For the last two decades, we’ve continued to hear about the advantages of “smart growth,” and in most cases that means new developments which promote efficient land use, urban redevelopment, neighborhood revitalization and economic opportunity. Over the past few years, that definition has also expanded to include green building techniques, especially those related to energy efficiency and sustainability. Once relegated to certain project types, today smart, green building encompasses everything from high-rise office buildings to low-rise affordable housing options.
For California’s AMCAL Multi-Housing, smart/green building has meant cost savings not only internally, but in a recent case allowed it to refund over $500,000 to the City of Rancho Palos Verdes when it came in substantially under budget. So what’s their secret? According to AMCAL President Arjun Nagarkatti, being a vertically integrated company with experience in market-rate housing has proven to be a huge benefit because they can go through any single line item of a budget to wring out costs savings.
For example, to save on interest reserves, on-site expenses and overhead, the company pursues six-day work weeks when it’s appropriate. In order to build podium-style multi-family housing projects at a discount, AMCAL orders prefabricated wall systems shipped in from either California or Arizona. And in order to find the best bid, Nagarkatti says they don’t just stop at two or three vendors – they compare those from three to five separate companies. For green building, all of the company’s projects are now built to LEED standards, and its leaders believe that the higher up-front costs associated with energy efficiency and better-quality flooring and hardware pays dividends down the road – an important consideration for a company which continues to own and manage its own properties.
At CityView, the institutional investor founded by former HUD Secretary Henry Cisneros in 2000, smart growth means balancing the tension between social responsibility against a maximum return for their investors (which include pension funds for the City and County of Los Angeles as well as the State of California.) Explains Cisneros, “The trick here is to select wisely so you never have to compromise on financial return by doing the right thing in an urban environment.” Two of its most recent green building initiatives include the Tennessee Lofts in West Los Angeles as well as the country’s first LEED-certified student housing project near USC.
Having invested more than $2 billion in 45 communities across the country, CityView seems to have found a formula which works, which is to partner with local builders which offer expertise on specific submarkets. Such partnerships are critical to successful smart growth, argues Cisneros. “Without the built-in environment making some progress, there’s no way we can achieve (larger) societal issues,” he says. “The world is at a point of inflection in terms of infrastructure, making it more responsive.” Given that the U.S. population is expected to grow by 90 million more people between now and 2050, builders and investors such as CityView have to keep producing.
At the same time, that doesn’t mean only urban infill areas will benefit: another beneficiary of CityView's dollars are “edge cities” such as Bristol, Connecticut, the O’Hare Airport area of Chicago or even the San Fernando Valley portion of Los Angeles which offer access to mass transit, their own local employment base and underdeveloped land. Such investments can also mean buying existing Class B apartments and not only making them more energy efficient, but giving them design upgrades which allow them to compete with Class A product at a more affordable price point.
Of course like with all things, the evolution of smart/green building comes with a price: according to AMCAL’s Nargarkatti, in several master-planned communities in which they’ve worked, their affordable housing product actually looks better than market-rate apartments and condominiums. Concludes Nargarkatti, “People are focused on the affordable side to look better, and public/private partnerships have a lot to do with it. It provides pride of ownership.”
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