquire competence. They have certainly learned how to write tight contracts, for their benefit, and they are far more likely to keep current on all of the latest design fads. But it still isn't part of their curriculum to work out on the job, cursing the architects for having so little appreciation of the real building experience. And affordability will not be a primary concern when their fees are based upon a percentage of building cost. Laws regarding the necessity of licenses vary from state to state. In Colorado, a designer may go it alone if the project is less than four stories in height and all buildings are fourplexes or less. Most of the time the building inspector will require the stamp of a professional engineer, at least for the foundation and often for the major structural elements. I never complain about this - the stamp comes with the engineer's liability insurance, which designers most often will not carry. I like not carrying insurance too - it makes me twice as cautious, double-checking my math, to avoid even the minor professional embarrassments. On average, including the engineer's stamp, my design work averages about a third of the cost of a licensed architect. All that is really needed in a designer, including licensed architects, is a good, working knowledge of the building trades, the kind of design sense that is learned instead of taught, a three-foot-long shelf of books containing all of those big secret mysteries and formulae, a working knowledge of high school algebra and trig, and an unspecified number of years of real-world experience. I have to confess to being a dinosaur when it comes to CAD - much preferring to draw by hand, and then using the computer for the standard details and construction specifications package. But I'm starting to offer the option of subbing CAD work out for the clients who insist. Your own ideas or pre-conceptions about what is needed will decide this question. The search for a designer, particularly for affordable projects, is best focused on projected design costs, personal visits to buildings already completed, references from builders and references from clients. When you approach a potential designer with the criterion of affordability near the top of your list, just about anybody looking for work will claim that affordable design is an important part of his skill set. The cost-saving strategies and techniques outlined herein may serve you well as the basis for a pop quiz to test this claim. Most of the ideas here are not new, even if the collection and arrangement is unique. Most of these tips have been well-published over the years in such respectable places as Fine Homebuilding magazine and the books of Taunton Press, If affordable design is truly important to this designer, he will have been paying attention. Don't let him fool you - we are talking about lots of money here.
The General Contractor or Project Manager. The same pop quiz on cost-saving strategies and techniques should be sprung on any applicant for this job as well. Site-built affordable housing is not the same as custom, stick-built housing, not even close. If a true specialist in affordable construction cannot be found, this may require the careful reeducation of an experienced building contractor or sub, who may have long ago adopted certain standard ways of bidding projects and of putting materials together. This will require a sharp pencil, careful management and a sustained effort in frugality. When a particular cost-saving technique is introduced to a builder who is set in his ways, and the majority are, a typical reaction will be: "That's only a hundred dollars worth of wood. It's not worth worrying about, or the cost of changing the way I do things. There are good reasons why we do things the way that I do them." But this is also another hundred dollars in labor to install the unnecessary wood. And this also replaces insulation with thermal bridging, adding a hundred dollars to lifetime heating costs. And then there is the cumulative financing interest paid by the buyer on this three hundred dollars, amounting to an additional five hundred. And this builder has said this about at least fifty of the cost saving tips that you have wanted to put into practice. Suddenly this has added up to forty thousand dollars in savings forgone, simply because this contractor is reluctant to learn anything new. He should be paying his own tuition, you are not his parent. The fact that this guy's construction price adds up to roughly the same as normal construction in the area helps to disguise the fact that this is still the result of extremely wasteful construction practices. While interviewing an applicant, it may be a good idea to keep a running count of how many times he dismisses a cost- saving technique and how quickly - it will tell you much about how much he is willing to learn. Once again, check his references carefully, with specific attention to affordability criteria. In this case, you should also ask a few of the architects or designers that this builder has worked with about any habits or tendencies he has to deviate from plans and specifications, and whether these decisions cost or saved money, and whether these decisions improved or weakened the project. If the project manager is the developer, and he has not had a great deal of building experience, and he expects to still be able to save a lot of money, he should know that most of his expected savings should really be earmarked in advance for tuition, in the school of hard knocks, but hey - how else are you going to get experience? Finally, if you do wind up finding a builder who is willing to learn more affordable construction practices, it will still not serve your needs at all if he is not willing to modify his bidding practices and rules of thumb at the same time.
Program Development. There is a lot of dynamic tension between what buyers and renters want, what they only think they want, what they really need and what they will accept. Half of the challenge of affordable design is in finding the proper balance between all of these. With married couples, the other three-quarters [sic] is in getting the wife to approve of your decisions. A lot of questions need to be asked in the harsh light of affordability issues. Some answers become decisions that will be hard to reverse beyond even the preliminary stage of design: Are those nine-foot ceilings not more suited to custom homes? Is that glamor bath with a separate soaking tub and shower really worth the cost? Can you make the decision on behalf of the buyer to stack the washer and dryer? How much storage is needed and how much of a pain in the ass can it be to get to? And then some answers can change as you go along: How much future flexibility do you want to build into the design? Is it enough to provide a two-foot space in the lower kitchen cabinets, with rough plumbing already in place, for a future dishwasher? How far do you go, or more often and importantly, where do you force yourself to stop, in providing what will one day be needed in an unfinished basement or attic? There is no getting around the first set of hard-to-reverse decisions. My own preferences for affordable projects are for eight-foot ceilings, shower-tub combinations, stacked two-piece laundries and plenty of storage that you don't really need to walk around in, As to the second category, in general, I tend to prefer designing for maximum flexibility, leaving open as many options as possible for future DIY and sweat-equity projects, leaving something out or unfinished whenever I can get away with it. For me there is no sense making affordable housing any less affordable up front than it needs to be. Further, the items omitted can always be placed on a punch list, to be re-included in the turn-key package if this is desired by the buyer.
Building Height. It is a too-little questioned assumption that two-story construction is cheaper to build, due to somewhat smaller foundation perimeters and more efficient coverage by the roof. This isn't always the case. You not only have to build a staircase for this, you also have to design around it, and allow for extra hallway to circulate around the stairs, and count all of that space twice in your square footage allowances against your maximums. On top of this, you begin to eliminate the growing proportion of seniors with aging knees from your pool of potential buyers. The cheapest way to build remains the single-story with a slab-on-grade foundation and floor, and a light wood truss roof system, and vaulted ceilings made with scissor trusses. If total spans remain fairly short, or if there is a central bearing wall or girder, this can be made even more efficient by using attic trusses for second-floor spaces. Balloon framing, to get partial second floors with low exterior walls, has gone out of fashion, but it remains a labor saving affordable option. It will tend to trade more cost-efficient trusses for rafters and ridge beams, and modern restrictions on the height of stud walls, combined with diminishing quality of available 10-12 foot studs, suggest using LSL studs, but these can also utilize 24" centers more comfortably than conventional studs.
