In 2001, I was tapped to lead an affordable housing initiative called First Homes in Rochester MN for which I was sorely unprepared. We've financed more than 950 units of housing since 2001, in Rochester MN and the surrounding area. That's more than $150 million of investment in affordable rental and ownership housing. Our charge at the beginning was to create housing units for the local workforce as fast as possible. More than 100 local businesses, led by the Mayo Clinic, contributed more than $14 million to get things started.
I'm proud of our achievements, particularly the affordable homes we've helped create which provide a stable, affordable lifestyle for many low income families and children.
But there's a catch. Many of the homes we helped create contributed to sprawl. Our initial charge to create affordable homes fast meant that we took the fastest road when it came to siting developments.
In order to get things rolling, we had to go where the land was, and more importantly, where the ownership, zoning and infrastructure would allow for quick development timelines. It sounds obvious, but when a group of businesses give you $14 million, they expect results - right away. One thing we did right from the start was prohibit predatory mortgages, so we've avoided much of the housing crisis repercussions as a result.
I knew what we were doing wasn't sustainable. I knew that it could be much better. It took someone who literally knows nothing about housing or real estate finance to help show me the way.
I've been friends with polar explorer Eric Larsen since freshman year in college in 1989. Eric has always been the environmental conscience of those around him. Back in the early 1990s recycling was in its infancy, and we were accustomed to throwing away our aluminum cans. (Single use plastic water bottles were not in use at the time.) When they added the recycling bins at school, Eric would go through our garbage and take the recycling to the proper bins. God help you if he saw you throw away a pop can! Fast forward to the mid 2000s. Eric passes through Rochester from time to time on his many travels. He kept a small desk in my office for his use while he was in town. I'd take pride in showing him our housing projects, and he had a way of appreciating our progress while making an annoyance of himself by asking questions about our sustainability, our green building practices, and our impact on the environment.
Of course my first reaction was resentment. Eric obviously didn't (and still doesn't) understand the complexities of real estate development finance, and our project were hard enough to get accomplished without adding the complexities of "green building". Green building by the way, means different things to different people. For my purposes, it means a sustainable development approach that minimizes the environmental impacts and maximizes the long term liveability of the homes and neighborhoods.
Having an external conscience can be annoying, but helpful. As I thought more and more about the future of our organization and the community, I began to see that greenfield developments, while great for quick production of large numbers of suburban style homes, would only contribute long term to our community's bigger problems. Problems like connectivity, lack of walkability, reliance on cars and huge roadways, long term infrastructure costs, water quality issues, and a reduced quality of life. I started looking
around Rochester and I realized that the core neighborhoods were in serious disrepair. Decades of disinvestment, rental conversions, and parking lots to support the downtown had led to a virtual concrete moat around the downtown and dilapidated housing stock all around. Neighborhood associations had formed to address the crime these conditions created. However, the neighborhoods were unable to change the conditions and
addressed only the symptoms of the problem - crime and disruptive rental properties.
Sustainable Sites
I saw an opportunity to redirect our organization to a more sustainable approach by embracing the core neighborhoods. At the same time, downtown revitalization became a community aspiration, and our efforts would assist in creating the conditions for the downtown to improve. Our first effort was to begin purchasing dilapidated homes in the core neighborhoods and rehabilitating them. After the first few successful homes, we started working with the neighborhood association in the Kutzky Park neighborhood. It was immediately clear that without some type of long range plan, our efforts would be a drop in the bucket. We put together a process called Imagine Kutzky as a grassroots effort to build a long range plan for the neighborhood. Once we had the plan, First Homes began rehabilitating homes in earnest, and eliminating homes that the neighborhood identified as beyond repair.
Green Building
Eric continued to hound me about our building practices. He suggested green building as a way to decrease our organization's carbon footprint and to save money for our home buyers. We had heard from funders that green building was desirable, but no one could really tell us what green building meant. We hired a talented young architect named Adam Ferrari to lead our rehabilitation efforts. He immediately saw the green building opportunities within our organization and put together a plan to produce green rehabs
- or as he calls them, GreenHabs. The problem was, we couldn't find a good source of information about how to complete a green rehab, specifically, which investments paid off in terms of long term cost savings, environmental impact, and salability. Adam developed a program designed to use our rehab projects to produce the research necessary to understand the answers to these questions. We are in the middle of that project, with more than 15 homes completed to extremely high green standards - beyond
the requirements of our funders - and we intend to publish the results of our experience so that others can learn from them. We also decided that as an organization we would require ourselves and other developers we work with to develop new construction to meet LEED certification. We are just starting our second LEED project and the learning curve has been steep, but valuable.
First Homes has become a leader in core neighborhood revitalization, green building, and sustainable design in Minnesota. This is a far cry from our early days of counting rooftops in corn fields. We took an incremental approach to this change and it was difficult. But as Eric says – " begin with one step."
Our organization's orientation to sustainability has ensured our very existence. Without our focus on the core neighborhoods we wouldn't have survived the shift in funding priorities of our major funders. Our embrace of provable green building practices has ensured our reputation as an innovative organization that can adapt to the changing economy, funding patterns, and building best practices. Eric, to his credit, has never said I told you so - but he certainly hasn't let us off the hook. Our newest building which will be certified as LEED Silver, will be completed about the time Eric comes back from Mt. Everest. I fully expect him to ask why we didn't go for LEED Platinum. I won't have a good answer. But I'm already thinking about our next project and how we can get a little closer to Eric's, and now our, vision.