SC Magazine November/December by Partnership for Sustainable Communitites

Sustainable Communities

Vol 1, No 6 • November/December 2011 • www.p4sc.org • $12

Kasim Reed: The New Politics of Sustainability

IN THIS ISSUE

Affordable housing equity flows.............................................. p. 22 Pat Clancy’s legacy................................................................. p. 28 Solar financing innovations................................................... p. 34

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Contents November/december 201 1

12 4

Departments

2 Letter from the Editor 4 Renewable Energy Financing Solar financing innovations

6 Around the Nation

Regional Planning: San Diego adopts California’s first Sustainable Communities Strategy, setting out a forty-year vision for sustainable planning and development in the region. Critics and supporters weigh in on the plan.

“Agrarian” Urbanism: Famed new urbanist Andrés Duany describes a vision for a new type of community, one where agriculture is seamlessly woven into the town and residents are involved in all aspects of food production.

37 Design & Architecture: College students from around the world competed in the U.S. Dept. of Energy’s 2011 Solar Decathlon, designing and building solar homes. University of Maryland emerged the overall winner of the competition

• Illinois • Maryland • New York • Texas

• Washington

15 Transportation & Development

Features 12

On the Cover:

22 Special Section Soaring tax credit equity investment prices make up for shrinking federal and state subsidies to sustain production of affordable rental housing. Competition for tax credits increases, as state allocating agencies examine ways to cut project costs. 29 California’s tax credit program: How one developer makes deals work, and what to expect in 2012. 30

Celebrating a housing leader. Sustainable Communities looks back at the 40-year career of Patrick Clancy with The Community Builders, and his groundbreaking work to preserve affordable housing and create new mixed-income developments.

Mayor Kasim Reed: The New Politics of Sustainability Atlanta is at the center of one of the fastest growing regions in the country and Mayor Kasim Reed wants it to lead the region into a new era of sustainability. In an exclusive interview with Sustainable Communities magazine, he talks about the new politics of sustainability, and why he knows he will prevail. Story begins on page 8. Cover photo by Jenniferstalcup.com

november/december 2011 • Sustainable Communities

Sustainable Communities

Letter from the Editor

Vol 1, No 6 • November/December 2011 • www.p4sc.org

Inklings of Optimism

Sustainable Communities Magazine 6i-2

Editor and Publisher Andre Shashaty, andre@p4sc.org Office & Member Services Manager Carol Yee, carol@p4sc.org

By Andre Shashaty

ith 11 months to go until the presidential election, and deficit reduction completely dominating the political dialog, it would be easy to give up on the ideals of sustainability. But when you get away from Washington, and talk to the real people who do the real work of shaping our communities, you find something much different. People are thinking harder than ever about the future. And they are waking up to the need to reduce dependence on cars, build more affordable housing, increase the efficiency of our buildings, and make our economy more equitable.

I am an aging Baby Boomer who is just getting to the cranky age, where everything seems to be going downhill. But the strangest thing is happening. As the election approaches, I am experiencing inklings of optimism. People like to make fun of Obama’s “Got hope?” campaign from 2008. But after writing about the sustainability movement for over a year, I do have hope. Positive change is coming, and it’s due largely to people like Kasim Reed and Pat Clancy, both of whom are the subject of articles in this issue, and thousands of people in the public and private sectors just like them, even including some in Washington. Reed is the 42-year-old mayor of Atlanta. He is determined to make Atlanta a national leader and an example for other southern cities in regard to sustainability. He is right when he says it’s not about Baby Boomers like me. He’s speaking for the Millennial Generation and generations yet to come of age, and he knows that their growing political power means the sustainability movement will only accelerate in years to come. Clancy is retiring after 40 years developing mixed-income communities and helping lowincome tenants become self-sufficient. He and his colleagues at The Community Builders have kept delivering housing no matter what the federal government did or did not do to help. And they will keep doing it in any political climate. If Republicans take control of the Senate or even the White House next year, it will be a serious set back to sustainability. But no matter what party you favor, remember this: Our movement is permanent and irreversible. Young people with the determination of Kasim Reed and his constituents can’t be stopped. Just like the young Pat Clancy could not be stopped when he started his career in affordable housing after volunteering in college for a Massachusetts settlement house. Any party that ignores the views of voters in their 20s and 30s who want government policies to support sustainability may prevail in the short-run, but they cannot hold power for long. The argument that we can’t afford to invest in sustainability while we are in a recession sounds good to old-timers, but not to young people. They are not buying it for a minute. They know we have to invest in our future. It’s only a matter of time before Washington gets that message.

Shashaty is editor of Sustainable Communities magazine and president of the Partnership for Sustainable Communities.

Art Director Kay Marshall, kay.marshall@earthlink.net Advertising & Conference Sales Manager Wendy Chaney, wendy@p4sc.org Assistant Editor Megan Truxillo, megan@p4sc.org Board of Directors Rev. Betty Pagett, Community Acceptance Strategist Todd Sears, Vice President of Finance, Herman & Kittle Properties Patrick Sheridan, Senior Vice President for Housing Development, Volunteers of America Leadership Advisory Board Richard Baron, Chairman and CEO, McCormack Baron Salazar Doug Bibby, President, National Multi Housing Council Christine Carr Manager, Community Development Finance Silicone Valley Bank Henry Cisneros, Executive Chairman, CityView; former secretary, U.S. Dept of Housing and Urban Development F. Barton Harvey, Former chairman and CEO, Enterprise Community Partners William C. Kelly, Jr., President, Stewards of Affordable Housing for the Future (SAHF) Kerry Mazzoni, Public policy consultant, former state legislator and former California Secretary of Education Nicolas P. Retsinas, Director, Joint Center for Housing Studies, Harvard University Caleb Roope, President/CEO, The Pacific Companies Mitchell Silver, PP, AICP Director Department of City Planning for Raleigh, N.C. Sustainable Communities Magazine is published by Partnership for Sustainable Communities (“PSC”) is a private nonprofit organization incorporated in California. It is not affiliated with the United States federal interagency “Partnership for Sustainable Communities,” which is a venture between HUD, DOT and EPA. PSC is not supported by government funding. It depends entirely on membership dues and charitable donations to cover its costs. To make a donation, go to www.p4sc.org and click on the “donate now” button at the top of your screen in the green bar on the left. To join our cause, click on “become a member” also in the green bar.

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Sustainable Communities • November/december 2011

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Renewable Energy Finance

Solar leasing inches toward explosive growth

ith solar panels getting cheaper and securitization of loans for solar installations getting closer to reality, millions of property owners may soon be able to tap the power of the sun to generate electricity with no money down. That’s according to Jason Cavaliere, director in the Alternative Energy Finance Group at Citi, which is leading the charge to finance solar panel leases for homeowners. Citi has financed several leasing programs with solar installers. Most recently, SunPower Corp. and Citi announced a new fund for approximately $105 million in residential solar lease projects.

SunPower will use the fund to extend its SunPower® Lease to customers in eight states, expanding the financing options available to homeowners interested in high-efficiency SunPower solar power systems. Citi is contributing $80 million to the fund. “Citi remains at the forefront of developing financial solutions that support the adoption of renewable energy and enable consumers to maximize energy efficiency. We are pleased to partner with SunPower, an undisputed leader in solar energy,” said Cavaliere. Citi is financing solar installers to offer leases so that users need no money upfront. With lease terms of 15 to 20

Sustainable Communities • November/december 2011

years, the combination of the lease payment plus remaining costs for utilities generally results in a savings of about 20 percent to the owners, Cavaliere said. Citi absorbs the credit risk on the leases, and the lease obligation can be transferred to a new owner. “Residential PV has tremendous growth potential,” said Cavaliere. “As panel prices come down, it’s reaching grid parity without subsidies.” In some places in California, solar PV can be cheaper than buying power from the grid. The challenge for Citi is that right now, it cannot tap the secondary capital markets for these kinds of deals. “Because it’s new, the financing

market has not fully acbond will be used to design, cepted it,” Cavaliere said. construct, and install conserHe said securitization vation measures at state and might begin in late 2012 local government agencies. or early 2013. Citi was named “America’s “Rating agencies are Greenest Bank” in 2010 by looking at it, but have not Bank Technology News and come out and said they “Most Innovative Investment will rate it.” Until they do, Bank in Climate Change and ▲ Jason Cavaliere, Citi is using its balance Sustainability” by the Finandirector of Alternative sheet and assuming it cial Times’ Banker Magazine Finance Group at Citi. will hold the debt for its in 2009 and 2010 for its duration. ongoing commitment to enviCiti is considering diversifying into ronmental sustainability. commercial PV but is more concerned Citi is in the midst of a 10-year, $50 about credit risk in that sector combillion initiative to support the compared to leases for homeowners for mercialization and growth of alternatheir principal residences. tive energy and clean technology in In another innovative move, Citi was markets around the world. To date, Citi the sole underwriter for a $70 million has directed over $24.3 billion as part bond issued by Sustainable Energy Utilof this initiative. ity Inc., a nonprofit corporation created “Citi is committed to helping our cliby Delaware in 2007. Proceeds of the ents finance different forms of renew-

able energy because it is good for the environment, good for energy security and helps create American jobs,” said Marshal Salant, head of Citi’s Alternative Energy Finance Group. ❧

Efficient Buildings Today is a new magazine about reducing energy and water costs through retrofitting, rehabbing and refinancing affordable housing, market-rate rental housing and other income-producing properties. It explains key strategic thinking, financing options, technology and regulatory realities for owners and asset managers, facilities managers and professionals in the private and public sectors. To request a free subscription, or for advertising information, go to www.efficientbuildingstoday.com

november/december 2011 • Sustainable Communities

ARO U ND THE NATION

4 3

Illinois

fixtures offered Amtrak an impressive 2- to 3-year payback on its initial Chicago Union Station $200,000 capital investment. Realizes 40% Energy Savings In addition to impressive energy-efAmtrak Chicago ficiency numbers, the lighting Photo: ©vincent desjardines Union Station is a wellupgrades also provide Chicago known venue in the Union Station with brighter, Windy City, transporting better-quality light. The new nearly 50,000 paslamps also have longer useful sengers every day. The lives, which saves Amtrak in train station is 85 years terms of maintenance and serold, but Amtrak is dovice issues. ing everything it can The lighting retrofit proto make sure Chicago gram at Amtrak Chicago Union Station isn’t seen Union Station is expected to as a relic of the Indusreduce energy costs by over trial Age. 40%, which has a significant ▲ Chicago Union Station To get started, impact on the budget. “ProjAmtrak embarked on ects like this help Amtrak realize that a lighting retrofit of the station. As part these green choices can really reduce of the retrofit, the lighting in Chicago operating expenses,” explains Frank Union Station’s head house, station, and Tverdek, Vice President at Jones Lang two train sheds was replaced. The team LaSalle, which manages Amtrak Chichose upgrades that revolved around cago Union Station. two-year paybacks, and focused on

replacing HID lamps with induction and fluorescent lamps to get the biggest savings possible. The energy consumption of several 400-watt fixtures was reduced by 35 to 40 percent. Taking that number and multiplying it by thousands of 400-watt

Maryland

Maryland names five “sustainable communities” Five towns across the state of Maryland, including Westminster, Aberdeen,

Sustainable Communities • November/december 2011

Cumberland, Hyattsvile and Laurel received “sustainable communities” designation from the Maryland Department of Housing and Community Development (DHCD) and the Maryland Department of Planning. A “sustainable communities” designation reflects that a municipality has identified a specific local area in need of revitalization and has created a comprehensive strategy to encourage and guide local investment. Under Maryland’s 2010 Sustainable Communities Act, receiving this designation is required for communities to receive help from the state’s Community Legacy and Neighborhood BusinessWorks programs. The Community Legacy program provides funding for projects such as business retention and attraction, encouraging homeownership and commercial revitalization. Neighborhood BusinessWorks is a loan program that provides financing for new or expanding small businesses and nonprofits. Other programs that can be tapped with the Sustainable Communities designation include a state sidewalk retrofit program and job creation tax credits. “Sustainable Communities strengthens the progress Maryland has made in smart growth and sustainable development,” said Maryland Secretary of Planning Richard E. Hall. “These five designees are demonstrating their commitment to sustainable communities: sound environmental protection, strong local character and sense of community, solid economic development and innovative housing and development strategy.” Westminster’s proposal, for example, calls for connecting parks and open space with a system of trails, pedestrian pathways and bike routes and continuing an upgrade to water and waste-water treatment plants. Westminster will complete small-scale affordable and market rate housing projects already underway.