Roof Pitch. Snow accumulation is not a reason to go to steeper roof pitches. Due to the ultra conservative multiplication of safety factors in codes and standards, most roofs can actually withstand eight times the maximum expected loads. Furthermore, snow accumulation on a roof acts as a blanket to help insulate the space below from the colder temperatures above. Aesthetics is a big reason. Pitches between three- and six-in- twelve, particularly with stubby gable ends and flat soffits on the rake ends, scream "double-wide" or modular, reducing curb appeal and apparent value. This association is largely a function of hauling regulations for modular units. These low pitches, even down to two-in-twelve, can be made a lot more appealing with wide, even exaggerated eaves, provided that soffits are sloped, or even better, rafter tails are exposed. This look is fairly common in craftsman-style homes. For steeper roofs, there is no need to jump all the way up to twelve-in-twelve. There are head clearance issues for sloped ceilings over partial second floors, but if the short wall is 64.5" or higher (see below), anything over seven in twelve will do. If you are really fussy about cost, the length of a roof slope may be made a multiple of 2 or 4 feet, to cut down on waste of rafter and sheathing materials. One of my favorite roof pitches is 7.5-in-12, or 5-in-8, which approximates the golden ratio and is found a lot in Craftsman and Japanese architecture.
Garages. I always thought it was a peculiar thing to build a special house for a parked car to live in, especially given that most cars already come with a few coats of waterproof paint. I also thought it peculiar that so many governments, developers and homeowners associations are so insistent that these things be provided, replacing a relatively small artifact of colorful metal parked in the yard with a much larger, more visually intrusive structure in which to conceal it. Of course, at the same time, a garage makes a wonderful storage shed and workshop. On the whole, I would have to suggest letting the garage be a punch-list add-on, or an optional item. But it should be one that is already well thought through, with working drawings on the same set of plans as that of the main residence. This also leaves the buyer the option of setting up a less-expensive, temporary or semi-permanent backyard shed for storage and workshop space, If the aesthetic appeal of such accessory structures is particularly important, designs can be made subject to approval, according to criteria in the CC&R's.
Pre-Designing with Sub-Contractors. As soon as the preliminary plans are developed, someone on the design-build team should meet individually with the sub-contractors, if known, in each of the various trades. No matter how well-informed the general team might be, the specialists are likely to know a lot more about their own fields, and particularly what's the best buy in a fixture and what's new in emerging technologies. And, just like general contractors can get set in their ways, and have their tried and true ways to bid projects based upon how things are normally done, they will treat you just like the average customer and give you average prices per fixture unit until you can convince them that you and your project are special, and in need of a sharper pencil and a closer analysis of actual costs. Of course, hand in hand with this, they need to be informed of your goal of unusual degrees of affordability and asked for their expert help in suggesting the most cost-effective way of doing things properly. Be willing to offer them an hourly fee for this time and effort. Because you are asking them to do a closer analysis and arrive at lower bid, it might also be a good idea to promise them that you won't share these lower numbers indiscriminately, or that you will tell others how pleased you were that these people were willing to work with you on developing the best cost-effective design solutions, and that was how you got the price down.
Purchasing Materials. It's always important to remember that materials are sold by salesmen, often on a commission basis. Your own goals of affordability are not in an especially harmonious resonance with this. Many, many times I have uncovered both attempted and successful end runs around very specific construction specifications, wherein the materials supplier approaches the contractor directly and convinces him to upgrade from the materials specified, or else simply supplies the unnecessary material. Generally speaking, free-market construction in a fairly prosperous economy can be thought to be one step up in almost every specification from what is truly needed in affordable construction, and from what is actually required by the already-conservative building codes. In other words, half-inch plywood is used where three-eights will do, and three-quarters is used where five-eighths will do, Studs and joists 16" on center could as easily be 19.2" on center. This relentless push to upgrade can be most annoying for a designer who is working carefully towards affordability and is using real algebra to calculate precisely what materials are actually required. I have even taken to adding a paragraph to my specifications documents, making the supplier accountable for the costs of unneeded materials, or requiring him to waive restocking fees. Finally, some sort of cursory cost-benefit analysis needs to be made on your own time and energy spent in trying to save money on materials. Clearly, time taken shopping around is an activity with diminishing returns, and there are advantages to purchasing materials and supplies from a more limited number of sources.
Site Work. A lot of time and effort can be wasted in moving things around. It is usually worth a few hours to think your staging areas through. Ideally, stocks of materials and supplies should sit where they are when unloaded, until they are moved to their final location. Of special concern is the staging of excavated materials, and one reason for the special concern is that opportunities are often wasted. Most excavations involve at least two layers or strata of material. It is an increasingly common practice to store the topsoil in a separate place from the inorganic material in the lower layers. But suppose you have a layer of clay and a layer of well-drained material with much sand and gravel, or a layer of rubble, or a layer of stone. Since most layers have specific uses, it may be worthwhile to pile them separately. Well-drained material can be used to backfill against the foundation to reduce hydrostatic pressure and improve drainage, and can replace a specification for more expensive, imported gravel to accomplish the same purpose. Stone of course is a fine thing for landscaping. Coarse rubble can be used in a rubble-trench foundation to reduce the foundation depth. Rubble may also make a good sub-base for driveways. Clay makes a great cap layer when placed around the a house just before the topsoil - it will shed water away from the house whenever it gets wet, assuming the sense to give it some slope. Even the forces that disturb the topsoil can be put to use. It is fairly inexpensive to take a couple of topsoil samples, have them tested, and get recommendations for fertilizers and other soil amendments. Do the tests and apply these additives before the topsoil is removed, stored and replaced and they will get very well mixed in the process. Many organizations offer trees at bargain prices. There are state and university forestry and agricultural programs, environmental groups and arbor day festivities to take advantage of.
Foundations. Where required frost depths are greater than 24 inches, both rubble-trench foundations and shallow, frost-protected footings may be worth investigating. Since foundation engineering is often required anyway, the design may not be any more costly. Formed walls are still less expensive than ICF walls, at least where conditioned crawl spaces and basements are not planned, and the most cost- effective wall heights are still 4 and 8 feet even. A word should be said about the four-inch gravel base that is normally placed beneath slabs: it is normally unnecessary, unless the slab is below grade and not on well-drained soil. This habit has crept in from early engineering advice against pouring slabs on a base with rocks larger than 4 inches. This was simply a lazy way to be sure that slowly became a bad habit.
