Cursed By Knowing The Numbers

Presenting at public hearings is like working in a sausage factory.  It is democracy at its most FUN-damental (groan).  It is the acid test of the public benefit of your (or anybody else's) proposed use.

How do you approach presentations? Is fear part of it? Fear--or speech fright--usually revolves around the perception that your personal worth or self-estimation is at risk. The natural reaction to most situations of fear is to flee--which I generally discourage in public speaking as being counter-productive.

Being prepared, having the right mental attitude, being direct, and being active are how you increase your credibility.  Your objective is to present with Clarity, Coherence, and Conciseness the following: 

easily understood exhibits showing conformance with your adopted codes,

• a scale model of your intended use,
• a point by point analysis how your use compares to existing uses in the neighborhood,
• what is allowable as-of-right, under the general and specific plans and under requested variances,
• a tax benefits analysis showing increased property taxes paid by your proposed use,
• sustainable/carbon footprint survey of your proposed use, and
• your letters of support.

Work to understand the planning staff's position on your intended use, whether they support it, and if not, why not.  You won't be privy to the staff report prior to the hearing, and their position can be a real surprise to you.  Be ready for it.

Here is a book I find valuable in preparing for public hearings. BTW, Mr. Ailes runs FOX News these days. 

Review Majora Carter's presentation.  Review it again.

Architecture can be one of the few factors differentiating your asset from the one down the street.  Ignore the power of elegant and function and you are no more than a commodity.  Great design is a timeless advantage.

Design is best defined at the margins--the margins of materials, how they meet, how they are daylit, how they are located where people can touch and feel them.

Design is more reductive than it is additive.  You know you are there when you can't take anything else away.

I spent today getting my head around the numbers for a acre and a half site that is the perfect mixed use, sustainable, walkable location.  Design will be a significant part of my message for this proposal. 

A lot of design people never really get.  For example--every mixed use plan in the markets I work in is a parking plan, first and foremost. How you:

• get the cars off the street,
• get the people out of the cars,
• get them into their place of refuge (home), or
• get them into the mixing chamber (retail/restaurant),
• get them back in their cars, and then
• back out on the street

safely, securely, and with the sense of place that leads them to the next decanting point.

I still am struggling with this site--getting the parking to work.  Every plan is a parking plan...every plan is a parking plan. And a significant part of the costs--an underground parking space is $35 to $50K to build.

Day Two of getting my head around the numbers on a couple of development sites.  Friends tell me there is a lot of capital around, but clearing the mirrors and smoke surrounding a deal to get to a real number is still difficult--the amount of capital sloshing around actually makes getting a deal done harder.  The saying "With sufficient thrust, pigs fly just fine!"  comes to mind.

Surprises are for birthday parties, one of my clients says.  Imagine my surprise today to find a groundlease on top of the fee advertised for sale.  Not disclosed, and they want an offer tomorrow.  oops.  Still waiting for the answer on why this was not disclosed.

Tips to brokers:

• Get the facts straight.
• Don't lie.
• Leave nothing out.
• Take the all-cash offer.

...was the description of the program developed by the architect and owner on a remarkable house in Montauk profiled by Pilar Viladas in the NYT Magazine this weekend.

There are several tongues spoken on any project, threaded together through the course of design and construction.  The list includes:

• Architecture--the language of program, of design and the detailing, hardware and finishes.
• Contracts--who has to do what by when, and whom gets paid when, for what.  What to do if promises aren't kept.
• Construction--the sequencing of trades, resolution of conflicts, and getting different systems to fit and work with each other.  Translating the two dimensional language of plans to a three dimensional structure (the "full scale model").
• Interiors--finishes, fabrics, and interpreting light.
• Public approvals, and code interpretation--what needs to be approved to satisfy requirements, and
• Spanish is now a requirement, as it seems 60 to 80% of the workforce here in Northern California is Latino.

With all these languages, the potential for misinterpretation, and the fact that our industry is largely peopled with non-verbal male, action-oriented professionals, listening and problem resolution are key skills at all levels.  And the key contribution of a project manager is to understand these tongues, and to translate, tie together, and provide a unified picture of where you are at present.

