More than 11 million US households are severely cost burdened,
paying half or more of their income for housing, reports the Urban
Land Institute, citing the latest study on affordability from the Joint
Center for Housing Studies at Harvard University. Their ranks are
expected to swell by another 1. 3 million over the next decade.
“At a time when states and cities are often at odds over hotly con-
tested social and economic issues, land use reforms that expand
housing choices and opportunities can constitute common ground,”
says Stockton Williams, principal author of the report and executive
director of ULI’s Terwilliger Center for Housing, which published
the report. “State and local collaboration can create a lower cost of
doing business, a more efficient real estate market and a wider array
of options for buyers and renters across the income spectrum.”
In its report, ULI proposes five ways in which states can help
cities and counties promote housing development, primarily
through their land use powers:
Ensure that localities and regions are assessing their future housing needs. “Because many communities do not analyze their housing needs or assess its importance to economic growth, states
should establish and enforce workable standards,” advises ULI.
Provide local communities with incentives to zone for new
housing. “Zoning often needs to be modified to allow for and
encourage development of needed new housing. States can support communities’ efforts with financial and technical assistance.”
Reduce regulatory requirements that stifle development.
States can use their authority and creativity to cut the regulatory
red tape that makes housing more expensive than it has to be.
Authorize cities to invest their own resources. Even with appropriate zoning, local jurisdictions often need state approval to offer
their own incentives for construction of below-market rate housing.
Enable communities to overcome unreasonable neighborhood
opposition. “Community opposition can drive up the cost of—or
completely derail—the construction of new housing.” States can
provide mechanisms to moderate NIMBY opposition and make it
easier to build housing needed to support local growth.—Paul Bubny
Uncle Sam: Not the Best Partner in P3s
A few weeks ago, President Donald Trump told lawmakers he had
changed his mind about the structure of his $1-trillion infrastructure investment plan. Previously the plan was contingent on private sector participation; now, Trump reportedly said, he didn’t
want to take that route. The reason? Certain partnerships between
the private sector and federal government just don’t work.
A survey of experts in this area reveals that the president was
right, at least when the federal government takes the lead in the
project. The best structures, it is widely thought, are when the
state or local jurisdictions are heading the transaction.
This is not to say the model is broken, says Warren Hennagin,
construction industry leader and apartner at Marcum. “It’s a mat-
ter of putting all egos aside to come together in a collaborative way
to come up with a plan that’s beneficial to all parties.”
Examples of projects with models that worked are the Long
Beach Civic Center, The Port of Los Angeles and LAX, he says.
“Agencies serve a great purpose in private-public partnerships and
when they have the appropriate business acumen, they are able to
bring all elements from contracting to design seamlessly.”
Whatever the reality of P3 projects may be, the president has
signaled he doesn’t want to pursue that tract. And a structure in
which the federal government distributes money to states would
make a P3 cumbersome at best, to say nothing of where the fund-
ing would be found in the first place.
For starters, says Pillsbury partner and projects practice co-leader Nick Sarad, one substantial hurdle to increasing the US
government’s role in P3s, particularly those structured as “
availability payments” is that under an Office of Management and
Budget rule, long-term payment contracts are most often treated
as a capital lease or lease purchase. This means that an entire
project’s cost—the government’s total monetary obligations over
the life of the P3 contract, even in the out-years—must be
accounted for in the year when the commitment is made.
“This has an outsize impact on the budget, and in essence
precludes federal agencies from utilizing most long-term P3 projects,” he states.—Erika Morphy
Stemming the Tide of Economic Burden in Housing
UP Front A comprehensive look at what’s trending in the world of commercial real estate
A three-property multifamily portfolio in Northeast Atlanta has
changed hands. The collective price tag for the suburban properties came in at $76.5 million. Mike Kemether and Tyler Averitt
of Cushman & Wakefield’s Southeast Multifamily Advisory
Group arranged the deal for the seller, Audubon Communities.
“Looking closely at how Atlanta is pivoting, you’ll see the
Northeast suburban quadrant is poised to outperform the
other suburban submarkets over the next five years,” says
Averitt. The assets—Bella, Peachtree Corners and Summit at
Dawson—traded in separate deals. Sabra Property
Management, Hathaway Development and Zavala Properties
were the respective buyers.
“These properties were our first post-recession acquisitions in
Atlanta, and each required a multi-million-dollar investment to
Christopher Edwards, a
managing director with
“After owning them for
six years, it was a difficult
decision to sell, but the
timing was right to move
on. We’re confident that
the new owners will also
have great success.”
In addition to having a full menu of amenities and oversized
floor plans, the communities are located in areas poised for
significant appreciation; both population and employment
growth in the Northeast Corridor are projected to outpace the
rest of Metro Atlanta through 2030.—Jennifer LeClaire
MF Portfolio Highlights Atlanta Suburbs
BEHIND THE DEAL
Summit at Dawson in Norcross, GA