Framing. Although framing constitutes a smaller percentage of total building cost than most people outside the industry realize, a lot of valuable cost saving tricks still add up to significant savings. Most builders I have seen seem unaware of the strength of wood. A single 2x6 stud or trimmer can usually carry 4000 lbs or more. A pair of 2x6's used as a header will carry 2400 lbs across a 6 foot span; a 3.5x5.5 LSL header will do the same, but will also carry up to 10,000 lbs up to 3 feet. The sheathing above openings, if properly placed, also has a structural value not ordinarily counted. Yet many builders will routinely use a 5.5x11.25" flitch header for all loads, even on light-bearing gable walls. Sometimes headers over openings are even unnecessary: when the rim joist above has sufficient structural value, a couple of joist hangers on the rim over the opening will perform the same job. I will often see six to twelve packed studs to carry the end of a beam with an eight kip load, which may only require two studs. The 19.2" option for centers of joists and rafters is often overlooked - this divides eight foot lengths into 5 even bays instead of 6. Many studs may often be eliminated at wall intersections and corners by using drywall clips. Rim joists for upper floors, with loads of less than 1000 plf, don't need to be as strong as LSL provides - they can be ripped from sheets of 3/4'' ply, if the holding strength of bolts for any ledgers is reconsidered.. The rafters in vaulted or sloped ceilings are often greatly oversized to accommodate required R-values for insulation and venting. In many cases these can be reduced to 2x6 and the roof venting eliminated by using 5.5 inches of polyurethane insulation, either foamed-in-place or as sheets caulked in place. The insulation is more expensive, but the structural and venting savings may be favorable. Sometimes savings can be found in the specification of wall heights. A 100.5" wall height may cost less than the standard 97.125," even with the extra time it takes to cut the cheaper 96" studs to exact lengths, and this can also be a good compromise alternative to 9 foot ceilings. Codes also permit elimination of the second top plate in wall framing, assuming the use of specific connector plates and either a rim joist above or the alignment of the studs with rafters or trusses above. For half-floor pony walls bearing sloped ceiling joists, 64.5" is a good wall height, using 10- foot 2x6's cut in half, with no waste, and it is still tall enough for a 6 ft person to stand with his shoulder against it without hitting his head on the ceiling. I have already mentioned that in most practices structural sheathing exceeds the required thickness by 1/8 of an inch. The main thing to watch if using 3/8" wall sheathing for wind shear is the cost of custom jamb extensions, if you aren't already using the less expensive drywall returns, or else upgrading to 5/8" drywall to make up the difference, which you may want to do anyway if you are using studs on 24" centers. In very tight urban situations, with strict limits on site coverage and gross floor area, you might consider picking up 20-50 square feet of net floor area within the gross allowable by using 2x4 exterior walls with fairly expensive R-7 per inch insulation.
Enclosure. Many forms of sheathing require neither shear panels beneath them, nor house wrap, if the edges are sealed. Sub-sheathing is usually only required on portions of exterior walls, defined by wind-shear guidelines. Elsewhere, much of this can be replaced with lighter, better insulating materials. There are adhesive strip alternatives to house wrap for all applications. Beside T-111 siding and similar products, clear, rough-sawn 4x8,9&10 panels are available, which need only applied vertical batts over the fasteners to give a board-and-batt look. I will often use a wainscot below this if panel lengths are exceeded, to avoid unsightly Z flashing. Ungalvanized 26 ga corrugated metal, stood off 1.5" from the sheathing and flashed above, is an inexpensive material for this. Masonry stucco, maybe with a more modern color coat, should not be dismissed out of hand, since this may pay for itself in savings on maintenance. The same is true for permanently colored fiber-cement siding, provided that one is endowed with some exceptionally good taste in color selection. If you are planning to use horizontal lap siding, you may find that the slightly more expensive 5 and 6-inch reveal has a lot more curb appeal than the 8-inch. Similarly, it may prove a good aesthetic investment to add a simple touch of class to boring exterior trim. Stucco will also help break up monotony in a multi-unit development. For roof systems, three tab-shingles on felt, with baffled ridge vent and ice shield at the eaves, or simply Propanel on felt are the most straight forward. Ungalvanized 26 ga corrugated metal intended to rust is a lot less expensive than Corten, but it will rust through eventually, and so it is normally installed over a bituthene membrane covering the entire roof. I am not afraid of flat roofs as much as I'm afraid of roofing contractors who cannot install them properly, or who convince the builder to replace what is specified with systems needing frequent maintenance. I like simple sheet goods, 60 mil EPDM or TPO, or torch down, in as close to a single sheet as possible. For the flattest slopes, I make sure that there is still 1/8" per foot of positive drainage from the midpoint of the span under total load deflection.
Doors and Windows. Energy efficiency issues are simple questions of code compliance these days, leaving cost combined with durability and simplicity of installation to drive good decisions. Commercial systems, and enameled thermal-break aluminum windows (with drywall returns and waterproof interior sills) should at least be investigated. For casing and trim, MDF can pose challenges with nailing and moisture, but it's the cheapest. Paint-grade finger-jointed wood is next, if the look and color of real wood is too expensive. The really cheap-looking, narrow streamline trim is not nice enough for affordable housing. Where it shows, you can afford to show a little class. Only one exterior door needs to be 36" wide. I like insulated fiberglass or metal doors, and sliding patio doors for cost. On interior doors, I like to take a step up and use raised 6 and even 4 panel units, but I don't know if this touch of class cuts down on the fist-holes made in rental unit doors or not. One should also go a step or two up from the cheapest polished-brass door hardware.
Plumbing and Electrical. As discussed above, details and specifications for these big-budget items should be worked out using the normally superior knowledge of their contractors. You want the most for the least, which is most often one step or grade up from the least. Don't look for the cheapest thing, but start looking at the second cheapest, while keeping life-cycle costs and durability in mind. Classic styles may offer some benefits too: fashions come and go rapidly in both plumbing and electrical fixtures, and often they go for good reasons. Definitely plan on energy-saving light bulbs throughout, even though the "waste" heat will no longer help to heat the home in winter. Fixtures and appliances are still cheapest when they are white. New technologies in both fields are worth exploring, or at least asking about, such as plumbing vent substitutes and wireless light switching.
