Apparently it is a small world, after all. Too small, that is, for the Walt Disney Co. and California multifamily developer SunCal Cos., which are at odds over SunCal's proposed construction of a 1,500-unit condo and apartment complex in Anaheim's tourist zone, a 2.2 square mile patch of the O.C. that has been off-limits to residential development since 1994.
On March 20, the Anaheim City Council voted 3-2 to reconsider those zoning restrictions during a late April council meeting (after press time). It's likely to be another round in an ongoing clash that could also see action in the courtroom and at the ballot box.
Disney—which envisions a third theme park on acreage it owns within the tourist zone—contends that residential development would put a squeeze on tourism, Anaheim's No. 1 industry. In an April 4 article in USA Today, company vice president of communications Rob Doughty said the neighborhood generated $80 million in hotel and sales taxes in 2006, and SunCal's project—along with two smaller developments proposed by Parc Anaheim and West Millennium Homes—could create a land grab detrimental to that revenue stream.
To prevent such a scenario, Disney for some time has been maneuvering to block development in the neighborhood. Most notably, the company formally objected to Anaheim councilwoman Lucille Kring voting on the proposed zoning changes when it came before the council on Feb. 13. Kring, who has interest in the construction of a wine bar in the tourist zone, was deemed not to have a conflict of interest by a state ethics agency. She cast the deciding vote in March and will be allowed to vote on the issue moving forward. Disney also sued the city of Anaheim on Feb. 26, asking for an environmental impact study on SunCal's proposal.
SunCal's planned project, which will be located directly across from Disney's yet-to-be-built theme park on property that used to be a mobile-home park, includes both affordable housing and market-rate condos. According to SunCal agent Frank Elfend, that proposal is in line with a 2005 city study that determined rezoning would not hurt the transit occupancy tax generated by visiting tourists.
“We have several different plans, including up to 1,500 units of a variety of product from podium to high-rise, but there has never been a single communication with Disney where they have suggested any compromise with us on this proposal,” Elfend says. “The fact of the matter is that Disney's idea of compromise is intimidating elected officials, suing the city, and then coming up with their own initiative to reflect their business interests.”
Critics of Disney—including Kring, fellow councilwoman Lori Galloway, and Los Angeles Times columnist Steve Lopez—have taken up affordable housing as a cause célèbre, pointing to Disney's 21,000 strong work force, many of whom earn below the O.C.'s annual per capita income of $40,380. “Maybe Disney should just lock them all on the premises at night and let them sleep in the Haunted Mansion or the Swiss Family Robinson tree-house,” Lopez wrote in a March 4 Times editorial.
In the media, Disney claims that it is not affordable housing, but housing of any kind, that the company objects to in the tourist zone. The company is collecting signatures to put an initiative on the Feb. 5, 2008, presidential primary ballot that would require a city referendum on any change to boundaries or zoning within the tourist zone. Doughty tells USA Today that the referendum, combined with lobbying the city council and leveraging the courts, “shows how important we think this is.”
“If Disney wants to go ahead with a referendum, we will coalesce the community [in favor of new zoning],” counters Elfend. “We are in it for the long run. Otherwise, there's no reason to have city government. Disney can make all of our decisions, and anyone who wants to do anything in the city of Anaheim should just go see them.”
For an update on the April 24 Anaheim City Council vote and further news on development within the Anaheim tourist zone, point your browser to www.multifamilyexecutive.com.
Furry Neighbors Trying to boost occupancy? Consider putting out the welcome mat for Fido and Fluffy. Nearly 84 percent of respondents to an Apartments.com pet survey own a pet—and more than one-third also said it was difficult to find a pet-friendly unit. According to Apartments.com, the most popular states for pet searches include Colorado, Oregon, Washington, Kansas, New Hampshire, Arizona, New Mexico, Missouri, Ohio, and Minnesota. —R.Z.A.
Call for Entries! Think you've got the hottest apartment or condo property in town? Does your new technology initiative take the industry by storm? Enter the 2007 MFE awards contest today at www.mfeawards.com. The entry form/fees are due by May 15, 2007. All binders are due by June 29, 2007. —R.Z.A.
