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Hotels Lag in Energy Sustainability. One Project May Change That.

The hotel industry has fallen behind other real estate sectors in adopting energy-efficiency measures, but a Connecticut developer hopes to change that by converting an office building into what could be the most energy-efficient hotel in the country.

The $50 million gamble aims to revive the long-vacant Armstrong Rubber Company headquarters, a distinctive concrete box in New Haven that was designed by the Modernist architect Marcel Breuer in the late 1960s, as a 165-room boutique hotel to be called the Hotel Marcel.

The developer and architect, Bruce Becker, is building the hotel to meet net-zero energy standards, meaning it will generate as much energy as it uses.

“It’s probably the most challenging project I’ve ever undertaken, particularly since we’re doing it during a pandemic,” said Mr. Becker, whose firm, Becker + Becker, is based in Westport. “But I’ve been intrigued with the building at least since I was a graduate student at Yale in the late ’80s, and I thought it could be fascinating.”

Credit…John Muggenborg for The New York Times

Some large hotel brands and owners have set companywide greenhouse gas reduction goals, but much of the industry has failed to take advantage of measures that could save energy and reduce operating costs, according to a report by the Urban Land Institute’s Greenprint Center for Building Performance.

Among the obstacles to widespread adoption are complicated hotel owner/operator models, a lack of collection of energy use data and concerns about the impact on guests, the report said.

“The hotel industry is very well poised to benefit from sustainability — the owner/operators carry the burden of all of the energy costs,” said Marta Schantz, the center’s senior vice president. “The fact that this Connecticut project has decided to do it from the get-go is the perfect, most cost-effective way to do it.”

Ms. Schantz said she knew of no other net-zero energy hotel in the United States. But some major hotel brands are trying to reduce their carbon footprint, using various management systems and apps to track their progress.

Among the leaders is Host Hotels & Resorts, a real estate investment trust that owns about 80 upscale hotels in Brazil, Canada and the United States. The trust is aiming for a 55 percent reduction in carbon emissions by 2025.

Such goals are of increasing interest to investors, who regularly ask about environmentally and socially sound business practices, said Michael Chang, the director of energy and sustainability for Host Hotels.

The trust uses a diagnostic tool that identifies opportunities to install energy-saving technology — like LED lighting and room thermostats with occupancy sensors — that provide a good return on investment, he said. The trust makes the investments, and it depends on hotel operators to use them efficiently. To that end, it prefers to work with brands that have their own sustainability programs in place, Mr. Chang said.

The trust also hopes to increase the renewable share of its energy use by 30 percent in the next five years, primarily through off-site solar agreements.

“Even if we blanketed our portfolio with solar, we’d probably only get to 10 percent of our energy usage,” Mr. Chang said. “There is a limited amount of space to put panels on.”

The Armstrong building, along Interstate 95 near New Haven Harbor, is notable for a striking Brutalist design that incorporates a two-story open gap between the block of offices above and the ground-level lab space. The building’s beige exterior is made of precast concrete panels and is lined with deep-inset windows.

Locals also know it as the Pirelli building; the Italian tire maker moved into the space in 1988. Ikea bought the property in 2003 for one of its warehouselike stores. Much to the consternation of preservationists, the company demolished a taillike section of the ground floors to allow for more parking, but it left the rest of the building intact.

In recent years, Ikea has worked with the city to come up with a plan to convert the historic structure into a hotel. Last year, Mr. Becker bought the building and about 2.5 acres for $1.2 million.

He recognized the structure’s compact shape as a naturally efficient envelope — the ratio of surface area to interior space is low, a plus for minimizing heat gain in the summer or heat loss in the winter.

“It’s hard to make buildings that meander efficient,” Mr. Becker said. “But with a highly efficient envelope and building systems, we’ll be able to use about 80 percent less energy than a typical hotel building.”


Credit…John Muggenborg for The New York Times

Mr. Becker has considerable experience with high-efficiency construction, most recently at a Modernist office building in Hartford that he redeveloped into a 27-story apartment tower. That project, called 777 Main Street, is powered with a fuel cell and a solar array. The U.S. Green Building Council gave the building its highest efficiency rating, LEED Platinum.

For the hotel project, solar canopies over the parking lot and rooftop solar panels will supply all of the building’s electricity, Mr. Becker said. High-efficiency air-source heat pumps will be used for heating and cooling.

