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Thursday, May 17, 2012
Regional Focus: August 2007
Better homes and Gutters
Building a quality community starts with infrastructure
Story by Cosmo Garvin
Elk Grove has embarked on an unusual experiment in suburban development with Madeira, its first large-scale development project since it incorporated as a city in 2000.
Once Madeira is built out, the 1,900-acre community will include nearly 8,000 homes, a shopping center, a new high school and 175 acres of parks and open space. It will also be the first project of its size anywhere in the state adhering to strict rules that require its infrastructure to be completed before the first home is built.
“I don’t think there’s been an area so big completed so soon,” says Mike Winn, vice president of community planning with Reynen and Bardis Homes, one of the main Madeira developers.
“We’re either the poster child or the guinea pig for Elk Grove, I’m not sure which,” Winn says.
Thanks to an ordinance adopted by the City Council back in 2004, Elk Grove requires that all the infrastructure needed for new development projects be completed before the first building permit is issued for new houses. That costs developers a lot of money upfront, but there are some unique advantages to this approach.
In Madeira (the marketing name for what local government calls the Laguna Ridge Specific Plan), Reynen and Bardis and Pulte Homes have already sunk $230 million into new infrastructure. That includes new roads, landscaping, parks and even a new high school set to open in time for the 2008-09 school year.
Just the backbone infrastructure, the roads and major drainage facilities cost $130 million according to Fritz Buchman, the city of Elk Grove’s development engineering manager.
In most new developments, there are lots of houses under construction, with little else but bare dirt and the few roads necessary to get the work done. In Madeira, it’s the opposite.
“It’s really like building a mini-city all at once,” Winn says.
“We’re either the poster child or the guinea pig for Elk Grove, I’m not sure which.”
— Mike Winn, vice president of community planning, Reynen and Bardis Homes
Throughout the project there’s brand-new bright-green street signs marking Chicksaw Court and Caneria Way, already paved streets. There are landscaped paseos with double rows of trees, and more trees connecting the larger swaths of parkland.
In all there are seven parks, covering about 50 acres, under construction now. “They’ll be done before the first few families move in,” Winn says. Once the later phases are built, the amount of parkland will top out at about 175 acres.
And just across the street from Madeira, Cosumnes Oaks High School is almost completed, even though there will be very few students in the neighborhood for years. In fact, Cosumnes Oaks will have to draw students from other neighborhoods at first.
But for all the trappings and landscaping of the new community, there are almost no houses, save for a few model units under construction. City officials recently gave Reynen and Bardis the green light to pull its building permits.
Elk Grove has turned the development process upside down, partly in response to complaints from its own citizens about the pace of new home construction.
“You hear it all the time: People say new development should pay its own way,” says Jim Estep, assistant city manager for Elk Grove.
Indeed, new developments often lag behind other communities in services and infrastructure because local governments aren’t prepared to pay for those new services, or because the financing doesn’t quite jibe with the construction schedules.
A good example is parks. “Most cities have a big problem with parks development,” Estep says.
In most developments, the parks are funded as homes are built, sold and assessed park fees. Each house represents a small deposit into the parks fund. But it can take years to collect the money to actually build the parks.
Estep notes that the large development just next door to Madeira, the East Franklin area, is struggling with its own parks deficit.
The Sacramento County Board of Supervisors approved East Franklin before Elk Grove became a city. It was scheduled for build out in 10 to 15 years. But thanks to the red-hot real estate market of the time, buildout happened in three years.
“They still don’t have all their parks,” Estep says. “Their kids will be grown up and out of the house before these parks are done.”
Building parks and other infrastructure upfront is a tricky balancing act for developers. “In straight economic terms, it’s very expensive,” Winn says. “But once you’ve survived that first year, you really have a good-looking community.”
Having amenities in place could help sell homes, Winn says. “People really want to live in a neighborhood where they can play in a park,” he continues, “instead of just looking at a sign that says, ‘Coming Soon.’”
On the other hand, with the housing downturn, Reynen and Bardis has to be a little anxious about when it will be able to recoup its investment. After all, builders began building all that infrastructure just before the housing market took a nosedive.
And if the developers have trouble selling the homes, that means the city won’t get its property taxes as quickly as it would otherwise. That’s OK by Jim Estep: “It’s a small price to pay next to the complaints from residents who move into a house next to an empty lot that’s supposed to be a park.”
Asked what Reynen and Bardis learned from the development experiment, Winn says that in future projects the developer would think twice about how much development it wants to bite off at once.
“It’s a very pressure-packed way to build a new community,” Winn says. “We wouldn’t say ‘Hell no, we’ll never do this again.’ There have been some real positives. But we also burned some people out along the way.”
