File this under the category, “Studies that prove what we already knew”:
WegoWise, a building intelligence provider, has unveiled a utility bill study that for the first time demonstrates how incentive structures can make a substantial impact on building efficiency. The study found that multifamily buildings where owners pay utility bills use approximately 30 percent more energy (BTUs) per square foot than buildings where tenants pay utility bills. Additionally, the study found that annual utility costs for buildings with owner-paid bills are 20 percent higher than tenant-paid bills.
“The building efficiency space has long been dogged by the ‘split incentive’ issue, whereby only those who pay the energy bill are motivated to change behavior or invest in building upgrades,” said Eric Bloom, senior research analyst at Navigant Research. “For years, upgrades have been seen as the smartest investment for owners because they deliver reliable returns and increase value. However, the WegoWise study reveals that incentives that motivate behavioral changes can play a significant role in cracking the efficiency puzzle. Understanding these complexities will be increasingly important as the multifamily sector continues rapid growth.”
While it isn’t shocking that people use more energy when they don’t pay the bills, the sheer amount that they use is a bit of a shocker.
If you’re wondering why people are still renting instead of buying the Wall Street Journal has an item that helps explain what’s going on. In short, the banks are covering their butts and doing whatever they can to not repeat the mistakes they made during the housing bubble. After having to buy back toxic mortgages and pay billions of dollars in fines they’re playing things extremely close to the vest:
One way to reduce the risk of having to buy back mortgages is to make sure than any loans sold to Fannie or Freddie or submitted for a Federal Housing Administration guarantee not only meet official standards but surpass them. That way, if a loan falls short of the bank’s standards for some reason, it still will likely meet official ones.
Federal housing officials refer to the higher standards as “overlays” and want to eliminate them. To that end, officials have tried to clarify what triggers a buyback and strengthening procedures that allow banks to resist repurchase demands.
So far, however, these have had little effect. Banks have made it clear that it isn’t just repurchase risk that is triggering the overlays. They are the result of internal rules prohibiting banks from making loans their analysis predicts will have a high rate of default.
That is, banks are second-guessing Fannie, Freddie and the FHA. Even if the agencies approve a certain type of loan and promise not to ask the bank to repurchase it, the banks refuse to make the loan if they view it as too risky. Their aim: avoid a situation similar to the one that just cost them billions.
Those of us of a certain age can remember when bankers were seen as stodgy and boring, then deregulation happened and all the sudden they were running with the wolves on Wall Street. Looks like it’s time to say, “Welcome back, stodgy.”
Multifamily Executive asked three executives to define workforce housing. Here’s a part of what American Land Ventures’ Jason Robertson had to say:
As developers, we must attend to the needs of the essential workers in the community and develop ways to provide housing that is affordable to the people that are gainfully employed, making from 60 percent to 120 percent of Area Median Income (AMI), generally categorized as teachers, policeman and fireman. Unfortunately, most of the federal subsidies and tax credits come from serving residents below that income threshold, therefore it is incumbent on the local planning departments to incentivize development to respond to this critical need. If cities create the right programs, such as density bonuses, up-zoning and impact-fee waivers, market forces will respond and fill the void by creating housing that is affordable to this essential segment of our population.
You can read the rest here.
Mebane’s city council has approved Keystone’s plans for a 330-unit apartment community near I40/85. From the Burlington Times-News:
A second developer received approval this week to proceed with plans to construct apartment homes.
Keystone at Mebane Oaks, part of Keystone Homes of Greensboro, applied for rezoning and a special-use permit to develop the multifamily complex…
That location is property along Interstate 40/85 at the dead end of Cameron Lane, off Mebane Oaks Road.
Along with 330 apartments, Keystone says, the complex will include a residents’ club, pool, fitness room, exercise studio, game room and kids area, along with a playground, pet park and walking trails. One- and two-car garages will be located throughout the property, which will be divided by a thoroughfare that Keystone will build, in line with a proposed larger road between Mebane Oaks road and N.C. 119…
Currently, the property, valued around $1 million, generates $5,350 in taxes for Mebane. The expected property tax value after construction is $23.1 million, which would generate $113,000 a year in taxes and an additional $114,000 in annual water and sewer fees. Keystone also will have to pay $759,000 with the building permits in water and sewer connection fees.
The Triangle Business Journal has an interview with Chaucer Creek Capital’s Billy McClatchey after the firm made $43 million in apartment acquisitions in the last few months. Some highlights:
Chaucer Creek bought Gallery Lofts at a rate of $176,341 per unit. Why was the investment worth it? The Winston-Salem acquisition was very different. It’s a very definite bet on the downtown growth, and the investment that they’re making there. (Bell Brassfield) is a very suburban location, but what we consider to be a very, very good location.
Why make that bet on downtown Winston-Salem? It’s just so rare to be able to have the amount of land that they’ve been able to set aside to really start from scratch, and remodel the downtown, both for living, for retail, and for jobs, and to be able to thoughtfully approach that. Not many cities have been able to do that, or have that opportunity. I think it’s a brilliant strategy on the part of the city. There are countless cities across the Southeast who would not have had the forethought or energy to do what they’re doing downtown. The only town we’ve seen it work in as well is Durham in the past 10 to 15 years. Durham has done a great job, and I think Winston-Salem is next.
PTAA member Burkely Communities received some positive press for the work it’s doing at The District:
A private student housing complex serving UNC-Greensboro, Greensboro College and other area schools that was cited for more than 100 code violations at the end of last year has been cleaned up under its new management team, Burkely Communities, according to company and city officials…
Burkely CEO Sterling Kelly said the building owners had already made a significant investment in repairs prior to his company’s involvement, including an overhaul of the heating and air conditioning system. But a long list of deferred maintenance items had grown overwhelming, so his team has been tackling it systematically during the past several months.
“The work required to fix those items just hadn’t been getting done, though they were relatively inexpensive things like electrical receptacles pulled out of the wall or plumbing leaks or exit doors not closing so the building wasn’t secure,” Kelly said. “Rome wasn’t built in a day and there are still some more things the owner may choose to do, but the first order of business has been doing what was necessary to make the building what I would consider habitable.”
Kelly goes on to say that their work at The District is far from done and they’re concentrating on marketing the property in a similar fashion to their other student properties – moving away from promoting amenities like pools and game rooms and focusing instead on promoting an environment geared towards the more serious students. (You can read more about Burkely’s approach here.)