The only common element that should course through all these threads is trust and respect.  It makes the rest of the job much easier.

In this article in today's NYT, I came across a new term coined to fight infilling our existing urbanized areas--vertical sprawl--a higher density land use that causes increased traffic, parking problems, and the cost of supporting new projects with schools, water and other municipal services.  Key unique issue is building height, and shadows cast on adjacent properties.

Parking can be solved through adequate below grade parking--a matter of public policy, economics and soil types.  Traffic is a more complicated issue.  It depends on safe, time efficient, and convenient alternatives to SOV's (single occupancy vehicles).  Economics need to factor in the door-to door elapsed time and yuck factors of urban mass transit.

The costs of building type I--highrise--(c. $550PSF) are two times the costs of building lowrise--type V (c. $275PSF).  The cost of land and infrastructure does not offset these higher construction costs, which is why people still flock to the exurbs and ignore the transportation costs (for a while).

Housing costs are starting to be viewed as the combination of costs of housing plus costs of transportation to work and services

Here is the Brookings Institution study.

"Significant empirical evidence is beginning to point towards a tantalizing association of economic productivity and compact, centered, and efficient regions."

The Sierra Club  produced a white paper on sprawl and an interesting study--particularly the contrast between Portland OR and Atlanta GA--cities with roughly equivalent growth with widely varying effects on costs of providing services, traffic, and air pollution.

Barton Biggs, in his book Hedgehogging,  describes two types of people--visiles and audiles.

Visiles primarily absorb information through the eyes by reading.  They can read plans and have spatial thinking abilities, the ability to translate from two dimensional plans to three dimensional space.  Howard Roark was probably a visile.

Audiles ingest information mostly through the ears, through talking and listening.  They are good at putting together teams, and intuiting friction points by talking to team members.  A lot of my really effective broker friends are talented audiles, sensing whether a deal can be made amazingly quickly.

Which one are you? 

Always wondered why there aren't more robotic parking systems in NYC, BOS, or SF.  I remembered seeing a number of them when I was working in Tokyo in the early 90's...with land at $2400PSF (our project) to $25,000PSF (Ginza) it seemed liked the numbers worked in markets with high land prices, and where you can't get people out of their cars (like here).

The only one I was aware of here was in Hoboken, NJ.  And Wired came out today with "Giant Robot Imprisons Parked Cars". 

 

Why don't we have more here?  Politics, for one.  And it is a real bummer when the cars fall down when they are not supposed to.  Twice.  Construction problems--structural steel was out of alignment--a big no-no on what is basically an overhead crane, pallet and pulley system.  Facility was down for 26 hours once--an attendant's jacket was left on a parking pallet and fell into the machinery.  Operator error.

I dug into the numbers.  This is what I found. 

Harvard engineering students did a very informative study you can download here.  Cost to provide the technology is about $20K per space, exclusive of shell costs.  Operating costs are about a wash.  Savings really kick in on underground parking facilities greater than 2 levels, where the required volume is about half that of a self park facility.  Economics work on small footprint (<20KSF) above grade facilities.  Facility needs to be sized for SUV's--40% of cars sold today won't fit in traditional stackers.  Looks like breakeven is about $300- 350/mo, with $150 of that for ongoing operations and capital reserves.  We are not quite there yet in SF.  All in costs are $35 to $45K/space.

 Problem is Hoboken is a nightmare,  How do you get end users over the bad press?  Intellectual property is a new risk here.  A vendor having the ability to completely shut my asset down--now that's a negotiating position.

There is one non-pallet system set to go in the Norman Foster designed condo tower in Vancouver, BC.

I still like the automated concept, not as a money saver, but as a space saver and as an elegant way to decant people from their cars.  The system needs to be valet staffed and the benefit is better security and the ability to mask the facade, since you don't need the 15 airchanges/hr typical of a selfpark..  Arrival sequence/queuing needs to be carefully thought out, both in and out, as the number of transfer rooms determine max input/output.

