Category: Green Development



There was no mention of all the unique green features that are a part of the Greenbridge condominium project in the release announcing its sale last week.

In fact, the downtown Chapel Hill development wasn’t even named.

Bank of America sold the debt on the property as part of a much larger pool of 29 commercial real estate loans for $880 million.

Such a fate is hardly unusual these days for a distressed property, and it’s likely to become more common as banks belatedly come to grips with the fact that real estate values aren’t likely to make a significant recovery anytime soon.

“There are more of these deals that are getting done because the banks are getting more realistic about the value of the assets, or the lack thereof, that they hold,” said Tony Plath, a finance professor at UNC Charlotte. “We’re going to see tons and tons more of this, especially in residential mortgages.”

Plath said banks are now willing to entertain selling their distressed loans for between 40 and 60 cents on the dollar, whereas earlier they were seeking 80 cents on the dollar.

What the sale of the Greenbridge loan will mean for the project remains unclear.

Sales at the development have been frozen for 10 months, and 60 of the project’s 97 units remain unsold.

One possibility is that the new owners, a group of subsidiaries of the global investment manager Invesco, slash prices and move quickly to sell off the remaining units.

Such a scenario is now occurring at Bloomsbury Estates, the downtown Raleigh condo project that was acquired by Patten Sales and Marketing earlier this year. Patten is liquidating the remaining units as quickly as possible while still making a profit.

Such a scenario seems unlikely to occur at Greenbridge, at least initially.

Although the new owners certainly acquired the loan at a healthy discount, they aren’t Patten – a company that specializes in taking over and repositioning distressed properties.

Bill Hensel, an Invesco spokesman, declined to comment, adding that he wasn’t even completely sure that the Greenbridge loan was a part of the portfolio that the company acquired.

Buy first, analyze later

That doesn’t surprise Plath.

“Essentially what they’re doing is buying a bag of paper, and then they’ll sift through it after the fact to find out what exactly they own,” he said. “But remember, when you’re paying 20 or 25 cents on the dollar it doesn’t pay to examine each loan you buy.”

Property records don’t show the price Invesco paid to acquire the Greenbridge loan.

The developers borrowed $43.25 million from Bank of America and still owed $29 million as of this past summer. If Invesco paid 60 cents on the dollar, that would put the purchase price at $17.4 million.

The most likely outcome for Greenbridge is that the property will be sold again to a buyer more interested in owning a condo project in Chapel Hill.

“It will be, and they’ll make money,” Plath said.

News&Observer


CHAPEL HILL —        Police charged three people with rioting and  damaging property after a group of protesters vandalized the Greenbridge  condominium project in downtown Chapel Hill over the weekend.

A group of 15 to 20 people entered the building on West Rosemary Street on  Saturday afternoon while another group stood on the sidewalk with signs asking  drivers to honk if they opposed the project, said Lt. Kevin Gunter of the Chapel  Hill Police Department.

An officer initially thought the protest was confined to the sidewalk. He  then learned more protesters were inside. The suspects sprayed foam inside the  lobby, broke furniture and moved couches and end tables to block the elevators,  Gunter said.

The protesters ran out a side door, Gunter said.  Police caught three of them and charged each with one count of felony rioting  and two counts of misdemeanor damage to real property. They are:

Brian Paul Dingledine, 37, of  Chapel Hill.

Karoline Patrice Knable, 26, of  Durham.

Kyle Daniel Whisenant, 27, of  Greensboro.

All three posted bond and were released. Two will have public defenders  appointed to represent them; the third plans to hire a private attorney. They  are scheduled to return to court July 7.

Greenbridge, a $56 million pair of seven- and  10-story condominium buildings with commercial and planned restaurant space on  the ground floor, sits on the edge of the historically black, working-class  Northside neighborhood.

Critics say the project, where condos top out at  more than $1 million, will hasten gentrification in Northside. Census data,  however, shows the neighborhood began losing black residents and seeing more  student rentals long before the project opened last summer.

Since 2007, 20 incidents at Greenbridge have been  reported to police, Gunter said. Nine have been related to vandalism and/or  graffiti. There have been two bomb threats and four trespassing  incidents.