HVAC. Buyers love radiant in-floor heating, but you cannot give this to them. It is far too expensive, and high in maintenance costs as well. New subject. Forced-air heating is still the best deal for multiple-bedroom residences, and the technology of noise reduction has been much improved with multiple-speed blowers. The main ductwork can also be provided with a number of inline retrofit options, as for air-conditioners, air filters and humidifiers. Electric baseboard heaters are still the cheapest up front, but the savings still vanish in just a few years. I don't hesitate, however, to put a small one in wet rooms with plumbing walls. For smaller or simpler residential units, both free-standing and direct-vent wall-mounted heaters are an inexpensive option, with or without the glowing ceramic elements. If not centrally located, then consider an ultra low-sone method of air circulation. Low-sone blowers can also be used to bring hot air from above down to the floor or into a conditioned crawl space. A well-insulated or winter-sealable operable window at the high point of the conditioned space, combined with equal ventilation low on the north side will cut cooling costs considerably. For hot water heating, demand heaters have attractive payback periods, which get even better in one and two person units. Check flow rates against both incoming water temperature and altitude and up-size as needed, but I still would not size a unit for two people bathing at the same time in units smaller than three or four bedrooms.
Solar. Smart energy use begins with tight design, conservation and efficiency. But efficiency is ultimately measured at the bottom line. When looking at the cost of alternate energy it is important to look at the total cost of the system after it needs complete replacement. If a system is sold with a twenty year payback and only survives fifteen, then you have spent yet another five years worth on your good conscience. Heat is the cheapest energy to gather, and water is the cheapest way to store it. Pound for pound, water will hold 4.75 times as much heat as concrete. Tubes with water, under glass, in site-built collectors is the most straightforward. The water needs to self-drain in freezing conditions, but such a system is much more cost-effective than one using antifreeze. Dual-pane, 34x76 patio door replacement glazing, salvaged if possible, is the most cost-effective glass. Save wind and photovoltaics for only the most efficient and necessary appliances and electronics. I try to discourage clients from using the term "passive solar," and also from looking to active solar as the only alternative. Hybrid solar lies between these extremes. You might allow yourself a single pump or fan, a differential thermostat to switch it, some insulated ducts or pipes, and a tank or two. You don't have all the things to break down or go wrong that you do with active solar, and you don't need to make the whole of your design serve solar gain and shadows like you do with passive solar. You can set your collectors along a garden wall if you like. And you don't have to live in a solar oven whenever the sun comes out. Don't forget that the sun only shines from the south for one instant each day - the rest of useful daylight comes from southeast and southwest, and these want different treatments. Generally you want direct gain from southeast sunlight to warm your home in the morning, and overnight storage and re-radiation from the southwestern sun, when direct gain is too intense to enjoy.
Appliances. I will always use such resources as Consumer Reports when specifying these big-ticket items, and especially for affordability, I look first for the ones called a best buy. When I want to select a manufacturer to use throughout to achieve better quantity discounts, I look for overall trends both for that year and long- term. For affordable building, when there is a wide range of optional features to choose from, I try to go only one step up from the most stripped-down model. You start with what you absolutely can't do without, and then you grant yourself one little wish. Rating systems such as Energy Star have made evaluating certain features a lot easier - but I will still look for payback periods and avoid the items priced solely for people who want a good conscience.
Cabinetry. For built-in cabinetry, don't be too quick to dismiss using the local cabinet maker, but pay close attention to scheduling issues. At least compare prices and quality between these and the large home supply outlets. Take a close look at the quality of the boxes. Melamine and its kits (and MDF in dry locations) can make acceptable boxes, but you do not want them stapled together. Look for screws or dowels instead. And real hardwood makes a preferable door side. Shop around for real-wood and other face frames. It's often worth the money to have a better look and more durability here. For counter tops, the best bang for the buck is still shop-assembled plastic laminate tops, fastened from below with screws so that tops can be exchanged. For shelving, consider 3/4" A-C or hardwood-veneer plywood with 1/4x3/4 birch edging. You can beef up the edging to 1x2 hardwood for longer spans or heavier loads, and even back those edges with materials such as steel angle. For industrial shelving, 16 or 18-gauge sheet metal, shop-bent to 1x wood dimensions with 1/2" bottom flanges might be worth investigating.
Finishes. All that needs to be said about finishing and finishes is contained in an analysis of long-term costs, including maintenance, and of course the initial taste in color that drives the probability of replacement of permanently colored materials. If you are the kind of person who likes to install bright red metal roofs on buildings, then you don't give a damn about other people and I wish you only failure, bankruptcy and a speedy departure from the development business.
Sweat Equity. Leaving significant portions of a starter home relatively unfinished is still an underutilized strategy for keeping initial purchase prices low, despite the fairly ubiquitous unfinished basements. This is particularly useful with certain demographic profiles: young couples planning to start a family in a couple of years, workers in entry level positions who will be able to afford more space as they are promoted, contractors who lack the time to build an entire house but who can still afford to putter on weekends, do-it-yourselfers and buyers who want to add custom features. Thinking things through, envisioning how a future space "wants" to be developed, may help the buyer a great deal later on, particularly with providing major power and information wiring circuits, water and gas lines, and especially sanitary sewer lines. At the same time, the relentless temptation to do just a little bit more or make the unfinished space just a little more presentable needs to be resisted, as it can easily drag you all the way to completing the space yourself. The minimum requirements for obtaining a certificate of occupancy establish the basic punch list. In recent years, the most expensive and relevant new requirements here concern the provision of fire-resistant membranes, such as a drywall layer, over ICF's and other flammable insulation. Unfinished spaces may also want to be set up as conditioned and therefore pre-insulated spaces, and this means considering the effects of moisture and condensation in both cold and warm conditions. Beyond minimum CO requirements, I would concentrate on getting future utility lines only to a point where tie-ins will not require tearing up other parts of the house, and put the required outlet and light there. But I would also make a few hard decisions and pre-set any water closet flanges and shower/tub drains. Basement slabs may be poured later through a window, but any required vapor barriers in the ground must be protected until then, and the basement footing and wall must be designed without using the slab for lateral support.
The techniques described above are an evolving skill set. I would have to guess at the total savings involved if the majority of them were practiced with reasonable diligence. Comparing this to modestly priced tract home development, where builders are more experienced in mass production and efficient logistics, the savings might not be any better than 10-15%. Comparing this to the lower end of relatively custom resort construction, where the scales are smaller and suppliers more distant, and where building techniques are less often questioned, I would have to put savings closer to 25-45%. Prices can be driven down even lower than this when the public sector gets involved in the manner described below, but in the next section, on public housing, we'll see how badly the public sector can screw things up instead.
