Friday, July 30, 2010

Is the Era of the Master Planned Community Dead?

How, during these times, can you talk about Master Planned Communities or even think about starting one? Last week I received RCLCo’s (Robert Charles Lesser & Co.) Special Advisory spread on Trends from Top-Selling MPC’s, they listed the top selling communities from a survey of over 400. Of these ten, four were from Texas (all Houston), three from Arizona, two from Las Vegas and one from Utah. This I would not call a representative slice of the pie. While pointing out the growth in sales of some, there was little emphasis on the six communities that had drops of over 20% in sales over 2008 (which was a disaster of a year to start with). Statistically these numbers and communities are meaningless within the national residential market.

It is painfully obvious that these communities are in sunbelt areas. How many sales are to older/retired buyers is not mentioned. How many foreclosures sit empty in these same communities? Why are these communities even selling units (other than the expanding energy industry in Houston) is also hard to tease out. The residential industry is so deep in the tank that I am reminded of what my old boss told me in 1990, “the era of the master planned community is over.” It may have been, but then was reborn, took sick, took last rights, healed itself, and is now once again ill to the point of death (mourners are being summoned). Will there be resurgence? What will its form be if it miraculously recovers once again, and how can anyone afford to even considering developing master planned communities over 500 acres during the next ten years?

Over the next few weeks I will take out a murky crystal ball, wave a T-square over the thing and see what might appear. Trends, locations, styles, and markets are just a few of the issues to look at. I will also note some of the historical points made over seventy years ago just before and after WWII concerning MPC's of those times (somewhat similar).

A few questions to ponder:
What will the involvement of the existing community and city be in the process?

Will the feds, through energy and environment issues, take on an even greater role?

What will the impact be on the mid-market home builder, who often fleshed out the MPC?

Will we end up pricing ourselves out of our own housing market by do-good and feel-good issues, fees, regulations, materials costs, mortgage fears, and federal control of the housing market through Fannie and Freddie?

This is lot to chew over. I look forward to the challenge – stay tuned…….

Friday, July 23, 2010

Vison California -- Page 3 and last

Without a doubt, if implemented, Vision California will be the greatest growth inducing measure implemented in the state since the discovery of gold in 1848. It is the Law of Unintended Consequences. Underwritten as a support document by the California High-Speed Rail Authority, to help justify the rail and its impact on the California, the report says one thing but will generate something else. It is critical to understand that this rail line will reach into regions of the state like no other man made transportation structure since the interstate highway system of the late 1950s to today.

Let’s look quickly at the system as proposed and ultimately hoped for. One line runs the length of the Central valley from to San Diego. A second line starts in San Francisco goes south to about Gilroy then east to Merced where it joins the Central Valley line (a variant starts in Oakland and goes over the Altamont to meet south of Stockton). A number of stops are proposed along these lines and every stop requires significant development and support. The largest is where a huge maintenance facility needs to be built to service and build the trains (build here means to connect the cars to each other to form a “train”). One is proposed in the Merced area if this is where the San Francisco merge occurs. Thousands of employees will needed along with the required support of homes and services.

Approximately 26 station locations have been picked for stations, by whom I am not sure, some obvious, some political. But the one thing that is sure is that every community, not on the list but on the line, will have trains racing through their town at 100 miles an hour (or more) and they will have train envy. They want a station in their town – now. They know that each station will have a huge multiplier on their town and region – they want a piece of the pie and they do not want to be left out. They want it in their general plans, downtown plans, sphere of influences – and they want the revenue from the housing, jobs, fees, and sales taxes. They want an "interchange" not a bypass.

Vision California
, through its “miraculous” tools, will tell these communities how to grow, where to grow, and what type of growth. They will tease and wave carrots, offer incentives and services, and expand the state’s role throughout the planning process. Remember this is all about “saving ourselves from ourselves.” It revolves around AB 32, SB 375 and the mitigation/reduction of California’s carbon emissions through increased urbanism, density, and state control of development. I absolutely believe that the High Speed Rail and the Law of Unintended Consequences will do just the opposite – it is an incredible catalyst for growth into the farther reaches of the state, it will push affordable growth from the coast toward the Central Valley and the Inland Empire, increase vehicle use, and give small valley towns a second life. And is this a bad thing?

Sunday, July 18, 2010

Vision California - Page 2

Inherent in many politically oriented land planners is their great desire to create communities that are perfect. If the streets are laid correctly (i.e. gridded), if there are front porches (that can be successful only if there is a cable tv connection), and the garage is hidden (thus removing the evil auto from sight), our new towns will be wonderful.