“This is the most serious situation we’ve encountered there,” Gunter  said.

Efforts to reach Greenbridge partner Tim Toben for comment Monday were  unsuccessful.

The project faces foreclosure because of cost overruns and a freeze on  condominium sales. About a third of the approximately 100 units have been sold,  including 15 priced to meet the town’s affordable housing rules.

Last week, Toben said Bank of America has  indefinitely postponed a scheduled June 27 sale to give the partners time to  find an investor to buy the property’s outstanding debt.

BY MARK SCHULTZ – Staff Writer, N&O


Chapel Hill condo-retail project gets under way without debt – Real Estate News – NewsObserver.com.


Greenbridge developers say they have investors – Real Estate News – NewsObserver.com.


In February 2008 Ken Lewis, then CEO of Bank of America, gave a speech at the N.C. Emerging Issues Forum in Raleigh.

“Green commercial construction is a very big deal for our industry in general and Bank of America,” Lewis said. “We’re very excited about Greenbridge, an eco-friendly residential development here in Chapel Hill we’re financing.”

Today, Lewis is long gone and so, apparently, is much of the Charlotte bank’s excitement about Greenbridge, a $54 million project that has drawn national recognition for its numerous environmentally friendly features.

In October, Bank of America refused to pay the final $1.6 million in invoices on the completed 10-story project in downtown Chapel Hill. That led the general contractor, Weaver Cooke Construction of Greensboro, to file liens against the development.

Tim Toben, a partner in the Greenbridge development, is now bracing for the likelihood that Bank of America, which loaned the project $43.8 million, will foreclose.

The Greenbridge partners, after initially stepping in to cover the project’s costs and interest payments, ran out of money in January.

“We just needed the bank loan to fund the project,” Toben said.

Greenbridge’s plight is the latest local example of the problems that continue to plague the commercial real estate industry. While developers of high-profile projects seek patience from their lenders, those same lenders are under pressure to deal with the troubled real estate loans on their books.

About a third sold

Greenbridge has sold 36 of its 97 condo units.

The last sales occurred in early December, and only because Weaver Cooke temporarily lifted the liens to allow the sales to close.

“We still have 15 contracts that got frozen basically when the liens got put on the building,” Toben said. “A lot of those [contracts] are beginning to evaporate. We can’t do anything until these liens are removed, and the liens can’t be removed until the invoice is paid.”

A Bank of America spokeswoman said customer confidentiality prevents it from discussing any details of its relationship with Greenbridge.

“But I can tell you that we have been working with this borrower for some time to help address the financial issues impacting the project,” spokeswoman Shirley Norton said.

Last week, Bank of America appointed a new substitute trustee for the property, which also includes 36,000 square feet of retail and office space.

Toben said the bank cited the fact that the contractor “exceeded his guaranteed maximum price” as the reason for refusing to pay.

Bank of America and Greenbridge Development each owe the general contractor several million dollars, said Dan Estes, Weaver Cooke’s president.

The final invoices that Bank of America balked at paying were costs above and beyond what was budgeted. Toben said cost overruns were inevitable given the project’s use of cutting-edge technologies.

LEED certified

Greenbridge is the first mixed-use project in North Carolina to earn the Leadership in Energy and Environmental Design, or LEED, Gold certification. Its green features include solar energy, water conservation and energy-reduction systems.

Estes said he can understand Bank of America having a problem with the final invoices. But he said the bank was well aware of earlier cost overruns, which makes its decision to dig in at the end puzzling.

“They had their guy on site that was involved in the project,” Estes said. “It isn’t like it was a big surprise to anybody.”

Estes and Toben have been working on an agreement that would allow Weaver Cooke to receive the proceeds of future units sold once Bank of America is paid off.

Estes and Toben say the bank has refused to sign off on such an agreement.

Toben and his partners, meanwhile, have refused to sign a forbearance agreement that Toben said would have forced the developers to give up all rights to make future claims against the bank.

