The State of Land Development – By Tony Wernke, Terry Mock, and Greg Yoko
Follow Tony and Terry on Twitter: Tony – @Sustainable4U; Terry – @SustainLandDev
Moving forward, you can’t achieve one without the other two.
These are certainly interesting times in our industry. Throughout history, land development has been the backbone of our society. By enhancing conveniences and quality-of-life opportunities for people everywhere, development has nearly always been perceived to be beneficial.
Well, that’s certainly changed, especially in the last five years or so. Opposition to development is now stronger and more organized, and the obstacles that must be overcome today are larger and more complex than ever. Today, a public relations battle is occurring, and the land development industry as a whole is not only losing the battle, it hasn’t even really figured out how to fight. Here are some sobering facts to support that claim.
Problems, Problems, Problems
According to a recent study by the University of Massachusetts Center of Economic and Civic Opinion, 83% of Americans today don’t want new development in their community. What’s more, 70% believe the development approval process is “fundamentally unfair” to them. As a result, opposition to development is becoming stronger and more organized with every day that passes. Just last December, Worth magazine, a financial and investing advice publication, published an article profiled on its cover called, “Defeating Developers,” detailing how its affluent readership can more effectively “fight overdevelopment and preserve their quality of life.”
To make matters worse, not only does the public distrust the industry, industry professionals distrust each other – and for good reason. The Construction Management Association of America recently published a study indicating that 84% of professionals in the industry have experienced or encountered unethical acts in the past year – an alarming figure. The study estimates that acts such as reverse auctioning, change order games, over-billing, understaffing, fraudulent insurance claims, and the like account for the loss of approximately 2.5% of construction costs. Conservative estimates indicate that the total cost of such behavior creates $10.5 billion in waste – each and every year. But there’s more…
Another big issue in today’s industry is data flow. The U.S. Department of Commerce conducted a study of the costs of “inadequate interoperability” (the efficient and effective flow of data among appropriate project stakeholders). They concluded that over $15.8 billion is unnecessarily wasted. This is because all the various stakeholders, from initial planning and due diligence, through design and construction, don’t communicate very effectively with each other, and project data doesn’t flow through the process as it should. There’s more yet…
Our fragmented and nebulous industry suffers from severe productivity and innovation problems. This fact is typically overlooked because we rarely compare our industry to others. However, as can be seen in figure 1, while the rest of the world has doubled it’s productivity over the last 50 years, Construction was actually more productive 50 years ago than it is today! There is still more. Keeping up with the deluge of new regulations and changing priorities of municipal agents can be difficult – to say the least. In some areas of the country, the entitlements process can take years – even up to a decade or more – to navigate.
Land carrying costs, legal expenses, entitlement processing costs and lost opportunity costs add significantly to reduced bottom lines and project risks. And how does all that translate into “value” for society? Not surprisingly, not very well. There is no question that thousands of clear-cut, tightly packed, cookie-cutter developments are going up all over the country as you’re reading this. But, as you can probably guess by now, there’s still more, and the next issue is the biggest of them all.
Environmental issues have become thoroughly mainstream in the last year, particularly climate change. Media coverage about it abounds. Articles in mainstream publications document how the earth is near its “tipping points” as a result of global warming; best-selling books are being published, even Oscar-winning movies being produced. In the last couple years, global warming has quickly progressed from a left-wing political issue to a main-stream moral issue. Make no mistake, the public is responding.
Naturally, there are also detractors. Some scientists refute global warming or whether we can have an impact on it. However, atmospheric carbon dioxide is at an unprecedented level, and a majority of the world’s best scientists believe that humanity is outrunning its headlights. If we like, we can choose to wait for unanimous agreement before committing. But, we can’t do that if we want to enjoy success in future land development activities.
From the perspective of identifying and capitalizing on market trends, the issue isn’t whether global warming is in fact occurring. Today’s reality is that the public believes it is happening. As our population and knowledge base continues to grow, people are becoming more aware of the total impact that humans can have on our natural systems, carbon emissions, non-renewable energy resources, water quality, biodiversity, and many other issues. This trend is not a fad, and it has important long-term ramifications for land development industry markets everywhere.
