It Takes a Village
From: BUILDER May 2007
Posted on: May 14, 2007
South Florida developer delivers affordable, green housing.
Gerald Goray, President of Boca Raton, Fla.–based Goray Communities and Randy E. Rieger, principal of Housing Trust Group in Coconut Grove, Fla., each have lengthy track records for developing high-quality residential and commercial properties in Florida and other states. Their projects have ranged from affordable to high-end luxury communities, senior housing to shopping centers. With land prices so high at the height of Florida's boom, however, it was proving difficult to do more affordable projects.
So, when long-time vegetable farmers Ted and Trudy Winsberg offered to sell the pair 42 acres of their farm in southwestern Palm Beach County, Fla., for 30 percent below market value to build affordable, for-sale workforce housing and rent-restricted apartments, they understood that it was the opportunity of a lifetime. “A lot of times when someone builds tax-credit apartments or subsidized housing, you have to go into an area that's marginal because that's the only place you can get cheap land,” Goray says. “We were right in a crème de la crème area, surrounded by $400,000 to $500,000 houses.”
Still, the requirement to build homes that would be affordable for teachers, police officers, firefighters, and nurses was not an easy task in 2003. Along with land, home prices in the county were increasing by roughly 25 percent a year and the luxury market was booming. Material and labor costs were rising rapidly, as well. But Goray and Rieger shared the Winsbergs' concern that working family buyers were being priced out of the market.
AFFORDABLY UPSCALE: The developers of Green Cay Village sacrificed square footage—not quality—to help achieve a price point targeted to the salaries of local teachers, police officers, nurses, and firefighters.
The Winsbergs, who are ardent conservationists, also asked that the homes be as energy efficient and environmentally friendly as possible. All together, it made for a daunting, but intriguing, challenge.
“I thought it was a great idea,” Goray says. “We went to the site planner and architect and said, ‘Incorporate these things into the site plan and floor plans.'” They also researched pricing that would make the units affordable to the salaries of their target buyers and devised a cost-saving strategy that encompassed everything from unit design to materials pricing to construction techniques to marketing. “We knew we had to do some things a little bit different than everyone else was doing,” Goray says.
When sales began in December 2005, the base price for two-bedroom, two-bath condos was $198,900; townhouses started at $252,900 for a three-bedroom, 2½-bath unit with a one-car garage. (Pricing on the town-houses now starts at $292,900—still about $100,000 less than the median price of an existing single-family home in the county.)
MEETING THE CHALLENGE
To keep prices down at the new community, named Green Cay Village after the Winsbergs' farm, architect George Tseng packed functionality into a small footprint—939 to 1,163 square feet for the condos and 1,419 to 1,549 square feet for the townhomes.
Another major decision that contributed to the project's success and its ability to meet its goal as an affordable community for middle-class families was to build the entire community at one time. They also used a concrete-and-steel forming system from Miami-based Outinord Universal that saved both time and labor costs. Plus, the developer locked in both construction financing and contracts for materials and labor, which kept the project from being hijacked by price hikes brought on by the hurricane seasons in 2004 and 2005.
“Rather than just build a model and sell from the model, we said, ‘We're going to build out the entire project, even without sales, to achieve the price efficiency on labor and materials,'” Goray says. “We contracted to build all of them in one fell swoop. ... Concrete was a big deal. We locked in concrete at $82 a yard. While we were building, it went up to $115 a yard.”
To honor the Winsberg's commitment to environmental conservation, all units feature Energy Star–rated appliances, ceiling fans in the bedrooms, an energy-efficient hot water heater and air conditioner, R30 insulation in the attics, and low-VOC carpet. Ted Winsberg bought water-saving showerheads for all the units, which were installed in the master baths, and one fluorescent light bulb each to take the place of a less energy-efficient incandescent bulb.
“As we walk owners through on closing, we give them one of Ted's light bulbs,” Goray says. “We're introducing these things to the homeowners and then will follow up with classes on energy efficiency.”