Even if Bank of America had not stopped paying invoices in October, Greenbridge would still have needed to either negotiate an extension with the bank or find an equity partner to buy out the loan.

Greenbridge’s construction loan comes due in July, and Toben estimates it will take two years to sell the remainder of the units.

Of the 36 condos that have sold, 14 were the project’s affordable units priced at under $100,000. In an attempt to boost sales, Greenbridge has discounted some of its market-rate condos, which range in price from $259,000 to nearly $1.5 million, by as much as 15 percent.

Toben, who also serves as chairman of the N.C. Energy Policy Council, believes Greenbridge’s problems expose a systemic problem.

“We bailed out these banks,” he said. “We’ve brought them out of insolvency. And what do they do but drive us into insolvency. It is really to me such a great frustration.”

Estes said he’s continuing to work with all the subcontractors on the project to find a solution.

“As far as I know it’s not a completely done deal that we’re not going to get paid,” he said. “I’m hoping somebody comes to their senses here somewhere.”

 
BY DAVID BRACKEN, News and Observer

DENNIS SMITH: Agriculture and urban development can coexist – Community Voices – Modbee.com.


It’s been two years since 34-year-old Jdimytai Damour was trampled to death by a frenzied crowd of Black Friday shoppers at a Long Island Walmart. The stampede is a twisted symbol of what’s become of the American Dream: We’ll apparently stop at nothing in the quest for more stuff.

But that wasn’t the holy grail that James Truslow Adams had in mind when he first coined the phrase “American Dream” in his 1931 book, The Epic of America. Instead he believed in “that dream of a land in which life should be better and richer and fuller for everyone … It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”

Adams wrote that as the Great Depression was beginning to swallow many Americans’ dreams — and their fortunes. Perhaps that time of financial instability helped him to see something beyond just the grasping for wealth. As Americans today are trying to claw their way out of our worst economic rout since the days of Adams, have we gained any similar insight?

The end of the second World War ignited the spark of our consumer culture — one that reached a conflagration by the 1980s as spending outpaced the median income and has ended, for many, in catastrophe in recent years. As heartbreaking as the job losses and foreclosures are, there is also a bright side to the downward economy — Americans are beginning to see some value in the “less is more” adage.

RIP McMansions

The era of “bigger is better” has brought us the infamous McMansion, which Wikipedia defines as, “a pejorative term for large new houses which are judged as pretentious, tasteless, or badly designed for their neighborhood.” They could otherwise be likened to the all-you-can-eat buffets of the building world. Or as Kim Derby writes for EcoSalon, they are “Poorly built and inauthentic, most look like they belong on a movie set because their facades are just that, a facade.”

Once ubiquitous on the suburban skyline, the days for McMansions may now be numbered, much like the way the mammoth Hummer has been pushed toward extinction.

Cindy Perman writes that the median home size has shrunk from 2,300 square feet in 2007 to 2,100 today. That may not seem like a huge jump, especially considering the average home size in the U.S. in the 1950s was 983 square feet, but the downward decline is a first in modern times and compared to the building frenzy that produced 10,000 square foot McMansions, it’s definitely a step in the right direction. After all, the average family size has actually shrunk from 3.8 people in the ’50s to 2.6 people today.

Kermit Baker, the chief economist at the American Institute of Architects told CNBC, “We continue to move away from the McMansion chapter of residential design, with more demand for practicality throughout the home. There has been a drop off in the popularity of upscale property enhancements such as formal landscaping, decorative water features, tennis courts, and gazebos.”

This year’s Builder magazine concept home is only 1,700 square feet and many builders today, Perman writes, are rethinking how they design homes — getting away from the myriad “bonus” rooms and instead focusing more on great rooms — large family rooms that can accommodate different uses and bring family together in communal spaces. The trend is catching on — one-third of people surveyed by the real estate Web site Trulia.com said they’d actually prefer a house under 2,000 square feet.

