How Real Estate Developers Think. Peter Hendee Brown

       Prologue

      A Brick Wall in Evanston

      We used to call them our town founders and we honored them by erecting their statues in our town squares. Today we just call them “developers.”

      —Andrés Duany, Miami architect and planner¹

       The Costs of Opposition

      In 2002 a Chicago developer named Neil Ornoff hired the architect David Haymes and his firm, Pappageorge Haymes, to design a twenty-unit residential project on a corner site at 525 Kedzie Street, in Evanston, Illinois, a northern suburb of Chicago. “The alderman—the city councilman—was really fearful of the people who lived in the adjacent building and were concerned about losing views they had across the vacant parcel, so he asked the developer to work with them,” recalled Haymes. “We designed a beautiful building,” but the design required a small portion of the building to be a little bit taller than what the height limits in the code allowed. The site plan also required the developer to seek relief on a parking rule that required a twenty-foot setback from the street to the building face to allow for on-street parking for the property, even though all of the parking for the building was going to be accommodated onsite, within the building, and concealed from view. These were routine and modest variance requests but, as Haymes recalls, “The neighbors simply said no, we are going to oppose the project.”²

      So Haymes went back to the drawing board and redesigned the façade on the side of the building that faced the neighbors, adding articulation and setbacks that made the building look better from the neighboring property but increased project costs. This time the neighbors said, “No, that is a very nice design, but we are still going to oppose it.” So the developer said, “That’s it—we will build it ‘as-of-right,’” which means per the letter of the code and without any variances. Haymes redesigned the building, eliminating the small portion that was to be taller and changing the site plan to accommodate the required twenty-foot setback. He stripped off all of the articulation and setbacks on the side facing the neighboring building because there wasn’t room and the developer no longer felt the need to incur the costs required to curry favor with the neighbors. “We gave them an unadorned brick wall facing their building because we had to push our own building so far back on the property.” In the end, it took the developer and his team more than two years to obtain the approvals required to build a small, twenty-unit condominium project and by then it was late to market. The project opened in 2007, just as the housing bubble burst. The condominium units failed to sell out at pro forma prices so the developer was unable to fully repay the construction loan. The bank foreclosed on the property and sold it to another developer, who converted it to apartments.

      In addition to providing architectural design

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