Friday, August 20, 2010

Part 4 – The Death of the Master Planned Community

A few notes questioning my numbers from last week. I noted that the projected residential development this year (ownership and rental) is estimated at 1.17 million units, the source was the National Association of Home Builders (NAHB) – May 18, 2010. Some readers (thank you) have pointed out that we will be lucky to build half of that amount (and two months later so has the NAHB). That may be, and during these days it is safe to assume there is no shortage of hope at the NAHB, both due to their dwindling membership numbers and wishful dreams. The underlying point is that whether it is 1.17 million or six hundred thousand units it is woefully below the need. This is exactly the same problem in America between 1930 and 1946 where virtually no support for the housing needs of Americans was met. In the 1930s there were feeble governmental attempts with the greenbelt communities but there was none due to World War II. This back-up will continue until it becomes a very serious problem, both economically and socially.

Last week I announced the death of the Master Planned community for a number of reasons: lack of institutional financial support (some are just gone from the scene, i.e. Lehman Brothers)), high state and local fees, approval costs, entangling environmental reports and issues, fundamental problems with loans to homebuyers, capital sitting out the current economy, and a general lack of cultural support for these communities in the current literature. What developer would jump over these hurdles to try and build the next Shaker Heights, Park Forest, Illinois, Country Club Village in Kansas City, Columbia and Reston? As it normally is, it is the third or fourth owner that makes any money anyway. Seldom do the original founders of the idea survive the vagaries of the economies that they must pass through to complete these fifteen and twenty-yearlong projects. And today? Why would you even consider the opportunity or possibility?

The future? One reader noted the potential for a more rational and focused type of development, the Master Planned Neighborhood (MPN). There is much to this argument and type of project. It is a development that as they say “one can get their arms around.” Peripherally urban, densely suburban, built into the current fabric of streets and utilities, and broadly mixed with rental and for sale; these projects can deal with the vagaries of the market – and most can be completed from design to last move-in, in less than five years. There is little about these that make them TODs (Transit Oriented Development) though some may take advantage of these stations or lines, or TNDs (Traditional Neighborhood Development) with their myriad rules and regulations trying to be all things to few people. These developments must be flexible, buildable, marketable and above all burdened with few fees and costs to the residents. They cannot solve the economic woes of the surrounding community.

We are entering a time where there will be little aid from the cities and state and you can forget the feds. They cannot afford to be surrogate landlords, managers, policemen, arbiters, tax collectors and superintendents to large communities of disconnected and often culturally unrelated owners. The builder will leave a community to the residents that may be too expensive to maintain with HOA dues, too hard to operate because of complex environmental restraints and regulations, and complex social structures defined in the required documents and manuals.
During the next few missives, I will try to explore some ideas as to what these MPNs are, how they differ from TODs and TNDs (don’t you just love the acronyms), and where they can be applied in our need for housing.

Stay tuned . . . .

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