3-2-1: Breaking Ground At 501 Main, Community Land Trusts, A Creative Use Of ARPA Funds, & More
Issue #22
Happy Sunday —
Here are 3 things from others, 2 things from me, and 1 picture related to incremental real estate development and my projects at Village Ventures.
Enjoy!
THREE THINGS FROM OTHERS
I. Kôrazón, Crescita, and community land trusts
Community land trusts (CLTs) have been used since the civil rights movement to create affordable and equitable housing opportunities for historically marginalized groups. Both ownership and rental models exist.
A quick rundown—CLTs are often structured as a nonprofit organization that own the underlying land and issue long-term ground leases to the owners of individual buildings. They can be used for commercial and retail projects. But most often, they focus on housing.
By owning the land, CLT boards can impose income and resale restrictions on the homes to ensure they remain affordable indefinitely.
Kor Community Land Trust in Bend, OR is a great example.
Kor has developed two 5-home projects so far—Kôrazón (completed in 2021) and Crescita (under construction). Kôrazón reserves two homes for households earning between 30-50% of area median income (AMI), two for 50-80% AMI, and one for 80-120% AMI.
To enable affordability, CLTs often receive grants or donations to offset costs. These can come in the form of land donations, federal subsidy, or some sort of public partnership.
Want to learn how CLTs work? Here’s a good primer.
Out of ~250 CLTs nationwide, Burlington, VT’s Champlain Housing Trust is one of the country’s largest, with 2,200 apartments and land leases to 565 owner-occupied homes.
(Thanks EHK for sharing!)
II. Tracking lumber prices vs inflation
By now, everyone knows that construction costs are through the roof.
But let’s take a peek at lumber costs for a second. When you look at real prices—that is, with inflation accounted for—the increase might not be as drastic as you would think.
See below.
The first graph shows nominal lumber prices—the actual price you pay. Second is adjusted for inflation.
While nominal prices have jumped 50% since the start of the pandemic, real prices have “only” gone up 25%.
Lumber is, of course, only a piece of the bigger puzzle though. Overall, the US saw (nominal) prices for building materials increase 80% in 2021 alone.
III. Revolving loan fund
The American Rescue Plan Act of 2021 (ARPA) will provide $350B in funding to state and local governments. The funds are flexible and can be used to:
Support public health expenditures
Address the negative economic impacts caused by the public health emergency
Replace lost public sector revenue
Provide premium pay for essential workers
Invest in water, sewer, and broadband infrastructure
One creative use?
A revolving loan fund for the rehabilitation of dilapidated buildings. Barre, Vermont is establishing a $1M fund “to renovate commercial properties and rehab 25 vacant homes that are currently languishing on the market.”
This comes at a point where there are just over 100 homes priced between $220,000 and $300,000 available across the entire state.
It’s unclear who will have access to the funds—non-profit and/or for-profit developers. Either way, it seems promising. And extremely savvy on the city’s part. Several benefits jump to mind:
Earn interest income on the debt issued
Drive increased property tax base as buildings are renovated
Ensure creation of affordable housing to attract and retain residents (typically, there is an affordability component with public/private partnerships)
Improve aesthetics of rehabilitated areas and boost general perception of the city
Kudos Barre!
TWO THINGS FROM ME
I. Kicking off demo at 501 Main
We kicked off demo at 501 Main last week!
As a refresher, here’s the existing building on the right, a single-story, 1400-SF commercial space on Main Street. We’re redeveloping it into a 3-story mixed-use residential and retail building. Nine units total.
To reduce waste and embodied emissions, we’ll repurpose the existing foundation and decking. This means approaching demolition cautiously.
Instead of the wrecking ball approach with an excavator, we’ll deconstruct the building by hand. And, along the way, attempt to salvage materials and find new homes for them (windows, doors, HVAC, lighting, cabinets, etc).
Hopefully we’ll be able to reuse some of the lumber for this project—2x4s are around $8 at the local building supply company and we’ll need around 1,000 of them. And another 1,000 2x6’s ($12 per board).
After getting latest round of pricing back, we’re creeping up above our original budget. Thankfully, we were able to procure additional funding to cover the gap, but anything we can do to keep that cost down will help in the long run.
The other justification for slow rolling the demolition is because the framing crew is busy until May/June. So we have some time. And I can put in a little sweat equity to cut costs.
In the meantime, we need to take the building down to the floor decking. Then reinforce the foundation and floor system in preparation for building up.
To get a sense of the reinforcement required, take a look below at the structural engineer’s plan for the first floor.
501 Main was first built in 1934, then expanded in 1968. The structure wasn’t built to handle three stories.
But, not to worry. A few additional posts, a girder, and sistering a number of joists and we’ll be off to the races.
II. Short TikTok videos
Also on 501 Main—I started making short videos to capture the day-to-day on TikTok.
I’ll admit, the videos aren’t great (yet). But take comfort knowing they can only get better.
ONE PICTURE
I.
Bungalows On The Lake is an ambitious Missing Middle Housing neighborhood developed in 2020. With 540 units across 50 acres, it serves as an inspiring model for walkable urban architecture.
Papillion, Nebraska
Source: Opticos Design
That’s it for today. Thanks for reading. If you haven’t yet, go ahead and subscribe here:
About me: I’m Jonah Richard, a small-scale real estate developer in Vermont. With my company, Village Ventures, I’m currently getting my hands dirty developing Missing Middle housing while trying to pick apart and replicate what makes other communities thrive.
Connect with me on LinkedIn and follow my projects on TikTok.