Part Two: Public-Private Partnerships
Public Housing, or The Wrong Path to Take
Is there a right to affordable housing? It would be silly to say that "the people" have a right to be provided with at least a minimum floor of affordable housing by their governments. The global failures of welfare states and the implosion of Soviet communism didn't convince everybody of the superiority of self-reliance and free markets, but there aren't many big believers in communism left. At the other extreme, even the right wing might agree that everyone has a right to work like a plow mule for decades to have housing that they can afford - without federal, state and local governments undermining their efforts and throwing up obstacles at every turn, as is the current situation. There is also the fact that real, unfair inequalities exist. The fundamental economic laws of first possession insure that first-comers and their heirs have a distinct opportunity advantage over newcomers and their next generations when it comes to acquiring property. Also in play are simple bad luck, hardship, old age, infirmity, disability and especially bad choices in future divorce partners. Yet the law persists in its fairness, as Anatole France pointed out: "The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread."
We cannot succeed at leveling the field of opportunity by tearing down all of the high spots. But some economic redistribution is necessary, and even the most libertarian among us sees a role for government and taxation in addition to that of private charities and non-governmental organizations. We argue over what that role is, and whether it will cost taxpayer dollars. The big problem with the public entities is that they do not have a clue how to spend money well, wisely or responsibly. They do not know the nature of effective power. For the most part they should not be doing things at all - they should be facilitating things, allowing things to happen, using their abilities to open up opportunities, or to tear down the obstacles that they themselves have erected. They should be distributing private-sector booklets on how to teach a man to fish.
Public Housing, or housing designed and constructed with public funds and subsidies under the management of public and government officials, fails for a number of reasons. For a look at these, consider a typical process. Let's say that a municipality decides that it wants to construct a given number of affordable rental units. The process usually involves the following steps:
1) Allocating $25,000 for a special consultant to perform a housing needs survey and assessment
2) Formation of a task force or committee to develop the program
3) Hiring a project manager
4) Investigating sources of project financing, grants, subsidies, additional mil levies, waivers of tap and use fees, municipal bonds and public election
5) Identification of a project site, whether publicly owned or acquired on the open market or by condemnation, with the value to be assigned at market rates
6) Locating and hiring an architectural firm with experience in public housing
7) Extending the municipality's consulting engineer's contract to include the housing project. This is the firm that was chosen for its conservative approach to avoid public liability
8) Preparation of construction documents and corresponding approval processes
9) Request for bids from qualified contractors
10) Value engineering and design modification to bring project costs down to 25% above the previously anticipated project costs. This may be the first time in the entire design process that any of the techniques of affordable construction are taken seriously.
11) Construction and project completion
By the time the project is done, the total dollars spent, counting up all of the "free money" from the taxpayers and foundation grants, will never be less than double the sum that a free-market entrepreneur would have spent. Never. Every dollar spent on or by the public or government sector is a dollar that would be at least twice as well and responsibly spent by more accountable agents in the private sector, agents who have more to lose than public officials have to lose. The clues to why begin at item one above:
1) Why do you need a needs survey? Common sense tells you that housing is a problem. Look around you
2) With entrepreneurs, task force and design team are one, and much more focused on cost-benefit analyses
3) The entrepreneur will manage the project
4) Funding will be based solely on assessments of project viability, with no cost to the public
5) The site will be acquired on the basis of uses by right and developed on the basis of an upzone to uses permitted on review
6) If a non-licensed building designer can do as good a job at design as an architectural firm, at a third of the cost, then a designer will be selected
7) An engineer will be hired based upon his ability to develop cost-effective solutions instead of his ability to protect himself from liability
8) The approval process will likely be just as harsh for the municipality as for the entrepreneur, since boards and commissions believe that they must be either adversarial or must make a show of this
9) The project is constructed and occupied for less than half of the public's budget.
So here's the fun question: If the private sector and free markets can do such a superior job in providing housing affordably, is there any way that the public sector can harness this force of nature to serve the public good? And how much will this cost? And shall it use sticks, or shall it use carrots?
The same mentality that fails at providing public housing also seems to favor the use of sticks. All around the country these days, whenever the private sector proposes to do a private-sector project for profit, the public sector likes to step in and say "But this will cause impacts to our growing housing crisis. You must therefore give us a percentage of your anticipated profits in impact fees so that we may spend this money to solve this problem." They have another popular trick as well, known as "inclusionary zoning," applied thus: "We see here that you claim a use by right to build twenty units of housing on your property, provided that you can convince us to grant you a subdivision. We will consider granting you this subdivision, which is a privilege and not a right, provided that you build fifteen percent of these units cheaply and sell them at cost to buyers who are authorized by us." Of course, by the time the public sector is done collecting and managing its impact fees, and spending them on housing needs assessments and housing authority salaries, it has very little left over to apply towards solving its housing crisis. And by the time it is done hounding the free-market developer throughout the adversarial process that it has set up with inclusionary zoning, and filled the affordable housing with qualified renters and buyers, and watched and micromanaged these renters and buyers for a few decades, it has spent enough taxpayer dollars for the private sector to have built several more housing units. The next section addresses the advantages of carrots, and a more cooperative, win-win process.
Incentives for the Private Sector
Preliminaries. Before proceeding to the details of public-private housing partnerships, a few pages of digression is in order, in order to examine the minimum efforts on the part of public entities that it will take to bring the private sector into the kind of willing or voluntary participation that will get housing built at the costs that only the private sector can attain. Most public-sector housing programs take a heavy handed and even coercive approach, aimed largely at the real estate and rental property developers to require them to account for their impacts on the local housing problem. This leaves the general economy contributing nothing towards the solution, although it is equally responsible for the problem. This adversarial approach is usually in the form of housing impact fees and/or inclusionary zoning, described above. The term inclusionary zoning is derived in part from the fact that these ordinances seek to counter the zoning practices which exclude affordable housing from an area through the land use code. In practice, these policies involve placing deed restrictions on 10%-30% of new houses or apartments in order to make the costs of the housing affordable to lower income households. The mix of affordable and free-market housing in the same neighborhood is seen as beneficial by many communities. Inclusionary zoning is becoming a common tool for local municipalities in the United States to help provide a wider range of housing options than the market provides on its own. Bear in mind that this is not a free market, but one already manipulated by growth management polices. There is another reason for the term inclusionary: the affordable housing units developed under these regulations are usually included as part of the total number of residential units allowed under the current zoning. This turns the provision of housing into an assessment or exaction and sets up an adversarial process which always tends to drive affordable housing costs upwards. It also drives up the prices of the free-market housing. And it goes nowhere towards having the local government face its own, very large portion of the responsibility for creating the housing problem in the first place.