New York

New York City Removes Green Building Obstacles New York City officials are set to unveil a set of 20 new green zoning guidelines aimed at removing obstacles to sustainable building practices, city officials told attendees at “Zoning the City,” a day-long conference sponsored by the NY Dept. of City Planning, Harvard and Baruch College. “This is the most comprehensive effort to sweep away impediments to green buildings in our zoning,” said City Planning Commissioner Amanda Burden. Burden and Robert Steel, New York’s deputy mayor for economic development, who first announced the planned guidelines, declined to give specifics to the crowd of real estate pros, academics and city planning experts. However, officials have briefed the Real Estate Board of New York on the proposal. Paul Selver, co-chair of Real Estate Board New York’s zoning committee, reports the proposal appears to focus on removing hurdles rather than providing incentives for green building. “There are things in zoning today that work against green building design,” Selver said, noting that current regulations often hamper efforts to install environmental features like solar panels and green rooftops. The conference, held to mark the 50th anniversary of the city’s Zoning Resolution, brought together roughly 200 academic, real estate industry and public sector experts to address the future of zoning in the city. Source: http://therealdeal.com/ newyork

Texas

Dallas plans for complete streets Through its Complete Streets program, Dallas is trying to break from its

past as a city of long, straight roads designed just for cars. “The Complete Streets project is intended to shift the city’s emphasis to building streets that are safer, more livable, and welcoming to everyone,” says the program website. “Doing so can raise property values, improve our personal health, reduce the impact on the environment and lower our transportation costs.”

▲ Dallas hopes its complete streets program will increase the livability of the city.

Through the program, the city hopes to create a Complete Streets Vision for Dallas, a Complete Streets design manual, and redo a number of Dallas’s thoroughfares as “complete streets,” designed to safely accommodate pedestrians, bicyclists and cars. To get citizens involved in the process, the city is hosting several workshops that will explain to the public what complete streets are and how they can serve Dallas residents. “In this global economy, livable urban environments will continue to attract jobs and residents and keep Dallas competitive,” says the Dallas Complete Streets website.

Washington

Seattle Celebrates Freeway Removal Moving forward on plans for a rejuvenated Seattle waterfront, crews demolished the first of several segments

of the Alaskan Way Viaduct, an elevated freeway that has cut through Seattle’s waterfront for the last five decades. Years of wear and tear, earthquakes and the salty marine air finally took their toll on the structure and supporting seawall, requiring its demolition. Seizing the opportunity, Seattle plans to replace the elevated freeway with a bored tunnel and surface street, which will allow the city to create a more pedestrian friendly waterfront and downtown. The demolition of the first segment of the freeway coincided with the newest vision for the waterfront from the design team behind the waterfront project, James Corner Field Operations. The design team is planning nine acres of new public spaces as well as improved pedestrian, bicycle and public transit access to the waterfront. Corner Field Operations is also proposing some creative ideas, like a popular pier getPhoto courtesy WSDOT.

▲ It took crews a week to demolish the southern end of the viaduct.

ting a roller rink, a pool and hot tubs, a grandstand seating area with views across the bay, and a series of floats in the water for animals and kayakers. Major redevelopment must wait until the Alaskan Way Viaduct is completely demolished, but the team wants to move forward with some early projects next summer. To follow the project visit waterfrontseattle.org. ❧

november/december 2011 • Sustainable Communities

Millennial Mayor:

Atlanta Mayor Kasim Reed believes his dedication to making Atlanta sustainable will pay off for his city and its residents.

Reed’s Sustainable Vision for Atlanta By Andre Shashaty

ou have heard the conventional on his side. Reed is that rarity in politics, and it was one of the leaders of the ecowisdom that the post-baby boom a long-term thinker, who truly believes nomic boom in the south in recent degenerations will lead American cities it’s his job to leave the city better than cades. Now he wants the city to set the to a new era of sustainability. But you he found it, and to be a good steward of example for the region on sustainability. won’t grasp the tremendous power of natural and human resources. He also sees sustainability as the key to generational change until you talk to He is also a staunch advocate for the city’s ongoing competitiveness and Kasim Reed, the game-changing young the city of Atlanta. He says the city led the quality of life it offers. mayor of Atlanta. the southeast in advancing civil rights, A veteran of early success in Georgia The 42-year-old Reed took state politics, he knows what Photo: Wikimediacommons ©Mike Downey office in 2010 and went right he’s up against, and he is not to work tackling public safety the least bit intimidated. The issues, budget challenges and critical vote coming up next the city’s unfunded pension summer on a new sales tax to fund liability, among other fund transportation improveissues. But even with those ments doesn’t seem to worry urgent issues on his plate, he him. Neither does the lack of climbed way out on a limb with support for sustainability proa pledge to make a city known grams in the U.S. Congress. for sprawl and traffic into one Generational change is comof the nation’s 10 most susing, he said, and it will sweep tainable cities. aside any politician that doesn’t ▲ Atlanta is the center of a metro area that grew by 24 Reed displays the quiet understand the younger genpercent from 2000 to 2010, and is home to 5.27 million confidence and complete deeration’s concern for sustainpeople. The Atlanta metro area was responsible for more termination of someone who ability. Reed knows that our than half of Georgia’s 2010 population and more than two-thirds of the state’s growth. knows the facts and time are service-based or “knowledge”

Sustainable Communities • November/december 2011

economy depends on smart young workers, and that those people are going to choose to live and work in cities that are good stewards of natural resources. He also knows that mayors in dozens of other cities know the same thing and are trying to attract the same labor force and the employers that seek them. Reed believes that the generation right behind his, known as Generation Y or the Millennial Generation, will force Republicans and Democrats alike to support pro-sustainability policies. ▲ Atlanta’s Future? Making Atlanta more sustainable depends heavily on taxpayer When that power begins to be willingness to finance the Altanta BeltLine’s light rail component. felt at the federal level, he wants Congress to reward cities that are The biggest obstacle to making the top ten most sustainworking now to make themselves more sustainable. “What we able cities is probably transportation options. Mid-range goals need is that municipalities that are focused on sustainability include creating more bike paths and shifting city subsidies go to the front of the line for federal support. A government for employees from parking to transit. Among the long-term that does not have a sustainability plan should not be on a goals, the biggest is to build the Atlanta BeltLine, a multilevel playing field with those that do. That’s the most signifimodal transportation system akin to a beltway road but focant policy shift the federal government could make.” cused on public and non-motorized transit. The organization spearheading the project calls it “a Setting goals comprehensive redevelopment and mobility project that will shape the way Atlanta grows throughout the next several de“Power to Change” is Atlanta’s plan to become one of cades. The project provides a network of public parks, multiAmerica’s top 10 cities for sustainability. The plan sets sususe trails and transit along a historic 22-mile railroad corridor tainability benchmarks for all City departments, such as the circling downtown and connecting 45 neighborhoods directly reduction of petroleum fuel usage and water system leakage. to each other.” It is intended to organize the city’s heretofore It continues some previous initiatives and calls for new ones haphazard growth and expand transportation options while – most notably to increase public transit substantially, create reducing car traffic and carbon emissions. green jobs, and reduce food “deserts” in the city --- neighborThe BeltLine project is moving forward as land is acquired hoods where access to locally grown produce is limited. and bike and pedestrian access initiated. Reed said supporters In 2008, Atlanta was ranked as the 19th most sustainable have raised $38 million of a $60 million private funding goal American city, according to Sustainlane, http://www.sustainto move forward with 1,100 acres of green space preservation lane.com/. along the route. To move up by at least 9 slots, Reed’s goals include:

• Reduce greenhouse gas emissions within the City of Atlanta’s jurisdiction 25 percent by 2020, 40 percent by 2030, and 80 percent by 2050; • Reduce energy use for existing municipal operations 15 percent by 2020, 40 percent by 2030, and 80 percent by 2050. Make renewable energy five percent of total municipal use by 2015; and • Bring local food within 10 minutes of 75 percent of all residents by 2020. Reed’s administration says more than 50 percent of the objectives introduced only a few years ago had been achieved by 2010. Atlanta was the first city in Georgia to determine its municipal carbon footprint, which occurred in 2008. By 2010, Atlanta reduced its footprint by 12.5 percent.

Key transportation vote coming But the biggest battle is yet to come, when voters will decide whether to fund the rail links that would connect the line to the city’s existing transit system. A vote is expected next summer on the Transportation Investment Act, which would authorize a one percent sales tax to fund transportation projects. In the Atlanta region, 15 percent of funds are sent directly to local governments to fund local transportation projects, while 85 percent of funds support a list of regional projects created by local elected officials. The list contains $602 million for a City of Atlanta transit

november/december 2011 • Sustainable Communities

>> 9

project that starts at MARTA stations in Midtown and Downtown and connects to the east and west sides of the Atlanta BeltLine. Reed is speaking in favor of the sales tax hike as a crucial financing step but other transit advocates want to postpone the vote because of doubts about getting a high enough turnout for passage in the summer. Another key issue is the availability of fresh food in all city neighborhoods. To advance that goal, the city, with support from Wal-Mart, is looking for an organization to create a demonstration urban farm on an empty city-owned lot next spring. The Trinity Avenue Urban Farm Design Competition was launched to support the city’s effort in establishing an effective and inspirational model for urban agriculture. “We are very excited about the opportunity to create a sustainable and ac-

cessible greenspace in the heart of downtown that will serve as a model and educational tool for similar projects in the future,” said Mayor Reed. Prior to his election as mayor, Reed served 11 years as a member of the Georgia General Assembly. He was first elected in 1998 as a State Representative and served two terms. From 2002-2009, he served in the Georgia State Senate, where he was Vice Chairman of the Senate Democratic Caucus. As an undergraduate member of Howard University’s Board of Trustees, he created a fundraising program that has contributed more than $10 million to the school’s endowment since its inception. Mayor Reed was appointed as Howard University’s youngest General Trustee in June 2002 and remains a member of the Board of Trustees. ❧

KASIM REED: In his own words

We are going to win the debate Your plan to make Atlanta one of the nation’s ten most sustainable cities is very ambitious, especially in a state and region not known for environmental causes. How do you get people on board with that kind of long-term thinking? Sustainability has to be a core value and you can’t get tired of explaining it. You have to continue to make the case. And you have to do it over and over, or you will lose the debate. If you respond to all the knee jerk reactions about short-term costs, you’ll lose the debate. Every time someone says ‘we should not change, it costs too much money,’ you have to take them on. I happen to believe I am on right side of this argument. But nothing worth doing is easy. Your plan talks about economic development as a motivating factor, talking about making Atlanta a “magnet for talent and a model for the country.” Can you explain why being sustainable makes Atlanta more competitive? Again and again we make the long argument. In a knowledge economy, you have to be able to show in word and action that you are a city of the future. If you are trying to avoid, delay or kick the can down the road on carbon emissions, your city won’t be able to attract the kind of people they need to be a leading city of the world. Today, Atlanta is what it is because of our ability to attract well-educated young people. If we stop attracting

Sustainable Communities • November/december 2011

them, our progress won’t continue. If you are not known as a city that cares about tomorrow and is a good steward, you will stop attracting young people. I’m 42 years old. But the generation right behind me, they don’t even understand the debate about whether we need to change. Cities that don’t do this will be left behind. They will be noncompetitive. That’s the argument I make when people push back on it, and they do push back on it. But most of them are over 40, and I say this is not about you. What kind of push back do you get? There is a bit of a divide between rural and urban, which is traditional, so you get that push back from surrounding suburbs. Folks in the suburbs don’t see the need for green space preservation, water conservation, and light rail so people can move through the city without driving. How do you view the disparity between the activism of cities like yours and the distinct lack of interest in these issues from Congress? Unfortunately, we are allowing individuals that are not forward thinking to speak louder than us. When you see retreat around issues related to sustainability, it’s because the other side is speaking more loudly. It’s not fact based. Do you see change in the political situation nationally coming soon?