Tiny Homes Make Big Gains

For a growing number of people even 2,000 square feet is too much space and so they’re saying goodbye to the albatross of expensive mortgages and buying into the “tiny house movement” instead. “I woke up to the reality that I had taken on too much risk during good times and was totally unprepared for tough times,” wrote Michael Janzen for Yes! magazine. “Armed with this better understanding of the financial risks I’d already committed to, I started looking for answers and found the tiny house movement, which offers a different way of thinking about housing.”

This movement focuses on how much space (and stuff) we actually need, instead of how much we want or think we’re suppose to want. Janzen learned about tiny living from Jay Shafer who started Tumbleweed Tiny House Company and spent years living in spaces under 100 square feet. Janzen is in the process of building a house with found and reclaimed materials that will be built on a trailer and contain 80 square feet of indoor living space. What do you get for 80 square feet? In this case, room to sleep three (two in a loft and the third on a flip out bed), a small kitchen and bathroom with a composting toilet.

Janzen is thinking of his new house as a second home and safety net if times get tough. Others use tiny homes as offices or guest rooms in their yards, or affordable vacation homes. But many people are happy to call a few hundred feet of space their sole residence. “It’s very un-American in the sense that living small means consuming less,” Shafer told the AP. “Living in a small house like this really entails knowing what you need to be happy and getting rid of everything else.”

A hundred feet of space may make some people claustrophobic, but so too can mountains of debt. For people struggling to pay expensive home loans, the idea of getting a house for only 20,000 bucks or getting the plans for only a few hundred and building it yourself may seem like a breath of fresh air. Shafer’s Tumbleweed Tiny Homes business is booming, the AP reports he now sells 50 blueprints a year instead of the 5 he was averaging a decade ago. And it’s not just Shafer, the Tiny House Blog run by Kent Griswold gets 5,000 to 7,000 visitor a day and the Small House Society, has grown from 300 members just five years ago to over 1,800 today.

Dee Williams is one that has joined the ranks. In 2004 she sold her 3-bedroom Portland bungalow, got rid of her $1,000 monthly mortgage payments and instead invested $10,000 in a 84 square-foot cottage, complete with solar panels. Now her only home-related expenses are $8 a month for heating.

A smaller living space inevitably means rethinking how much stuff we own. “The more intentional you are in your choices, the more every change makes room for more changes,” she told Yes! magazine. “It doesn’t make me feel bad about myself. I just love that there’s this endless potential. To see that you have this power. You get to choose what you want. That’s been cool.”

Downsizing by Design

Somewhere in between McMansions and tiny homes are most of the rest of us. And even those who are in the middle are looking for less.

Between 2007 and 2009 first time home buyers made up 41 percent of the market and the National Association of Home Builders reported that these buyers were purchasing houses that average only about 1,800 square feet — considerably smaller than the national average. And it turns out, it’s not just first timers that are getting smart about saving money and doing more with less space, as Baby Boomers are finding themselves with empty nests, and some with tightened retirement funds, downsizing is becoming more popular.

Erin Conley recently helped a Southern California grandmother move to San Francisco and switch from 1,300 to 950 square feet. Conley owns the San Francisco-based business Rightsize By Design, which helps people downsize and relocate. Conley’s company helps people figure out which stuff to keep and what to get rid of (in the greenest possible fashion), packs boxes, coordinates with moving companies, and then unpacks and redesigns the new space — from hanging art to setting up electronics.

“What I do is ‘interior redesign,'” said Conley. “It’s not about going out and getting new stuff, but about using what people already own and getting rid of the stuff they don’t need.”

Some of her clients are green-minded San Franciscans who are conscious about reducing their consumption and others are hoping to save money as they get older.

A Greener Housing Market

As people have become more inclined toward smaller spaces, they’ve also become more aware of energy efficiency — not only do people want more economically-sized homes, but they also want to spend less on their energy bills — they’re looking for renewable energy sources, smart appliances, water-saving fixtures, and energy efficient windows and insulation.

And the green benefits are even more robust when you consider another trend: walkability. People are increasingly preferring to live in walkable neighborhoods and are passing up houses in car-dependent suburbs.

