Daily Transcript Staff Report
Wednesday, June 14, 2017
While the city weighs the benefits of massive developments like SoccerCity, a contingent of small-scale developers continues to stitch smaller additions to the urban fabric in the form of infill projects.
A trio of developers spoke Tuesday about the opportunities and challenges associated with small-scale, infill development at a breakfast panel hosted by the Urban Land Institute San Diego-Tijuana chapter.
“Everybody’s talking about SoccerCity recently, but the things that impact the communities that we live in and could potentially… address our housing supply in an urban area are these types of projects,” said moderator Omar Passons, a construction and land-use attorney who is involved in community development projects throughout the city.
The panelists agreed that one of the greatest impediments to infill development is financing, especially with construction costs skyrocketing.
Keegan McNamara, principal of Solana Beach-based development company McNamara Ventures, said one of the primary drivers of construction-cost increases is the current labor shortage.
“Every subcontractor is booked for who knows how long. It’s hard to get them to bid, and when they do bid the costs just keep going up,” McNamara said. “I think in the last cycle, when we hit the downturn, a lot of our subs left San Diego, and I don’t think they’re coming back.
“In terms of labor, it’s extremely constrained right now.”
Bothwell Builders principal Matt Bothwell said the high cost of housing is the “tail wagging the dog” when it comes to the labor shortage.
“If we had a lower cost of housing – if we were able to build faster, more efficiently, get our permits faster, have more certainty – we could provide lower-cost housing, and then those [skilled laborers] wouldn’t have to leave to migrate to areas where they can afford to live for the job they do,” Bothwell said.
Passons, who lives in North Park, asked the panel how they scout out the “next big thing,” in terms of an area that is ripe for revitalization.
Architect, developer and contractor Lloyd Russell, who has been creating infill projects in San Diego since the 1990s, said he doesn’t necessarily want to be the first on the scene. He said one of the biggest challenges to getting financing is receiving a fair appraisal for a bank loan.
“If I were looking for the next place, I would be looking for where someone went out and did a successful project,” Russell said. “When we started out in Little Italy eons ago with the redevelopment agency, we couldn’t get financing because there was nothing new that had been built in twenty years. And you build something and then all of a sudden there’s a [comparable] for other developers.”
Regarding the myriad zoning and development regulations imposed on developers, Russell said he would like to see the city give small-scale developers more latitude in designing a project. He cited the rules in Portland, Ore., which employs a form-based code, as opposed to use-based zoning.
“They give you a building envelope and that’s it – no [floor area ratio], no density, in some situations no parking restrictions – and there’s no brain damage in figuring out how to develop a property,” Russell said, adding that, if San Diego took the same approach, small-scale developers would “build as much as we can in the appropriate size for what the market demand is.”