Density Bonus Law: Why Affordable Housing is Badly Needed in California

As the single-family home market continues to struggle, the focus on the multifamily sector has intensified. In order to make these projects financially feasible, California developers often rely on Government Code Section 65915, also known as the Density Bonus Law, which is one of many California statutes reflecting “an important state policy to promote the construction of low income housing and to remove impediments to the same.” (Building Industry Assn. v. City of Oceanside (1994) 27 Cal.App.4th 744, 770; Gov. Code § 65582.1(f).)

Density bonus ordinances, either planned or adopted, are found throughout the U.S. and Canada, including: Austin, Texas; St. Petersburg, Florida; Portland, Oregon; Clarkstown, New York; Salt Lake City, Utah; and Lehigh Valley, Pennsylvania.  Most of these local density bonus awards are tied to the provision of certain thresholds of affordable units, while other jurisdictions provide density bonuses for projects meeting certain green building or sustainability targets.

“The purpose of [California’s] Density Bonus Law is to encourage and provide incentives to developers to include low- and moderate-income housing units in their developments.” (Wollmer v. City of Berkeley (2009) 179 Cal.App.4th 933, 940.) It does so through a mechanism of awarding certain affordable housing projects with “one or more itemized concessions and a ‘density bonus,’ which allows the developer to increase the density of the development by a certain percentage above the maximum allowable limit under local zoning law.” (Id. at 941.)

Read more at MultiHousingNews online

Attitudes on American Dream, homeownership changing in a

When Lina and Jimi Gibson moved into their 850-square-foot apartment in 2009, they figured they’d stay two years while planning their wedding and saving for a house. Now, with the economy in another tailspin, they’re on the fence.

They can walk to restaurants and movies from their building in southwest Charlotte. They have a gym and a pool and don’t have to mow the lawn or repair the roof. Mostly, they don’t have to worry — like so many of their friends — that the housing market slide isn’t over.

“I don’t want to have a house that’s going to be worth nothing or a neighborhood that’s going to lose everything,” said Lina Gibson, 27, a bank teller. “We just want to start off strong, with no debt. We’re just being very careful.”

The homeownership dream For decades, Americans have aspired to own homes, and everyone from bankers to government officials has worked to make the dream accessible. But around the country, particularly in places hit hardest by the real estate bust, that’s changing.

Legions of homeowners remain underwater on their mortgages or unable to move because they can’t sell their house. Plenty who want homes can’t buy them because credit remains tight.

Look deeper, though, and the trends suggest a larger shift in how people feel about homeownership.

Droves of potential buyers, particularly young adults, are  renting longer even when they can afford to buy, stockpiling their savings or seeking investments they see as safer, real estate brokers and economists say.

People who do buy are increasingly choosing more modest houses. Recent data show that new homes are smaller — and sport fewer pricey extras, such as fireplaces and patios.

Read more at Fort Worth Star-Telegram

Ascension-Moriah JV Buys 4,568-Unit Multifamily Portfolio

In a joint venture buy, Ascension Commercial Real Estate LP and Moriah Real Estate Co. have acquired a 15-property multifamily portfolio with 4,568 units from several lenders.

The portfolio has one asset in Austin, the 192-unit Aubry Hills at 8926 N. Lamar Blvd., and the balance is located in Houston. “The buyers purchased this property at a substantial discount to replacement cost and will be able to create significant value through increased occupancy and rental rates,” Lewis said.

Read more at CityBizRealEstate

Four Arlington apartment complexes sold after foreclosure

Four north Arlington apartment complexes, which faced having the water turned off last fall because bills were several months overdue, have been sold out of foreclosure.

Branch Banking & Trust foreclosed April 5 on the complexes owned by King Landing Apartments. The communities are Bristol Pointe, Misty Woods, River Ridge and Oak Valley and total more than 860 units. The properties, which were in disrepair, had been posted for foreclosure for several months.

They were then sold in mid-June to an investor group of Iliad Realty Group in New York, according to deed records.

The city of Arlington has given the new owners until December to make repairs to the four complexes, said Tiffany Bull, an assistant city attorney.

The real estate group has hired a professional management firm and has several millions of dollars in an escrow account that it is using to pay for repairs, she said.

“They are making repairs on the properties to bring them into compliance,” Bull said.

“Those repairs are to be done before the end of the year.”

From: Fort Worth Star Telegram

Trammell Crow Partnership buys Richardson luxury apartment property

A group of investors has bought The Pradera, a luxury apartment community at Greenside Drive and State Highway 190 in Richardson for an undisclosed price, according to a report from the Dallas Morning News.