In summary, it works where the volume of the building restricts the amount of allowable parking  [or storage] and reducing your cube from 4000CF to 1600CF per space makes economic sense.  The all in cost is about the same--$45K/space, and op costs are about the same as those of valet parking.

that the London based terrorist plot was foiled.  Thankful for the good guys, the professionals doing their jobs, and the for strength of the network detecting the bad guys in enough time to do something about it.

Air travel just gets tougher and tougher.  The need to for face to face meetings is still important, but with broadband, skype, and the quality of the data threads we can find online, it is becoming less so. The quality of information available online has gotten remarkably better. There has to be a better way than standing in lines at the airport, or drop $3K per flight hour for private air travel to properly allocate capital or deliver an asset on-time, on-budget.

Makes one thankful for that place of refuge, that insanely great place to live, called home.

Maybe it is time to look into that Eclipse again...

...in the practice of producing insanely great places to live.

We really are getting to the point where we are moving bits and only doing windshield tours as a final check.  Property data is now available online, and the amount of public data is tilting the value add equation.  And getting to know the numbers has gotten dramatically easier with online tools--but it takes a fair amount of time to become proficient--

"Give me six hours to to chop down a tree and I will spend the first four sharpening the axe."

--Abraham Lincoln.

Here is what I use when turning over stones to find a suitable project:

1.  Google search rank has changed how I develop alternatives.  The single greatest tool I use.

2.  I keep Google Earth open on my desktop all day.  Handy for virtual low altitude fly-bys of potential sites.  I have a two monitor setup using an NVIDIA Geforce 7800GTX driving two Viewsonic VA1912wb's.  I keep Google Earth on one monitor and my current app on the other.

3. Zillow, and its user blog, to get a sense for development values around the sites I look at.

4.  For trends in residential markets, Zindex.

5.  To understand how current and former residents are trash-talking multifamily properties I am underwriting, I check Apartment Ratings.

6.  For property acquisitions, I use re3w.  It only works on IE--is really buggy on Firefox, my preferred browser.  And it uses MS Visual Earth, not Google Earth.  Let me know if you have a better alternative.

7.  Proformas are run on MS Excel, it has the flexibility to do whatever I need it to.

8.  I use Dreamweaver to put together my web apps--great product, but I am only using about 10% of its capabilities. Need to sharpen this tool...

9.   Movable Type v3.34 is my blogging software, a lot of brain damage setting it up on my server, but now seems to be running without a problem.

10.  When I am laying out or checking elevations on site, I love my DeWalt Laser rotary level--self leveling, uses the standard DeWalt 18V battery packs, and beeps if it goes out of level.

11. And I never leave home without my trusty Treo 650.

12. My Leatherman Juice is essential to McGyver'ing my way out of a problem.  It is always in my pocket...except when on my way to the airport.

What tools do you use?

OK-you've decided you want to build.  The first challenge I face in producing an insanely great place to live is establishing basic requirements, and putting a number to it.  This first pass number is my instant feasibility test of size times unit pricing against resources available.

Agnes Bourne says:

 "When creating your physical world, it is good to realize that this place is a reflection of you.  Knowing what matters to you is important in the planning of these spaces...What matters most to you?"

If the first cut cost is more than your resources available, your choices are:

• increase the budget
• shrink the size by reducing program
• shrink the footprint by building up
• shrink or eliminate the basement, or
• leave space unfinished.

A major fallacy of modernism is that spaces are multi-use.  Spaces may start as multi-use, but they end up as single-use spaces.  Develop your program with a focus on single use spaces.

Stratify your program into <strong>good, better, and best</strong> level of finishes for each component.  Scope creep during construction tends to drive everything toward the best level, this first cut is a good way to draw a line in the sand about how far you are willing to go.  This post talked about how finishes and casework and cabinetry are the big variables in construction costs.

Iterate, iterate, iterate.  Refine the spirit of your project.  I will be posting additional insight on refining what you want in your physical world in future posts, so if this is where you are right now, stay tuned.