Other efficiency measures will include triple-glazed windows, high-efficiency insulation, an all-electric heat pump HVAC system, and heat and energy recovery systems. These methods should help the hotel meet passive house standards, a set of design principles aimed at creating ultra-low-energy buildings, Mr. Becker said.

“It will probably cost about $5 per square foot more, but we’ll be saving about $1 per square foot every year on energy,” Mr. Becker said. “So it really does make a lot of sense. It’s an opportunity to create a new paradigm that the hotel industry can look at and study and learn from.”


Credit…John Muggenborg for The New York Times

Slated to open next fall as part of Hilton’s Tapestry Collection, Hotel Marcel will have a restaurant, a bar, meeting spaces and a top-floor gallery with views of Long Island Sound on one side and the city skyline on the other.

The project is being partly financed through a $25 million construction loan from Liberty Bank in Middletown, Conn. The balance is a mix of developer equity, solar tax credits, federal and state historic tax credits, and a utility program grant.

Christopher Arnold, Liberty’s senior vice president and commercial real estate manager, said that although the hotel industry faced extreme challenges because of the pandemic, this project’s proximity to Yale, its high visibility and its inclusion in the Hilton network gave him confidence it would succeed. The efficiency measures will help by lowering operating costs and enhancing cash flow, he said.

The hotel is likely to gain national attention because its level of sustainability “just doesn’t happen in the hospitality industry,” said W. Chris Green, the president and chief executive of Chesapeake Hospitality, a Maryland-based hotel operator that will manage the property.

“I do believe this is going to be a huge test,” Mr. Green said. “Hotels are long-term real estate plays — there is a value to saving money on electricity, sewage and water.”


Credit…John Muggenborg for The New York Times

Mr. Becker hopes to spur the industry with his all-in approach. Many sustainability strategies, like eliminating single-use shampoo bottles and asking guests to reuse towels, are largely “superficial measures,” he said.

“If you really want to change the paradigm, you’ve got to not use fossil fuels and generate all your energy on site,” he said. “I think the time will come when what we’re doing becomes the norm.”

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An Ohio Mill Town Lost Its Identity. Can Youth Sports Restore It?

HAMILTON, Ohio — Hamilton has long been a city in search of an identity.

During its heyday, its industries churned out paper, and it was home to a company that produced safes that could withstand a nuclear blast. But as demand for paper and bombproof safes declined, those industries took Hamilton down with them. What was left of this city of 70,000 along the Great Miami River was then gutted by the Great Recession a decade ago.

Over the years, leaders tried to reinvent the city, sometimes in ways that brought more ridicule than redemption.

Hamilton gained notoriety in the 1980s when the city officially added an exclamation point after its name (an addition promptly rejected by the mapmaker Rand McNally). Then the city christened itself the City of Sculpture, and it still boasts a highly regarded collection of sculptures and an award-winning sculpture park. Still, the artsy moniker could not break through the city’s Rust Belt image.

The city’s manufacturing ghosts continued to haunt it in the form of abandoned factories and smokestacks pointing like frozen fingers into the sky. Now, one of those shuttered factories is poised for repurposing, and locals doubt even the pandemic can derail Hamilton’s makeover, this time into a city of sports.

Credit…Andrew Spear for The New York Times

The city manager, Joshua A. Smith, arrived in 2010 from Howard, Wis., a bedroom suburb of Green Bay, another struggling Rust Belt city.

“The community lacked any kind of energy,” Mr. Smith, now 47, said. “It almost felt like the city had given up on itself.”

Perhaps no facility illustrated the city’s fortunes more than Champion Paper’s empty plant, which had closed in 2012. Some potential buyers began circling with offers (one out-of-town firm wanted to buy it for cold storage), but Mr. Smith saw promise, and the city bought the Champion complex along with its 40 acres of riverfront land for $400,000.

The 1.3-million-square-foot site is poised to become what is being billed as the largest indoor sports complex in North America: Spooky Nook Sports Champion Mill.

Spooky Nook is an indoor-sports company based in Manheim, Pa., where its 700,000-square-foot complex draws more than a million visitors a year, bringing in more than $50 million for the local economy, according to Tourism Economics, a travel analytics firm.

