May 2, 2011 - From the April, 2011 issue

California Infill Builders Association: For Infill Builders, By Infill Builders

The California Infill Builders Association hosted an L.A. launch party earlier this month, where they shared and engaged participants in a discussion of their primary agenda items (redevelopment, CEQA, and parking) for land use policy. To address the need for a new organization of infill developers around the state, TPR is pleased to present the following interview with Meea Kang, president of Domus Development, and John Given, principal of investment and development at CIM Group.

Meea Kang

Meea Kang, as the President of the California Infill Builders Association, why is a new organization needed, given the BIAs, the Bay Area Council, the Central City Association, the AIAs, and all the other groups that advocate for development? Why an Infill Builders Association?

Meea Kang: Infill development is very particular. There are many barriers to developing good infill projects statewide. There are a lot of regulatory hurdles in conflict with good development, and we needed an infill voice at the table to express our needs so that we can build these projects more efficiently, help meet the goals of SB 375, build more communities near transit, and allow us to grow more sustainably in California. Specifically, builders founded the Infill Builders, so we speak from a builder's perspective.

John, help define where the interests diverge within the development community. Why the need for a niche organization around infill?

John Given: We came together through a series of seminars sponsored by the Bank of America at the UCLA and Berkeley law schools looking at implementation of SB 375. There was a lot of talk about barriers, and barriers led to a lot of the same old saws that all of us have been through. What became clear was that nobody disagrees with infill development. No building group has a bone to pick with it, and no environmental group has a major bone to pick with it. In fact, at the broadest level, infill represents the state land-use policy. The problem is that the expertise in lobbying for infill and the credibility of lobbing for infill is highly dispersed. The strong influencers of land-use legislation have bigger fish to fry, and the legislators who look to them very closely to indicate their preferences do not see a viable alternative that both of the large interests will support.

More than ten years ago, smart growth was the dominant theme for the advancement of development in California. Much of the argument was that infill was the smartest way to go, and there ought to be incentives for infill in the review process, but just the reverse remains policy. Has anything changed in the last ten years? Are infill developers still making the same arguments and getting little response?

Given: There have been anecdotal advancements that vary from one jurisdiction to anther, but the overriding presumption of incentives associated with the discretionary actions of environmental review add up to a greater barrier to cost-effective, lower-risk development than more traditional, horizontal greenfield development.

Meea, share a bit about your firm, Domus Development: where it is building, and what your infill projects come up against regarding the disincentives to smart development?

Kang: We tend to choose urban locations. My company focuses on infill sites. We pursue public-private partnerships to build affordable housing. We believe in adding community benefits in the areas that we redevelop. Frankly, all of these projects are challenging. Often the sites we choose are contaminated brownfields and have failing infrastructure and other factors that function poorly and we need to fix. Part of the challenge in doing infill is that it's a lot more expensive-it's riddled with more barriers and complications. There's a lot more risk in doing infill.

Ultimately, though, our projects have great impact, because affordable housing is needed and we are revitalizing areas where investment is so sorely needed. We're also increasing transit ridership in many of the locations where we're building. For example, our project in Sacramento called La Valentina Station is going to put 81 households, for about 300 residents, within one minute of light rail. We're placing new neighborhoods in old ones, reconnecting sidewalks, providing convenient options for people to get out of cars, and locating housing next to existing goods and services.

This is the type of work that our infill builders do, and that is where the greatest challenges are as well. Unfortunately, cities see development as being the solution for all of their fiscal problems. Governments rely on infill developers to pay a disproportionate share of infrastructure costs, more so than perhaps any other development right now, especially compared to greenfield sites that don't necessarily pay their way.

John, you had a productive life in public sector redevelopment before you transitioned to the CIM Group. Essentially, what doesn't the public sector understand about what the infill association is trying to advance? What are the present barriers to infill development?

Given: The public sector needs advocacy as much as do the infill builders to break down some of the existing barriers. It needs to be better understood that infill development, while highly beneficial in its impacts, is more costly. Those costs can only be offset without burdening the public budget by reducing risk and speeding up the development delivery process.

Furthermore, what Meea talked about is a big, long-term issue for public and private interests: over the last 20 years, probably ever since the invention of the concept of fiscal impact, development has been asked to carry the brunt of a large number of costs, whether it's housing, schools, or parks. It's understandable-if you're subdividing a square-mile ranchero and you need to bring utility services, schools, and parks into that subdivision-to create a Mello Roos and do all these things. There's an economy of scale, and there's a phasing that allows these costs to be easily assigned, building-by-building on a sale-by-sale basis.

Perhaps what the public sector does not understand is that urban development begins and ends with each of those incremental investments. The incremental investments are huge, and the risks associated with them are much greater. The degree to which relatively large scale policy shortfalls are loaded onto individual development projects is as effective as relocating the deck chairs on the Titanic. We are going to have the development. The greater communities of business and public and private interests have an interest in the maintenance of schools, the maintenance of parks, and the maintenance of affordable housing. The incremental impact that we pass off on urban redevelopment is disproportionate.