I think it’s changing with the generational shift. As committed as I am and as hard as I am willing to push, the generation behind me in their 30s and 20s, there is not even a debate going on about this. It’s going to move, it’s going to move in the south naturally. I think we are going to win the debate because of a realignment between Republicans and Democrats alike that is generational in nature.

drive our economies. If you focus on delivering policies in line with what young people are concerned about, you will see their energy. But you have to be bold. That is why we said we want Atlanta to be in the top ten of cities for sustainability. It necessitates a whole series of actions. It creates pressure to perform. Without pressure and stimulation, we’d just play around margins, and our goals would be fuzzy. How do you assess your progress so far?

What do you say to the comment that young people are not generally politically active these days? They are politically important because they are going to

I feel good about it. But I’m never satisfied. I want to do more faster. The maximum amount of time I will have is 8 years. I always want to do more. ❧

Conference focuses on energy management for affordable housing

f your are interested in working to improve the energy efficiency of multifamily housing, a new conference sponsored by The Partnership for Sustainable Communities should be on your calendar. For building owners and asset managers, innovations in financing and technology are accelerating, making it far easier to reduce utility costs with little or no upfront investment. On the policy side of things, state and local governments are moving toward increased regulatory involvement in efficiency, including new requirements for disclosure and benchmarking. All the opportunities and changes in policy and financial markets will be addressed at the Conference on Energy Management for Affordable Housing. The two-day event is scheduled for late April, 2012, in Washington, D.C. This conference will help you master the new world of energyefficient retrofits, preservation and rehab. It will help you meet the need

to control operating costs in your apartment properties and stay ahead of increasing state and local efforts to promote energy efficiency. You will learn about a growing array of innovative public and private financing models for energy improvements and renewable energy. The conference is sponsored by the nonprofit Partnership for Sustainable Communities. Endorsers and co-conveners include the following: • National Housing Conference • National Housing Trust • National Multi-Housing Council • Stewards of Affordable Housing for the Future (SAHF)

Sponsors include the following organizations: Reznick Group Efficient Buildings Today Baker Tilly Virchow Krause, LLP National Equity Fund On-Site Insight Silicon Valley Bank Enterprise Low-Income Investment Fund Volunteers of America The Pacific Companies For more information on the content of the conference and registration, contact Carol Yee at carol@p4sc. org. For information on sponsoring the event, contact Wendy Chaney at wendy@p4sc.org.

november/december 2011 • Sustainable Communities

San Diego Adopts California’s First Sustainable Communities Strategy: Critics say transit takes backseat to freeway expansion By Megan E. Truxillo

ith so much attention on climate change, advocates and critics have closely watched the development of California’s landmark anti-sprawl legislation, SB 375. Now, observers will get to see a real life case study, with San Diego becoming the first Metropolitan Planning Organization (MPO) in the state to release its 2050 Regional Transportation Plan, which includes a Sustainable Communities Strategy. For those new to the discussion, back in 2008, in an effort to reduce greenhouse gas emissions from cars and light trucks (and meet state-mandated GHG emission reductions), California became the first state to pass so-called “antisprawl” legislation.

The legislation, SB 375, requires regional planners to develop Sustainable Communities Strategies (SCS) as part of their Regional Transportation Plans (RTP). The crux of the SCS is that regional planners are required to address how the Regional Transportation Plan and land use plans can be coordinated to reduce greenhouse gas emissions from cars. Now all eyes are on San Diego. And for good reason. There is a lot at stake, not only the estimated $214 billion dollars to be spent on transportation over the next 40 years, but the success of the legislation in reducing greenhouse gas emissions, and also, for Californians, the livability of our cities.

Photo courtesy Wikimedia Commons.

Early Investment in Freeways The draft 2050 RTP, released in April, drew almost 4,000 public comments from 1,500 individuals and organizations. Criticism of the draft plan revolved largely around the plan’s perceived prioritization of highway expansion over public and active transit. In the first ten years, the plan slates 34 percent of funds for highway improvements, 21 percent for local roads and

▲

To the dismay of transit activists, San Diego’s Regional Transportation Plan commits 34% of funds in the first ten years to highway improvements.

▲ Cyclists embark the Coaster line at Santa Fe Station. The 2050 RTP speeds up and expands Coaster service in the North Coast Corridor.

San Diego Mayor and SANDAG Boardmember Jerry Sanders supports the 2050 RPT.

▲

“This document represents a lot of compromise, probably nobody is completely happy with any part of it, or all the parts of it. But everybody has got some piece of it, and I think it is a very balanced approach and for that reason I will be supporting [it].” —Jerry Sanders

streets and 36 percent for transit. The percentage dedicated to transit grows each decade, up to 44 percent from 2021 to 2030, 47 percent in the third decade, and 57 percent in the last decade of the plan. “Someone once said the definition of insanity is doing the same thing over and over again and expecting a different result” said Steve Padilla, Consultant/Director of Sustainable San Diego and a former Mayor of Chula Vista and SANDAG Boardmember. “The San Diego region’s air quality is in danger of being downgraded in its ability to meet Federal air quality improvement goals, and the statewide goals set forth in SANDAG’s plan are just barely met by the year 2035. Despite this, SANDAG wants to adopt a plan which still focuses on road

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capacity and improvements as the first priority, while investments in transit are put off years and even decades. We need a plan that creates a better chance for reductions in Greenhouse gases to actually be achieved, and provides more transportation alternatives for our residents,” he added. Defending the plan, Jerome Stocks, SANDAG Chairman and Deputy Mayor of Encinitas, says the 2050 RTP takes a “balanced approach,” pointing out Photo courtesy Port of San Diego. that although money is set aside for highway ▲ The San Diego region will add 1.2 million residents in the next 40 years. The 2050 RTP sets construction, most of it out how the region will accommodate current and future residents, in terms of housing, jobs and is for highway widening, transportation, while reducing greenhouse gas emissions. especially the addition of carpool lanes. San Diego Mayor and SANDAG Boardmember Jerry proach and for that reason I will be supporting the motion Sanders also supports the 2050 RPT. “This document rep[to approve it],” he said at SANDAG’s October 28th board resents a lot of compromise, probably nobody is completely meeting. happy with any part of it, or all the parts of it. But everybody But this “balanced approach” isn’t satisfying critics who want to see real change. has got some piece of it, and I think it is a very balanced ap-

SF Bay Area: Transportation agency supports SB 375 goals The question that looms over the entire SB 375 planning process is how to get local jurisdictions to encourage higher density development in targeted areas near transit. In the San Francisco Bay area, the Metropolitan Transportation Commission plans to do it with a whole new framework for allocating the remainder of the $1.4 billion in federal housing funds for 2010 to 2015. The proposed OneBayArea program would “better integrate the region’s federal transportation program with land-use and housing policies by providing incentives for the production of housing with supportive transportation investments.” “MTC is driving the transportation dollars to the areas where the majority of the growth should occur; near transit and jobs,” according to Steve Kinsey, a Marin County Supervisor, who is also an MTC commissioner.

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MTC staff proposes a distribution formula for OneBayArea Grant funding that includes housing incentives to support the region’s Sustainable Communities Strategy and promotes focused transportation investments. It is proposing to require that at least 70% of funding be spent on projects in Priority Development Areas (PDAs), that is, areas identified in the Sustainable Communities Strategy as targeted for high-density development. The remaining funds under MTC’s management are proposed to continue station area planning and/ or CEQA assistance to PDAs and support additional investments in affordable housing. Technical assistance services are available to local jurisdictions on a competitive basis to advance transit-oriented development (TOD) in Priority Development Areas.

“While the agency claims to support public transit, most of its transit projects are not scheduled to be built in the early phases of the plan. Critically, by the time public transit is constructed, our region will have adjusted to the plan’s massive new freeway projects – and will already have constructed development in far-flung areas of the county,” writes Jim Mills, former state legislator, and Duncan McFetridge, chairman of the Cleveland National Forest Foundation. Responding to this charge, Solana Beach Mayor and SANDAG Boardmember Lesa Heebner, said, “[t]his plan has more transit in it than ever before,” why “we have more transit towards the end is because we have more money towards the end and that is the only reason.” The criticism didn’t go completely unheeded. SANDAG made a number of last minute improvements to the draft plan and commitments for future improvements that focus on public and active transportation, including a commitment to adopt an early action measure for active transportation

by next summer, to develop a transit-oriented development policy and to develop a complete streets policy.

“Backsliding” of GHG Reductions Another criticism of the plan comes directly from the California Air Resources Board (ARB), the agency that set the greenhouse gas emission reduction targets for San Diego and is required under the law to determine whether the Sustainable Communities Strategy will meet those targets. ARB set San Diego’s GHG reduction requirements at 7% per capita reduction by 2020 and 13% per capita reduction by 2035. “The San Diego SCS would achieve double the 2020 target and just meet the target in 2035,” writes ARB. Although, this is technically allowable under the law, it is not within the spirit of SB 375, which is meant to achieve progressively greater reductions in per capita GHG emissions over time. SANDAG attributes the “backsliding” to “a slow economic

Following closely on the heels of San Diego, the Southern California Association of Governments (SCAG) adopted its preferred alternative at the beginning of November and will release its own draft RTP/SCS at the beginning of December. The release of the draft plan will kick off a 45-day public comment period. SCAG will adopt the final plan by April 5, 2012. According to SCAG executive director Hasan Ikhrata, the preferred alternative will achieve “an 8-10% reduction in per capita emissions by 2020 and a 16-18% reduction by 2035.” At this point, public transit and housing advocates seem to generally support the preferred alternative. Move LA, a non-profit that advocates for active and public transit, called the November 3rd meeting a “lovefest at SCAG,” because there was so much support for the plan. “We believe the plan is a good one that helps makes the region truly transit-oriented, encourages more sustainable land use, and broadens the sources of revenue for regional transportation investments,” writes Move LA. Transit advocates are already working to have SCAG include more funding and investment in active transit in the plan. “More than 20% of all trips in the region are made by bicycle or on foot, yet, even with the new funding in this plan, the region still only spends 1.3% of its transportation dollars to make those trips easier and safer. We don’t think that’s enough,” writes Amanda Eakan, NRDC.

Photo: Wikimediacommons ©Basil D. Soufi

“Lovefest” for Southern California’s Draft RTP

The draft RTP/SCS includes plans to: • Build out the Measure R investment in 12 new rail lines in LA County, upgrade Metrolink and bus rapid transit service across the region, build planned Metrolink and BRT lines, expand the regional bus fleet and service, and build Phase 1 of the highspeed rail corridor; • Triple funding for bike and pedestrian projects; • Emphasize the development of housing and jobs in downtowns and near transit, and include negotiated agreements with 50 cities to either increase or decrease growth depending on the availability of transit and other infrastructure; and • Explore new revenue sources including pricing strategies and a VMT fee, an increase in the gas tax, and adoption of additional sales taxes.

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Highlights of San Diego’s 2050 RTP/SCS: • Preserves more than half of San Diego’s land as open space, parkland and habitat • Provides 156 new miles of trolley service • New trolley tunnel in downtown San Diego • Expands and speeds up COASTER service in the North Coast Corridor • More than doubles transit service miles, increased transit frequency in key corridors • 130 miles of managed lanes to facilitate carpools, vanpools, and premium bus service • $2.7 billion for regional and local bicycle and pedestrian projects and programs • Creates new carpool and telework incentive programs to reduce solo driving • Provides housing to meet projected population growth in San Diego County • 84 percent of new housing units built in San Diego County will be multifamily • Nearly three-quarters of multifamily housing will be built on redevelopment or infill sites • Homes and jobs within one-half of a mile of transit nearly doubles

recovery combined with early investments in public transportation including mid-coast light rail, I-5 bus rapid transit, and other transit projects,” writes ARB. We “never once imagined that a region would be considered to have met its targets if the GHG reductions were temporary and eroded over time,” commented NRDC staff member Amanda Eaken. NRDC was a co-sponsor and drafter of SB 375. In response, SANDAG has promised to “address and reverse the backsliding,” in subsequent plans, commented SANDAG Boardmember Lesa Heebner. An opportunity it will have with the next Regional Comprehensive Plan and subsequent Regional Transportation Plans.

Accommodating a Growing Population In addition to transportation planning, SB 375 requires the Sustainable Communities Strategy to set out how the region will accommodate a growing population, in terms of housing, jobs and transportation, while maintaining greenhouse gas reductions.

