We see four steps to make a credible pitch to new wealth committed to affordable housing in the Bay Area. Those steps are underground parking platform analysis, updated pro formas, market research and corporate structure.
Underground Parking Platform
The location of the platform needs to be optimized. The 2% slope for drainage remains the same, but the modeling of the platform would be rotated and elevated up and down to optimize how much fill it can replace to reduce costs of hard rock grading.
Updated Pro Formas
With better estimates for the costs of excavation and the platform, the pro formas can be revised with recent costs to estimate the affordability incentive and analyze it for HUD affordability.
Market research would focus on the key markets using travel diaries, interviews, and focus groups. The affordability incentive will attract interest making people want to know what the catch is, and education can see if the project will work for them. Conventional developers do not do this kind of research but it is essential for estimating an absorption rate. The size of the parking structure could be reduced based on market research. Building all spaces that are allowed could result in unleased spaces and loss of expected revenue. Even with a careful estimate of parking demand, there may be unleased spaces that could be used for other purposes such as personal storage.
The philosophy is to have a project that works for everyone who does not need a car for routine trips. That include renters and buyers in the same project, which does not happen for new development. Condo owners are allowed to rent, which means developed projects have mixed tenure, which can cause problems if the HOA is not strong enough to del with problem tenants. There is also the issue of balancing owner rights in the HOA with the entity managing the rentals. There is opportunity here for better marketing to both renters and buyers, and rent-to-own should be part of the system. There can be change of tenure options and move up options as well.
The City council would pass a resolution approving all of the above, amounting to near-entitlement, leaving only technical documents needed to move to final maps, warranty and other requirements to get a grading permit and start on site improvements. Near entitlement greatly reduces the cost and risk of an application. The City would prepare a Letter of Intent (LOI) included a Purchase and Sale Agreement (PSA). The LOI would have technical components developers need to sign on. A developer could come forward but also it will probably be necessary to take the project to the new money interested in increasing housing in the Bay Area which not as hide-bound as conventional developers.