VX2016: Three Regional Developers, Three Cutting-Edge Approaches to Sustainable Development

Quay Hays: Infill development has certain benefits and drawbacks. Benefits include profitability and community-building. The downsides include a loss of touch with nature and the fact that you’re tapping into infrastructure that may be old, inefficient, and crumbling, so it just adds to the environmental problems.

With suburban development, the upside is a traditional neighborhood—you can build community and can de-stress. But this adds to a reliance on autos, existing infrastructure stress, and isolation.

We took the best parts of each of these approaches—the walkability of New Urbanism, the traditional neighborhoods of the suburb—and put them together into “New Ruralism.” That was our solution for dealing with how best to benefit the environment.

Water is a big problem in the State of California. Our solution is: Since we’re putting in infrastructure, we can put in a one-water system where we reuse 95 percent of the water. That effectively doubles the water source. A typical development would need six acre-feet of water per acre. If we planted almond trees, we’d need four acre-feet of water per acre. In our development, we’re going to need less than two acre-feet of water per acre. We don’t use water—we reuse it.

Energy is another transformational part of development. The sun definitely gives us enough energy—we just need to be smart about how we capture, store, and use it. And if we do it right, people in our community will never have an electric bill.

Transportation is usually the second largest expense wherever you live. We thought that, in an ideal community, it would be great if you could walk everywhere. We have a seven-minute rule for walking: Any school is within seven minutes of any home. Shopping and jobs are nearby.

Jobs are an absolutely critical component. You have to create jobs to create revenue to pay for the services and the infrastructure in a community. The solution is: Create enough economic drivers that you have one and a half jobs for every home that’s built, instead of a traditional one-to-one jobs/housing balance.

The fastest growing portion of the workforce for some of the Silicon Valley companies is the telecommuter—those working from home. So, we are going to be providing fiber optic to every home and every business. We want to build in a platform in the infrastructure, the homes, and the buildings that future-proofs the community.

If you have connectivity directly in your home, it affects healthcare. Many Boomers want to age in place. With this technology, you can do remote diagnostics, and telemedical.

In the last half of the last century, because of autos, homes were, for the most part, built outside of urban areas. The advent of television brought entertainment directly to your living room, so homes became cocoons. We thought: What if we make the homes hives instead of cocoons? You do what you have to do, and then you get out into the community. Our approach to building the homes is to create a tighter envelope: It can be put up quicker, it reduces waste, and creates more energy efficiency.

California is facing an affordability gap crisis. A new generation of people aren’t as motivated to buy homes, and we need to get first-time homebuyers into the market to support the entire housing market in California. The US median price for a home is $223,000. In California, it’s $482,000. And in the Bay Area, it’s well over a million dollars. According to the California Association of Realtors, demand is 100,000 units a year more than supply, and that drives up prices. We wanted to address that.

Then the question is: Where do you put it? In 2007 The Brookings Institute determined that the greatest untapped market for upward mobility in this state is the Central Valley. They refer to it as the “beacon of opportunity” for California. It currently produces or raises 25-40 percent of everything consumed in the country. But the Central Valley can offer so much more. So we looked at the Central Valley as a possibility for our project.

Now I’m going to show you what we’ve come up with. We are GROW Holdings. The name of the town is Quay Valley, by coincidence. It’s in the heart of California. It’s a 7,300-acre planned community with 26,000 state-of-the-art, high-performance homes and 20 million square feet of commercial in Kings County, one of the poorest counties in the state.

It’s not prime ag land. It has five miles of frontage on I-5. We straddle I-5 just above the Kern County border.

As a company, we worked closely with the planners and with all the government agencies that are necessary to put a whole town together. The planning team on the project is headed by Jon Lash, who ran Pardee Homes. Our master planner has built whole towns in California from start to finish. We also have great companies like Psomas on board.

Essentially, we’re putting together a model town. Hopefully it’ll result in a new standard for live, learn, work, shop, and play. A sustainable development isn’t just triple-paned glass and solar as an option. It has to be economically, socially, and environmentally sustainable.

You need to have the right combination of residences and commercial. We’re creating walkable neighborhoods and putting things into the community that will incentivize walking or taking a bicycle.

Our median home price is $276,000, for a single-family residence, a lot with a garden.

We’re designating 2,000 acres along I-5 as an entertainment destination. It’s going to consist of 2 million square feet of specialty retail—hotels, attractions, and other recreation. We spent more time on this area than anything else.

A 250-acre area called the Serengeti will have a hotel where all the rooms overlook African savanna, with animals provided by the San Diego Zoo, safari camps, and safari guides. The Challenger is 150 acres of action adventure sports. The Californian Winery Resort is for the older demo, couples and special occasions. We have a cultural area, with two Smithsonian-affiliated museums.

We’re exactly halfway between LA and San Francisco. There are 27 million people within a three-hour drive. And we did a deal with Hyperloop Transportation Technologies. The first five-mile test track is going to be in Quay Valley.

