3-2-1: Ideas from San Francisco, State Permitting, A Lesson Learned, & More
Issue #19
Happy Friday —
Here are 3 things from others, 2 things from me, and 1 picture related to incremental real estate development.
Enjoy!
THREE THINGS FROM OTHERS
I’ve spent the past few weeks in the San Francisco bay area. Here are a few cool ideas I saw while exploring that I think are worth replicating elsewhere.
I.
State Street Market is a former mid-century grocery store recently repurposed and reimagined in a Spanish Colonial style.
In 2021, the 33,000 SF building was converted into a food hall with an attached restaurant, bar, and upstairs offices.
Not only is it beautifully designed, but the mix of uses really mesh. The food hall provides a place for the second-floor office workers to eat and meet during the day while the restaurant and bar activate the space during the evenings. Good inspo for Chapman’s Place.
In particular, I was struck by the food hall operations—3 or 4 dining options (and bar) around the perimeter with tables in the center; a table-specific QR code for ordering and payment online without servers; food delivered directly to table; and a self-serve water and utensil station.
The technology to do this isn’t even that complicated. A QR code links to a website that is set up with a payment processor. And orders are paid for online by customers before food is delivered.
My guess is we’ll continue to see more places adopt this model, particularly given the ongoing shortage of service staff. This effectively eliminates the need for dedicated servers to take orders, process payment, and wait on table (beyond the initial delivery of food and final cleaning of table).
I don't know how sustainable a $25 sandwich is, but I’d give the concept overall an A+.
II.
I noticed a lot of simple, but elegant, designs for wooden railing systems and sheds while walking around.
I doubt this is unique to the Bay Area, but it’s been on my radar now for a few weeks as we finalize designs for 501 Main. We’ll have balconies on the front and back of the building. And I'll need some sort of shed for screening of heat pumps and trash.
We’re exploring custom metal railings for the balconies at 501 Main, but honestly, after seeing what can be done with rough-sawn planks, I think wood is the way to go. We’ll see where we land with pricing but my guess is that site-built wooden railings will be more economical.
III.
At one point on the trip, we stumbled on this vacant lot recently converted into an electric vehicle (EV) charging station. No gas pumps, just 20+ Level 3 charging spaces.
The station is owned and operated by Electrify America, self-described as the largest public charging network in the US. They even offer a subscription where EV owners can pay monthly and access discounted charging rates.
It’s interesting to watch the trends of EV vs combustion engine car sales. Specifically, US EV market share doubled year-over-year in 2021 (from 1.8% to 3.6% of all car sales in the US). By 2030, McKinsey predicts 53% of new car sales will be electric vehicles. Which (coincidentally?) lines up with Biden signing an executive order last August that sets a goal of 50% of new cars sales to be EVs by 2030.
Passing by the Electrify America station reminded me of a 2019 article about the first gas station to fully convert to EV charging in DC. The story is impressive. Especially considering how expensive gas station infrastructure is—underground tanks can cost north of $500,000 to install in rural Vermont and that figure likely skyrockets in more urban settings.
Making the switch from gas to EV charging certainly remains a tough nut to crack financially. But with the burgeoning (consumer, federal, and state) pressure to manufacture EV cars, we’re going to start seeing more of these conversions.
With Vermont as a leader in EV adoption (on a per capita basis), I’m excited to see some of these conversions happen closer to home. Especially on the highly-trafficked interstate routes across the state.
TWO THINGS FROM ME
Two updates on current projects: 61 N Pleasant and 501 Main.
I. 61 N Pleasant
We received approval from the Bradford Planning Commission on our site plan and historic district review to convert the 3-family building into 7 apartments.
With that hurdle cleared, we’re moving onto the state permitting process.
Before I get into that though, I’ll take a quick step back.
There are three critical steps to complete before starting a construction project—town approvals, state permitting, and funding. Sounds obvious, but the order of operations isn’t necessarily (at least to me). And what I’m finding is that the order changes on a project-by-project basis.
For 501 Main, I started with securing funding, then moved to approvals, then to state permitting. Being my first ground up development, that was logical. I needed to know I could finance the project before investing the time, energy, and capital into developing plans and seeking town approval.
I’m approaching 61 N Pleasant differently, partly because it’s less complex (renovation vs new construction) and partly because I think there’s a more efficient way to sequence events.
I’ve made the mistake previously of trying to raise capital from investors too early only to see the project fall through. Not only is this demoralizing, it’s poor form from a reputational standpoint. I wanted to avoid this happening with 61 N Pleasant.
For this reason, I chose to close on the property before locking in the renovation funding. It wasn’t practical to attempt to pinpoint a renovation budget without having gone through town approvals or state permitting. Either step can introduce complexity that will drive up costs. I had certainly run the numbers based on an expected budget yet, in my mind, it wasn’t worth soliciting investment until those numbers could be solidified.
I’m glad I waited.
While there wasn’t any material impact to scope coming out of town approvals, I can’t say the same for state permitting.
After a few initial conversations with a state fire marshal (Vermont’s de facto building inspector), some unanticipated items surfaced which will affect scope and budget:
Requirement for stamped architectural drawings
Potential requirement for increased tread depth and riser height on the two existing staircases
Potential requirement for two ground floor units designed to Fair Housing Act standards, in addition to the ADA-compliant unit already planned (see my earlier post on Accessibility Requirements for more details)
#1 is a definite requirement. #2 and #3 are pending clarification.