Hamilton, through tax breaks and infrastructure upgrades, has provided $20 million in funding for the $170 million Champion Mill complex in the hope that it will have the same draw when it opens in late 2021. To achieve that, the development will go beyond sports to include a fitness center, restaurants, residences and stores. The city estimates it will create 380 permanent jobs.

The shift to sports is a natural fit, said Mayor Pat Moeller, who added that he envisioned legions of tourists visiting Hamilton’s restaurants, bars and shops.

“It will transform us,” he said.


Credit…Andrew Spear for The New York Times

Around the country, youth sports have become big business, and cities often covet the facilities as a way to spur local development and lure out-of-towners.

The industry generates $19 billion in revenue nationally, up from about $9 billion several years ago, said Norm Gill, managing partner of Pinnacle Indoor Sports, a consulting service that has helped build 50 complexes across the country but is not involved in the Spooky Nook project.

“Sports tourism is on steroids,” said Mr. Gill, who estimated that each visitor might spend $110 to $180 a day on food, lodging and tickets.

More than $550 million has been spent developing complexes to host youth sports over the past three years, according to Sports Business Journal, a trade publication. And there are 1,250 indoor soccer facilities across the country, according to the U.S. Indoor Sports Association, a trade organization. They can range from less than 25,000 square feet to Champion Mill’s size, but only the largest attract major tournaments.

The SportsPlex in Cape Girardeau, Mo., for example, opened in May to great fanfare among residents. By offering six regulation basketball courts, two indoor soccer fields, 12 volleyball courts and other amenities, organizers hope to draw sporting and tournament business from a five-state region.

“These sports complexes are a symptom or the result of the professionalization of youth sports that has occurred over the last 40 years or so,” said Victor A. Matheson, a professor of sports economics at the College of the Holy Cross in Worcester, Mass. Elite traveling teams, increasingly expensive gear and more rigorous practice schedules are part of the experience for today’s players.


Credit…Andrew Spear for The New York Times

The pandemic has put the brakes on many industries, and youth sports is no different, but Mr. Gill thinks that by the time Spooky Nook Sports Champion Mill opens, the demand will be there. The industry is most likely oversaturated and headed for a reduction, he said, but the mixed-use component of Hamilton’s facility could give it staying power.

Industry experts agree that the key is drawing travelers who will circulate their dollars in the host city. Without that component, success can be fleeting.

Large youth sports complexes are typically 30,000 to 100,000 square feet, and many are privately run. Those owned by municipalities, like Cape Girardeau’s SportsPlex, are often built as a catalyst for development.

“Those facilities are loss leaders — the cities don’t make money from them,” Mr. Gill said. “The real goal is to bring hundreds of thousands of dollars in for the local economy.”

Spooky Nook Sports predicts a million visitors to Hamilton in the first year, a milestone that its facility in Manheim, near Lancaster, Pa., did not reach until its third year.

But the challenge for Hamilton and other cities is the finite supply of children and parents willing to spend many weekends of the year competing in these tournaments.

“You have to have gigantic tournaments to justify this size,” Professor Matheson said. “A town of 70,000 can’t generate business to keep 700,000 square feet of indoor athletic space occupied. You can shoot baskets in your driveway for free.”


Credit…Andrew Spear for The New York Times

To that end, Hamilton is trying to draw a critical mass of recreation-seekers to complement Spooky Nook. The Pinball Garage recently opened nearby, featuring more than 30 game machines, and Mr. Smith, the city manager, has stipulated that Spooky Nook fill the space for restaurants and other amenities with local operators.

Spooky Nook’s founder, Sam Beiler, is not concerned about market saturation. Thirty-five weekends in 2022 are already booked for youth sports tournaments at Champion Mill.

“We believe our model, which focuses on local traffic and corporate events throughout the week and youth sports tournaments on weekends, is an excellent model,” he said in an email.


Credit…Andrew Spear for The New York Times

Local businesses are also hitching their fortunes to Spooky Nook. Hamilton straddles the Great Miami River, and up until a few years ago, the west side was pockmarked with empty storefronts. But once rumors of Spooky Nook’s arrival started circulating, boutiques, art stores and restaurants began moving in.