“Boomers are downsizing as their children leave home while the millennials, or generation Y, are setting out on their careers with far different housing needs and preferences,” wrote Patrick C. Doherty and Christopher B. Leinberger for the Washington Monthly. “Both of these huge demographic groups want something that the U.S. housing market is not currently providing: small one- to three-bedroom homes in walkable, transit-oriented, economically dynamic, and job-rich neighborhoods.”

Not only it is a quality of life decision — it’s also an economic one. Families in walkable neighborhoods spend 12 percent of their income on transportation Doherty and Leinberger report, compared to 24 percent for those in car-dependent suburbs — that can mean the difference of $100,000 when it comes to affording a mortgage.

This new urbanism will require bold steps in sustainable development — something that may get a boost from an unlikely source: the federal government’s Department of Housing and Urban Development (HUD), now under the leadership of Shaun Donovan. He told the Senate: “HUD can help develop communities that are livable, walkable, and sustainable by joining up transportation and housing to give families the choice to live closer to where they work and in the process cut transportation costs.”

This initiative is being driven by Shelley Poticha, the head of HUD’s Office of Sustainable Housing and Communities. “When you look at the regions that are really embracing walkability, investing in transit, and thinking about natural resources protection, these are the regions that are weathering the downturn best,” Poticha told Builder magazine. “We’re looking at changing the rules of the game so that sustainable communities have a fair chance of succeeding in the market.”

All this is good news for the environment and for community, too. A focus on smaller homes in pedestrian-friendly neighborhoods means that people are more likely to hang out in public spaces or at local businesses. Smaller houses for many has also meant smaller yards, which can result in more people visiting local parks or participating in community garden spaces. One couple who downsized from a two-bedroom apartment and few cars to a studio and bikes realized they could afford to work from home, go back to school and have more time to travel, visit with family and volunteer.

Sometimes it takes a catastrophe to create a little growth — cultural growth, instead of economic growth. Instead of our ravenous hunger for more, some Americans are learning that living with less has a lot of rewards even beyond the obvious economic benefits. E.F Schumacher of “Small Is Beautiful” fame wrote, “The less toil there is, the more time and strength is left for artistic creativity.” As we pick up the pieces of our shattered economy, perhaps we can rebuild with a more enlightened idea of how much is enough and a more holistic view of wealth — one that does not merely reflect the size of our homes, but instead the largeness of our lives.

By Tara Lohan


State board is reconsidering new rules as builders cite added costs in a bad market.

As an international building-code council debates energy efficiency this week in Charlotte, its host state is waffling over the costs of requiring new energy-saving measures.

About 1,200 people are in town for the International Code Council’s annual conference and code hearings. ICC codes serve as models for state and local jurisdictions.

The N.C. Building Code Council seemed poised this year to adopt changes, based on the ICC, to improve building energy use by 30 percent. But in September, the council took the changes off the table as homebuilders protested changes they said would add costs in a tough housing market.

“We’re not just concerned with the added cost of the building, but the cost to the consumer,” said Robert Privott, a code official of the N.C. Home Builders Association. “With the market the way it is, this is just too much too quick.”

Those cost estimates vary widely, from $2,400 to $11,000 for an entry-level home. “Every individual who’s interested comes up with a figure,” said Tom Turner, the Charlotte architect who leads the council’s energy-code committee.

Gov. Bev Perdue had committed the state to adopting efficiency measures in exchange for millions of federal dollars for energy programs. A $500,000 Energy Department grant had paid to revise the energy code.

Perdue also appoints code council members. After hearing from the governor’s office, the council agreed to reconsider the changes, published reports say. The energy code committee will revisit them Nov. 9 and Nov. 14, and the full council meets in December.

On Wednesday, green-building advocates used the ICC’s presence to lobby for the new measures.

Energy efficiency can pay for itself, the advocates said at a news conference, with energy savings canceling the extra cost of more insulation or tighter air ducts.

Asheville building consultant Chris Mathis said shaving $50 a month from energy bills, spread over a 30-year mortgage, would pay for $9,000 in upgrades to a house. One problem, he said, is that energy-efficiency costs aren’t often included in home appraisals. That means either buyers or builders have to swallow the extra expense.