Meea, you signed a letter, along with Michael Dieden, announcing the agenda of the California Infill Builders Association, in which you state your support for Governor Jerry Brown's plan to balance the budget. But you request that there be a more thoughtful debate regarding the plan to take $1.7 billion from the redevelopment agencies of California. Can you elaborate on your position?

Kang: It's a position of "Mend, don't end" in the sense that there are many, many valuable tools that redevelopment offers California. If you look around right now, much of the construction work that's happening in all of our communities is because of redevelopment funds. Redevelopment plays an essential role for infill development and urban development around the state. If we completely end redevelopment, the cost to untangle all of that will be unparalleled. It's going to be extremely expensive and extremely complicated.


Redevelopment agencies seem willing to look at a compromise solution that would perhaps reform some of the abuses of redevelopment practices, really bringing it back to the core of what's important for California: infrastructure investment, brownfield cleanup, military base redevelopment, affordable housing production, and other benefits. We can look at what those core purposes are and find a way, perhaps a spending balance, that would allow more funds for what California needs from a budget perspective: schools, firefighters, and police services, still allowing for the maintenance of redevelopment that is so essential to keep California moving forward.

John, as a veteran of California redevelopment and aware of Prop 22 (which limited the ability of the state to take funds from local entities), isn't the governor between a rock and a hard place?

Given: The California Redevelopment Association feels very strongly that a clear decision cannot be made because it will end up going to court because of Prop 22. The points that Meea made are so important. There are tremendous success stories around the state, in which the combination of redevelopment and other forms of public investment, incentives, and sheer political focus have resulted in multiples of private investment and multiples of sales, utilities, business licenses, TOT, and property tax increment.

The slogan "Mend, don't end" perhaps isn't possible under the mandates of Prop 22. And many advocates of ending redevelopment contend that the opposition doesn't offer how to "mend" community redevelopment.

Kang: There is an effort afoot now to put forth a reform proposal. As long as folks are agreeable to sitting down to a conversation, there are some legal ways that allow for a reform proposal to take root.

Turning to another issue, What is needed in CEQA reform to meet the agenda of the Infill Builders Association? What must change for CEQA to play a valuable role in the evolution of California's cities?

Kang: There needs to be a realignment of CEQA to support infill and the SB 375 Sustainable Communities Strategies the COGs are producing right now. A lot of jurisdictions are making it policy to increase density in certain areas, particularly where there are links to transit. But CEQA doesn't yet create the process incentives to make that happen. To that end, we believe CEQA should recognize a project's context-i.e., urban versus greenfield-and shape the process accordingly. In urban areas with good plans that address environmental issues, projects might go through a type of "performance review" or a standard conditions checklist as opposed to a new analysis that starts completely from scratch. In greenfield areas, a more traditional CEQA process is warranted.

There are a lot of discussions happening around the state about CEQA. There is a growing awareness that CEQA doesn't really work to produce quality environmental outcomes, especially for urban infill areas. We're hoping to continue with those dialogues and find a solution that works for multiple stakeholders.

Given: We're still formulating the precise solutions, but there are groups that are working on mechanical and incremental improvements to reduce risks, especially the litigation risk associated with CEQA. On the other hand, there is a 10,000-foot or 30,000-foot picture that says, "Let's strengthen CEQA relative to natural resources, habitat, carbon impact, and sustainability and recognize that large project decisions and large planning policy decisions must deal with cumulative impacts."

Once you get past that, if urban development is really accepted as state policy, it should no longer be subject to review against the kinds of very important natural resource and environmental issues.

What are your association's positions on AB 32 and SB 375?

Kang: Those strongly align with the goals of the infill builders. It's the right direction to go for California to grow so that we can focus growth where it is needed the most. SB 375 and AB 32 will ultimately influence transportation planning and habits. If we can provide more reliable transit, it will become a more reliable and regularly used form of mobility, so it will reduce greenhouse gas emissions and vehicle miles traveled. If we continue to provide the type of resources that are necessary to make that happen (in the form of financial resources and land use entitlement resources), we will get there. But there are many roadblocks ahead. The need of the infill builders is to keep the message strong that this is the state policy direction that we need to move in, but we need to find ways to make that happen so that the private-public partnership can facilitate the goals of the state.

Lastly, for our readers who might not be aware, describe the California Infill Builders Association, its scope of work, and its agenda.

Kang: The Infill Builders Association is the first statewide organization of builders focused on revitalizing existing neighborhoods and downtowns rather than building on California's shrinking open space. The Infill Builders are a 501c6, trade organization, and we also have an affiliate called the California Infill Builders Association Council, a 501c3 focused on research. The Council is doing research on infrastructure investment in the state as relates to infill and compact development and is involved in other initiatives.

We're an advocacy group, and we also work with local governments. I have been working with several local governments that have asked me and other builders to come to their cities to talk about the benefits of infill. At the state level in Sacramento, we're helping find ways legislatively to reduce barriers, while at the local level, we're working to promote the benefits of infill to local governments and help them figure out how to get it done.


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