I have suggested that the optimal solution yielding the most affordable kinds of housing is two-pronged - a public-private partnership, where each partner does what it does best, and just as importantly, refrains from doing what it does badly. When it comes to doing the actual building, government involvement and micromanagement are ridiculously expensive. A government entity needs to be satisfied that it has done its best and then get out of the way as much as is legal and reasonable. But putting the private sector to work demands adequate financial incentives than are normally explored. These do not need to be windfall profits at all, but they do need to represent a bottom line at least equal to the prospective return on doing business as usual. If there is a pent-up demand for affordable housing, and its purchase and rental costs can reflect the actual costs of providing this housing responsibly, then there will not be a great deal of risk to a developer. Here he will want to be looking at a bottom line that promises something a little higher than the prime rate for a net return on his invested capital. A developer should be able to recover land prices, together with all design, approval, infrastructure, construction, financing, operation and maintenance costs through rents or prices, plus a reasonable interest on all capital risked or invested. I would suggest that this interest be at least prime-plus-a-point, rather than bank interest, CD rates, or the consumer price index, which are often considered here, but are only the equivalents of treading water, stagnation and going nowhere. For developers of rental properties, a neutral or zero cash flow situation is often enough of a return, even where the original cost of the land is contributed gratis to the equation, because this still allows equity building over time at a rate equal to financing costs. This is similar in result to a retirement fund. It also takes the tax benefits of property depreciation, and it will sometimes allow a modest spreading of a larger, free-market project's per unit infrastructure costs.
If there is any greater risk, a developer will want to look more closely at the kind of numbers attractive to venture capital. Of course, this brings up the question of how to minimize risk. The answer to this is to make public-private solutions needs-driven and market-responsive. Then, when the need exists, risks drop and the solution becomes attractive; as needs are addressed, risk rises and the provision of additional affordable housing becomes less attractive. If this can be done, then the need for the ridiculously expensive "housing needs assessments" goes away, along with this assessment as the government's first excuse to delay action on its housing problems. To be made market-responsive, a program needs to be made neither more nor less attractive to a developer than that development which present zoning allows. A program should contain just enough incentive to get projects built when they are needed, and not any incentive to build them when there is glut. It should mimic free-market supply and demand and therefore should avoid monetary subsidies. This feature would also allow an "affordable housing planned unit development overlay" to be used as an inclusionary subdivision requirement without being punitive or adversarial, or felt as an exaction, It would also make it easy and painless to reject a proposal which failed to address community needs. But this is the rub - a non-adversarial solution is going to be at the expense of what the local government previously determined to be peak buildout population numbers. These numbers will grow slightly, as some of the pent-up demand or pressure for housing is bled off.
A further reason to prefer low-cost zoning incentives over monetary subsidies is to demonstrate to the market that a project can be affordable and economically viable without fee waivers and subsidies. When projects can provide true affordable housing with private-sector money, while avoiding local government subsidies and other taxpayer expenses, a momentum will build in proportion to a program's merit to stand as a model. And as much to the point, neither will exactions for affordable housing or a surrender, regulatory confiscation or attachment of existing property rights be proposed.
The Marginal Value of Land. While the discussion in the next three paragraphs doesn't bear directly on affordable housing, it will have its applicable lessons, to be discussed below. There is a difference in value between a piece of land with zoned usefulness only as open space or yard and an identical piece which carries legally specified development rights and potentials. There is a difference in value between a 35 acre tract of land with zoning for a single residence and a fifty acre tract with the same zoning but no additional rights to develop. There is a baseline cost for a "right to build" and an average cost per unit of land for the area upon which to build. The latter is the "marginal value of land." This can be quantified with one or more careful appraisals. This example illustrates its importance: Where I live, the State of Colorado establishes a "use by right" to develop a single-family residence on a 35 acre parcel of land. Local governments cannot override this with their zoning laws, although many governments place restrictions on the actual development with building codes, road standards, etc., and many try to circumvent the spirit and intent of the State law by making these restrictions prohibitively expensive, counting on developers not being patient and wealthy enough to sue them on grounds of confiscatory regulation. Even further, the State allows the owner of a large tract of land a "subdivision exemption," the right to subdivide his land into as many 35 acre tracts as he wishes without having to undergo a lengthy and costly subdivision process. The ease of using this procedure inclines the landowner to do no further careful planning, nor clustering of the development, unless these other options can be made equally attractive. While local governments do a great deal of public whining and hand-wringing about rural sprawl, they almost never do anything at all to make better planning an equally attractive option.
There are a few financial advantages to voluntary clustering. Roads and other infrastructure can cost significantly less. Wells and septic systems replace more expensive water and sewer lines and treatment facilities, plus these expenses are borne by the buyer of individual lots. Lots can front upon large and attractive common open areas, giving all adjoining lot owners a big yard or private-ranch feeling. There may be significant tax benefits in dedicating conservation easements across the common open spaces, although, be warned, the entities managing conservation easements will take as much as they can of the financial benefits. These advantages do not normally come very close to outweighing the expenses of clustering, for these reasons: 1) There are much higher design and engineering costs with a subdivision process that is subject to local regulations and approvals; 2) There is an enormous cost in politicizing the development and undergoing an extended subdivision process. Emotional neighbors get involved and will likely fail to understand the planning issues and benefits. The planning and zoning body will take a perverse delight in publicly sodomizing even the most civic-minded applicant, reminding him repeatedly that "subdivision is a privilege, not a right," until he wishes to have his rights back instead; and 3) The marginal value of much of the land is lost. This last item, for example, points to the difference in value between. let's say, 350 acres divided into ten thirty-five acre tracts and ten seven-acre tracts with 280 acres of open space. The marginal value of 280 acres of land is debited against the bottom line. The 280 acres does not have anything close to the value of the twelve 35 tracts that it could be divided into, were they developable, but it might easily have the value of two. And therein lies the big clue to the solution to the problem of sprawl - the easiest and the cheapest incentive.