While buyers probably would have flocked to Green Cay Village just for the price, the partners also made a commitment that affordable not be interpreted as cheap or shoddy, which helped quell the fears of neighbors who opposed the community, thinking it was low-income housing. All the units feature ceramic tile in the kitchens, baths, and foyers, as well as pre-wiring for high-speed Internet access. In the townhomes, granite countertops are standard in the kitchens.
Plus, the community features an entrance monument, a boulevard with palm trees and a fountain, a clubhouse with a fitness center, and a heated outdoor swimming pool and splash pool with fountain.
HIGH-END TOUCHES: Few developments in the area offer elevators in three-story buildings. Green Cay included them in all of its condo buildings, which was attractive to families with young children and senior citizens. Granite countertops, such as this one in the clubhouse, are standard in the townhouse kitchens. Ceramic tile floors in kitchens, baths, and foyers, and energy-efficient appliances are standard in all units.
“The pride of place is important,” Goray says. “They can't wait to have family over. ... It's not just altruistic. I want my reputation to precede me [on future projects].”
Marketing for Green Cay Village also was unique. Rather than traditional newspaper advertisements and direct mail flyers that blanket a region, the developer zeroed in on the buyers the community was built to serve and spoke to them directly. They contacted personnel directors at area hospitals, schools, municipal governments, and other large employers who agreed to include information on Green Cay Village in paycheck envelopes, company newsletters, e-mail blasts, and employee break rooms, says Yaffa Mizrachi, vice president of the Apple Organization, the public relations firm that organized the marketing.
“I was cold calling to let them know we wanted to offer this to the workforce before we started advertising,” Mizrachi says. “It didn't have to go beyond HR directors. They were taking it from there.”
Green Cay Village had booths or sponsorships at some unlikely events, too, such as an international extrication competition and fire rescue expo that drew 3,000 firefighters, friends, and family. Neighborhood flyers were stuffed in the goodie bags at the annual orientation of the Palm Beach County Classroom Teacher's Association, attended by 8,000 teachers. The result was a smaller-than-usual outlay for advertising.
“We did some advertising in the Palm Beach Post, but it was very little,” Mizrachi says. “I wrote four or five advertorials; I think I used one. The media responded well also, and we got feature stories when we went to the market. ... I've worked on the affordable housing story for a long time. This was above and beyond anything we've ever done. It was very fulfilling, personally and professionally.”
The end result, Goray says, was that when the vast majority of builders saw sales stall in 2006, Green Cay Village never slowed down.
“When we hit the market, we really did a great job selling when everyone was still selling luxury homes like crazy,” he says. “Then the market turned. Everyone else is just dead, and we just continued to sell and build.”
INVESTORS NEED NOT APPLY
Green Cay Village works with four preferred lenders, says sales manager Daniel Travis, to help buyers learn about special loan programs that might be available to them. The lenders are trained and certified by the county and state to locate and access state and local grants for down-payment assistance, first-time home buyer programs, a state bond program for affordable housing, and special mortgages for teachers, healthcare professionals, police, and firefighters.
To make sure that the homes would go to working families, Goray put anti-investor restrictions into the sales contract. Unless the buyer has extenuating circumstances, such as a job transfer, the unit can't be rented out for two years. If it's sold within a year, 100 percent of the profit goes back to the developer. In the second year, 50 percent of the profit goes back to the developer. After that point, any profits from a sale will be retained by the owner. “Everybody thought we were crazy because the government didn't make us [restrict investors] and it was not a condition of the sale of the land,” Goray says. “We thought it was the right thing to do.” It proved to be an incredibly valuable policy when the market turned and investors everywhere started dumping properties and walking away from deposits.
PRIDE OF PLACE: Amenities at Green Cay Village are comparable to those of much higher–priced communities in the area. Developer Gerald Goray says he wanted to give owners a beautiful community they would be proud of and want to keep well maintained. The green-friendly development uses recycled water for irrigating the landscape.
“If we sold to investors, we'd be sitting here with 60 percent cancellations, trying to sell in a soft market,” Goray says. “I think we have 5 percent or 6 percent cancellations, due mostly to job transfers. It's kind of a fun story.”
LOCATION: BOYNTON BEACH, FLA.