Mike Hoskins, the owner of Petals & Wicks, a flower and candle shop, said one of the things that had lured his wife and him to their current location four years ago was the expectation of increased traffic from the sports complex. They struggled during the pandemic lockdowns but have regained their footing and are banking on Spooky Nook’s changing the city, he said.

So is Paula Hollstegge, a co-owner of Hip Boutique, where the racks are full of colorful clothes and accessories, less than a mile from the sports complex.

“We are superexcited about Spooky Nook,” Ms. Hollstegge said. “We are hoping after a day of sports the women will want to leave the dudes behind and do some shopping.”

The city’s fortunes may well depend on that.

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The Capital of Sprawl Gets a Radically Car-Free Neighborhood

Phoenix, that featureless and ever-spreading tundra of concrete, has been called “the world’s least sustainable city.” It has been characterized as a “sprawling, suburbanite wasteland” and “a monument to man’s arrogance.” The Onion has darkly predicted that by 2050, “most of Earth’s landmass” will be swallowed by the encroaching Phoenix exurbs. The Walk Score index ranks the place as the second-worst big city in America for pedestrians, and traversing it has been described as “a slog through a desert, plus the occasional McDonald’s.”

The Phoenix metropolitan area is, in other words, the last place you would expect a real estate developer to spend $170 million creating what it calls the first-ever car-free neighborhood built from scratch in the United States.

The development, Culdesac Tempe, is a 17-acre lot just across the Salt River from Phoenix. Currently a mess of dust and heavy equipment, the site will eventually feature 761 apartments, 16,000 square feet of retail, 1,000 residents — and exactly zero places for them to park. The people who live there will be contractually forbidden to park a car on site or on nearby streets, part of a deal the development company struck with the government to assuage fears of clogged parking in surrounding neighborhoods.

Culdesac Tempe is a proving ground for a start-up also called Culdesac, which was founded in San Francisco and moved to Tempe during the pandemic. Started in 2018 by two native Arizonans, the company announced the project last year to a mixture of curiosity and doubt. Urbanists cheered it as a bold and important step toward a future with fewer cars, while suburban developers said the concept could never work on a large scale.

Others preferred to simply ignore Culdesac. “If something is described as ‘car-free,’” Car & Driver wrote, “we’re generally not interested in reading any further.”

Although Culdesac was devised before the coronavirus emerged and has experienced some construction delays, the project could end up benefiting from the pandemic, as more Americans consider working from home indefinitely in cheaper cities. Culdesac says it expects the first residents will be able to move into their apartments next year, with the larger site completed by 2023 — a pedestrian oasis in the megalopolis known as the Arizona Sun Belt.

To be fair, Tempe, the home of Arizona State University, gets high marks for bike friendliness and has seen a recent boom in high-rise construction. But outside the campus area, it is very much a part of the region’s autoscape. Culdesac’s immediate neighbors include an R.V. park, a mechanic, a transmission shop and an auto-parts store, and nearby apartment complexes — the competition — are surrounded by parking lots that shimmer in the three-digit heat.

The car-addicted reality of the area makes Culdesac’s architectural renderings both intriguing and a little hard to believe. According to the images, neighbors will lounge in communal courtyards and walk to do their errands. Culdesac Tempe is directly on a light-rail line to downtown Phoenix, but residents may never need to leave: The complex will feature its own grocery store, coffee shop, restaurant, co-working space and other amenities.




The 167 rowhouse-size apartment buildings will be broken up by wide pedestrian malls, and there will be a half-acre park where residents can walk their dogs and stage picnics. A limited amount of parking will be provided for outsiders who want to visit friends or shop at the stores, but the people who live there will have to rely on public transit, bikes, ride-hailing apps, scooters and the like to get around greater Phoenix. Apartments start at about $1,000 a month for a studio and $2,200 for a three-bedroom, about in line with the area.

Because Culdesac’s founders come from the technology industry, where no idea is valid if it does not scale, the company’s plans go way beyond Arizona. Ryan Johnson, a founder and Culdesac’s chief executive — he’s also the Tempe site’s first official renter — said the multidecade goal was to retrofit American cities and end car ownership as we know it.

“After this one, we’re going to build something for 10,000 residents,” Mr. Johnson said in an interview. After that: entire municipalities. “The vision of Culdesac,” he added, “is to build the first car-free city in the U.S.”