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In the next 40 years, San Diego will have an additional 1.2 million residents. The SCS land use pattern accommodates 79 percent of all housing and 86 percent of all jobs within urban areas, called the “Urban Transit Study Area” where the greatest investments in public transit are being made. The SCS land use pattern also protects and preserves about 1.3 million acres of land, more than half the region’s land area. These open space lands include habitat conservation areas, parks, steep slopes, floodplains, and wetlands. To meet affordable housing requirements, about 84 percent of the projected 388,000 new homes to be built by 2050 will be attached, multifamily units – with a planned capacity of more than 225,000 units at 30 or greater dwelling units per acre, and almost 75,000 units with a housing density of 20 to 29 dwelling units per acre. In addition, SANDAG forecasts that the number of homes located within one half-mile of public transit services will increase from 45 percent in 2008 to 64 percent in 2050. This increase is based on new transit services, and also on the fact that approximately 80 percent of new growth will be in urban areas. Affordable housing advocates say the plan does not go far enough, leaving low-income households without adequate access to public transit. “We should put transit which links housing to jobs first, not increase the ability for more people to drive more cars, while delaying transit. This is not the time for business as usual,” said Susan Tinsky, director of the San Diego Housing Federation. Implementation of the land use plan remains in the hands of local jurisdictions. To see the SCS implemented, SANDAG will provide information and funding assistance, including smart growth planning funding, active transportation funding and environmental mitigation funding.

A Conservative Plan Overall, SANDAG’s 2050 RTP is conservative; freeways will be widened, roads will be built and many San Diegans will continue to drive single-occupancy vehicles to work. “Many SB 375 watchers have opined that the law’s success will require a ‘marathon, not a sprint’ since the inertia of existing transportation and land use plans is so powerful. But as others have pointed out, the challenges faced by our communities and our planet are so great we simply cannot wait that long,” writes Climate Plan, a coalition of non-profits committed to promoting sustainable development in California. Fortunately, the 2050 RTP/SCS only marks the beginning of the race: State law requires that the regional transportation plan be updated every four years, SANDAG will begin revisions early next year. In fact, between now and 2050, the document will be updated 10 times, providing many opportunities for improvement. ❧

TRAN S P ORTATION & DE V E L O P MENT

Active Transit Compromised Federal transportation bill garners bipartisan support Lacks dedicated funding for bike and pedestrian programs By Megan Truxillo

dvocates of more federal spending to encourage bicycling and walking are vowing to fight provisions in the transportation reauthorization bill that does not include any dedicated funding for these purposes. Since the last federal transportation bill expired in 2009, Congress has been unable to gain bipartisan agreement on a new one, simply extending the outdated transportation policy. In the meantime, much-needed infrastructure improvements have been put off, with states unable to commit to large-scale construction projects without funding certainty. Accordingly, the Senate Environment and Public Works Committee’s approval of a new transportationspending plan is, in and of itself, cause to celebrate. Unfortunately, to gain bipartisan support, one of the main casualties in the bill is dedicated funding for bike and pedestrian infrastructure. Despite this, transportation advocates remain cautiously optimistic. “The bipartisan passage of the MAP-21 bill in the Senate EPW Committee this morning provides a significant opportunity to move forward on a long overdue authorization of federal transportation policy with full funding to ensure we invest in America’s infrastructure. Key reforms in the bill would place a stronger emphasis on repairing and rebuilding our roads and bridges, while instituting performance measures that will help hold agencies accountable for the maintenance and operations of our transportation net-

work,” said Transportation for America Director James Corless. The bill, titled “Moving Ahead for Progress in the 21st Century” (MAP-21), streamlines the existing transportation programs into five program areas. Another major improvement is the elimination of earmarks -- the last bill had about 2,000. Historically, transportation bills have included a number of wasteful earmarks, like the famous “bridge to nowhere,” a dedication of $233 million to build a bridge to an Alaskan island with 50 inhabitants. As part of the streamlining, three key bike/pedestrian programs are re-categorized under one main program, the Congestion Mitigation and Air Quality Program (CMAQ). The programs will continue to exist as “eligible uses” for an $833 million subset of that program. Importantly, however, the funding does not have to be used for those programs. Instead, the money could be diverted to other “eligible uses,” including new road construction if it “enhances connectivity and includes public transportation, pedestrian walkways or bicycle infrastructure.” Further, another provision allows states to opt out entirely from spending on bike/pedestrian infrastructure and divert the money to other CMAQ projects. Essentially, now bike and pedestrian projects will have to compete for very limited funds with other eligible CMAQ projects. The weakening of the bike/pedestrian programs was a casualty of garnering bipartisan support for the bill.

The Senate Committee chair Sen. Barbara Boxer (D-CA) reassured active transit advocates this summer that bike and pedestrian programs would remain in the bill, but her counterpart on the committee, Sen. James Inhofe (R-OK), was opposed to dedicated bike and pedestrian funding. The compromise – the programs remain but have no dedicated funds. The lack of dedicated funding is causing alarm among active transit supporters who fear, with a limited budget, active transportation programs will be the first to go. “While it is true that basic eligibility for federal transportation funds is important,” writes Bicycle Transportation Alliance, “all the evidence of the past 20 years and beyond suggests that mere eligibility is totally insufficient: most states will simply stop spending any of their Federal transportation funds on anything related to bicycling and walking.” Sierra Club’s Washington representative, Jesse Prentice-Dunn, said the bill “does not go far enough to break our addiction to oil.” “At a time when we are sending nearly one billion dollars overseas each day to pay for oil, it is critical that we give Americans transportation options that free them from the gas pump,” he added. Addressing the compromise, Sen. Boxer responded, “the bill before us is completely bipartisan; therefore, no one is going to think it’s perfect.” But transit activists remain optimistic that they can strengthen the investment —continued on page 40

november/december 2011 • Sustainable Communities

Agrarian Urbanism: “Food not as a means of making a living, but as a basis for making a life” By Andrés Duany

A Former Skeptic I was among the most skeptical: Agriculture as a lifestyle choice? You cannot be serious! I belong to the Seaside-Pienza Institute, an organization dedicated to local agriculture in Italy. Part of the research involves studying at great rural restaurants and we have enjoyed many wonderful meals lasting several hours. It became my habit to leave the table between courses and walk out into the piazza where I would sometimes come across the people who grew what we were eating. They were physically strong, of course, but they were also rough, with coarse skin and stiff limbs. Men and women both looked years beyond their age. Growing food was obviously very hard work. My somewhat disruptive theme at the Institute became that tourism was a blessing to such country people, because any farmer, given the choice, would gladly trade for another occupation. The lifestyle of the chambermaid and the waiter was much better than that of a farmer. I thought it was absurd of my colleagues at the Institute to think otherwise. … As further evidence of my skepticism I disclose that for years I had on my bookshelves no less than three unread copies of Michael Pollan’s The Omnivore’s Dilemma. They were gifts from friends who proposed a connection between what I do as a town planner and Pollan’s description of growing food. But they remained on the shelf until one of these friends absolutely insisted that I get down to reading it. Pollan’s compelling book forced a first opening of the mind. Although I was interested, I could not yet see a connection with the practice of New Urbanism. I remembered those Italian farmers and insisted that tending food was just not credible as a real estate amenity.

Sustainable Communities • November/december 2011

Sometime thereafter, the Vancouver developer Sean Hodgins retained my urban planning firm to design an “agricultural community.” When we began the process, in a barn on the farmland site, I was my usual pragmatic self and still skeptical. But gradually, under the tutelage of experts, including the master farmer Michael Ableman, I became truly involved in developing an agricultural urbanism. That was in 2008. Since then, my colleagues at DPZ have continued refining what became the plan for Southlands [a DPZ project in British Columbia, Canada], which has evolved into what I now understand to be “Agrarian Urbanism”—a concept that involves food not as a means of making a living, but as a basis for making a life. Hence the change in terminology: rather than “agricultural,” which is concerned with the technical aspects of growing food, the term “agrarian” emphasizes the society involved with all aspects of food. Agrarian Urbanism is not for everyone—but it is one of the more beneficial methods to develop and dwell on the land. The thesis of this book is that if the food-growing machine which is the traditional village were reorganized to minimize those hardships that I observed in Italy, it could be viable again; and that because of its mitigating effect on climate change, a neo-agrarian way of life should be made available to as many as possible, for ethical reasons no less than practical ones.

All images are courtesy DPZ.

▲ The plan for Goodbee, a DPZ project in Louisiana, proposes a pervasive pattern of squares that can be dedicated to allotment gardens. The overlapping urban blocks have turned lots at their ends--a layout which allows every dwelling to directly face a square. The Louisiana land is very low and flat and the inwardly sloping squares provide retention at the bottom, which can then be used for irrigation or released by pipes into the adjacent bayou. Image: Rendering for Goodbee Square, Louisiana.

As Michael Pollan argues, our food production must change; and as Leon Krier argues, so must our sprawling communities. Agrarian Urbanism addresses these two great concerns simultaneously. We cannot overcome the machineenabled efficiency of agribusiness unless we enable more hands to tend food. This will happen only if we introduce the agrarian community as a model within modern development practice. To make a difference at the scale required to mitigate climate change will require engagement with conventional real estate operations—which is the way most places get built. And so this book is directed primarily to 21st-century developers, with apologies to those who will doubtless shudder at its periodic commercial excursions. …

Four Related Models One important task has been to establish a vocabulary shared across the many disciplines that participate in creating the human habitat. Without a lexicon, it would be impossible

to work efficiently. Thus, we begin by making distinctions. Agricultural Retention refers to an array of techniques deployed to save existing farmland. This is of first importance. It is also exceedingly difficult, as Agricultural Retention operates at the regional and the macroeconomic scale, where planners have historically had little effect. In the United States too few farmland trusts are currently in existence, although there are stellar ones such as those in Louisville, Kentucky, and Lancaster County, Pennsylvania. In Great Britain the “greenbelts” are very much in evidence, having successfully been used to retain farmland for more than a century. … Urban Agriculture refers to cultivation within existing cities and suburbs, sometimes using space that is underutilized as a consequence of depopulation. Urban Agriculture is usually a secondary activity for people who are concerned primarily with other economic pursuits. The format includes community gardens and even small farms overlaid onto vacant blocks. Where there is no surplus land, gardens may be installed in private yards or on rooftops. (New York City is calculated to

november/december 2011 • Sustainable Communities

14,000 acres of unused rooftops!) The food produced >> have is supported by distribution and processing systems such as farmers’ markets, community kitchens, food cooperatives and contracted restaurants. While Urban Agriculture initiatives have recently become associated with distressed communities like New Orleans and Detroit, even the most economically successful cities foster allotment gardens as a public good irrespective of land value, as in Boston and San Francisco. Agricultural Urbanism refers to settlements equipped with a working farm. The agriculture is economically associated with the communities’ residents and businesses, but it is not physically or socially integrated. Anyone may visit, volunteer, and learn from the farm, but few of the residents participate in the productive activities. There are several modern developments that have implemented this model: the ancestor is Village Homes in Davis, then came Prairie Crossing outside of Chicago, and, more recently, Serenbe near Atlanta, New Town St. Charles near St. Louis, and Hampstead near Montgomery. Their management protocol is a version of Community Supported Agriculture (C.S.A.). … Agrarian Urbanism refers to settlements where the society is involved with food in all its aspects: organizing, growing, processing, distributing, cooking and eating it. A distinction of Agricultural Urbanism is that the physical pattern of the settlement supports the workings of an intentional agrarian society. Rather than the simpleminded prophylaxis of urban boundaries that perversely assure an economically and socially sterile hinterland, Agrarian Urbanism is a complex pattern that transforms lawn-mowing, food-importing suburbanites into settlers whose hands, minds, surplus time and discretionary entertainment budgets are available for food production and its local consumption. …

“A tomato plant may be a vector of conversation no less effective than a baby in a pram or a cute dog on a leash.”