We’re going to be creating 42,000 new jobs, according to DPF&G, who’s done an analysis for us. We’re going to be enhancing the environment in a number of ways. We’re going to be able to show other developers it will work—that you can put developments together, offer homes at affordable prices, enhance the water, and enhance the environment.

We are going through the permitting process now. The studies are done and the planning is done. We hope that we’ll be able to start moving dirt toward the end of this year or early next. Hyperloop is going to start ahead of us. They’ll be moving dirt sometime this year.

Michael Dieden: We’ve got to get people out of their automobiles and onto transit, bikes, and walking. I think what this conference is really about is the future catching up with that ethos. It’s because of invention—not because of the environment—that we’re probably going to get there in our lifetime.

We try to be as outside-the-box as is tolerable to equity and conventional banking. We’re into New Urbanism place-making. We always back into the pro forma—we don’t start with it.

As a transit-oriented developer, we have spent 90 percent of our time for 20 years dealing with parking. Every city and every transit authority we go to asks:  How are you going to increase the parking? The architects work 90 percent of their time on the parking. It’s crazy.

John Given and I, for about 20 years, have been intrigued by the automated parking system. Wally Marks is the innovator here. We’re building the prototype of the first truly automated garage in the United States by our office at Helms Bakery. The name of the company is Auto Parkit.

Public agencies are incredibly conservative. We get the question everywhere: What happens if grandma’s car gets locked in the garage and you can’t get it out? What if there’s a power shortage, a tsunami, or ISIS?

We partnered with Tesla and their new Powerwall. On the back of this garage will be a backup battery source. If there is a nuclear attack, grandma will still be able to get her car.

Fortunately, many millenials do not have cars and have no interest in cars. They ride transit, take the Expo Line, ride bikes, or come on skateboards.

A 2015 Vanity Fair magazine cover story asked: What is going to be obsolete in five years? Travis Kalanick from Uber said: The parking garage. Today in California, we’re spending hundreds of millions of dollars building parking that, in five years, may all be obsolete.

It’s been estimated that for every autonomous car, there will be 10 fewer single-family passenger vehicles on the road. Our roads are going to work, probably, for the first time. Street parking will be readily available and parking structures shouldn’t be necessary.

One of the benefits of the automated garage is that we can dismantle it when the single-passenger automobile and parking become obsolete.

I’ll discuss one case study: 10 acres in Rancho Cucamonga, right next to the Metrolink and adjacent to a really remarkable new town that Randall Lewis’s company is doing. Currently the 10 acres is a sea of asphalt with 1,000 cars. We’re going to put them into an automated garage. Then, we are combining Laemmle Cinemas, which is a family-owned longtime theater company, with Diesel Books to create a “cultural district.”

Commuters will come in, the car will get incorporated and ditched, people get on the train, and they retrieve the car at the end of the day.

We’re also fighting against the ghettoization of neighborhoods: seniors over here, Gen X-ers are over there, wealthy guys are over there. A new partner, Jason Mak, brought his senior housing company, and we’re marrying that with preschools. In a prototype near the same automated parking structure, the lobby of the senior housing is a preschool, so when the seniors come down, they see the kids coming to school. There are lots of studies on this: The quality of life for both generations greatly enhances. People live longer. The kids learn compassion, empathy, and great values. 

Randall Lewis: I try to take ideas and mainstream them for the middle of the market.

Healthy communities are part of the sustainability effort. We’ve been doing them as a company for the last 15 years.

These last 20 years, we’ve done “purposeful development.” When we do communities, we want to make money, of course—but we also try to change the lives of the people who live there. We think we’re the best in our markets, but we also want to be the best for our markets.

As a community developer, our master-planned communities are anywhere from 100 acres to 1,000 acres—mostly 300-500 acres. They could be 1,000 homes or 2-3,000 homes. We’re not a home-builder, but we do the neighborhood crafting.

When we try to do a master-planned community, we look at it through the lens of health: Is the plan healthy? Is it walkable? Do we have the right pieces in the right places? We try to avoid things that might be unsafe. We look at the physical elements. If we had a choice of a tennis court or a waterfall, we’re always going to opt for the tennis court.

We do a lot of programs, through a lot of partnerships. If it’s a cooking class, a mentoring program, something with pets, or something with seniors, we’re going to go to the Boys Club, the YMCA, the city, or the public health department.

We ask: Is there a school? If so, we’ll make it the center of the community, in a physical way and a social way.

We have to make communities pedestrian-friendly. It’s hard to walk if you have to walk in dangerous areas, so we spend a lot of time trying to get the trail systems right.

We spend a lot of time working with cities and other agencies on joint-use. There’s not enough time or resources to have a separate gym, library, or ball fields that close at the end of the day. So we try to get the school districts to work with the cities, to work with the libraries or others. It’s really difficult because bureaucracies have their own rules that have evolved for good reasons. But if you don’t try, you won’t get it, so we work very hard on joint-use.