Credit…Adriana Zehbrauskas for The New York Times

Mr. Johnson’s thesis, as laid out over a few hours of recent Zoom calls, is that (a) the future of American cities is the walkable urbanism found in New York and San Francisco but that (b) that future is headed to the Sun Belt.

The coasts may dominate American culture now, but for decades the biggest growth rates have been in sprawl-heavy places like Atlanta, Houston and Phoenix. The latter remains among the nation’s fastest-growing metropolitan areas, adding about 750,000 people since 2010. With a total population just under five million, Phoenix has edged out Boston as the country’s 10th-most-populous urban area.

Compare that with New York and Chicago, which are losing population, and with California, which continues to see a net outflow of middle-class residents to cheaper cities beyond its borders. If you want to be in the business of creating not just new buildings but entire neighborhoods, you go where demand is exploding, and that’s Arizona.

Megan Woodrich might become one of these coast-to-Sun-Belt transplants. “It’s absolutely untenable here long term,” said Ms. Woodrich, a teacher who lives in South San Francisco — a suburb of 63,000 that sits below its more famous neighbor — with her husband and three children. They are considering a move to a cheaper place like Arizona, but they want a walkable neighborhood — a combination of desires that led them to discover Culdesac. Ms. Woodrich is on a list of 200 people that have expressed early interest in the development.

Some economists and demographers have derided Phoenix’s growth as cheap. They note that many of the jobs being created are low-paid positions in sales and customer service, the result of the local government’s encouraging corporations in higher-tax states to move their back-office operations.

But in the recovery since the subprime-housing bust, which leveled the local economy and its construction-dependent job growth, Phoenix has developed a budding tech scene and started to attract jobs from Silicon Valley. Zoom, the videoconferencing app that has gone from little known to ubiquitous during the pandemic, recently announced that it was opening a research and development office — full of the higher-paid software engineers that tech companies usually place in the Bay Area, Seattle and New York — in the Phoenix area.

At the Culdesac site, the developers are blending two ideas that usually have nothing to do with each other. The project is both an “infill” development that aims to sleeve itself into the urban landscape, and a master-planned community that recalls a Disney exhibition or a golf-and-condos parcel in Florida.

The goal might be termed instant gentrification: to open up with all the amenities that make a place desirable, and hope that they make the neighborhood a destination overnight. The development’s park, shops and co-working spaces will all be open to the public, and every penny spent on site, whether from a tenant’s rent check or an outsider’s bar tab, will filter up to the same company.


Credit…Adriana Zehbrauskas for The New York Times

When Culdesac Tempe was announced, the idea of a large, car-free development in Arizona seemed like the extreme but plausible edge of a long-term trend. Americans are getting serious about reducing their carbon footprint, and for years, cities across the country have been rewriting their zoning codes and building regulations to require fewer parking spots and encourage greater density.

Outside urban cores, there has been a parallel trend toward more duplexes, apartments in shopping malls and “car-lite” developments — building projects that acknowledge most residents must drive to work five mornings a week but may prefer to walk or use transit for errands and leisure. Even in Phoenix, the few relatively walkable neighborhoods command premium prices.

Still, there was probably going to be a ceiling on the number of tenants Culdesac could attract. The great bulk of the city’s working population has jobs requiring a car commute. Culdesac might have made a profit courting the subset that shunned automobiles and worked from home, but there’s no disputing it would have been a subset.

Then, of course, came the pandemic, causing tens of millions of Americans to begin telecommuting from their living rooms. Across the country, employers are re-evaluating whether they will ever reopen their downtown offices at full capacity, and some have told their staffs that they can accomplish their tasks via videoconference forever. Suddenly, the Culdesac pitch — a Sun Belt development that caters to people who work remotely and middle-class refugees from the expensive and crowded coasts — started looking eerily prescient.

Builders and urban planners have long denounced city-mandated parking minimums — requiring projects to include one or two spots per unit — as “apartment blockers” that raise the rent. Instead of telling developers how many parking spots to build, they argue, cities should allow parking to be built according to demand. The hope is that once residents see how much a parking space is costing them (a few hundred dollars a month in big cities), they will be more apt to embrace car-sharing and public transit.