If the local government could come up with a fair solution to equalize the benefits and costs of clustered development, and cast it in terms of density equivalents, this problem of sprawl would start to go away. It is normally given the power to do this by the State, under Planned Unit Development statutes. But this may require an admission of responsibility that government actions are in part responsible for the sprawl problem to begin with. It may require the government to back away from its compulsion to micromanage and obstruct the subdivision process. And it will require the government to grant a modest increase in zoned density to make up for the net costs of undergoing a subdivision process and foregoing the marginal value of land. In the case above, this could be the difference between ten and thirteen units - one unit to cover the costs of the government's meddling, through the subdivision process and its tighter standards, and two units for the 280 acre of open space. Planned Unit Development regulations can be set up to allow for the customizing of such tradeoffs on a case by case basis, using licensed appraisals as needed, to balance the value of those options with greater public benefits, such as open space or the provision of affordable housing. This may also be established as a separate set of simplified review procedures, sometimes called a "rural cluster subdivision." It is not at all necessary to make the better planning options any more financially attractive than the uses by right - only equivalent, along the bottom line. Normally a developer will be inclined to do the right and conscientious thing, provided that his time delays are compensated for and that he can be seen as a benefactor to the community, rather than a public whipping boy.
So, how do the concepts above help us to frame a public-private housing solution? The same formula for the recovery of costs will be required. Conventional zoning allows a maximum number of dwelling units per acre. Developers can build up to the maximum density, but cannot create more dwelling units than is allowed. As land, infrastructure and construction costs rise, affordable housing is difficult to develop under existing density limitations and the higher land costs discourage the construction of modest-sized units. Therefore many affordable housing ordinances allow the developer to construct more dwelling units than are allowed by the zoning district. This permits the developer to spread the costs of land and infrastructure over more dwelling units, making the units more affordable. It must be understood that any market-based proposal will allow a greater number of kitchens on a given unit of land than are allowed under conventional zoning. This increase is granted in exchange for specified public benefits, mitigation measures and secure agreements, But, unfortunately, such an increase in kitchens is too often and too quickly called a "density bonus" or an upzoning, even in cases where the modest unit sizes mean lower overall population figures, or smaller total building masses. It is the nominal increase in density that creates the knee-jerk overreactions and the most negative public comments related to affordable housing. This term implies that somebody, somewhere, is getting their grubby hands on windfall profits at some sort of expense to the noble and sacred public goals of growth management. How do we go about rendering the term "density bonus" meaningless? The beneficiaries of the action should be primarily the local community as a whole, for reasons of greater socioeconomic diversity, and the target demographic that is in need of affordable housing, the very salt of the earth.
By adding one or more kitchens to the "right to build" numbers for a given parcel, the cost-per-unit for the added units is greatly reduced. There are still additional costs to be carried by the developer, notably design, process, approval, infrastructure, and other related costs, as well as tap fees. But any savings gained from decreasing the costs of the "right to build" a residential unit, by an amount assignable to the zoning alone, should translate as directly as possible, dollar for dollar, into housing affordability. This is a direct result of government action and therefore should not serve private interests in any special way. If this can be achieved, then who is it really who gets the bonus? The goal should be to erase this misperception of bonus and eliminate the term. But, as you will recall, the right to build is only one component of the value of raw land. There remains the marginal value of the land upon which the added residential units sit. If it sits on an acre of land, then the value of that acre will approximate the difference in appraised value between a five and a six acre parcel which carry identical rights to build. The developer should at least be able to recover that marginal value, since he could easily do so by attaching the land to the parcel next door. And, of course, he should be able to realize a fair rate of return on his investment in that property, for as long as it has his capital tied up. This approach accomplishes two objectives: it guarantees that all savings resulting from government action are passed directly to the qualified project participants, not to the developer, and it demonstrates to other potential developers that true affordable housing can also pay its own expenses.
Motivating the Public Entities
Getting Local Governments to Initiate Affordable Housing Ordinances. When a public entity starts to develop an affordable housing program for itself, its first temptation will be to look around to neighboring communities and attempt to copy programs already in place which they might discover there, or at least to import large patches of boilerplate verbiage and stitch this together into a locally-customized quilt. This is a very attractive process for entities without the imagination and courage to innovate. It would even work, but for one thing - the neighboring communities have all done the same thing, and have selected their own patches based on how plausible or convincing the verbiage sounds, but usually without any regard for whether or not the programs also work. And at bottom, there is always an assumption that any affordable housing program is going to cost a lot of money in grants, subsidies and other taxpayer dollars. A local government or housing authority will need to be convinced first of the necessity of finding and implementing a viable program and second of the wisdom in taking the time and summoning the courage to create a program that actually works, even if that incurs some risk of partial failure. Convincing a public entity to take this much care and make this effort comes down to a political sales pitch. And it will not want to act at all without a great deal of persistent political pressure from both the people who need affordable housing and the people who employ them. The economic class of employers may need to be shown that a workforce not stressed by long commutes will be more productive. You cannot successfully promote affordable housing unless you have a constituency of the people most affected - people who need decent housing and can't afford it and the people who need those people nearby in order to continue to prosper. This constituency must be organized. And there have to be significant negative consequences if these politicians fail to deal with their needs and demands. Otherwise you will only get empty political rhetoric, and maybe a call for a housing needs assessment and a lot more time to study the problem.
In 1996, after writing a couple of guest editorials on affordable housing for a local paper, I was asked by county commissioners to participate in a statewide panel on the subject. This session resulted in a set of recommendations to local governments, adopted by the State of Colorado. Unfortunately this work, together with all of the work of a subsequent, local Affordable Housing Task Force and its report, was meant by the County to satisfy, in full, all of the political requirements to "do something" and nothing further has been done, pending the next big wave of public pressure to do something, and of course, contracting for yet another, updated needs assessment. I reproduce this two page recommendations document here in full because it's another way to sum up the problems and solutions, and hopefully it puts the tasks at hands into terms that some in the public sector can understand. Some of the wording will sound familiar because much of it is from my own contributions to the panel.
State of Colorado Smart Growth Housing Task Force Recommendations.
Conclusions of the State of Colorado Smart Growth Panel on Affordable Housing, 1996
Vision: Develop an adequate inventory of safe and affordable housing throughout the Region.
Issue: The lack of available and affordable rental and 1st time homes (starter).
Goal: To provide a market-responsive mix of affordable housing options, including rentals and first-time homeowner programs, that maintain and promote socioeconomic diversity in our communities.
Strategies:
1. Conduct a needs assessment which includes good demographic information about our communities.
2. Make use of government power to write legislation and zoning law to service community objectives (i.e., overlay zones, affordable housing, deed restrictions).
3. Make use of government power to waive requirements in exchange for public benefit.
4. Educate government officials about various stages of the building process where savings can be effected (i.e., fee waiver/deferred, sweat equity, pool purchasing).