In all of our master-planned communities and apartments, we put in big clubhouses, gymnasiums, meeting rooms, parks, and pools.

We have about 9,000 apartments and we’re building 500-700 a year. We can do even more in our apartment communities, because we control them and run them. We don’t have to worry about a homeowners association. So we put in no smoking—10 years ago in the Inland Empire, that was pretty avant-garde.

We put in community gardens in all of our apartment projects. We have bike loaner programs. Event coordinators plan activities, because we want really rich programming for the residents in our apartment communities.

We’re working on one “branded community” called Harvest. We’re probably going to have seven planned communities throughout California and Nevada in the next few years that will mainly be for-sale, with at least one rental community. Each Harvest will be custom-tailored to the climate and the soil. The common theme of Harvest will be gardening, edible landscaping, and sustainable living. We’re building an outdoor dining area, so we’re partnering with local chefs and the Master Gardner Program. We’re working in Claremont with the local botanical gardens.

I read a book that influenced me a lot called Food Not Lawns, which said: Rip out all your lawns—you don’t need turf anyway, and it’s a water hog—and replace it with edibles. We try to do that wherever we can.

If we really want to have an impact, we have to do it at the community and regional level. We were really involved in the Inland Empire with a number of cities starting Healthy Cities programs. The Inland Empire has a bigger cluster of cities doing this than almost anywhere in the United States. There are at least 20 cities now that have Healthy Cities programs, but if you want to study this, look up the websites for Healthy Rancho Cucamonga, Ontario, Fontana, and Chino. They have very mature programs.

We do a lot with public health agencies in San Bernardino County and Riverside County. Even LA County’s got some great stuff. Call your local County Department of Public Health. They rarely get a chance to talk to developers or businesspeople. They’ll jump all over you and say: How can we find some good partnerships?

My wife and I are sponsoring a program in its fifth year. This year it’ll have 25 interns who are Masters or PhD students from 10 schools. They work for a year for free (we pay them) and ask a city or a county: How can we help you with healthy issues? They might be set up in a farmer’s market, it might be a career pipeline for high school students, or they might be working on the General Plan or a breastfeeding policy. Each year we try to match the needs of the students with the needs of the community.

We’re doing a lot of work now with SCAG, Southern California Association of Governments. And the Urban Land Institute has a national Healthy Places Initiative.

We’re part of a movement in the Inland Empire called Convergence. 10 or 11 colleges are working together for the first time to look at healthcare as one of the industries that the Inland Empire might go after. They know the Inland Empire’s not going to be Silicon Valley or a media center. We felt, because of the number of hospitals and colleges there, and because of the Affordable Care Act, health is going to be a growing industry.

These colleges are getting together to coordinate curriculums. We’ve brought in a number of local hospitals and said: What are your career needs for the next 10 or 20 years? They’re now working on what we call pre-convergence. We’ve got four high school districts that are working with local hospitals on career pathways, and they’re making some pretty good progress on that. How can we create industry clusters? If we’re going to produce all these college graduates that have specialties in health and wellness, maybe it could attract companies to the Inland Empire.

Where do we go from here? It’s really at the house level or apartment level—how do you make sure you have the right flooring so you don’t emit gases, the right paints, the right cabinets?

We’re trying to look at telemedicine and there’s some pretty cool stuff that’s just a couple years down that road. Everyone’s realizing the connections with the Internet of Things: How can you turn your house into a diagnostic area? How can the house and what you’re doing in it give you guidance on your medicine and put you in touch with the people who need to know if something’s going wrong?

When we do our jobs, we want to be successful and make an economic difference—but we also want to make a difference in people’s lives. 

Audience Question: How do you see people moving to that new village? 

Quay Hays: We have to create jobs first, and that’s why I showed you the entertainment destination. We’re working with Fresno State University to do a satellite university campus called the California Institute of Sustainability and Innovation. That type of higher learning facility really helps kickstart a community.

In regard to finance, we’re personally financing the planning and housing part of the enterprise. Then we’re going to be utilizing the same type of structures that are utilized in large developments. We’ll entitle the land, and people will come in—maybe a master residential developer—and they’ll put in some of the backbone infrastructure. An entertainment destination developer will put in stuff there. We don’t go vertical.

Audience Question: How do you deal with the fact that millennials, who don’t like planning, are expected to move into a planned communities? 

Quay Hays: We are not going to be a community that looks as planned as other planned communities. Let’s say you’re in your 20s and you want to begin a career, maybe begin a family. You want to stay in California, and you’re connected right to Silicon Valley and to two world-class cities—San Francisco and LA. If you like nature, it’s an easy shot. You don’t have an electric bill. You can telecommute to wherever you’re working, or you’ll be able to find a decent job in the area; you’ll be able to walk your kids to school. I think they’re the perfect audience for a project like this, because they adapt to new technology and new ways of thinking so easily.