In 2018, Seattle passed a law requiring developers to unbundle the cost of parking from the cost of rent, and various other cities, including Los Angeles, Portland, Minneapolis, Austin and San Francisco, have approved buildings with minimal or no parking for residents. Just a year after Culdesac announced its Tempe development, a more modest project — a 104-apartment complex with just six units of parking — was proposed in Charlotte, N.C. The developer, Grubb Properties, assembled a spreadsheet of car-free buildings and developments for the City Council to consider. Culdesac topped the list, which mostly consisted of smaller, one-off projects.

The more common it becomes to sever parking from development, the easier the concept is to sell to tenants. “When other developers get on board, it helps change the mind-set of lenders and others who are stuck in the traditional car-centric mentality,” said Clay Grubb, Grubb’s chief executive. In mid-October, Charlotte’s Council approved the project with a 6-to-5 vote.


Credit…Adriana Zehbrauskas for The New York Times

Arizona — for all the scorn heaped upon it by, ahem, car-despising coastal elites in professions like journalism — is actually a magnet for housing innovation. Like the rest of the West, the state boomed after World War II, attracting residents and industries as white Americans suburbanized and the baby boom commenced.

In the dominant Phoenix region, which accounts for about two-thirds of the state’s population, growth was steered by a cabal of civic boosters and Chamber of Commerce men, who courted out-of-state employers by hoovering up federal infrastructure dollars and fostering a good “business climate” — that is, they kept unions weak, taxes low and regulation minimal.

The mix of fast growth and low-key rules has given Phoenix a reputation for being “the petri dish for housing experiments.” It’s a great place to build because people are constantly showing up. And because so many houses look the same — terra-cotta roof, rock lawn by the driveway, and exteriors in your choice of tan, tan or tan — the region emerged from the housing bust with a reputation for being one of the easiest places in America to gauge the price of a home.

In the aftermath of the Great Recession, when investors built single-family-home empires from the wreckage of a mortgage crisis, the Phoenix region was one of the first markets where institutional buyers started amassing foreclosed properties. More recently, Phoenix also became a test market for an emerging class of “iBuying” (short for instant buying) companies, including Redfin, Zillow, Offerpad and Opendoor, which hope to upset the traditional broker model by offering home sellers quick cash offers, then flipping the properties back on the market.

Arizona is so encouraging of new real estate schemes that its Commerce Authority has a program, Property Technology Sandbox, in which companies can apply to test new ideas to buy, sell and develop without having to get the usual licenses. It’s a place that attracts builders because the local attitude seems to be “Eh, give it a try.”

Unlike so many other Arizonans, Mr. Johnson is actually from here. He grew up in Phoenix and was one of those kids who spent hours building rail networks and skyscrapers in SimCity. Being a good student and interested in software and public transit, Mr. Johnson expected that he would attend the Massachusetts Institute of Technology or some other elite university in a dense, Eastern city.

Instead, he went to the University of Arizona with a full-ride scholarship plus $50,000. This came from the Flinn Foundation, whose Flinn Scholars program aims to keep smart locals from leaving the state.

Mr. Johnson used the $50,000 to invest in the Tucson rental market, then left for a succession of out-of-town jobs in consulting, finance and in public service, the latter at New York’s Metropolitan Transportation Authority. In San Francisco, he joined Opendoor, and in 2018 started Culdesac with Jeff Berens, his college roommate.

“What we saw at Opendoor,” Mr. Johnson said, “was there is enormous demand for walkable neighborhoods, and with all these innovations in transportation, ride sharing, scooters, et cetera, we realized that there was a way to build it. So we said, ‘Where can we build a new type of walkable neighborhood?’”

Doing this would require three things: raising money, finding land and getting a city to let them do it. The first two could be satisfied anywhere. The last required a place with a loose approach to housing regulation. However much Arizona is associated with sprawl, the Phoenix region is actually a builder of everything — towering condos, garden apartment complexes, golf course villas.

The company approached Tempe with its plans in 2018 and by late last year had a development agreement that allowed it to build the project without residential parking so long as the residents were prohibited from parking nearby. With that, Mr. Johnson went home. Soon the company followed him: In May, Culdesac canceled its office lease in San Francisco and instituted a remote work policy. A half-dozen of the company’s 20 employees have since moved to the Phoenix area.