Faced with the messy problem that people do like their cars, tv, curvey streets and cul-de-sacs; they continually push for general plan and zoning regulations that outright outlaw these elements of suburbia. Yes, these simple things are now codified out of existence through town laws and ordinances across the United States. (Well except for the tv bit – politicians do know their media outlets).

Yet the fundamentals of the marketplace challenge these new requirements. Vision California promotes the need to push homes closer together, rebuild urban areas, densify edge cities (regardless that they were once low density suburbs), and promote if not mandate transit oriented development (TOD). As a planner I am comfortable with many of these goals but they should be determined in the marketplace by the buyer and user – not forced through preventive ordinances.

Currently I am working on exactly these types of residential neighborhoods in Hayward, Milpitas and Santa Clara – all successful, all infill and transit oriented - and they have replaced land uses that have become obsolete, unnecessary, or just plain social disasters. These are partnerships between the developer and city and have created excellent neighborhoods. But they start at $450,000 and go up from there to near $800,000 – in today’s rough marketplace. The buyers have no cheaper options and the city then extracts fees for its affordable housing simply because they required the builder to reconstruct the surrounding streets and improve city utilities to many homes not a part of the new neighborhood. Easily more than a third of the cost of these homes is in other improvements not directly associated with the development. This is not the case elsewhere especially in the outlying areas.

This is why, in spite of planner concern and dogma, residential sales will return to the outlying areas during the next five years, the flight from the city and marginal suburbs will continue, driven by value, price, and availability. In the long term, jobs and facilities will follow, just like they have for two hundred years across the expanding United States. I recommend three authors who continually challenge these political planner's efforts: Joel Kotkin, Forbes columnist, futurist, and author of many books on the urban situation, The Next Hundred Million, America in 2050, The City, and other thoughtful books on the urban condition. Wendell Cox is an international demographic and urban policy consultant and brings a unique perspective in his War on the Dream, How Anti-Sprawl policy Threatens the Quality of Life. And Robert Bruegmann and his Sprawl, a Compact History, that shines a light on this pejorative term that changes the debate before it can begin.

Till next week . . .

Friday, July 9, 2010

What is "Vision California?"

“Vision California is an unprecedented effort to explore the critical role of land use and transportation investments in meeting the environmental and fiscal challenges facing the Golden State over the coming decades.”

Hyperbole aside, this begins the online marketing package (see: ) and precedes, by a few months, the speech made by Peter Calthorpe at the 18th Congress for the New Urbanism in Atlanta. This plan, Vision California, was finally released on June 23, 2010 and is the state’s first major planning document in almost 30 years. Funded by the California High Speed Rail Authority (who knew they wanted to redesign California – I thought they were just a fancy railroad!) and in partnership with the California Strategic Growth Council (not one developer or builder in the board), this document and the powers behind it, according to the San Francisco Chronicle, “takes direct aim at today’s development politics in California, where cities and regions for decades insisted on having the autonomy to develop their own growth initiatives.” Well, golly gee-whiz, and I thought that most communities were just responding to the needs and desires of their residents.

This is the latest effort, paid for by you and me, to nibble, nick, and cut away bits and pieces of every community’s right to plan for themselves. This newest idea follows (in the large, soon to be felt, boot on the neck of Californians), AB 32 (Global Warming Act), SB 375 (land use controls) and mandates by the California Air Resources Board (CARB), and State Water Resources Control Board (and many other regulations at both state and federal levels). Mind you fellow Californians, the published idea is to promote how Sacramento can produce state-wide scenarios to illustrate linkages (to be managed by selected elites) between land use and affordability, farmland preservation, infrastructure, energy and water consumption, economic development, energy independence, energy efficiency, decreased driving time, improved air quality, promotion of sustainable lifestyles, production green jobs, land use and transportation investment, greenhouse gas reduction, reducing carbon emissions, increased production of apple pies, protect mothers (all types due to diversity), and increase the number of chickens in every pot (free range organic). By the way, how is that budget issue going, governor, senators and assemblymen?

It is easy to throw barbs at reports as overreaching as this type of initiative. At least 2.5 million was spent on this process and document (called modest by some and as best as can be determined) by the California High-Speed Rail Authority – why it is needed I am not sure.

The state of California does indeed face dramatic challenges in the coming years, with growth rates that may bring over 25 million new residents to the state by 2050 and an expected total of 60 million Californians, (over 30 million in Southern California alone) and yes it is critical that communities face up to the realities of densification and expansion. But they do not need to have a Board in Sacramento dictate to them on how to respond to these challenges and to create “Models” that must be followed. Most communities can barely manage their zoning ordinances.
Over the next few weeks I will try to pull together the thoughts of a few urban futurists who are looking at this issue, not with jaundiced political eyes, but with a level of common sense and reflection. In all cases remember the maxim of Austrian economist Ludwig von Mises, “The market is supreme.”