5. Write PUD legislation specifically dedicated to affordable housing that is distinct from other PUD contracts (Specify specific economics, i.e., purchasing, sweat equity).
6. Create a data base of affordable housing options and ideas that is consumer friendly.
Issue: Government regulations and policies are negatively impacting the availability and mix of housing options in our communities.
Goal: To design and implement more flexible regulations, definitions and review processes that allow for alternative housing types and design and evaluate housing projects on individual merit.
Strategies:
1. Educate the regulators as to the impacts of regulation on the provision of affordable housing. Identify and quantify the cost benefit of regulations on housing in our communities. Direct and indirect (quality of life) costs. Identify and explore workable alternatives to existing regulations and policies.
2. Encourage flexible review of development proposals which allow approvals based on positive net community benefit as opposed to rigid adherence to component performance standards.
Issue: There is an adversarial relationship between government and the private sector which eliminates incentives for market responses to build housing, leaving the task to government.
Goal: To minimize the adversarial relationship between government and the private sector in order to promote incentives that encourage market responsiveness to housing.
Strategies:
1. Create local citizen task forces to identify potential areas of municipal and county cooperation and means of communication.
2. Develop utility extension (water, sewer, road) policies that encourage and reduce the cost of housing.
3. Better define the roles of government and the private sector while recognizing property rights, the value of public input and the role of government in securing public interest.
4. Provide opportunities for developers and contractors to build affordable housing on a profitable basis.
Issue: Nimby-ism exacerbates the problem of socioeconomic stratification and the lack of acceptance by the community of a variety of affordable housing options.
Goal: Eliminate Nimby-ism by becoming an educated and tolerant community that takes pride in place and supports social diversity through the acceptance of a variety of affordable housing options.
Strategies:
1. Provide education on home maintenance and retaining value of property.
2. Prepare to regulate junk and nuisances and institute design and landscaping criteria.
3. Review community comprehensive plan to ensure that they include policies that promote diversity and sustainability as a key component of a community's overall health.
Dimensions of the Problem
The three-thousand year old Chinese Book of Changes [Line 49,4, my translation] has this to say about advancing an idea for change before it's time has come: "To expedite has pitfalls. Commitment is difficult. When the talk of change has circled three times, then be sure." Well, even so, somebody has to speak up the first and second times if the change is ever to come to pass. My mistake was not in making the first effort, but in expecting results from what I assumed were reasonable human beings who were involved in local politics. I had assumed that there would be at least a little bit of vision and a little bit of courage there, for no other reason than that there was then some public pressure on them to do something. I brought forth a wonderful demonstration project incorporating all of these recommendations, and and also those of the local task force. I had the needed recent experience as the assistant planner for an entire new town of 900 people, all housed in deed-restricted, affordable, mostly owner-occupied, single-family units. The late actor and environmentalist, Dennis Weaver, was going to contribute the land (and subordinate it for a creative, internal financing program). There were to be twenty-two 1/4 acre sites, on a nice, boat-able river, along a bike path, with views of 14,000 foot peaks, and 14 irrigated acres for community Permaculture gardens. The houses were expected to be occupied for less than half of the square foot cost of nearby free-market units, and still we had it planned that our benefactor would walk away from the project having made banker's interest on every dime of his investment, including the contributed land, in order to demonstrate to other potential developers that the idea was economically viable, and even reasonably profitable. He was willing to take all risks of doing a prototype because he was willing to do the project at no profit at all.
The proposed project failed, first before the Ouray County government, and then with an annexation proposal before the Town of Ridgway government. In both places we hit such a shocking, vertical stone wall of myopia, smugness, cowardice, ignorance and arrogance that I wasn't able to return to the public-private part of this subject until I started writing this booklet. The degree of reactionary stupidity was amazing, in front of both governments. We mentioned the word community and suddenly we were on the wrong side of the war on communism. We mentioned a common barbecue and fire-ring and suddenly we were all dancing naked around the fire, except for the babies, whom we were sacrificing to Satan. We mentioned forming a cooperative, in order to purchase building materials collectively at wholesale, and suddenly we were toiling as slaves on a Stalinist cooperative. In rural southwest Colorado, where I live and work, the politics can get pretty petty and the reactions to visionary ideas pretty reactionary. Whether the community is conservative or liberal only determines the color of the ignorance, not its degree. How on earth had I forgotten that, when humans form groups to govern themselves, their average IQ drops to a dozen point below that of the slowest member, so that no fool is left behind? It's like the exact opposite of a think tank and its synergy. The point of all this is that you will need more than reason and logic to convince a local government to provide anything more than empty gestures and lip service, Ouray County has done nothing at all in the decade since. The Town of Ridgway has allowed homeowners to convert garages to "granny flats," thinking smugly that it has now done something significant and humane. And much of the workforce now arrives each morning from 25-35 miles away.
On the other hand, Lawson Hill, the new affordable housing community for 900 people that I mentioned above, was completely built out in a handful of years and continues to thrive. This was in nearby San Miguel County, where the roaring growth and prosperity of the Telluride region brought housing matters to a crisis much sooner and there was enough pressure for lower income housing to topple the local government if it had failed to actually get something done. Empty gestures and lip service would not save anything. The Town of Telluride itself had put together a miserable track record for wasting public funds, which continues to this day because nobody has thought to publish the numbers that you get when you divide the total dollars spent by the number of people housed. The project succeeded because, in addition to the political pressure, there were a couple of people with sufficient vision and courage seated on the boards and commissions and in the planning department.
Three significant mistakes were made along the way in this project. I managed to get on record as warning against all of them in advance, but I was only the assistant planner. The landowner and the politicians had other ideas. These bear mentioning here, for the lessons we learned. First, the County government was endowed with $750,000 worth of free money, to be spent on developing a smallish portion of the project to relocate the residents of a displaced trailer park. Instead of turning this over to someone more accountable in the private sector, they did it themselves as a public housing project and wound up losing much more than the amount of their original grant. Second, the County bowed to pressures from the Town of Telluride, whose municipal boundaries were three miles distant, to force a pre-annexation agreement with Lawson Hill. This town's government is an impossible morass of fiscal foolishness - its municipal budget, thanks to a massive tax base, exceeds ten thousand dollars per capita per year, far in excess of huge big federal slice of the tax pie. It's involvement in the project, in nothing more than theory and legal maneuvering, and with no discernible contribution to services and infrastructure whatsoever, raised the price of each residential unit by more than ten thousand dollars. It was like watching a black magic sh