As consumers continue to learn more about how to “go green,” there can be no mistake that the public is changing its behavior: recycling like never before, purchasing fuel-efficient cars, implementing solar energy at unprecedented rates, purchasing bio-fuels, organic foods, and the list goes on and on.
What’s more, last month we published the results of a study by NAHB projecting the strong growth of demand for green homes, and the current high prevalence of green products being implemented during home remodeling. There is a mega-trend occurring, and industry professionals of all disciplines need to get on the bus, because this time, it’s not coming back around. So far, we’re behind schedule, and the public has taken note.
Sustainability: More Than a Buzz Word
With all these dynamics simultaneously converging, it’s easy to see why the public is skeptical of land development like never before. And it’s easy to see how the increasing complexity and specialization that has occurred in just the last decade has created such dysfunction throughout the industry. The market is clearly changing and the industry must respond. It must move forward in ways that are truly sustainable. But “sustainable” is a term that has been thrown around in the industry for a few years now, and thus far, it has predominantly been synonymous with “environmental” or “green.” It is ironic that such a use for the term isn’t really sustainable at all.
The Shortcomings of “Green Building”
During this green movement, the concepts related to “green building” have become common. But the implementation still remains uncommon. The efforts of those championing the green building movement should be applauded, but a broader perspective than environmental building design is necessary, or the effort will ultimately fail. For example, of the over 20,000 development projects undertaken each year, only a few hundred buildings are being certified. That equates to a fraction of one percent of the total number of buildings actually built. Obviously, that isn’t enough to make a lasting impact – not even close. There are many reasons for this:
1. Myopic Perspective
A fundamental problem with environmental building design-centric standards systems is that, because of their lack of scope, they can only attempt to reduce the harm buildings impose to “acceptable” levels. We reject the notion that man (and land development) can, at best, merely minimize negative impact.
Not only is that premise short-sighted, it demonstrates a lack of imagination and resourcefulness. Our society possesses the knowledge to not only to do less damage, but in the process of re-tooling our economy and achieving greater levels of profitability, we can redesign our urban ecosystems in ways that mimic nature, to ensure our ultimate sustainability.
There’s simply more to green building than buildings. Common problems such as tree canopy decline, soil loss, the degradation of water, the introduction of toxic materials, and unsustainable energy use all occur extensively outside the building footprint. Development sites directly affect watersheds and areas much larger than that of just the buildings, and if project sites introduce toxic materials and invasive plants or diseases, they are free to spread across property boundaries. Inside the building, such problems might be contained or controlled by walls, filters or mechanical systems, but not those outside.
2. Need for a Developer-Centric Approach
Ultimately, green building is doomed to fail without a legitimate triple-bottom-line, holistic, comprehensive perspective that places the needs of the risk-taking, decision-making, check-writing developer at the center of its universe.
Developers need a host of professional consultants – not just building architects – to provide in-depth expertise within a holistic multi-disciplinary process. The entire team must be willing to do things more holistically and in a more sophisticated manner. Likewise, they need a set of standards that address the variety of issues and can be used to effectively drive project planning, finance, design, entitlement, construction and marketing as well.
3. Don’t Address Financial Risk
Current green standards programs don’t adequately recognize the financial needs of the vital financial stakeholders in the development game. Any new effort that adds time, money, and risk to a project, without a well-defined added return, is not likely to be widely accepted by those who have primary responsibility for preservation and creation of financial wealth. The developer’s first challenge is to gather supporting evidence that profit follows from such environmental stewardship, but the challenges to the approach don’t stop there.
There are many sound land development practices (that fall predominately outside the building footprint), which not only reduce development costs, but add sales premium potential and provide additional environmental benefits. Such practices require a more holistic and sophisticated approach than that which is typically employed today, but nevertheless, offer significant cost saving opportunities. A prime example is the current, common practice of stripping the land of all vegetation as the first step of land development. This very same vegetation, from prairie grasses to mature trees (that are often viewed as development obstacles) not only aid in achieving ecologic stewardship goals, but also provides the least expensive form of stormwater management and erosion control mitigation. Additionally, the preservation of mature trees and native landscape features adds substantially to the attractiveness of the project to future buyers.
4. Ineffective Financing and Public Mediation Tool
Another problem with building design-centric standard systems is that they don’t do enough to address the real problems decision-makers face. Although well meaning, these standards systems, by definition, demonstrate a lack of input and consideration for the total site and watershed-wide issues related to the development effort.
