ULI: How The Tools of Sustainable Development Get Built.

Sustainable Development requires adaptations for many different situations. The Urban Land Institute serves both the real estate industry and communities by giving them the ideas and tools needed to develop sustainably. And if one assumes that infill redevelopment is the most effective strategy to remaking local economies and reducing municipal and household costs, then ULI is fundamentally important.

With an infill strategy in mind, let's look at three tools developed by ULI-Chicago. Prioritized by their strategic importance and longest use to shortest, these three tools evolving sustainability are: Technical Assistance Panels (TAPs); The Preservation Compact; and regional Infrastructure.

1) TAPs test innovations. TAPs are ULI-Chicago's central public service: usually one day seminars in which ULI members volunteer their expertise, propose a written plan of action and, then, followup. Subjects typically focus on specific redevelopments -- often of suburban downtowns -- but can range from specific developments to regional issues.

TAPS helps local government think-through a problem area. TAPs also help developers see there may be new business opportunities in this community. Much like the real estate investment process, projects often can show early results in five years; but are most important for their long-term strategic value.

Also in a business-like manner, TAPs reapply existing tools to craft an innovation. Over time, this process evolves the changes that will create sustainability.

img A fast-forward example of TAPs impact started in 2003 at a south suburban townhome development called PaceSetter. While built in only the 1950s, the homes had fallen on such hard times that by the 1990s (the photo is from the ULI TAP report) that the Village of Riverdale had lost hope of solutions and wanted to start razing the 1000+ blighted units that were thought to be dragging down Riverdale.

Guardians of affordable housing approached the Chicagoland chapter and applied for a TAP. Sensing this could be a high-profile redevelopment, this early TAP started a process that averted blight from de-industrialization and, eight years later, the PaceSetter makeover into Whistler Crossing was finishing its first phase and had received its sixth award; including the first LEED-ND certification in Illinois.

While the accolades are not over for this project's unusually daring innovations, neither is the redevelopment; still rife with risk and requiring more subsidy than planned at a time when there is much less. But, look at the value the public

got. Instead of another sad half square mile of blight from de-industrialization, Chicagoland got a model suburban transit-oriented development with rehabbed moderate-income rentals co-existing with resource-efficient middle class homes; all within walking distance of daily needs of shopping, schools and transit; lowering household transportation costs and municipal infrastructure operations.

ULI's TAP panel did the early thinking and proposed complimentary innovations that improved the redevelopment's chances of success. Much like Whistler Crossing's developer who specializes in the tough, ground-breaking affordable projects, this TAP and others are successful because panelists have specific talents that, when combined, dynamically yield multiple benefits. In this way, a TAP prepares projects for Step 2 of this "Citizens Guide"; developing the multiple benefits.

img Whistler Crossing's daring innovations included LEED buildings (pictured) and the first affordable community certified by LEED for Neighborhood Development. This respective combination of energy-efficiency and location-efficiency is another example of sustainability's promise in creating multiple benefits.

 

2) The Preservation Compact shows how networks achieve sustainability. With a logical sequence similar to a TAP, The Compact first corralled its ranging problem with a plan that focused its strategy and improved its chances of solving rentals' on-going failures. The Compact's "Rental Housing Action Plan" organizes the project with "Six Keystone Initiatives To Preserve and Improve Affordable Rental Housing in Cook County." Each Keystone has an organization or government agency that "partners" with ULI; much as a developer would bring in specialty trades.

To avoid long committee meetings which get too little done, The Compact organizes its time well. Also much like an entrepreneur keen to expand its market, The Compact added a "seventh" Keystone to build skills so many smaller Cook County municipalities can benefit from preserving their rentals. This fits our Theme 2 in which the idea entrepreneur teams up with the regional synthesizer to begin Step 2.

img A sustainable future, by necessity, must preserve affordable units. But, this future faced a double threat. First, projected demand for rentals remains steady for the coming decade; but, supply drops starkly by 40%. Second, the real estate bubble bursting around 2007, then, escalated foreclosures and their cost to make-ready for rental families. Resolved, the Compact stayed on strategy and responded with this report.

Out of these crises and consistent with its strong start, The Compact well could add key innovations to sustainable development's toolbox to keep housing prices within reach. This helps families start the positive dynamic to build savings, pay taxes and allow government to invest; all multiple components of sustainability.

At this point and as an example of how Sustainability's social policies can yield multiple benefits, we suggest how The Compact contributes to the 4 areas of Sustainability offered in the 4th Theme of the Introduction to "The Citizens Guide."

The 4 components of this Theme's rendition of Sustainability dynamically help each other when they operate within compact communities… or communities intending to become more so.

Environmental Sustainability wins short-term and long. Preserving homes makes a smaller carbon footprint per unit by as much as 50% better than new construction per some studies. Second and more long-term, preserving rentals within compact developments means the daily lives of those renters annually will repeat a smaller carbon footprint of 30-60%; depending on which study you apply.