Charlotte engineer Kim Reitterer, an N.C. code council member, quoted a national survey showing that efficient homes sell faster. “It’s the one benefit that homebuyers recognize,” she said.

Advocates say that updating the N.C. code will create jobs, bring in federal training money and help buyers avoid foreclosure by reducing utility bills.

Many builders aren’t convinced.

“The two things that scare builders are change and the fear of increasing costs and losing money,” said Chad Ray, a green-home builder in Zebulon whose family has worked in the trade for 35 years.

Privott, the N.C. Home Builders official, said builders are willing to compromise but prefer phasing in the changes over a longer time.

By Bruce Henderson
bhenderson@charlotteobserver.com
Posted: Thursday, Oct. 28, 2010

Two issues, cost and return, are critical for real estate investment and development decision making. What can a developer do to ensure his or her investment in sustainable design is a successful one?

via The Business of Sustainability.


In New York City’s South Bronx, a new 47-unit complex is proving that green and affordable can go together. Fox Point, developed by New York City–based Palladia Inc. and Enterprise Community Partners, is showing that environmentally sound homes for lower-income households can be a model for the future.

Among the green initiatives at Fox Point are a microturbine system that generates electricity using heat from the boiler that ordinarily would be wasted, reducing the building’s utility costs.

“Fox Point is an excellent example of what you can do with the right combination of innovative thinking, forward-looking partners, and well-thought-out design,” says Victoria Shire, deputy director of Enterprise Community Partners, New York City. “The usual perception is that green is more expensive, but it’s not. The Enterprise Green Communities Initiative has shown that building green calls for thoughtful improvements in decision making, requiring architects, owners, contractors, subcontractors, and others to work together to build differently.”

The greenest thing about Fox Point is that it was built one block from a subway line, adds Sally Bernstein, senior director, capital planning and development, at Palladia. “We have also made sure we have an airtight building envelope with great insulation—something any building could do—and we made sure that paints, carpets, and sealants were all made from low-emitting materials.”

Paul Freitag, a regional director of development at Jonathan Rose Companies (JRCo), a mission-based multidisciplinary real estate firm with its headquarters in New York City, agrees. The 222-unit Via Verde (the Green Way)—which JRCo is codeveloping with Phipps Houses in partnership with Dattner Architects and Grimshaw Architects—is a green, affordable housing development, also in New York’s south Bronx. “We utilize low-tech strategies like cross-ventilation, solar shading, and green material choices, as well as planted green roofs, photovoltaic panels, high-efficiency mechanical systems, and energy-conserving appliances,” he says.

Green and affordable will continue to go together and may offer new opportunities for U.S. entrepreneurs, says Stephen Whyte, managing director of Seattle-based Vitus Group, a developer of affordable housing that emphasizes sustainability, green asset management, use of alternative energy sources, and ongoing energy consumption monitoring. Vitus built the 32-unit Northwood Place in Ketchum, Idaho, a 100 percent affordable development that uses solar power to generate electricity in the common areas and uses geothermal energy to melt snow on walkways and on the parking surfaces. “Because of the heavy Idaho snowfall, owners usually had to significantly increase the size of the parking areas so they would have a place to store the snow,” says Whyte, who is assistant chair of the Affordable/Workforce Council of ULI. “By using geothermal energy, we don’t have much snow buildup and thus could construct more units on less land, making Northwood Place more affordable.”

Whyte says his firm continually studies new trends in green, affordable development and urges those interested in the sector to do the same. “You can always learn from the experts since the green, affordable trend is in its infancy,” he says. “Reach out to others to find out what works and what doesn’t.”

Green, affordable developers also should provide information on their efforts, Freitag says. “Perhaps a builder could feature interactive panel displays in the lobby about how the green building works,” he says. “You should show tenants and visitors how you’ve achieved green.”

Shire advises builders to continually model system performance—before beginning construction as well as after completion—in order to set benchmarks. “Performance data drive operations,” she says. “Building green, affordable housing requires making green commitments in plans and specs and really closely watching construction—not just photovoltaic panels, but the little details to make sure you get everything done the way it should be done.”