Second only to construction costs, the highest hurdle such developers must overcome is opposition from local decision makers and the project's potential neighbors. NIMBY, the acronym for the "not in my backyard" attitude of people living near proposed development sites, is stronger than ever, especially when it comes to rental housing. "Sometimes just the word apartment can be a negative," said Jack Selman, senior partner at Architects Orange in Orange, Calif.
According to a study last August by Hingham, Mass.-based Saint Consulting Group, which specializes in winning zoning and land-use battles for national and global companies, 48 percent of Americans oppose apartment development. Their negative attitudes are deeply embedded in the perception that rental housing will somehow worsen the quality of their lives. Fears of increased traffic and noise, overcrowded schools, lower property values and even more crime are common among homeowners who live near proposed rental housing
"People who oppose development tend to do so because they oppose change of any kind. They typically possess the fundamental quantities of their life and they are now looking to protect the quality of their existing lifestyles. By comparison, people who support new development projects are seeking the new benefits that change can bring," points out land-use attorney Debra Stein, president of the San Francisco-based public affairs firm GCA Strategies and the author of several books on NIMBYism.
Nowhere are those opposing attitudes toward rental housing greater than in the suburbs, AvalonBay CEO Bryce Blair told attendees of the NAREIT conference in June. "Think about the communities you all may live in individually and, generally, you're not looking to have an apartment community next to your home. So there is fierce, fierce opposition in places like Canaan and Darien, Conn., and Chesterfield, Mass. The high-rent suburban communities remain very, very difficult and I'm not optimistic that's going to change," he said. Blair blames a lack of leadership at the local level in those suburbs where "you don't have a strong county forum or mayor who can take action" and finds officials in the urban centers to be much more pro-housing.
"If you're a Mayor Bloomberg, you understand that housing is critically important to making the city grow. Surely that's the case in San Francisco, Washington, D.C, and Boston. They understand, and certainly Mayor Daly in Chicago understands, that to have a vibrant city you need residents and to have residents you need a mix of housing, both rental and condominium for-sale. In the cities, the issue isn't necessarily approval, it's not getting zoning; it's, frankly, working through the entitlement issue or the very difficult infrastructure issues of building over subways or dealing with affordable housing issues, or with the physical high cost of building in the city," said Blair. AvalonBay's same-store portfolio of 44,353 upscale apartment units is located mainly on the West and East coasts, with a small presence in the Chicago area.
There's no question more apartments are needed in city cores and in the suburban areas. Renter households are on the rise, while development has not kept pace. According to a U.S. Census Bureau survey last year, rental supply increased by less than 200,000 units between 2002 and 2005, although around 1.2 million units were created from 2004 to 2006, because many of those new units replaced apartments that were converted to condos or removed from supply through abandonment, disaster or demolition.
Yet multifamily developers continue to come up against restrictive zoning, building codes and policies that were created to inhibit rental housing development, but that also reduce the range of housing options for people and make housing more expensive. Advocates agree that the greatest promise for increasing acceptance of rental housing is in the long range effort to reduce or eliminate those regulatory impediments. In the meantime, it is important to counter opposition to apartment projects on a deal-by-deal basis.
Stein warns that simply filing an application isn't enough to get a potentially controversial project approved because the standards public officials use to evaluate proposals are often far different from the actual application standards. "Getting approval requires identifying the real decision-making standards, persuading officials to adopt pro-project attitudes and then turning pro-project attitudes into a pro-project vote of approval," she said, pointing out that the projects most likely to attract neighborhood opposition are those that will house residents perceived to be different in income, race, age, family mix or cultural background.
"America is dominated by the Protestant work ethic, which means that through hard work you can succeed, and wealth is evidence of your moral worth. That means, if you don't earn what I earn and live where I live, you're considered to be a bad person," said Stein.
She came up against that ingrained attitude while working to get approval for condos that would sell for around one-third the average median income. Neighbors' objections included the belief that the owners of the new condos would have wild parties and would be unable to maintain the property. "These units were going to sell for $900,000. It's not that the buyers were poor, just poorer then their $3 million neighbors," she said.