High Marks Multifamily and commercial property consulting group CEL & Associates has tapped Denver-based Simpson Property Group, Austin, Texas-based CWS Apartment Homes, Charlotte, N.C.-based Crosland, and Cincinnati's HILLS Property management as the recipients of CEL's 2006 corporate “A-List” award winners for customer service in multifamily property management. Based on rigorous tenant satisfaction surveys, the awards are bestowed on “best in industry” firms for their ability to perform at a higher standard in providing quality customer service throughout their portfolio. Most recently, seven properties operated by Atlanta-based Lane Management received community level awards. —C.W.
Adobe Acrobatics As part of a 2.5 acre acquisition and redevelopment plan in Tempe that is likely to include condos, additional retail space, and possibly a hotel, Phoenix-based developer 3W companies will build around a historic adobe structure constructed in 1871 by Charles Trumbull Hayden. Dubbed “La Casa Vieja” by Hayden, the building will be integrated into the design of the forthcoming development. Previous owner Michael Monti, who has operated a steakhouse in the building since the early 1990s, will lease the space from 3W and continue providing gastronomical fulfillment to Tempe residents. —C.W.
Homeland Security The Redlands Police department in Redlands, Calif., is ready to assist multifamily executives who are looking to take a bite out of crime. The squad held a “Crime Free Multi-Housing Workshop” for property owners and managers on April 11 to address control and prevention of illegal activity on rental properties. Topics included applicant screening, evictions, gangs, narcotics, and dealing with the Fair Housing and Mediation Board. The police department hopes that proactive outreach and partnership will help on-site personnel increase safety and improve operations. —C.W.
Zealous Offer A rolling stone gathers no moss, and neither does Sam Zell's money. Just a few months after selling Equity Office Properties Trust, the chairman and founder of Equity Residential purchased the Tribune Co., which includes the Chicago Tribune, the Chicago Cubs, Comcast SportsNet Chicago, and the Los Angeles Times. —R.Z.A.
Executive Feedback Q & A How do you anticipate your portfolio will evolve in the next several years?
A: “We have gone from 5,000 to 12,000 units in the last five years and made a conscious decision to migrate from B properties to A properties. [We] look for properties where revenues are low, where we can ... get a return on investment. We want to have a long-term, high concentration of A properties that is narrow and deep rather than wide and thin.”—Larry Connor, founder and CEO, The Connor Group
A: “We are going back to the urban infill in markets like Boston, New Jersey, Washington, D.C., Nashville, and Charlotte. Our portfolio is a mix of value-add and ground-up. Of our 10,000 units, we are split 50/50 between apartments and for-sale condominiums.”—Michael Lerner, founder and CEO, MCZ Development
A: “Our portfolio is Colorado-specific, and that should be the case for at least the next few years. Future acquisitions are expected to fall into several categories: urban infill, value-add acquisitions, and potentially ... Colorado resort communities.”—Jared Miller, director of marketing, RedPeak Properties
Up in Smoke
Sub-meter wiring leaves an AIMCO property burned.
Faulty sub-meter wiring was blamed for fires that damaged six buildings at AIMCO's Spring hill Lakes apartments in Greenbelt, Md., in late March, forcing an electrical shutoff at the garden-style complex's 275 buildings. “Thank goodness no one was hurt,” says AIMCO senior vice president for communications Patti Shwayder. “There were 63 residents affected, and we relocated most of them as quickly as we could.”
Shwayder says insurance investigators are still preparing initial damage estimates, but regardless of the final tally, it's likely just a small portion of the $948 million in damages and losses incurred annually by apartment fires, according to a 2005 National Fire Protection Association fire survey. The study notes that approximately 94,000 fires occurred in multifamily properties in 2005, which translates into roughly one fire every 5.5 minutes.
Or, in AIMCO's case, three fires all at once. According to Shwayder, it took fire officials approximately 24 hours to determine that sub-meter wiring—possibly strained by a power surge—was the culprit leading to the three simultaneous fires at Springhill Lakes. “We were as horrified as our tenants, plus we have 28 of our own employees living on the property,” Shwayder says. “Obviously when you have three spontaneous fires, it is a scary thing.”
As part of their internal investigation, AIMCO is examining the subcontractor who initially installed the sub-metering system approximately seven years ago. Power was restored across the complex's 2,900 apartments—sans the 63 damaged units—within four days, and AIMCO has offered residents $100 towards inconveniences caused by the conflagrations. With the sub-metering destroyed, AIMCO will also pay electrical utilities across the complex until a new system is online.