What is the right unit pricing number?  Costs have been going up 2% a month for the last two and a half years, so right now that number is both moving, and scary.  Your contractor should have a sense for what his recent jobs cost him, or drop me a line and I can give you my take on current costs vs. value.

The state director of finance, together with Angelides' office, on 16 August voted for a $67 million draw for construction of the new Condemned Inmate Complex at San Quentin at a recent meeting of the Pooled Money Investment Board.  Note to self--remember this when voting for Governor this fall.  Marin IJ report here.  State law requires condemned inmates, and any executions, to be held at San Quentin.

No voter approval required for lease revenue bond transactions--no matter how large.  Current state budget line is $220 million, no firm cost estimate on production costs yet.  This draw is enough to get sitework and utilities started, however.

"I fully expect them to end up going significantly over budget," Nation said.  "Before they finish this, they'll have to come back for an additional appropriation."

I posted previously about the history of the death row expansion.  The law must be changed before any meaningful dialog on location can be had.  The state has given no alternatives, the residents of Marin County are silent, and our elected representatives are taking no action.  The prison guards union is active politically--wouldn't the attraction of a new facility, with dramatically safer operating conditions, in a place where they can afford to live, make sense to them?

“There are no seasonal fluctuations, it is a non-polluting industry, and in many circumstances it is virtually invisible.”

 (A California Department of Corrections official explaining some of the benefits of putting a prison in a rural area).

What are the numbers?  Current scope is 764 cells, 6 180's as they call them, totaling  301,200SF of program at a  budgeted cost of 220 million.  Final costs will not be available until the drawings are put out for bid--What is the five step action plan to fix this current land use problem?

1. Change the law. Previous attempt in 2005 can be downloaded here [.pdf].
2. Recruit an optimal location via development/lease-purchase agreement that will acquire a modern facility in an area that values  the economic development benefits.
3. Decommission San Quentin and gain specific plan, EIR and site development approvals for the County's transit village option.
4. Build alternate facility, develop transit village.
5. Move In.

Nothing can happen until the law is changed. 

Speak out now. Print out this letter, sign it and fax it in. What legacy do you want to leave?

Download this faxable form Letter to Supervisor Huffman.

Download this faxable form letter to Senator Carole Migden.

It is later than you think...

...Stephen Suzman and Lisa Guthrie of Suzman & Cole Landscape Architects about how to work best with your landscape architect, what is important, and what isn't.

1. Is "voice" important when looking for a landscape architect?

Landscape architecture primarily needs to respond to the site.  The landscape architect needs to understand the site, its opportunities and constraints, its microclimate, and the preferences of the client.

Planting a formal French garden that is not responsive to the site is not a valid solution.  Voice is possible, voice can be a fashion, but the opportunities and constraints of the site need to guide you.

We do not specialize in a particular vernacular, what we are is perceptive, inventive, and resourceful. Our goal is to produce a hybrid design--a new response that avoids endless repetition and sterility.  The Bay Area is an extremely conservative place (from a design perspective) where firms that provide only one voice limit their options.

The client's personal preferences, colors, plants and styles, are essential to identify early on, through an interview or a questionnaire process.

2. What three questions should an Owner ask you when you first sit down?

• Are you available?
• Is this something you would be interested in?
• Have you worked in this jurisdiction before?
• Are you familiar with the microclimate?