Instead of agribusiness, with its centralized machine operations, many willing hands would become available to work in all kinds of productive formats, from the tractor farm to the window box. To be sure, the many downsides of rural life must be mitigated by appropriate planning and organization. Agrarian Urbanism assimilates successful precedents, but

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it is not a restoration of tradition for its own sake. It is a typically pragmatic New Urbanist construct—a combination of that which works best in the long run. It proposes an evolution of the village—one that is agriculturally productive even if largely inhabited by part-timers overqualified or underqualified (depending on point of view) to farm. …

Graft: Agrarian Urbanism If Neighborhoods and Urban Villages have environmental, economic, and social advantages, it follows that they should become the basis of Agrarian Urbanism. There are, however, flaws that have become apparent with the stresses confronting the 21st century. These can be addressed through Agrarian Urbanism. A major problem is the assumption that social interaction would be based around shopping as leisure occupation. This is so pervasive that it has never been seriously questioned. Planners continued to rely on retail as a magnet, even if located in the less relentlessly commercial environments of a Main Street and Town Square. But, as the primacy of shopping necessarily wanes, Agrarian activity can provide a surrogate urban condenser. Social interaction could be comprehensively associated to food—as a culture rather than the mere purchase of it among many other goods. Developments structured on useful and productive activity that support the common health and wealth is a compelling vision (and with apologies to the Marxists among us), not least for the marketing of real estate. These are the basics: Agrarian sociability is based on the organizing, growing, processing, exchanging, cooking, and eating of food—much of it taking place around a Market Square. In a post-consumer age, these squares would provide the indispensable “third places” for social interaction that supplement those of home and workplace. Third places encourage tarrying in public without the constant pressure to purchase things. The multifunctional agrarian Market Square provides an array of third places perhaps more compelling than the conventional pubs, cafes and clubs that, to be sure, should continue to exist in parallel. Certain types of street frontages support social activity. One of the premises of the New Urbanism—based on Jane Jacobs’ observation—is that strangers socialize informally when hanging out on stoops and porches, their leisurely presence signaling they are “available to say hello.” But the provision of such frontages in practice has proven to be less effective than originally envisioned. As it happens, many people are no longer comfortable publicly displaying themselves in domestic leisure. However, they don’t seem to mind being seen in the act or the pretense of working—such as standing in the front

As with ecotones in nature, the most diverse and productive sector of an agrarian community is the interface between the social and the agricultural. Rather than a tight linear urban boundary, which focuses on protecting the open space prophylactically, the urban design should “corrugate” this edge, increasing the interchange. Image: Rendering of Southlands, British Columbia, Canada.

garden, leaning on a hoe contemplating vegetables. … A tomato plant may be a vector of conversation no less effective than a baby in a pram or a cute dog on a leash. … In conventional suburbia walking and bicycling are considered only as occasional recreation along paths and trails. New Urbanism is more operational, as it is conceives walking and bicycling as mandatory and utilitarian—the way to reach daily necessities like shops, schools, jobs, and transit. Agrarian activity is a further extension of this, catalyzed by the commitment to livestock, vegetables, fruits, and herbs. … Hand-tended crops lead to a less toxic environment because the numerous available hands take the place of many carbon-based industrial operations and because weeding replaces weedkillers. And any food produced and consumed locally replaces that which would have been shipped, flown and

“A major problem [of current town planning] is the assumption that social interaction would be based around shopping as leisure occupation, … but as the primacy of shopping necessarily wanes, Agrarian activity can provide a surrogate urban condenser.”

About the Author Andres Duany is an architect whose work focuses on the planning of communities. He and his wife, Elizabeth Plater-Zyberk, founded their practice in 1980, at the time of their design of Seaside, which began an ongoing debate on the alternatives to suburban sprawl. Since then, DPZ, their planning practice, has completed well over two hundred downtown and new town plans. They have particular expertise in writing codes. Andres and Elizabeth were founding members of the Congress for the New Urbanism.

trucked into the community. There are also the direct health benefits of eating the fresh, wholesome foods that result. The produce, being hand-tended locally, can be of a kind more delicate and valuable than the tough, travel-resistant foodstuff. Michael Ableman has demonstrated that such specialization can be economically viable, covering the cost of the supporting labor, management and machinery. And remember: the financial model of Agrarian Urbanism also includes the subsidy that is transferred from the debit column of “landscape maintenance.” Excerpted from a new book by Andrés Duany and DPZ, Garden Cities: The Theory & Practice of Agrarian Urbanism (The Prince’s Foundation for the Built Environment 2011). Editor’s note: (…) denotes deleted content, footnotes have been omitted. ❧

november/december 2011 • Sustainable Communities

Affordable Housing

Tax Credit Investment R

Economics improve, politics worsen as LIHTC program turns 25; Developers expect continued intense competition, subsidy cuts By Andre F. Shashaty

fter 25 years, the federal low-income housing tax credit (LIHTC) program looks like a program half its age. It survived recent economic upheavals with remarkable resilience, largely because of the flexibility built into the program and the ability of federal and state policymakers to work together to get through some rough patches. There are more economic challenges ahead, but they pale compared to the political risks facing the program in these turbulent times. The tax credit has enjoyed remarkable bipartisan support since it was enacted in 1986, but far fewer members of Congress are willing to cross the aisle now. There are also many new members of the House of Representatives who

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are not familiar with the program or its record of success. With deficit reduction at the top of the Congressional priority list, and the so-called “super committee” about to unveil its budget and tax plans, the program could be weakened or even killed by changes in the tax code. “Every time you have a groundbreaking or a ribbon cutting for a new tax credit project, be sure you tell your members of Congress and invite them,” David Gasson, director of communications for Boston Capital, urged developers attending AHF LIVE: the Tax Credit Developers Summit, an annual conference. Developers have won strong political support by publicizing

For tax credit developers trying

Roars Back

to prepare for 2012, the best advice is to look for ways to cut costs, watch for new guidance on cost management from state agencies, and look for development opportunities in cities with the political will and financial resources to help make your project work.

could come by way of changes in corporate tax rates that would impair the value of the credit. The program enjoys a very good reputation in Congress, at least with those who have been around long enough to look at it. But the political mood in Washington is at least as volatile as the stock market, so uncertainty is the only certainty until after the 2012 Congressional and Presidential elections. Budget and tax proposals that could hurt the program could come up with little or no warning, said Garth Rieman, director of housing advocacy and strategic initiatives at the National Council of State Housing Agencies (NCSHA). “We have to be vigilant,” he added.

Strong competition resumes ▲ The award-winning Pradera Apartment Homes in Anaheim, Calif., developed by Related California, was financed with tax credits. It consists of 146 apartments and a two story subterranean parking garage. It has a full-scale photovoltaic energy system. Equity investment came from Union Bank and US Bank. Debt financing came from CCRC and Union Bank. Construction financing was provided by Wells Fargo and Union Bank.

the high-quality projects they build with tax credits, and must redouble their efforts as Washington gets serious about major deficit reduction, Gasson said. The worst-case scenario for program users is a complete overhaul of the tax code that does away with targeted tax credits for housing as well as things like renewable energy or corporate research and development. A more indirect attack

For developers, the biggest challenge after making sure the program survives is winning the competition for credits. It appears that the surest way to do that in most states next year will be to reduce project costs (while still meeting various selection preferences) and finding state and local subsidies. NCSHA is working on new guidance on how states should factor cost reduction into allocation plans. Rieman acknowledged that there is tension between the desire to reduce costs and the recent layering on of more and more requirements that go far beyond the provision of low-cost shelter. State agencies have increasingly given priority for credits to developments that have social services, target hard-to-serve populations and that have desirable features like high-quality design, larger apartments and infill locations. The trade-off is that the more they ask for, the higher the cost of the projects that win the competition for credits, and the greater the risk of political attacks on the program for supporting projects with costs as high as $400,000 per unit in some states. november/december 2011 • Sustainable Communities

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Rieman said there is “strong support to make sure the program is used wisely and costs are controlled,” recognizing the political risk of high costs. But he added, “there is also deep concern that the program be used to deal with other issues. It is a very difficult balance.” NCSHA’s goal is to give state agencies guidance on how to weigh those competing goals. National standards from NCSHA have called for states to have standards for costs for some time, but the costcontrol effort is becoming more serious now, and more sophisticated. NCSHA is working on changes to its guidance on how to control costs this fall. But one thing is already clear: the previous reliance on Federal Housing Administration multifamily mortgage program cost standards is now considered less useful. In Washington, the state agency has stopped using FHA data. It took the very logical step of relying on data gathered over 25 years on the projects it has financed for benchmarking. It recognized that it would be too simple to just set a per unit or per square foot cost limit. Instead, it is using “an iterative process,” said Steve Walker, Washington State Housing Finance Commission. It is setting limits based on its project

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Sustainable Communities • November/december 2011

database, but allowing waivers if projects exceed the limits for good reasons. “We think of it as a ‘pause button,’” he said. “If you are outside the sweet spot of what we are seeing, we will ask for more information and consider whether to grant a waiver.” The agency is keeping track of how its own policy priorities add costs, as well as how local jurisdictions add costs by imposing requirements of their own.

Finding local money The other major factor in 2012 allocations will be how much state and local subsidy money projects can find. Many agencies give extra points to projects that have significant amounts of state and local subsidy, including direct assistance

FACTS AT A GLANCE Housing tax credit creates 2 million homes The tax credit program is the only significant federal subsidy for construction and rehabilitation of apartments affordable to low-income households. Since it was created in 1986, the program has financed more than two million affordable apartments, according to the National Association of Home Builders. Each year, the Internal Revenue Service allocates housing tax credits to designated state agencies, which in turn award the credits to developers of qualified projects. Each state is limited to a total annual housing tax credit allocation of $2.15 per resident, with only the first year of the 10 years of tax credits counting against the allocation. States allocate housing tax credits through a competitive process spelled out in a Qualified Allocation Plan (QAP). Provided the property maintains compliance with the program requirements, including the restriction on occupancy of tax credit units to households earning no more than 60% of the area median, investors receive a dollar-for-dollar credit against their federal tax liability each year over a period of 10 years. Federal law requires that the allocation plan give priority to projects that (a) serve the lowest income families; and (b) are structured to remain affordable for the longest period of time. Federal law also requires that 10 percent of each state’s annual housing tax credit allocation be set aside for projects owned by nonprofit organizations. Beyond that, states have flexibility to run the program as they see fit.

to a project as well as public infrastructure improvements. Developers know the federal focus on deficit reduction will probably bring more cuts to HOME and Community Development Block Grant programs – critical sources of soft secondary financing needed to bring rents down and meet tax credit allocating agency requirements for additional sources of funds. There are going to be fewer soft dollars available,” said Bill Witte, president of Related California. “Already we have seen in California that a number of cities are redlined out of affordable housing because they don’t have sufficient soft money to participate.” ▲ With financing from KeyBank, the Seattle Housing Authority developed what is The allocation process in California being called the greenest affordable housing in the state of Washington. Lake City results in many projects getting close Court, a new 86-unit complex, has on-site organic gardens, water conservation systems, non-toxic materials throughout, an onsite playground and relaxation area, to the same score on the point-based garage parking for 90 vehicles – and many, many bicycles. It’s in the middle of a ranking system. To break such ties, the walkable urban neighborhood, boasts a streetscape built according to neighborhood state agency favors the project that has stakeholders’ preferences and has 12 bus lines within a block. It has 4,500 squaremore local money, and that costs less. feet of photovoltaic panels and 1,500 square-feet of solar hot water heater panels. “The ideal proposal for getting points is one that’s very cost efficient, a total of $57 million in requests. The city only had $6 million that costs less than it otherwise might, but also has lots of in tax credit authority to allocate. For the Illinois state tax local money,” Witte said. credit, there were applications for $13 million, 2.5 times the Competition for the 9% tax credit was intense in some amount available. states in 2011. In Ohio, for example, the state agency received 109 applications and funded only 33 of them. The In most states, the ratio of applications to credits availstate agency expects about 100 applications in 2012 able was closer to two to one. In Indiana, for example, 25 as well. out of 49 applications were funded. In Washington state, the In Chicago, there were 70 applications for 3,600 units with agency is also funding about 50 percent of the applications

Tax credit projects maintain high occupancy, study says Despite the challenges in the housing market, there has been no material deterioration in the performance of apartment properties financed with the low-income housing tax credit. That’s one conclusion from a study by the Reznick Group of the vacancy rates, debt coverage, and net cash flow of 16,000 tax credit properties from 2008 to 2012. The report found Housing Credit property occupancy rates averaged approximately 96 percent during the years studied, reaching a high of 96.6 percent in 2010. The report also found that 0.62 percent of the 16,399 properties surveyed were foreclosed upon, comparing very favorably with the foreclosure rate of market-

rate multifamily properties and other real estate asset groups. Nearly every active Housing Credit syndicator and a number of the largest investors in the nation provided data for the study on investments made since 1987. According to the study’s authors, the data gathered represents approximately 60 to 70 percent of the Housing Credit development inventory, representing approximately $60 billion in Housing Credit net equity investments and $69 billion in Housing Credits. The report is titled The Low-Income Housing Tax Credit Program at Year 25: A Current Look at its Performance. It is available for download here http://www.reznickgroup. com/industries/real-estate/affordable-housing.

november/december 2011 • Sustainable Communities

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www.bellwethercap.com

Vision. Knowledge. People. ▲ Hope Manor Apartments in Chicago offers 50 apartments to veterans. National Equity Fund, Inc., contributed $8.8 million toward the $15.2 million project through the syndication of low-income housing tax credits, and Volunteers of America Illinois is the sponsor. To date, NEF and its parent, the Local Initiatives Support Coalition (LISC) have invested $1.2 billion in supportive housing projects. A new goal is to focus exclusively on the needs of vets.

