Wednesday, October 18, 2017

Opinion: Why We Plan to Develop on Vacant Land or Non-Residential Sites

By Danny Haber
Wed, Oct 18, 2017 at 3:57 PM

As developers, my colleagues and I have had one primary goal: to build middle-class rental housing that is safe, nice, and affordably priced. In the past, with limited resources and experience, we had focused on solving the complex problems of existing distressed sites that no one else was interested in dealing with due to the severe risks involved. And after working on such sites, I can fully understand why so many buildings are left in poor condition for decades at a time.

So, going forward, our development company, oWow.com, will develop empty land or other non-residential sites into housing — rather than redevelop existing housing.

Our new focus will add to the region’s residential supply, with the goal of offering rental prices that are well below market rate. Our company plans to build three-bedroom apartments that include two bathrooms, a living room, and a kitchen. Tenants will pay about $1,000 per bedroom initially, and down the road, projects will come in at $650 to $800 per bedroom, which is significantly less than the $1,800 to $3,000 per person for new market rate apartments in parts of the Bay Area. Everybody will be on one lease and live in a brand-new apartment.

We decided to change the focus of our developments after we tried to tackle difficult projects that most experienced developers would not touch.

One was the Travelers Hotel in downtown Oakland. It was both a hotel and SRO, with the majority of the rooms rented nightly as a hotel. The building was plagued with many problems, including electrical wiring that is typically used in single-family homes, not seven-story buildings. Using a hair-dryer and microwave at the same time would cause an entire floor’s electricity to go out. In addition, no fire sprinklers and no fire alarms compounded the building’s massive fire risk. Additionally, the plumbing caused sewage backups 2 to 4 feet high, the elevator had no emergency brakes, the building had a severe bed bug and mice infestation, and the building was not retrofitted to meet today’s standards. (There was a 40 percent chance the building would not survive the next earthquake.)

Our original plan was to renovate the structure by putting in sprinklers, fire alarms, new safe wiring, and plumbing in segments of two floors at a time. However, understandably, not everyone wanted to move multiple times within the building. So, we revised the original plan and reached individual agreements with 21 of 25 tenants, offering two packages: a buyout package for housing 2 blocks away with the same rent or temporary housing at a hotel paid for by us with right of return at the same rent once the building is completed. When the project is done, oWow.com will be adding more than 20 jobs, three businesses, and 78 units of newly constructed safe housing in Oakland.

The other difficult project we took on was 1919 Market St., which occupies an entire city block and was subdivided in 2001. We became involved in late 2015 in an effort to bring the building into compliance with city and state safety codes. Within three months of taking over the building, we made a unit-by-unit compliance plan to legalize the entire building over a two-year period.

The city of Oakland was initially open to our plan, but after a unit-by-unit fire and building inspection, the city decided to red-tag the building. Even though we did not own the building at the time, our firm paid tenants relocation allowances totaling more than $185,000. The city’s decision to red-tag the entire building also made it more expensive for us to renovate, because we could not rent out portions of the space while we worked. But we forged on anyway and helped provide a solution to one of Oakland’s biggest problems — the lack of housing — and gained city entitlements to build 63 units. Once demolition commenced, our team realized we had an environmental issue in the soil, thereby further delaying the project.

Following the delay, we held a series of community meetings where we got feedback on the project. During these meetings, we heard what the community wants moving forward for the space and we apologized for any previous lack of clarity and poor demolition work. We also vowed to do better, including hiring a new local contractor.

Our team went back to the drawing board and redesigned the project based upon community feedback: offering more parking spaces and increasing the density to allow former residents to come back and pay at an affordable housing rate of 30 percent AMI (area median income). We were able to do this without public subsidies.

It is my sincere hope to see these projects built against all odds, turning derelict and dangerous buildings into safe and beautiful ones — at prices that not only middle-class people can afford, but where former residents come back to the building as well.

We are in a housing crisis. Our goal is to be part of the solution.

Danny Haber is a developer.

The Express’ decision to publish an opinion piece is not an endorsement of it.

Hotel Travelers Before Photos
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owow_travelers_before_2.jpg

Hotel Travelers After Photos
owow_travelers_after_1.jpg
owow_travelers_after_2.jpg


1919​ ​Market​ ​Compliance​ ​Plan​
click to enlarge owow_plan_1.jpg
click to enlarge owow_plan_2.jpg
click to enlarge owow_plan_3.jpg

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