Stamped plans seem excessive given we’re not doing any new construction or adding/removing load-bearing walls. Ultimately, this means I’ll need to hire a licensed architect at $100/hr to redraft the floor plans I’ve already created in their own software, do a full code analysis, and develop staircase, fire-rated wall, and fire-rated door details—easily thousands of dollars.
It’s not that the building and fire codes are a problem. Of course any renovations we do would adhere to the appropriate codes. That said, I have trouble seeing the benefit of involving a licensed architect here when I can just as effectively produce floor plans and the requested details. I’m not pretending to be an architect or belittling the intricacies of their profession. I just think their time could be better utilized elsewhere solutioning more difficult projects.
As one architect that I spoke to about this told me: code analysis is supposed to be done by the fire marshal. The 0.8% of project costs in state permit fees is designed to cover the time required for the fire marshal to review plans. It seems appropriate that they would conduct a code analysis.
I can imagine a more streamlined process in the future where developers work directly with the fire marshal on less complex projects. In theory, this exists. And there’s an expedited permit application for projects less than $200,000 that shouldn’t require stamped plans (which 61 N Pleasant qualifies for). That said, the fire marshal still has the power to require plans if/when they see fit.
For reference, here are the before and after of each floor:
Take a look at the original floor plan file to zoom in.
I’ll let you be the judge. Regardless, for now at least, we’ll push forward with formal architectural drawings.
II. 501 Main
Plans are starting to firm up at 501 Main. We’re targeting submission for the state permit application mid-January.
Funny enough, we’re working with the same fire marshal as 61 N Pleasant. Which I’m sure only adds to the confusion with all the back-and-forth emails and phone calls between us.
Anyhow, here are a couple things happening on that side.
Kitchen design
My kitchen supplier has been working on mock-ups of cabinet layouts. Here are a couple drafts for two of the units. Still a work in progress so no need to point out the flaws in the initial designs :)
Note: Washer/dryer combos cannot be stacked in ADA-compliant apartments. They must be side-by-side to allow access.
A lesson learned
I learned an expensive lesson in order of operations recently.
This summer, I onboarded the fire suppression engineer while the architects were still shaping the floor plans. Given the complexity of the project, my architect suggested we do this. The idea being that the engineer could provide valuable insight on efficient wall and chaseway placement as plans were being developed.
The caveat was that the plans were subject to change as we got deeper into conversations with the fire marshal, town planning commission, and other stakeholders.
Fast forward to December when we had our first meeting with the fire marshal to review the plans (long gap in between due to appraisal delays and municipal approval process). He quickly pointed out that the retail bathrooms did not meet ADA regulations. Based on this feedback, we ultimately had to combine the two retail spaces into one as we couldn't accommodate two full ADA bathrooms.
There are a couple lessons here actually. Perhaps most importantly, make sure your architects are designing to code. But I won’t harp on that as there will always be a few things that get overlooked.
Second lesson here is to watch out when different trades and engineers are being introduced to the plans. Once we realized the ADA design mistake, I sent the updated plans to the fire suppression engineer who responded that these were significant changes beyond the allowance in the original scope of work ($3,500). Another $1,000 in time would be needed to modify the plans. Although some of this cost is also due to the shift from one bedroom to studio units in four of the apartments.
In retrospect, I should not have engaged the fire suppression engineer until the architects and structural engineer had completed their plans. I’m still kicking myself—I’ve never seen $1,000 evaporate so quickly.
But the only path worth following is forward so I'll write it off as an educational lesson. I’m sure there will be plenty more.
Electric service
Moving away from onsite fuel consumption for heat, hot water, and appliances to electricity is a great goal—simplified systems, ease in submetering, and less emissions (depending on your utility provider).
But the electricity loads that come with it are insane. As we dig deeper into the electrical scope, we’re potentially looking at a 1,200 amp service (the average house is wired for 100 amps). Because of the high load, primary service (i.e. a big pole and an ugly transformer) will need to be brought close to the building.
The initial guidance from the utility company was that a new pole carrying primary service would need to be installed directly in front of 501 Main. Although all this focus on façade design and cladding materials seems futile if we’re going to clutter the aesthetics with a bunch of wires and a transformer.
One alternative would be to bury the cable, but that would mean boring underneath Main Street and running 150 feet of expensive wire. Unless we were developing luxury apartments at $3,000/mo, no budget would be able to support that cost.
Alternative #2 is potentially more appealing. Next week, I’m meeting the field tech from the utility company to discuss running the service behind the adjacent gas station. This would require the installation of a new pole or two. However, they would be hidden behind the gas station.
We’ll also discuss installing a pad-mounted transformer but that still doesn’t solve the issue of how to bring the power to the site. We’ll need some poles installed no matter what.
Here’s a quick look at alternative #2 for getting service to the building:
ONE PICTURE
I.
I saw these little retail huts just off of Main Street last month. Reminds me of the holiday market in Union Square in NYC. Similar to outdoor dining has taken over streets in the past two years, would love to see more of these around town.
📍 Hanover, NH
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 redeveloping mixed-use buildings along Main Street while trying to pick apart and replicate what makes other communities thrive.
Want to learn more about my projects and incremental real estate development? Connect with me on LinkedIn, Instagram, or Twitter.
It's inspiring to see someone working so hard and so smart to reinvigorate our community. Thank you!