With a portfolio exceeding $4.0 billion, we are a full-service commercial real estate firm offering the most knowledgeable professionals in the marketplace and the deepest pool of lending relationships within our footprint. We have extensive experience and expertise in combining historic tax credits with FHA Financing and using New Market Tax Credits to enhance the benefit to investors while also helping to create communities that are more environmentally, economically and socially sustainable.

Vision. Knowledge. People. For more inFormation, contact:

Barbara Sullivan, Senior Vice President, Pittsburgh 412-566-1313 | bsullivan@bellwethercap.com J. Ross Halloran, Jr., Senior Vice President, Cleveland 216-820-4528 | rhalloran@bellwethercap.com

it receives. Wisconsin also reported a ratio of two to one. In 2011, developers saw renewed interest in the program from private investors, completing a recovery in the investment market after a severe slump in 2009. The current healthy demand from investors could not come at a better time, since it means that many projects have more equity capital than anticipated, helping compensate for reduction in soft secondary financing. The question on everyone’s mind is how long the resurgent investor interest will last. The year-end season for deal closings began as this issue of Sustainable Communities went to press. For many multi-investor funds, the exact terms of the project acquisitions happening now will determine the exact yields that investors will get, and that in turn will affect how they view the program for potential new investments in 2012. The recovery in prices paid for tax credit projects was so robust, that market observers think it may have swung too far, raising the prospect of price reductions next year. The core of the market consists of banks governed by the Community Reinvestment Act (CRA). Investing in tax credit projects is a good way to meet their CRA obligations to invest in low-income parts of their service areas, so they often compete to pay top dollar for projects in urban areas where there are a number of banks doing retail business. This drives up the prices paid for projects in those areas. At the same time, little of the bank’s capital goes to areas where they do not need credits under CRA investing rules. Those areas are only served by “economic investors,” that is, companies that invest to get an appealing return as opposed to satisfying a regulatory requirement. These kinds of investors include insurance companies and even some high-tech —continued on page 40

Sustainable Communities • November/december 2011

Affordable Housing

Witte takes on California’s tax credit development challenges I

n the competition for tax Bill Witte credits in 2011, Related Calipresident fornia came out ahead of most of Related applicants, winning credit California. allocations for a total of six projects. But company president Bill Witte knows it will be harder to put together successful proposals in 2012. Like other states, California faces reductions in federal funding for the HOME and Photo courtesy related california. Community Development Block Grant programs. These federal sources are critical sources of soft secondary financing needed to bring rents down and meet tax credit allocating agency requirements for additional sources of funds. California’s problem is compounded by the impending loss of subsidies from local redevelopment agencies. Gov. Jerry Brown and the state legislature have acted to strip these agencies of much of the property tax revenue they have collected, some of which is set aside by law for affordable housing. The fate of the agencies was in the hands of the California Supreme Court at press time, so it was unclear how the battle over these funding sources would be resolved. However, developers are preparing for substantial or complete elimination of redevelopment agency housing funds in many or all cities. The loss of redevelopment agency subsidies will hurt California’s tax credit program, Witte said. The California Tax

California Tax Credit Allocations 2012 Mostly minor changes are expected in California’s Qualified Allocation Plan for 2012. The only major change relates to cost controls. The state’s tax credit allocation committee may evaluate if actual basis for a project exceeds adjusted limits by a specific percentage. If it does, then the project would be treated as an “exception.” The sponsor would then have to explain the reason for the higher cost to the committee. The local government where the project is located will also have to address the committee. Application deadlines for 2012 are March 22 and July 11, 2012.

Credit Allocation Committee received 175 applications in its two rounds this year and approved 101. Sixty-two percent of the projects receiving credits in 2011 had some degree of financial support from their local redevelopment agency. There were far fewer submissions in the second application round than in the first round, Witte said. “New projects have been frozen by lack of redevelopment funds,” he stated. Witte is hopeful that some redevelopment money for housing will still be available. But even if it is, he is concerned about the reductions in funding for CDBG, HOME and other programs. “There are going to be fewer soft dollars available,” he said. The reductions in other sources of subsidy is very bad news for cities that do not have other funds to contribute to local projects. The allocation process in California results in many projects getting close to the same score. To break such ties, the state agency favors the projects that have more local money, among other things. The system favors projects in cities that can “throw money at a project.” But that will get harder if redevelopment money is cut, said Witte. He said some cities have already been effectively prevented from winning new tax credit projects because they don’t have sufficient soft money to help projects win the competition for tax credit allocations. Generally smaller towns are affected more, he said. On a more positive note, tax credit projects are raising healthy amounts of equity capital from investors. Related California raises equity in its projects from direct investors, such as Union Bank, US Bank, JP Morgan, and Wells Fargo. “There is a huge demand for tax credit investments in major market areas because of the Community Reinvestment Act,” said Witte. While Related was successful in the competition for 9% credits, it also participates in the state’s private activity taxexempt bond program. Under that program, projects that receive bond allocations also receive 4% tax credits. As Witte pointed out, the state’s tax-exempt bond cap far exceeds the demand for bonds with 4% tax credits, so it offers developers more certainty. The challenge is to find enough soft secondary financing to make the numbers work. ❧

november/december 2011 • Sustainable Communities

Affordable Housing

Clancy celebrates 40 years of leadership in housing, Leaves legacy of promoting mixed-income projects By Alexander Parker Patrick Clancy became interested in the plight of the urban poor while enrolled at the College of the Holy Cross in Worcester, Mass., and began volunteering at a settlement house there. This fall, he retired as CEO of The Community Builders (TCB), a nonprofit housing development organization that takes on very large and complex projects in 14 states. In recent years, it has been developing or rehabbing about 1,000 apartments per year. One of the many TCB projects was the mid-1980s acquisition and rehabilitation of an apartment building called Plumley Village in Worcester, which just happened to have been built on the site of the settlement house where Clancy had once volunteered. As has become its trademark under Clancy, TCB did not con▲ Patrick Clancy has spoken at dozens of grand openings for affordable housing projects as sider its job done when it comCEO of The Community Builders. pleted the rehab. Some 25 years after acquiring the property, TCB is more determined than ever to help the tenants there imthe staying power to keep going back to various government prove their lives, thanks to Clancy’s leadership. agencies to try to win the necessary funding. “You’ve got to Clancy cites Plumley Village as a turning point that have staying power to get in line 3 or 4 times to get a project helped fix his determination to focus TCB’s work on larger funded,” he said. developments, where TCB could contribute to the revitalizaTCB is also opportunistic in finding new pots of money. tion of entire neighborhoods, and where it could provide For example, while HOPE VI is gone, the federal government services to help families be more successful. provided new funding in response to the negative effect of TCB not only developed such projects, it argued in Washforeclosures on urban areas. TCB saw the opportunity and ington for a new federal program to redevelop older public won substantial funding under the Neighborhood Stabilization housing projects with low- and mid-rise mixed-income properProgram (NSP) recently. ties that fit into the pre-existing neighborhoods. The Clinton For a TCB project in East Chicago, city and regional auAdministration launched the HOPE VI program, and before thorities are helping with revenue from sale of a toll road the program ended, TCB had done 15 public housing redeveland from casino taxes. opment projects. For the kind of large-scale projects TCB likes to tackle, it The challenge now is to keep doing large projects when federal resources of all kinds are shrinking or disappearing. also takes “a commitment to remain focused on the process Clancy said such deals can still be done if a developer has of change in an urban neighborhood and riding it out through

Sustainable Communities • November/december 2011

In his own words:

Pat Clancy reflects on 40 years in housing & community development What are the biggest changes in how affordable housing gets developed in the 40 years you have been with TCB? The biggest change is that there is way too much caution, too much drag in the system, bureaucracy, defensive posturing. Everything takes enormous amounts of time. One of the first deals I did back in 1971 faced a court challenge, but while the case was pending, HUD insured the construction draw on our mortgage and we were able to proceed even before we won the case. Today, if there were a court challenge, no one would go ahead. Everything would grind to a halt. We would have to redo everything and start over after the court’s ruling. The immediacy of the need we’re trying to serve takes second place to people covering their rears and managing their risk. It makes the work more difficult time consuming and more expensive. Nonprofit housing sponsors have emerged as very major players. How do you see their future, as a group? There are a huge number of small nonprofits that are neighborhood based, and the strength of that model depends on them being able to be multi-faceted. It doesn’t work to be focused on a single neighborhood and be a major housing developer. What does work is be a membership organization that does everything from crime watch to buyers club, to picking up distressed homes, in short, to have a mix of activities. The larger housing efforts in the nonprofit sector are falling increasingly to organizations that are city wide, or regional like TCB. How would you summarize the strategic vision you pursued at TCB? We have tried to focus on large-scale development, because our strategic vision is grounded in understanding that the best residential development is that which is excellent on its own terms but also contributes to the success of families that live there and contributes to the quality of life in the neighborhood. This is more profoundly true the larger the scale of project, since larger projects have more impact and can support the cost of more amenities and services. What is your outlook on the likelihood of more

attacks on housing programs as part of the federal deficit reduction effort? It’s a sobering environment for everyone, us included. But I’m the world’s greatest optimist. It’s hard for me to believe that the business interests that control the federal purse strings will cut off their nose to spite their face by cutting spending while in a recession. Any economist with half a brain will tell you if we cut federal expenditures right now, it’s catastrophic. Until the economy strengthens, I doubt we will see the full measure of the kinds of draconian cuts people talk about. TCB has many advantages in getting deals done, but what’s your advice for other, smaller developers? We can afford to line up two or three times to win funding competitions for a large project. We are large enough to go to cities and states where there are resources available. For smaller groups, the most critical thing is to not take on larger or more resource-needy developments than you have the staying power to see through to conclusion. If need to get a deal done in a year, don’t take on a deal that you have to wait in line 3 years to do. You’ll die on the vine if you don’t calibrate how long deal will take you. What is your biggest success at TCB? To have developed an extraordinarily talented staff of committed professionals and a sustainable capacity that can continue to make a difference for families, urban neighborhoods, across a broad foot print, and can continue long into the future. What is your biggest disappointment or frustration? How hard it is to get the recognition of the value of the residential platform in supporting families and get cross functional resource commitments for social and employment programs at our properties. Supporting families in mixed-income residential environments is best anti poverty strategy the nation can have, but it’s been very frustrating to get the resources to do it. We’re finally achieving funding success now that we should have gotten to a decade ago.