A partnership set up by Dallas-based Crow Holdings Crow Holdings purchased the 360-unit rental property that was built in 2010, according to the report.

Read more at Dallas Business Journal

Our Love Affair with Apartments

The apartment sector has cemented a privileged position atop the commercial real estate investment hierarchy. Across a broad swatch of the nation’s markets, declining vacancy rates and accelerating rent growth have converged with low-cost financing to foment a sustained rebound in investment flows and a recovery in pricing unmatched in its geographic balance. Distinguished even further from other income-producing property types, the apartment sector has recorded a small but observable increase in development activity and has been the only sector to show a net increase in regional and community bank lending. 

The apartment sector’s proponents argue that recent gains reflect a structural shift in the housing landscape, with millions of young American families now disabused of the notion that homeownership is always preferable to renting, and embodied in a long-term policy retrenchment from mortgage subsidies and market-making. In support of this thesis, advocates can point to data showing a surge in rental households and a corresponding decline in the homeownership rate. Between early 2006 and late 2010, the renter pool in the United States increased by more than 10 percent, at a faster pace than household formation or rental supply.

The descriptors of the apartment rebound offer a compelling but ultimately incomplete picture of an exceptionally mutable housing market. There is no doubt that national apartment trends are outdistancing an ownership market that remains mired in its own localized recession. Still, investors must proceed deliberately, remaining cognizant of risks to their baseline expectations. While conditions in the apartment sector warrant a sanguine assessment, investors and lenders alike must guard against the potential for unabated enthusiasm to inflate prices and erode lending standards to the detriment of long-term stability.

Read more at The New York Observer

Are you ready for the new urbanites?

Younger generations want to live in dense, walkable, 24-7 urban neighborhoods filled with apartments

The more vital urban centers of the United States are about to experience cultural shifts that will shake the country like a 9.0 earthquake — in a good way.

In the wake of the Great Recession, several powerful trends are converging: The world is undergoing the largest wave of migration back to cities in history; markets are listening to the needs and wants of Generation Y; and Seattle will become an epicenter of ideas and creative energy.

How will new housing products respond to this convergence?

In Richard Florida’s book “The Great Reset,” he theorizes that a new, post-recession America will emerge, shaped by the needs of the creative class.

Florida says: “The places that thrive today are those with the highest velocity of ideas, the highest density of talented and creative people, and the highest rate of metabolism. Cities like Seattle, Vancouver, B.C., and Portland will become a single labor market, attracting the very best minds, energy and talent. Seattle, New York, Silicon Valley and college towns will survive; ex-urban Phoenix or Las Vegas will struggle for years to come.”

Read more at Seattle Daily Journal of Commerce

Holiday Retirement Buys McKinney Apartment Complex

ARA National Senior Housing has closed the sale of a senior living community McKinney. ES McKinney LLC has sold The Chateau, a community consisting of 202 independent living units in McKinney.

The three-story community, constructed in 2006 and refurbished in 2010, was purchased by Oregon-based Holiday Retirement Corp. Chad Lavender and Ryan Maconachy from ARA Senior Housing negotiated the deal on behalf of ES McKinney

Read more at Globe Street

Investors Buy Pradera Apartments in Richardson

Investors have purchased an apartment community in the Telecom Corridor in Richardson. A partnership created by Dallas-based Crow Holdings has acquired the Pradera apartments situated on Greenside Drive from Criterion Development Partners.

The 360-unit complex, located on the south side of State Highway 190, was constructed by Criterion in 2010. Terms of the deal were not revealed. The Balthrope Group of International Property Advisors marketed the Pradera project.

Read more at Globe Street

Federal Regulations at Odds with Demand for Urban Housing

 

The real estate market is undergoing the most rapid period of change in a generation — and the shift is decidedly urban. A succession of recent studies have found there is an under-supply of urban-style housing — attached and small-lot, single-family homes — on the scale of about 13 million units. On the other hand, there is an estimated oversupply of detached housing in the car-based suburbs of about 28 million units.

Public policy hasn’t quite caught up with the market, say the experts at the Congress for the New Urbanism. The Federal Housing Administration and its subsidiaries, Fannie Mae and Freddie Mac, are discouraging urban-style housing developments.

HUD lending standards dictate that the total value of mixed-use development projects can’t be more than 15 to 20 percent retail. Fannie caps retail share at 20; Freddie at 25 percent. And these standards set the tone for the private market — a tone that is consequently skewed toward single-family housing, and away from the pent-up demand for urban development with walkable amenities.

“It’s really disrupting the market,” said John Norquist, president of Congress for the New Urbanism. “It’s making it hard to developers to finance good projects.”

Read more at DCStreetsBlog