Economic Sustainability strengthens its weaker flank. Preserving the housing supply we have is the best strategy for making housing more affordable. Yet, this truth from Economics 101 has bedeviled real estate for decades. As the middle class left aging neighborhoods during the middle 20th Century, government tried to fix the problem and failed. In the last two decades, it has experimented with various incentives with growing success. The Preservation Compact for Cook County benefits from many of those experiments. And with the financial bail-out's cost driven-up by corrupted homeownership policies and Uncle Sam pulling back Fannie and Freddie, preserving rentals is even more necessary.

But the political economics of housing still hurts rentals. The Compact is not sustainable without major subsidy. To be weaned from major subsidies and be economically viable, renovating rentals needs a level playing field. Increasingl through the 20th Century, talent and financing gravitated to new construction and created suburban sprawl. With the federal government unable to subsidize the mortgage market and, hence, systemic sprawl, many developers will return to rehab if government levels the playing field.

Fiscal Sustainability improves with renovation. The fiscal burdens of deteriorating neighborhoods are well-known. Tax revenues and Quality-Of-Life drops and, soon, this negative spiral deepens and is inescapable; unless towns take effective action to keep apartments occupied. This stabilizes a neighborhood better than any other public expenditure. As a sustainable benefit, preserving rentals reduces the budget drains of social programs. And given that the updates to roads and sewers costs less than new construction, preserving rentals helps all governments balance their books for a sustainable long-haul.

Lowering Household transportation costs builds assets and feeds back into Sustainability. Preserving rentals in transit-rich neighborhoods lowers household transportation costs by 10%, as pointed out in the CNT study (provide link.). Households, in turn, can use that 10% to invest in their future (retraining, retirement) might even be able to pay for the infrastructure improvements.

Preserving affordable housing takes the various components of sustainability and ties them together to create the positive dynamic that sustainability needs to overcome sustainable. For a schematic explanation of this, refer to Theme 4 of this "Guide's Introduction."

 

3) Infrastructure Initiatives Linking Land Use Sustainably. In 2006, national ULI started its Curtis Infrastructure Initiative; publishing an annual report. The theme of each report adds to the case for linking infrastructure, land use and sustainability. The reports also lay the groundwork for Public-Private Initiatives since, to be economical, PPIs will need more compact communities. The 2010 report argues that despite the public's apparent hesitation to invest, upgrading infrastructure is required to maintain our economic strength.

For infrastructure improvements to become real, this Initiative needed programs at the regional level. In 2008, ULI selected four chapters to build prototypes.

Chicagoland's Infrastructure Committee is the most advanced and has over 45 members. It took the national model for analyzing infrastructure, called Game Changers, and evaluated Chicagoland's proposed strategic investments using these criteria (economic competitiveness, business and quality-of-life opportunities, public support, environmental sustainability, financial feasibility.) The Committee has produced two reports.

* The Lakeshore Industrial Heritage Corridor was the prototype report and explored the infrastructure needed to support redeveloping the vast area along Chicago's southern shoreline that had steel mills and stretching to the still functioning Gary Indiana plant.

* The second study explores updating seven existing infrastructure and adding two new systems of regional significance to help suburbs redevelop so they can compete in the 21st Century.

 

As concluding opinions to Technical Assistance Panels, The Preservation Compact and the Infrastructure Initiatives… we briefly suggest three ways in which ULI Chicago's entrepreneurs contribute collectively -- and possibly mightily -- to developing a sustainable region.

First, ULI incubates alternatives to sprawl. A major segment of ULI's members own developments that make communities more compact and walkable. The growing market share of this type of dense mixing of uses, in turn, feeds the region's infill strategy as a more sustainable alternative to sprawl.

Second, ULI multiplies the impact of its collaborative research. Better than most trade associations, ULI shares research and innovations among competitors. And more so than most industries, ULI members tend to be more entrepreneurial and, thus, compete more to adapt innovations to their properties. Proven by the recent revolution in energy efficiency or by how density reduces land costs per unit, this competitive dynamic accelerates the benefits of sustainability.

Third, Chicagoland's ULI chapter is a national leader. TAP was the first and remains the largest regional adaptation of the national ULI program. Also showing national leadership, a prominent Chicagoland developer, Charlie Shaw, endowed a national annual conference to explore cutting edge issues and their solutions; now in its tenth year. Also, the Curtis Infrastructure Initiative was endowed by a Chicago native. If Chicagoland is a national leader in holistic applications to achieve sustainability, the ULI chapter is a major factor.

Conclusion: Why ULI Builds The Sustainable Development Toolbox. While it is progressive and public-spirited, ULI gives its members the tools they need to profit in building a sustainable future. That helps them and most of us. As we enter that future, ULI remains the greatest source for generating the mental and real capital of innovative real estate development.

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