We work with government to identify and adopt policies that encourage offsite/modular affordable housing development.
County and municipal policymakers have many tools at their disposal; some include zoning, parking requirements, fees, communications, and other less conventional strategies. State legislatures and regulators manage broader statewide policies with legislation and agency rules. Governors further direct agency actions with executive orders. Adoption, elaboration, and enforcement of the International Building Code (IBC) varies state-to-state.
We suss out gaps in your existing policy matrix that make developing affordable housing, especially using offsite/modular construction, and help you to fill those gaps with policies that encourage more affordable housing. These are the broad areas where affordable housing developers need policy support to encourage development in your jurisdiction:
Affordable housing developers reject 19 out of 20 projects they evaluate. The primary evaluation tool is a specialized financial model commonly called a “proforma.” The proforma calculates the present value of inbound and outbound cashflows as they are discounted over time. The same amount of cash has less value in the future than it does in the present, the timing of cashflows matters; so, the heart and soul of the proforma is the discounted cashflow (DCF) analysis.
Short lead times are crucial to the success of offsite construction viability, but the approvals process for offsite is longer than for onsite, stick-built, projects.
Housing can’t be built without funding: equity and debt. The equity is raised from investors, based on the projected return on investment (ROI); debt is borrowed from lenders based on meeting a minimum ROI with a maximum of tolerable risk. The risk profile for offsite projects is difficult to calculate and to mitigate.
Inspection sequencing for new construction caters to onsite, stick-built, construction methods. In most states, projects executed using offsite methods are inspected by both the local building and safety department AND a state-licensed engineering firm.
Planning departments are responsible for drawing the map of what goes where, expressed through the municipal General Plan and its derivative, zoning code. Rigid zoning can constrain affordable housing construction, especially by means of offsite/modular methods.
Only a licensed building contractor can legally construct affordable housing or any other major land improvement. Years of experience executing building construction, onsite, using traditional methods is required to qualify for a contractors license. This requirement limits the pool of available qualified skilled labor for onsite projects and complicates the qualification of skilled labor for offsite/modular construction in a factory environment.
Building codes are the basis of the plan check phase of government entitlement review. Adoption of the International Building Code (IBC) as the core of state and municipal building standards ignores modern methods of construction (MMC) including volumetric modular, panelization, and even mixed-methods. Not accounting for MMCs in the building code means that approved assemblies and the way they are constructed drives the availability and cost of building materials.
HOW MODULAR/OFFSITE PROJECTS ARE MADE
What’s Important to Modular/offsite Factories
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