Comprehensive watershed and site development planning addresses (adequately or not) “non-point” pollution source issues that cross ownership and jurisdictional lines. It is in reference to those issues where public opposition is most likely to occur. What developers need is not a list of things they can do within their building(s), but methods, costs, realistic life-cycle benefits, and detailed research and explanations for the entire project. These are the tools that help them obtain financing and achieve success in public relations, entitlement navigation, marketing and sales.
5. License to Harm
Another problem with the environmental building-centric approach is that it paradoxically ensures the demise of that which it hopes to protect. Green building standards systems amount to a license to harm. Reducing harm, while an outwardly admirable goal, is not an effective strategy for success. It’s an illusion of change. Relying only on the current green building movement to save the environment will ensure that we ruin the environment – quietly, persistently and completely.
Without comprehensive site and watershed protection and restoration, as well as a primary concern for financial considerations and market dynamics at the forefront, green building becomes like low-fat cookies. They provide an excuse to consume more because they’re not as bad as the alternative. Keep eating them, and you’ll still never lose weight.
Further, by being too focused on environmental concerns, the approach inevitably pits environmental stakeholders and financial stakeholders against each other, creating battle lines where everyone comes out a loser. In the end, it’s relatively easy to point out a multitude of problems with an industry at its cross-roads. The real challenge is in developing effective solutions.
What Would George Washington Do?
In December 2005, we researched and published an article that explored the land development career of George Washington – a true visionary leader in every sense of the word. It is not commonly known from our history books that Washington’s private professional career ran the gamut of land development professions, including being a leading land developer and speculator. (If you haven’t read this article, I encourage you to read “Breaking New Ground” at https://www.triplepundit.com/2010/08/george-washington-land-development-ideas-shaped-sustainability/.)
Through his land development and speculation activities, Washington became the richest man in America. He was also a visionary land steward who practiced what he preached on his own projects when he saw the need for sustainable forestry and agriculture, as well as a variety of other environmental land development practices. He also deeply understood the need for responsibility on the part of every individual to respect and protect the rights and freedoms of both his contemporaries and all of us that are fortunate enough to follow in his footsteps.
Today, we find ourselves at a volatile point in our history, similar to Washington’s time, where new paradigms must be developed and embraced. It is at times like this where following the leadership of those proven visionaries who have come before us makes the most sense. At this time in our industry’s history, it is appropriate that we ask, “What would George Washington do?”
People, Planet, and Profit: A Comprehensive Model for Our Future
Understanding the life and times of perhaps our country’s greatest hero, George Washington, can help to light our way down a path of true sustainability – one where people, planet, and profit all are considered equally in a decision model.
George Washington professed and demonstrated belief in virtue, progress, equality, tolerance, universalism, civic duty, natural religion and morality while simultaneously embracing the profit-making opportunities that the new economy offered. This can be depicted as a fractal equilateral triangle, which adapts the concepts of the Hannover Principles (a set of statements about the built environment originally developed by Bill McDonough and Michael Braungart) to directly address the difficult issue of imagining and encouraging an environmentally sustainable future, and modifies them (as put forth in their original form and in the words of their authors, the Hannover Principles “may adapt as our knowledge of the world evolves.”) to conform to the triple-bottom-line approach of truly sustainable land development that Washington espoused.
The principles (also adapted from McDonough and Braungart in the book, “Cradle to Cradle”) put forth the ideas of sustainable development that, if used as a holistic planning model, can ensure the success of individual projects, and carry our land development industry forward. Our new interpretation of the principles and the sustainable fractal triangle matrix configuration, is as follows:
At the top of the equilateral triangle, representing economic growth, is the effective pursuit of “profit”. In order for sustainable development to achieve its goals, it must fully embrace the profit motive. This motive requires that developments deliver maximum present and future value to stakeholders by being driven by market demand, and that they do so in the most efficient means possible within the holistic triple-bottom-line perspective.