The good news is that developers don't need to sell everyone on multifamily. "All you need is the swing vote on the city council," Stein believes. "Not all public officials respond to citizen opinion in the same way. While many politicians are interested in making the popular decision that will protect them from immediate and future voter wrath, other officials focus on making the right decision. For a city council member who is obsessed with the city's laws and procedures, citizen opinion means less than whether a developer's attempt to increase density is an improper evasion of the rules. By comparison, a council member running for re-election in the fall may care nothing about legal standards and criterion and everything about community approval."
City officials usually require that developers consult with citizens and engage in a community outreach process. Developers who don't proactively undertake those efforts may be instructed by officials to attend or sponsor community meetings that are not particularly likely to produce a positive outcome. Stein warns that massive open-door workshops or neighborhood meetings are often the worst form of community outreach. "There are too many people full of fear and emotionalism, with too many issues to discuss in depth in such a short period of time that huge open door meetings often result in frustration and aggression. At their worst, large community meetings provide opportunities for potential opponents to meet, hear and adopt each others' agendas and they can easily degenerate into recruitment rallies for anti-project opponents," said Stein.
Municipal officials also may require developers to show that they've been able to reduce opposition or garner some local expression of support. So, successful community outreach campaigns usually involve two separate plans of attack--one to minimize opposition (some of which, when it is based on misinformation or loss of face, can be minimized or avoided altogether) and another to identify, recruit and mobilize support for important public hearings. But it's rarely possible to convert rabid anti-density opponents into flag-waving supporters," said Stein, adding that developers tend to ignore the fact that the people likely to support multifamily are in a completely different group from those who oppose it.
Supporters typically include transit and density advocates; farm and land preservation activists, such as the Sierra Club, which has a smart growth commitment; area employers who recognize the need for workforce housing, and citizens likely to benefit from a component of the project, such as a mothers' group excited about a proposed children's play yard associated with a mixed-use development.
When is it time to call in the big guns--the lobbyists, lawyers, professional planners and public affairs consulting firms? Most specialists agree that if the project is controversial, a third-party lobbyist may be a necessary expense that is in direct relation to the nature of the entitlements being sought, the proximity of residential neighbors or sensitive receptors, the type of residents likely to occupy the housing, the likelihood of the project becoming an election-time campaign issue and the sophistication of the developer.
"Just as anti-housing advocates have adopted new tools to persuade public officials to resist housing proposals, pro-housing advocates have increased the sophistication of their approach. The days when lobbying consisted of playing golf with the city manager are over, if they ever really existed. Today's housing builders are much more strategic and approach entitlements as a substantive part of the development process," said Stein.
"Making concessions will only solve one type of opposition to land use projects, and many developers waste millions of dollars on concessions that are popular but unpersuasive. The color blue is popular, but painting your apartment building blue won't cause people to accept it in their backyards. You'll end up with a blue building and just as many opponents at city hall, plus potentially other expensive concessions that don't create project acceptance," said Stein.
"We do a lot of public opinion polling on multifamily housing and we've found that what people say is important to them is different from what actually creates project acceptance," said Stein. "For instance, we did a master-planned community seeking density 15 times that of our neighbors and our research showed the neighbors hated the density. But neighbors also claimed they would be more likely to support the project if it included a creek restoration and a soccer field.
"Now, it would be hard to find someone who doesn't like soccer fields and creek restorations, but if we made these expensive project concessions, would it actually cause neighbors to change their opinion of density in their back yards? No. When you run a survey through a couple computer programs and a couple Ph.Ds, you can distinguish between concessions that are merely popular to think about and concessions that are ultimately persuasive in terms of gaining acceptance for density," she said.
Instead, Stein found the developer could compensate for almost half the resistance to density with, "of all things, equestrian trails, because neighbors liked to pretend they were living in the country. It wasn't popular, but if I could get you to think about it and make it popular, it was a slam dunk. So we cut deals with riding clubs. We got press about horse trails and got little girls with their horses to come testify. And we got density 15 times that of our neighbors with the signed endorsement from 71 percent of our neighbors," she said.