Shwayder praised city and county personnel who responded to the blaze and brought calm in the midst of tenant confusion. “The fire inspector came out the second day we held a press conference and confirmed that the property was safe,” she says. “But in the end we obviously would have preferred not to have the situation at all.”
- C.W.
Long Life?
Here's how long things really last.
It's the age-old question for property owners: to replace or not to replace building products and appliances? A new study might just make that decision a little easier. NAHB's “Study of the Life Expectancies of Home Components” provides guidelines on the average life expectancy of a wide range of household items, from kitchen appliances such as refrigerators and gas ranges to building materials and structural systems, including concrete, masonry, and framing.
The life expectancy varies greatly by product. Some components are expected to last anywhere from 50 years to 100 years, such as kitchen cabinets; wood, marble, slate, and granite flooring; various types of insulation; kitchen sinks made of modified acrylic; and slate, copper, and clay/concrete roofs. Other parts of the home, however, have a much shorter life span. Just a few examples: Wood decks should last about 20 years; kitchen faucets, 15 years; linoleum floors, 25 years; and interior or exterior paints, 15 years or longer.
Interestingly, while many products have a longer life span now than when NAHB last did this survey in 1993, some products have a shorter existence, particularly appliances. This is partly because items have more complex features than a decade ago (i.e., refrigerators with built-in TV screens), says Gopal Ahluwalia, staff vice president for research and surveys in NAHB's Economics Group. Oh, the sacrifices we make for television.
- Rachel Z. Azoff
Growth Plan
CAS Riverstone buys Stratus.
CAS Riverstone, formerly known as Riverstone Residential Group, in April acquired Woodland Hills, Calif.-based Stratus Real Estate for an undisclosed price, which brings Riverstone's fee management portfolio to 120,000 units throughout 625 properties. The acquisition helps the growing Riverstone dramatically increase its presence in two major markets: California and Arizona. (Stratus manages 23,000 units throughout those states, plus Hawaii).
“We are just not going to be big for big's sake,” says Terry Danner, co-CEO of CAS Riverstone, which is one of the largest fee management firms in the country. “We want to have a presence in markets that we view as key ones where we want to be in the future.”
For Stratus, the deal brings the power of size—and all of its efficiencies. “I believe in the bigger concept at play here, consolidation,” says Steve Heimler, CEO of Stratus, who will be a part of Riverstone's senior leadership group. Perhaps the biggest gain: back office efficiencies. “This business has way too many people spending too much money on backroom services,” says Heimler. “This is a way to solve that by assembling enough units so you can afford truly the best backroom services available.” The company's back office services, including accounting, human resources, and IT, will now be centralized with Riverstone's operations, but Stratus' property operations staff will stay in place.
Heimler says he's ready to take his company to the next level. “In my view, it's not so much that I have given up my baby; my baby has graduated college and is ready for the big leagues.” - Rachel Z. Azoff
Project of the Month
Marquee Park Place
Irvine, Calif.
Walking through the main lobby of Marquee Park Place—Orange County, Calif.'s answer to the urban high-rise craze—you get a sense that you're not in a run-of-the-mill condo building. It's more like a five-star luxury hotel.
Marquee's grand entrance features a gated circular driveway with a porte cochere and a secured entrance leading to the property's elegant lobby. A 24-hour concierge is stationed in the lobby, which features marble floors and jazz music, creating a ritzy hotel ambience.
Built by Vancouver, B.C.-based residential developer Bosa Development, the 18-story community known as Orange County's first high-rise condominium complex consists of two concrete and glass towers. There are 232 units offering two-bedroom, two-bath, as well as two-bedroom with den, floor plans, all ranging from about 1,275 square feet to 2,088 square feet.
Unit amenities include full-height windows, expansive balconies, and cable and Internet wiring. The complex also offers a business center, social room, billiards room, pool, lush gardens, and a fitness center with changing and locker rooms. When it opened for sale in 2003, prices ranged from $650,000 to more than $1 million.
Burnaby, B.C.-based Chris Dikeakos Architects designed the condo complex, whose verticality stands out from the O.C.'s suburban reality and pop-culture image. But Nat Bosa, president of Bosa Development, was willing to take such a leap. “How would you know unless you try?” says Bosa. He believes demand for luxury residences within an urban environment will only continue to grow in Orange County. In fact, he has four more high-rises planned for the area.
- Abby Garcia Telleria