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Policy areas

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:

Profitability

Leadtime

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.

Financing

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.

Compliance

Inspections

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

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.

Constr./Mfg.

Skilled labor

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.

Supply chain

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

Automation

Simplifies repetitive fabrication and assembly tasks.  Achieves more production with the same labor count.

 

 

Technology

Building Information Modeling (BIM), Monte Carlo analysis, and Excel supply chain modeling, etc., provide accurate measurements and powerful controls of the manufacturing and construction processes.

Manufacturing

Is more precise than skill-based fabrication. A controlled factory environment produces higher-quality assemblies, faster, and at lower cost.

 

 

Information Transfer

Some of the greatest obstacles to the adoption of offsite/modular construction are poorly disseminated information about existing circumstances and opportunities.

Setting (assembly)

The onsite assembly of factory-made modules is faster, less intrusive, and more efficient than the typical stick-built construction method.

 

 

Transportation

Moving subassemblies to factories to make modules, and modules to build sites to construct buildings is the proven method for building housing quickly and affordably.

Cashflow

Private equity, debt financing, and disposition or rental income work differently based on the way building materials become real property, either directly or first as fabricated personal property in the form of subassemblies.

Labor

The skilled labor shortage makes onsite construction difficult, but factory-built, modular construction integrates trade skills into the process, making labor easy to train without lengthy journeymanships.

WE’RE HERE FOR YOU

Send us a message — tell us how we can help you support offsite/modular construction.

Our Address
65 Pine Ave., #129, Long Beach, CA 90802, USA