3. What are the fundamental elements that you work with, in terms of complexity and cost?

• Water--extremely expensive to provide from a budget perspective.  (Ted: $300 to $500 per square foot of surface area for custom pools and spas).  Maintenance and room for pumps and filters is needed.
• Grade changes and retaining walls--retaining walls are very expensive (Ted: $35 to $70 per SF of wall) and steps and stairs need to be developed to circulate through the site.  Rise and run of these steps are critical.
• Paving, parking, and tennis courts--paving can be expensive (Ted: can range in cost from $15 to $200 per square foot).  The wrong surface can easily degrade in the environment.  Grade changes for the automobile are difficult to manipulate without creating a bunker feel.  Automobile turnarounds, fire department requirements on rural sites.  Tennis courts can be a challenge.
• Drainage--more plants succumb to bad drainage than any other malady.  Leaky pools.  Drainage needs to be addressed by the civil engineer.
• Dialogue, early and meaningful,  with the building architect to review site, grades, retaining walls.  With the client, to make sure we understand their preferences.
• Safety--stairs and lighting.  Providing a comfortable rise and run on steps.  Stair and pathway lighting.
• Transplanting Trees--some plants will be lost, it is a fact, and something we can recover from.  Trees need to be pruned for safety.
• Color--sample matches on pool plaster, hardscape, and paving are very important..  Samples need to be approved and archived and used to accept built finishes.  There is a wider palette to work with today than previously--materials are sourced worldwide.  No mica.  Porous stones need to be dark to hide staining.
• Lighting--safety lighting is critical, pathway and stair lighting.  Pool lighting.underlighting rather than overlighting.  Avoid high contrast--transitions from inside to outside are critical.

4.  How do you relate to the buildings existing or proposed on the site?

Site planning is a chicken and egg process between the Architect and Landscape Architect to identify opportunities and constraints.  Sloping sites are particularly important to understand early on.  Siting the building properly makes a huge difference.

Outdoor program should be an early product of the design process.  Outdoor rooms are different--the solar aspect, the fact there is no ceiling, and they change through the day and the season.  Interior space is much more finite.

5.  Views are critical to owners in the Bay Area.  How do you respond to this need?

Borrowing views in an urban property, minimizing views from offsite and maximizing privacy is one of our key tasks.  Developing view corridors on rural properties comes out during our initial discussions with the architect and Owner. 

6.  And plants?
Owners usually start with plants, but that is typically the last thing you work through on a site.  You don't really know what wants to go where until you have developed your grades, circulation, and view corridors.

7.  How important is a site survey?

A complete, topographical survey with two foot contours  is critical.  A complete site survey is the best $10 to $20K that you can spend to understand grades.  (Ted: AGREED!!).

8.  What are the more difficult needs you have to respond to?

People want what they haven't got.  Its never what you can, its what you can't. Flat sites want to be elevated, sloping sites want to be flat (Ted: see retaining walls, above).

Building Codes.  Owners ask me to skirt building  codes on their projects.  Code compliance is very important and a reality that you have to deal with all the time. 

9.  What is the one thing that needs to be understood, but is tragic if it isn't?

Wind.  People don't like it, and it picks up in the afternoon when you want to be outside entertaining.  Critical in San Francisco, and on any high elevation site.  Very important to design around it, but if not understood early enough, responses are too late and not effective.

10.  What seems important, but really isn't?

Whether you have done this garden before is not an issue.  It is understanding the site--not providing the same solution to different problems.

Following up my conversation with Stephen Suzman and Lisa Guthrie, I asked them to walk a mile in the Owner's moccasins. 

I asked them,

What are the ten questions you would pose to your landscape architect?

1. How will you figure out what I REALLY want?
2. How will you convince me what the site tells you it wants?
3. How much of the program will be what I tell you I want and how much of the program will be what the site tells you it wants?
4. How long will this really take to complete?
5. How much will this really cost to complete?
6. Who am I going to work directly with in your office?  What are my choices?  Why is this person the best fit for my project?
7. Do you have a good relationship with a contractor who could provide reliable pricing information and guarantee this price working from DD drawings?
8. What other contractors do you usually work with?
9. Have you worked in this town before?  Do you have a good relationship with the planning and building department?
10. Do you like Agapanthus or Lantana?  (if so, you are fired!)
11. Do you source/review material before it is delivered to the project site?

Insanely great homes are built from a common language, a patron that understands what they want, and has the resources to get it done.

Establishing this common language, establishing the values and principles, and articulating this in a way your designer understands so that they can develop the working drawings is the next major challenge you face, after right-sizing your budget.