>> november/december 2011 • Sustainable Communities

“In my 30+ years as a lawyer specializing in this field, I have middle-class households. “The mixed-income notion is what creativity, intellectual rigor and passion for affordable housmany urban neighborhoods were like 75 years ago, but today, it means working ing and community development. Pat always rose to the hard to recreate environments where dichallenge of reinventing both The Community Builders and verse people live together,” Clancy said. himself when necessary to accomplish his goals of creating He said TCB believes the mixed-income projects it has built are working well. But housing and building communities that worked for low and he acknowledges that there are stresses moderate income households.” in mixed income communities that must —Jonathan Klein be addressed by management. a partner at Klein Hornig LLP. Klein previously was general Under Clancy’s leadership, TCB has alcounsel and senior vice president at The Community Builders, ways made strong efforts to work with lower1988-2001 income tenants to help them advance and improve their lives. Many project owners offer some services to tenants, such as adult education or after-school the ebbs and flows of the market, until there’s a critical mass,” activities for kids. TCB went way beyond the norm when they said Clancy. That’s not a rhetorical statement after the real launched a practice called Ways and Means. estate recession of 2007-2009, a period when some complex The program is really more like personal financial planmixed-income projects crashed and burned. ning or life coaching than property management; It just Clancy may have done more than any other single housing happens to be delivered in a residential setting. It requires leader to promote developments that are planned to house TCB staff and tenants to work together to meet ambitious low-income people as well as middle-class and even upper

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Sustainable Communities • November/december 2011

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and measurable goals. It makes the financial success of residents the key success metric for managers at the four projects TCB calls “focus communities.” Key goals include doubling tenants’ earned income, and cutting the high school drop-out rate for young tenants by 50%. The main areas of focus are: • Financial coaching and access to financial products and asset building tools • Career development • Youth development The fourth element of Ways and Means is to build what TCB calls “social capital.” Clancy defines it as “neighbors connecting with neighbors to get things done or families getting value from each other and becoming part of each other’s success.” In a lot of urban settings, where new combinations of people live side by side, the social fabric is pretty thin, Clancy said. “If you maximize diversity, you have got to lay more of a common foundation. You have to build a spirit of community where people want to support each other. It’s a longterm investment,” he said. Born and raised in Green Bay, Wisc., Clancy has been a

leader in the affordable housing industry for over 40 years. He has been with The Community Builders since receiving his degree from Harvard Law School in 1971 and he has led the organization since 1976. What does Clancy plan to do after retirement? “I will take more time to enjoy life with my wife of 43 years and three grandchildren,” he said. He also plans to work with “young people who want to change the world” at Holy Cross. Finally, he is looking for an international engagement in community development and affordable housing. After Clancy retires, TCB will be lead by Bart Mitchell, chief operating officer, who joined TCB on July 1, 2010. Mitchell served as Deputy Development Advisor to the Mayor of Boston in the 1980s then worked at TCB for six years in the 1990s as a Director of Finance and project manager for select development projects. Since then, he has served as Chief Operating Officer of Beacon/Corcoran Jenison Partners developing HOPE VI communities in the Northeast and Mid-Atlantic regions and as President of Mitchell Properties LLC, a developer and owner of high quality residential and mixed-use real estate ventures in the Boston area. ❧

MILESTONES FOR A PIONEER

How TCB, Clancy remade neighborhoods, improved lives he South End section of Boston has come a long way since the 1960s, when deterioration and decay were serious problems. Now it is a vibrant area with a strong real estate market and some very high-end developments. But it also has a substantial variety of affordable housing, thanks to Pat Clancy and The Community Builders (TCB). The nonprofit development organization that Clancy has run for so many years had its roots in the South End. While it has expanded throughout the city and region, and recently ventured into other states, it has never forgotten its roots. It maintained a strong focus on providing social services for urban families and encouraging mixed-income communities since it was founded under another name in 1964. That’s not surprising, since it was an outgrowth of the settlement house movement. That movement had the goal of getting the rich and poor in society to live together and connect as part of an integrated community. Its main object was the establishment of “settlement houses” in poor urban areas, in which volunteer middle-class “settlement workers” would live, hoping to share knowledge and culture with, and alleviate the poverty of their low-income neighbors, according to Wikipedia.

City West – Cincinnati, OH

Photo: J. Miles Wolf

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1964, United South End Settlements (USES) recognized >> theInurgent need for quality affordable housing in the South

2010 - Present TCB receives $78.6 million in funding from the US Office of Housing and Urban Development (HUD) as part of the Neighborhood Stabilization Program (NSP2). TCB plans to quickly identify multifamily projects that meet the NSP2 funding criteria and aggressively redevelop the targeted multifamily properties. 2009 Morgan Woods, an affordable family rental community on the island of Martha’s Vineyard, is awarded the Urban Land Institute (ULI) J. Ronald Terwilliger Workforce Housing Models of Excellence Award. TCB completes Fairlawn Marshall

Photo: The Community Builders, Inc.

End. USES formed South End Community Development (SECD), later to be known as The Community Builders, to solve the neighborhood’s affordable housing needs. SECD began an innovative HUD-funded demonstration project that resulted in the renovation of 83 abandoned South End row-houses. Here is a more complete list of milestones for Clancy and TCB.

▲ Cascade Village – Akron, OH

Apartments, its first development in Washington, DC. 2007 TCB completes construction of the final phase of the New Brunswick HOPE VI Revitalization in New Brunswick, NJ. This marks the completion of TCB’s 10th HOPE VI development. 2006 The first phase of the Oakwood Shores HOPE VI development in Chicago’s Near South Side is completed.

Congratulations

Pat

on your retirement!

R www.redstoneco.com

Sustainable Communities • November/december 2011

2004 TCB’s Northeast Development office and newly-formed Preservation department renew Plumley Village’s Section 8 contract for another 20 years and complete a $33 million refinancing that allows for significant capital improvements. 2002 TCB begins the redevelopment of three distressed highrises in Pittsburgh’s East Liberty neighborhood. City funding, combined with creative restructuring of federal project-based subsidies, drives the revitalization on a scale comparable to a HOPE VI. 2001 TCB, developer of the Lincoln Court HOPE VI project in Cincinnati, is selected to replace the developer of the Laurel Homes HOPE VI project across the street. The combined site, named City West, involves over 900 units of residential and commercial development in 10 phases. 2000 The American Institute of Architects (AIA) awards its Urban Design Honor Award to Park DuValle in Louisville, TCB’s first HOPE VI project. TCB is also selected to participate in two high-

profile HOPE VI developments: East Downtown Revitalization in Durham and Broad Creek Renaissance in Norfolk, Virginia. 1997 University of Pennsylvania selects TCB as an advisor on a university-driven neighborhood revitalization in West Philadelphia. TCB’s revitalization strategy includes a business improvement district, retooling of faculty/staff home purchase incentives, and creation of a university-assisted public school. 1996 TCB adopts a new strategic plan that focuses on direct development activity, concentrating on large public and assisted housing projects, comprehensive neighborhood revitalization

“Pat has been instrumental in transforming blighted neighborhoods in inner cities from Chicago to Pittsburgh, Boston to Indianapolis. His creativity in financing, combining resources from the public and private sectors, together with high quality developments, has shown that mixed-income developments can work. Pat’s most impressive legacy is his selflessness — in all his work, he has doggedly put the communities he’s trying to serve first.” —John Zeiler, Hudson Housing

(CNR), and long-term ownership and management of properties developed and acquired. 1995 After helping the Boston Housing Authority receive the Orchard Gardens HOPE VI award, TCB assists in securing HOPE VI grants for public housing and neighborhood revitalizations in Louisville, Pittsburgh and Holyoke, Massachusetts. 1988 Tent City Corporation partners with TCB to complete Tent City, a landmark 269-unit mixed-income apartment complex in Boston. TCB buys Plumley Village, a 430-unit family complex in Worcester, Massachusetts, and institutes a broad range of human services. Greater Boston Community Development (GBCD) reorganizes as The Community Builders, Inc. (TCB). 1986 GBCD completes its second homeownership development in 1986, 18 row houses for low and moderate-income families in Boston’s Back of the Hill neighborhood. —continued on page 40

november/december 2011 • Sustainable Communities

Solar PV installations use creative financing to slash upfront costs, generate cash flow

ne of the nationâ&#x20AC;&#x2122;s leading owners

and operators of affordable housing has installed solar photovoltaic systems on existing buildings with a total of 2000 units using a combination of cutting edge financing tools that slashed upfront costs. McCormack Baron Salazar, based in St. Louis, has been building and managing transformational housing for 35 years, with over $2 billion in investments and 15,000 units of mixed income/affordable housing developed nationwide. To help it finance renewable energy installations, it founded Sunwheel Energy Partners.

Sunwheel is a turnkey solar provider that works on financing the project, designing and installing the solar power systems, and managing their operation. Through Sunwheel’s power purchase agreement (PPA) program, Sunwheel installs the solar modules and other equipment at a building at little or no upfront cost to the owner. Sunwheel is responsible for all operations and maintenance. The owner pays for the energy produced by the solar system at an agreed-upon rate that saves money over current utility rates. Sunwheel offers an option to ▲ King Louis Square in St. Louis. The 145 kW solar installation on 28 buildings will purchase the system both in the generate 174,350 kWh/year and offset 270,240 lbs of CO2/year. middle and at the end of the PPA term, typically 15 years. It can strucVirtual net metering is an innovative feature offered under ture projects through solar equipment leases as well. the California Solar Initiative’s Multifamily Affordable Solar U.S. Bank, one of the nation’s largest commercial banks, Housing (MASH) program that was used in several of the afjoined with McCormack Baron Salazar (MBS) to finance the fordable communities. With virtual net metering, the host can installation of solar-energy systems on 11 existing affordable elect to allocate some of the solar energy production to tenant multifamily housing communities in various locations throughunits, regardless of whether the units are physically connected out California. The financing structure used a combination of to the solar installation, thus, the “virtual” part of virtual net state rebates and federal tax credits under the new markets tax metering. Over 50% of power was given away free to tenants credit (NMTC) and investment tax credit (ITC) programs. at the sites where virtual net metering is permitted. The solar power generated by the solar panels lowers utilFour of the low-income housing tax credit communities ity costs in the affordable housing community and, in some located in Southern California in the Los Angeles Department cases, the benefits are shared with the tenants through reof Water and Power service area used solar equipment leases. duced utility bills. In these cases, the host site leased the solar installation from An affiliate of Sunwheel entered into solar agreements the Sunwheel affiliate at a predetermined price. The sites get with the host sites by which the affiliate would operate and credit on their energy bills from the utility, and the predetermanage the solar installation. “Due to differences in the lomined lease rates, being less than the estimated credit, allow cal utilities’ solar programs around the state, the Sunwheel the sites to save on overall energy bills. Using this approach, affiliate needed to be flexible and had to tailor the solar the communities in Los Angeles have been able to cover about agreements for the sites based on their location,” said Mi90 percent of the electricity used by their common areas. chael Steinbaum, Sunwheel’s Chief Operating Officer. In some areas, the host entered into a power purchase agreement. In other locations, they used a solar equipment Tax Credit Financing Structure lease. In all cases, the utilities provided a credit to the host site’s account based on the amount of power generated by the U.S. Bank joined with MBS’s affiliated community develsolar installation. opment entity, which used a portion of its NMTC allocation, For the affordable housing communities in Northern and and Sunwheel and its affiliated special purposes entities, Southern California served by Pacific Gas and Electric and which own and manage the solar systems. U.S. Bank used a Southern California Edison, a power purchase agreement was “twinned” tax credit financing structure, in which the NMTC used, in which the host site purchases the power generated at and ITC benefits ultimately flowed to the bank. an agreed-upon price from the Sunwheel affiliate. By blending the federal solar tax credits, new markets tax Because the agreement price is set at a lower price than credits, and the utility rebates, the combined structure provided the host’s grid rate, the host’s electric bill is reduced by the an acceptable return for the developer and tax credit investor. difference. U.S. Bank contributed bridge financing to the investment

november/december 2011 • Sustainable Communities

>> 35

in an amount equal to the anticipated MASH solar re>> fund bates from the local utilities. Sunwheel had previously applied with the local utilities and been approved for MASH rebates for each solar project. (MASH rebates are not paid out until projects are complete, and the utilities approve and commission the installations.) Once the rebates were received, the bridge financing was reimbursed. To further magnify the tax benefits, the modified accelerated cost recovery system allows one-year bonus depreciation

for eligible energy investments, including solar installations. The depreciation benefits and any losses are allocated through the ITC entity, with 51 percent going to the managing partner and 49 percent going to U.S. Bank. Sunwheel worked with two leading solar integrators, Real Goods Solar and Borrego Solar Systems, to design and install the McCormack Baron Salazar projects. Real Goods Solar implemented the Bay Area projects while Borrego installed the facilities at the sites in southern California. ❧

PHA engineers complex financing to retrofit 21 properties Many of the nation’s 3,200 public housing agencies are concerned about cutting energy costs. One of the most successful agencies in achieving that goal is the Housing Authority of the County of Santa Barbara (HACSB). The HACSB has completed a solar retrofit at 21 properties, totaling 863 housing units, involving more than 7,200 solar panels and three utility districts at a cost of $12.25 million. “To the best of our knowledge this represents the largest solar installation for any housing authority in the United States and will substantially ▲ Lompoc Public Housing Aerial View reduce the electricity costs for our low ergy savings measures. income tenants, as well as substanThe work was performed on HACSB’s public housing tially reducing our carbon footprint,” said Fred Lamont, projects as well as properties developed using low-inexecutive director. come housing tax credits where it is the general partner. The intricate and elaborate funding for this initiative The sources of funds included a grant from a oneincludes a HUD energy performance contract, a HUD time federal appropriation under the American Recovery competitive stimulus grant specifically designated for and Reinvestment Act. Another source was the Treasury energy improvements, a US Treasury grant for solar Department’s 1603 grant program, which expires Dec. 31 projects, and rebates from the various utility compaof this year. nies through the California Multifamily Affordable Solar Lamont attributes the agency’s success to a willingHousing (MASH) program. ness to seize the opportunity to tap a variety of sources Energy Performance Contract (EPC) is an innovative of financing to eliminate its upfront cost for the solar financing technique that uses cost savings from reduced panels. He said the authority had to act quickly, not energy consumption to repay the cost of installing enknowing if all the complex arrangement would fall into ergy conservation measures. This technique, normally place, since many of its funding sources were only availoffered by energy service companies (ESCOs), allows able for a limited time. building users to achieve energy savings without upFinancing programs and incentives vary greatly front capital expenses. The costs of the energy improvefrom state to state, Lamont told housing authorities at ments are borne by the performance contractor and paid back out of the energy savings. a recent conference. The best way for other agencies to The HACSB entered into an energy performance follow HACSB’s lead is to be alert to new incentives and contract with Constellation Energy to implement enprograms and jump on them quickly.