Stein noted that frequently-demanded concessions like cutting units and reducing height might not actually cause people to accept the remaining density. "You can get just as many opponents with 45 units as with 55 units, or with 14 stories as with 15 stories. The critical issue is not to make popular concessions, but to make concessions that actually create greater tolerance for density in neighbors' backyards," she said.
To get its highly controversial 8.8 million sq. ft. Atlantic Yards project in Brooklyn approved, Forest City Ratner (FCRC) spent $1.2 million on lobbying efforts and legal fees last year alone to sway NIMBYs and gain the support of city officials, finally conceding to set aside 2,250 apartments (half the project's rentals) for low, moderate and middle-income residents on a 50/30/20 plan, build a health center and hire women and minority contractors. The company also paid environmental consulting firm AKRF $4.8 million over the past 20 months for project-related work.
The developer began clearing 22 acres in the Park Slope and Prospect Heights neighborhoods of Brooklyn, including an 8.4-acre piece of the Vanderbilt Railyards that was seized in an eminent domain case, to begin the $3.5 billion project, which includes housing, a hotel, office and retail, as well as the centerpiece--a 19,000 seat arena for the New Jersey Nets, the basketball team that FCRC president and CEO Bruce Ratner purchased in August 2004. Atlantic Yards is designed by renowned architect Frank Gehry.
Extensive polling about multifamily and lower-cost housing shows that local residents are much more likely to support a multifamily proposal when they believe the project will be well-designed and well-maintained. "Extensive design work on the project itself is not necessarily required during the entitlement period," said Stein. "A photomontage of design ideas can convey the quality of design being considered, and examples of comparable existing projects can also demonstrate that multifamily housing can be attractive."
Jack Selman, senior partner at Architects Orange in California agrees. "The main thing we try to show is the lifestyle and the quality that we are building into the product. We talk about all the extra things we're putting into it and what the rent will be to quell the idea that there will be undesirable neighbors. We point out that these neighbors are high-income people, some of them--the young professionals and empty nesters--live there by choice. But it's high-end stuff and the quality of the renters is high and its not going to drag down the neighborhood," he said, adding that selling that story is still very important when a developer seeks to rezone a site for apartments.
"That's why companies like Archstone-Smith, BRE Properties and AvalonBay, who manage thousands of apartments, can do a good job of selling the city on their project quality by showing them one of their five-year-old apartment communities and explaining, 'This is how we maintain them. This is what they look like. We're not here just to build apartments. Our game plan is to own and manage high-end apartments.' That always reads better," said Selman.
It's Selman's opinion that design is not the only important issue when it comes to NIMBYs. "The thing I see in all these meetings is that no one likes density or anything tall or massive. They prefer two stories next to their one- and two-story homes. They might accept three, but have a real problem with four, so in that regard any three-story product, whether it be wrap or garden walk-up, is more acceptable than a four-story project.
"One thing Architects Orange does is manipulate the heights of the buildings to lower the silhouette adjacent to single-family. We do three-story wraps or gardens and even four-story next to residential, where we'll step down the back side. I'm working on a three-story project right now in Phoenix where the back units, the ones that abut the neighborhood residential, are only two-story, trying to minimize the visual impact to the adjacent neighbors. And, we have one in Los Angeles, a four-story on the front side facing the street with commercial on the other side. We take the building down to three-story toward the back, and then two-story adjacent to the single-family residential," said Selman.
Jerry Davis, Lane Company's new development partner for Arizona and Southern California, is delivering an innovative 311-unit three-story wrap designed by Architects Orange in the Phoenix market, where officials are opposed to anything over three stories. Like the four-story wrap product that originated in Texas, the three-story wrap allows residents to walk right into their units from parking on the same level.
"This product allows me to build higher density--40 units to the acre instead of the typical 22 to 24--and compete with garden-style product. It does cost more to build than garden, but with the higher density, it pencils. It also lends itself to conversion in the future, because it's easier to sell if you have only one middle level, since people like living either on the ground or top floors," said Davis.
And the product has been well received. "This is new, it's different; we are hiding all the parking and its three stories. When Jerry and I walk them through what this wrap product does, most cities are on board," said Selman.