 
Your architect is motivated differently than you are. 

This is my post on why people build.  It is the design, material, and recognition that drives your architect and your common language needs to incorporate these motivations.  Understand what motivates your architect and you are more than halfway there.

at 3KW per roof equals 3,000MW of clean power, provided at the same time of day as peaking electrical (AC) demand.  SB1 is predicted to provide rebates totalling US$3.3B toward US$24B of total installation.  Installed base to rise from 20,000 homes currently to one million.

After a tortured, three year stay in the California legislature, this law now provides for:

net metering of up to 2.5% of peak demand from 0.5%.  PG&amp;E was forecast to run up against this ceiling in early 2007, as their service area is the most feasible for installation of photovoltaic panels.

Muni utilities--such as Palo Alto, Sacramento (SMUD) and LADWP--will have to develop their own solar rebate program.  This is 20% of the residential power market.

20% of new SFD construction to be equipped with solar panels after 2011.

Feasibility--

You need to have a southern rooftop or at grade exposure available for six hours per day, in all seasons (in Marin, winter sun is blocked by ridgetops in some locations).  Efficiency falls off when azimuth departs from due south.

You need approximately 250SF of area to lay out the panels for a 3KW system.

Aesthetics are not for everyone.  Check with your local jurisdiction about what will be required

The Math--
California has a rebate program that pays for roughly 30% of your system. Rebate drops 7% per year until it zeroes out in 2016.   The feds offer a $2K tax credit, regardless of the size of your system. 

Here is a checklist for applicants.  The cost of the system is exempt from property taxes.

I figure the effective cost per KWH is about $0.20--higher than our base rate of $0.12, but less than PG&E 130% of baseline (and higher) charges.

My guess is that we are two to three years away from the tipping point for widespread adoption of photovoltaic systems in the sunny Western states.

The economists at Schwab are calling for a recession.  Made me wonder, is this another case of economists calling 10 of the last 3 recessions?  Or is it really time to batten down the hatches once again?

Liz Ann Sonders gave three traits resulting in her conclusions:  a severe real estate crunch, oil price shocks, and an inverted yield curve.   The numbers, curse them, are not as bad as one thinks.

Real estate crunch--here is Macroblog's look at sales adjusted for population for existing and new home sales.

This shows we are back to 2003 levels in much of the country--not a severe crunch unless you bought a condo in 2005--and not yet in recession territory.

The real issue is that appreciation has gone away, and as a result, those of us in states with a real run up in housing values will not have equity extraction as the way to pay for that new Escalade. 

And investors in second and third tier locations need to look closer at their hold strategies in a flat or declining environment.  Does the fact that we have a demand shock in the condo market mean that we are in a recession?  Or simply that it will suck to feed that negative cash flow for a couple of years for that condo?

Oil price shocks are part of the cost increases we are seeing--2% a month is how I handicap it.  I feel a higher exposure to increases in labor costs and trade contractor OH&P than to fuel prices. The extra $30 a week to fill up that carpenter's Quad Cab 2500 is small compared to OH&P moving from 19% to 27% in my market.   Here is the oil price chart:

And now to the <strong>inverted yield curve

The Fed believes

"the shape of the yield curve that has historically been the strongest predictor of recessions involves an inverted yield curve with a high level of the nominal [federal] funds rate."

  They add 

"it is noteworthy that Australia, and especially the United Kingdom have had downward sloping yield curves for some time...Both economies, however, have continued to expand robustly."

So the Fed's read of the tea leaves indicates odds are that we may avoid a recession.

To me, the real question is how the economy shifts over from being fueled by the consumer and their home equity extraction to growth fueled by companies.  Spatial demand is now longer fueled by investors buying condos because the stock market stinks. 

The demand is now from companies increasing headcount and putting cheeks in seats at 210SF per. 

The demand for insanely great housing has dropped some as my projects are insanely hard to pencil right now due to higher costs.  I don't see the top line increasing, so I am am focusing more on utility--functional floorplans, tier one locations, and buildable design.