APA Planning Academy October 22, 2013 Multi-Family Risk Tolerance John Campanella

1. APA Planning Academy October 22, 2013Multi-Family Risk ToleranceJohn Campanella

2. Overview • Site availability and cost • Allowable multi-family residences • Parking requirements • Absorption – rental lease-up / sales rate • Financial feasibility

3. Site Availability and Cost • Existing Use Residential, commercial, vacant • Neighborhood Multi-family, commercial, historic resources • Ownership Private owner, professional company

5. Allowable Multi-family Residences • Zoning • Residences allowed • Number of stories allowed • Height, set-backs, open space • Size of site / ability to merge sites

8. Parking Requirements • AUD areas – minimum 1 car per residence Applicant can request more • 1 car per residence lowers cost per unit Reduces structure size, bulk and scale Reduces structure cost Allows for more residences in same structure Allows for more open space

9. Absorption – Rental Lease-up / Sales Rate • Rentals – lease up period (net expense) Realistic time – rents / number of residences Construction loan funds prior to mortgage • Sales – escrow closings per month What “market bears” --- in a limited time frame 50% multi-family pre-sales for FNMA approval Developer guarantees to repay in 18 to 24 months • Lenders validate up-front or will not finance

10. Financial Feasibility – Residences Per Acre • Sales – up to 36 residences / acre • Rentals – up to 63 / acre • Employer sponsored sales – up to 63 / acre • Cooperatives – up to 63 / acre • At lower density – likely luxury units Unless owner develops or invest significant equity

11. Economic Comparison

12. Economic Comparison

14. Financial Feasibility – Residence Mix • Rentals – considerations 60% of residences in Santa Barbara are rentals 55% of rentals are one-bedrooms Average number of bedrooms is 1.50 • Sales – considerations 10% of owned residences are one-bedroom Average number of bedrooms is 2.50 • What product do workers want and can afford?

16. Financial Feasibility – Property Priority • Santa Barbara is a built-out city Underutilized properties are the opportunity • The owners may not want to sell Cash flow with no debt, avoid development risk • Commercial Properties – great opportunity But are expensive (cap rate) / other uses

17. Financial Feasibility – Mixed Use • AUD allows retention of the commercial SF Can be rebuilt onsite or sold to others • Residential has lower parking requirements • Residential more valuable on upper floors • Commercial more valuable on ground floor • But compatibility issues – usage and size

18. Financial Feasibility – Horizontal Mixed Use • Redevelop a block / zone of scale • Housing, work space, retail, other commercial • Centralize parking in multi-levels for all uses • A “village” –La Entrada horizontal model? • Creatives stay in Santa Barbara / spend $$$ locally

19. Discussion – Horizontal Mixed Use • Does this help the production of housing? • Does this help economic development? • Are there other benefits? • Are there similar examples elsewhere?

20. Cota Street Site CM Zone C D E

21. Project C – Cota Rental Design Team Detty Peikert Bob Kupiec David Black Cass Ensberg Bonnie Sangster Jaime Palencia Project Statistics 0.99 Acres 56 Units 1,500 s.f. Commercial 59 Surface & Tuck-under Parking 31% Open Space/Landscaping Lessons Covered Parking makes Room for Open Space 56 Units per Acre

22. Project C - Rental Elevations/perspectives $371,702 per unit or $1300-$2100 rent per month

23. Milpas Site A B

24. Project B1 – Milpas Rental Design Team Keith Rivera Ellen Bildsten Susanne Tejada John Moyer Project Statistics 1.54 Acres 79 Units 10,500 s.f. Commercial 79 Surface & tuck-under Res. Spaces 21 Surface & Tuck-under Comm. Spaces 20% Open Space/Landscaping Lessons 3-4 stories = 20% on grade open space 2-3 stories = 0% on grade open space 51 Units per Acre

25. Project B1 – Milpas Rental $366,400 per unit or $1200-$1950 rent per month

26. Hotel Santa Barbara