Sustainable Communities • November/december 2011

Good Day Sunshine University of Maryland wins solar design competition By combining energy generation and water conservation Washington, D.C. – College students from all over the world “caught some rays” here this fall, but not because they wanted to work on their tans. They were part of the biennial Solar Decathlon event, a competition that challenges collegiate teams to build solar homes. The University of Maryland came out on top in the 2011 Solar Decathlon event, sponsored by the U.S. Department of Energy. The Decathlon challenges collegiate teams to design, build, and operate solar-powered houses that are cost-effective, energy-efficient, and attractive. The winner of the competition is the team that best blends affordability, consumer appeal, and design excellence with optimal energy production and maximum efficiency.

The first Solar Decathlon was held in 2002; the competition has since occurred biennially in 2005, 2007, 2009 and 2011. The competition takes place in Washington D.C.’s West Potomac Park, where homes are open to the public for viewing. Visitors can tour the houses, gather ideas to use in their own homes, and learn how energy-saving features can help them save money. This year, 20 teams from all around the globe competed in the competition. Teams worked for two years to design and build their homes. Just before the competition, the teams transported their completed houses, from campuses across the country and around the world to the National Mall in Washington, D.C. Within days, the solar village sprung up. Teams compete in 10 different contests. Experts judge some contests; others are scored using measurements that precisely indicate levels of energy efficiency, consumption, or temperature. Each contest is worth 100 points. The

Photo: Stefano Paltera/U.S. Department of Energy Solar Decathlon

Visitors tour the U.S. Department of Energy Solar Decathlon.

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Photo: Stefano Paltera/U.S. Dept of Energy Solar Decathlon

Photo: Dennis Whitehead

▲ The Washington Monument appears in the background at the Solar Decathlon.

Photo: Dennis Whitehead

▲ Visitors line up to tour the University of Maryland’s winning entry.

▲ Exterior architectural photograph of Tidewater Virginia’s entry in the Solar Decathlon.

team that earns the most combined points—balancing costeffectiveness, consumer appeal, and design excellence with optimal energy production and maximum efficiency—wins the competition. This year, the University of Maryland emerged as the overall winner with its “WaterShed” home. “Maryland is a well-experienced team. After taking second place in 2007, they rested and regrouped in 2009 and came to West Potomac Park in 2011 focused and determined to win,” said Solar Decathlon Director Richard King. “In addition, Maryland’s Watershed is a beautiful house, judged first place in Architecture, which also performed impeccably in measured contests. This team mastered their strategies to ensure they excelled in all 10 contests.” Purdue University took second place in the competi-

Sustainable Communities • November/december 2011

tion, and New Zealand (Victoria University of Wellington) received the third-place award. Appalachian State University won the People’s Choice award with its Solar Homestead entry. The Solar Homestead is a self-sustaining net zero-energy house inspired by the pioneer spirit of the early settlers to the Blue Ridge Mountains.

The Winning Entry: University of Maryland Inspired by the Chesapeake Bay ecosystem, the University of Maryland’s WaterShed home proposes solutions to water and energy shortages. The house is a model of how the built environment can help preserve watersheds everywhere by

Design Philosophy The forms of the house highlight the path of a water drop. WaterShed’s split butterfly roofline highlights storm water runoff from each module, directing and collecting it into the water axis at the core of the house. Water ▲ The University of Maryland’s entry, which placed first overall, in the U.S. used within the house intersects this Department of Energy Solar Decathlon 2011. axis through a consolidated mechanical core. • A green roof that slows rainwater runoff to the landscape Spatially, the house is designed as two “shed” modules while improving the house’s energy efficiency slid apart along the central water axis and connected by a • A garden, an edible wall system, and a composting station third module: the hyphen. The two larger modules express to illustrate the potential for improved health, energy, and the programmatic intent of a live/work environment by cost savings with a complete carbon cycle program. physically separating the public and private realms. The hyphen houses the bathroom and highlights the connection between interior water uses and the wetland axis outside. Features WaterShed’s holistic approach to water conservation, recycling, and storm water management includes: • A modular constructed wetland that helps filter and recycle greywater from the shower, clothes washer, and dishwasher

Photo: Stefano Paltera/U.S. Dept of Energy Solar Decathlon

managing storm water onsite, filtering pollutants from greywater, and minimizing water use. The photovoltaic and solar thermal arrays, effectiveness of the building envelope, and efficiency of the mechanical systems make WaterShed less thirsty for fossil fuels than standard homes.

Technologies WaterShed features integrated systems that keep the house comfortable under a range of climatic conditions. These include: • The liquid desiccant waterfall, which serves as a design feature and provides humidity control • An engineering system that harnesses excess energy generated by the solar thermal array

Photo: Stefano Paltera/U.S. Dept of Energy Solar Decathlon

▲ Lakiya Culley, homeowner candidate through Habitat for Humanity, stands outside of her future residence. The designing schools will donate the home after the competition.

• A home automation system that monitors and adjusts temperature, humidity, lighting, and other parameters to provide maximum function with minimal impact on the environment. Market Strategy WaterShed is intended for a working couple that can use the house as home and office. This demographic is prevalent within the Baltimore, Maryland, and Washington, D.C. markets, where there are many individual firms in the fields of consulting, law, and architecture. WaterShed is affordable because the upfront investment in energy- and water-saving technologies eventually provides cost savings given the increasing cost of utilities. For people in the Washington, D.C. corridor, WaterShed provides the opportunity to telecommute, thus reducing travel expenses in one of the most congested areas of the country. ❧

november/december 2011 • Sustainable Communities

TRANSPORTATION AND DEVELOPMENT —From page 17

in bike and pedestrian funding before the bill becomes law. “We will work with Chairman Boxer and Ranking Member Inhofe and the rest of the Committee to ensure that there is dedicated funding that prioritizes bicycle and pedestrian projects, strong workforce development provisions, and smart transportation planning reforms. We are eager to ad-

dress these issues so we can put the full strength and weight of our coalition behind the bill as it moves forward in order to make the most of our federal transportation dollars, put people back to work and deliver the transportation system that Americans need,” said Transportation for America Director James Corless. ❧

TAX CREDIT INVESTMENT ROARS BACK —From page 26

companies like Google. Syndicators feel it is risky for CRA-motivated investors to pay too much, because it may reduce participation in the market by economic investors. If CRA-motivated investors drive prices for tax credit properties too high, it could drive away economic investors, said Ronne Thielen, a consultant who previously worked in tax credit syndication. Several speakers at AHF LIVE said that some economic investors are already backing away from the program. Insurance companies are very important sources of investment, especially in markets that are not on either coast, said Stephen Daley, The Richman Group Affordable Housing Corp. Thielen and other leaders, including some prominent bankers, are also concerned that the disparity in equity availability for CRA services areas and non-CRA areas could bring political challenges as well as economic ones. The other concern is that CRA directs the flow of capital into major cities, particularly those on the coasts, while communities without a lot of banks struggle to obtain any private investment. The disparity in the availability of equity investment means that projects in areas popular with CRAmotivated investors get an abundance of investment while those in other areas get shortchanged. According to tax credit syndicators and state allocating agencies, investors not motivated by CRA are paying 85 to

87 cents, on average, for every dollar of tax credit generated by a project. CRA-motivated investors are paying $1 or more for every $1 of tax credits their projects generate. Investors who pay that much will receive a yield on their investment of less than 5% per year, and possibly even 4% in some cases. On average, prices last year were around 70 cents per dollar of tax credit. This year, the average bid is more like 88 cents per dollar, said Joe Hagan, president of National Equity Fund, Inc., a national nonprofit tax credit syndicator. States have done a good job of reacting to higher equity pay-ins than were expected earlier in the application process, said Hagan. They are making projects stronger by asking them to reduce their hard debt and put more money in reserves. The strong equity market also allows them to do more deals. This reflects the flexibility of the program, which allows state agencies to adapt to market conditions. Just as they helped projects survive when equity prices were very low in the recent past, state agencies are now adjusting deal terms and subsidy amounts to make the best of a good situation. For tax credit developers trying to prepare for 2012, the best advice is to look for ways to cut costs, watch for new guidance on cost management from state agencies, and look for development opportunities in cities with the political will and financial resources to help make your project work. ❧

How TCB, Clancy remade neighborhoods, improved lives —From page 33

1983 Boston Housing Partnership (BHP) established with GBCD assistance. BHP organizes the redevelopment of approximately 1,600 dilapidated inner-city apartments. 1972-1982 GBCD pioneers use of tax-benefit syndication to finance affordable housing controlled by non-profits and assists local CDC with development of the 680-unit, $28

Sustainable Communities • November/december 2011

million Villa Victoria community in Boston’s South End. 1971 Pat Clancy graduates from Harvard Law School and joins the organization, becoming its CEO in 1976. 1970 South End Community Development (SECD) reorganizes as GBCD and expands its work throughout metropolitan Boston. ❧

Learn how to boost energy efficiency and cut operating costs The conference is sponsored by the nonprofit Partnership for Sustainable Communities. Endorsers and co-conveners: • National Housing Conference • National Housing Trust • National Multi-Housing Council • Stewards of Affordable Housing for the Future (SAHF) Gold Sponsors: Reznick Group Efficient Buildings Today Silver Sponsors Baker Tilly Virchow Krause, LLP National Equity Fund On-Site Insight Silicon Valley Bank Bronze Sponsors Enterprise Low-Income Investment Fund Volunteers of America The Pacific Companies

Energy efficiency is fast-becoming a critical issue in the operation, financing and regulation of apartments, including tax credit properties and assisted housing. Don’t miss out on new ways to save money, make your properties more valuable, get ahead of the regulatory curve and cut emissions. Join savvy owners of apartments and assisted rental housing at the only conference that brings new opportunities and new regulatory realities into focus. The Leadership Conference on Energy Management for Affordable Housing April, 2012, in Washington, D.C. Finally, there’s a conference that cuts through the generalities and wishful thinking to give you specific, actionable information, including details on financing tools you can use today, plus real case studies and actual data on the energy savings and payback of specific energy-related improvements. Water-saving measures are also covered. Whether you are looking at no-cost asset and property management moves, retrofits and system replacements or refinancing and substantial rehab, this conference is your guide. It will help you meet the need to control operating costs in your apartment properties and stay ahead of increasing state and local efforts to promote energy efficiency. You will learn about a growing array of innovative public and private financing models for energy improvements and renewable energy.

YES, I am interested in the conference described in this flyer. Please send me information on: For more information on the program, or to learn about sponsorship, complete the form at right and fax to 415 453-4200. OR contact Carol Yee at 415-453-2100 x302 or at carol@p4sc.org.

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november/december 2011 • Sustainable Communities

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