The “people” leg of the equilateral triangle represents the social responsibility of industry professionals to recognize that project design affects a broad level of human well-being. Society requires and benefits greatly from gaining a greater sense of connectedness; having greater access to quality food, shelter, health care needs, as well as work, creative, recreational and educational opportunities; preserving its cultural and biological heritages; being safe; accessing cultural enrichment opportunities; respecting the diversity of its people; and participating in its own governance. Within the context of natural laws, it is every individual’s right to maximize these social opportunities, and it is the land development industry’s responsibility to create the infrastructure to enable these opportunities to more readily occur.
The pure “planet” leg of the triangle recognizes the ultimate value and supreme intelligence of our natural world. Our environment offers an infinite number of time tested and successful patterns, designs and structures from the most minuscule particles, to expressions of life discernible by human eyes, to the greater cosmos. We must not only respect our natural world for its power to sustain us, but as we change and modify it, understanding its workings will lead us to the ultimate solutions we require to sustain ourselves. Make no mistake, the earth will survive. It is our societies which may be in peril. Using an ecological standard to judge our innovations will help us determine which solutions will work, and which solutions will withstand the difficult and ultimate test of time.
Emanating from the creation of economic value is the concept of eliminating waste. Waste reduces profit, and as a result must be eliminated, but it won’t be easy. Eliminating waste requires strong visionary leadership that can transform a liability into an asset. It requires team-building, the development of greater trust, and getting a previously fragmented group of people working more effectively together. That is indeed a challenging task, but its relentless pursuit is absolutely necessary if we hope to achieve sustainability.
Quality of Life
Building from our social responsibilities is the understanding that the values our society espouses, and in fact, the spiritual “lift” we gain from positive land developments, are more important than the material items we can own and consume. We must value and focus on the “soul” of our lives, for it is the root of true happiness and quality of life.
Emanating from nature’s model is our understanding of the natural long-term energy flows which emanate from the sun, and are captured by plants, some of which are eaten by animals, which then (along with plants) cycle the energy into the earth, which stores it and ultimately feeds our plants again. Our short-term oriented consumption of these energy stores is seriously disrupting the cycle, and we must learn how to respect, protect and utilize these natural energy flows.
Between the “profit” and “people” ideals is the recognition that, as we progress deeper and deeper into sustainable land development, we must be willing and able to share the knowledge we gain with the other stakeholders throughout the world. Our industry has many areas of specialization, and in order for anyone to effectively develop the requisite holistic perspective, we must seek to better understand and address the needs of all the stakeholders throughout the process.
Humans and Nature Co-exist
Rather than man dominating nature, or man being required to avoid nature, there must be a recognition that man and nature can and do co-exist. With this recognition comes an understanding that man must benefit from nature, but that nature must also benefit from man.
Between the “profit” and “planet” ideals, and stretching to the very epicenter of the triangle is the understanding that we must recognize – in fact maximize the effectiveness of – our interdependent relationships. This interdependence exists not only among industry professionals, but with society as a whole – as well as cause and effect in the natural world. This principle of interconnectedness, inseparability and union provides us with a continuous reminder of our relationship to the whole, a blueprint for the sustainability of our work.
The solutions we seek reside within this fractal model. As we dig deeper and deeper, the model replicates itself, becoming infinitely complex, yet always maintaining the necessary holistic, triple-bottom-line perspective.
Government is a Partner, But Private Industry Must Lead
As we move forward, we must do so in partnership with government, but ultimately, solutions must emanate from the bottom up, not the top down. History has proven that top-down solutions rarely solve the problems they purport to address, and they often create new ones in their wake. It is the private, profit-driven members of the industry itself that can and must take advantage of the opportunity to not only reverse the negative image the industry has been given, but to become the absolute heroes of our time. It’s a momentous opportunity, and the time is right to seize it.
Today’s reality is that the “people” are driving demand for practices that steward the “planet.” To date, the single-minded pursuit of “profit” has been an impediment to truly sustainable development, but as adopters continue to pave the way by incorporating more holistic new – yet proven – practices, the time is rapidly approaching that supply will begin to meet demand.
Are you ready to participate in the bold new world in which we live – where socially responsible and eco-friendly practices not only boost your bottom line, but are required for survival? That world is closer than you may think, and our goal is to help you achieve it. There are a host of emerging technologies, products, perspectives, knowledge assets, and other resources necessary to enable professionals throughout the industry to make it happen. Stay tuned, as they say. There’s much more to come.
Republished from the May, 2007 issue of Sustainable Land Development Today magazine