Credit…Adriana Zehbrauskas for The New York Times

Before Culdesac’s backhoe went in, the Tempe site was a neighborhood eyesore. The ground consisted of dirt and broken glass. On top of it stood abandoned buildings with stray wires and punched-out windows. Standing there in early February, I imagined it being the site of a dystopia-themed paintball war or a great place for teenagers to vape.

This is, of course, how developers make money: They see potential where others don’t, and profit through the timeless process of turning land that is worth little into land that is worth a lot. But I wondered how viable Culdesac’s expansion prospects were beyond the sure-why-not regulatory ethos of Arizona. Even if the Tempe project is a success, it’s unclear how many times Culdesac can assemble large, underutilized lots along existing transit lines and persuade cities to let them rezone with the eagerness that Tempe did.

I asked Mr. Berens to show me Culdesac’s potential development sites in other cities, and he agreed on the condition that I describe them only generally. Recently, over Zoom, he took me on a satellite tour of five metro areas: Denver, Washington, Dallas, Atlanta and Raleigh, N.C.

The common element was that the sites were miles from the central business district but still (with the exception of Raleigh) proximal to a rail line. Their neighbors were industrial yards and towing companies and car dealers. Imagine riding a subway from downtown, in the direction of the airport, and looking out the window as you reach a stop on the industrial edge of the city.

That’s the sort of spot Culdesac is seeking: Places that can be bought cheap, covered with hundreds or thousands of new homes, and made to feel that they are connected to the heart of the city because a new generation of tenants fundamentally embraces transit — or maybe doesn’t want to go into the heart of the city at all.

Doing this will require lots of money and lots of interests, pools of debt and equity that developers assemble into a “capital stack” that lays out who is paid for what and when. If Culdesac is successful, it will operate like a franchise or chain hotel that links several individual companies through one brand.

One of those companies, Culdesac Inc., has raised $17 million from venture-capital firms including Khosla Ventures, Zigg Capital and Initialized Capital. That company plans to serve as the developer and property manager for the series of limited liability companies that make up an individual project, which in turn will be funded by individual investors and bank debt. Culdesac Tempe, for instance, is being codeveloped with Sunbelt Holdings, a local developer, and Encore Capital Management, a real estate investment firm, which raised most of the equity for the $170 million project’s construction.


Credit…Adriana Zehbrauskas for The New York Times

We are living in a moment of extreme disruption. (And that’s a sentence I’m typing before the outcome of the presidential election is known.) People are changing how they live, where they work, how they get there or if they get there at all. The process of getting back to normal is likely to be more disruptive still. Billions of people will create new habits, and no matter what happens, many of them will stick.

For whatever reason, changing addresses seems to open people to further change. In studies of military families, one of the few groups of people who are shifted around at random, researchers have found that marriage and children are often associated with long-distance moves.

“There is something about being told that you are going to be moving across the country that forces you to re-evaluate other big decisions in your life,” said Abigail Wozniak, an economist at the Federal Reserve Bank of Minneapolis who studies migration.

This “discontinuity hypothesis” seems to apply to environmental habits as well. A study in Copenhagen found that when drivers were nudged to take public transit, the nudge worked best with people who had recently changed addresses. Movers also seem more open to recycling more, conserving water and reducing electricity use. There seems to be a sweet spot, sometime within three months of a move, when people’s habits are upset and they open themselves to the possibilities of new ones.

To build anticipation for the opening in Tempe, Culdesac has been hosting semiregular video calls with prospective residents, who give input on the final design. Talking about bike-rack design or the rules of a future community garden, they come off as the urban-planning equivalent of the fanatics and early adopters who stand in long lines for “Star Wars” movies and Apple products.

Demographically, they mirror the two groups that have been credited with the past three decades of urban revitalization: young professionals like Ms. Woodrich, and empty nesters like Reynolds-Anthony Harris, a 67-year-old business consultant who lives in the Minneapolis area and is also considering a move to Phoenix.

“There are some of us who have no interest or desire whatsoever to be in a segregated senior citizens’ community,” he said. “That, to me, is the fastest way to the grave.”

Whatever the age, they also all seem interested in a kind of self-imposed shock and the discovery of something new.

Daniel Moreh, a software engineer in Oakland, Calif., isn’t even interested in Tempe itself. He’s heard nice things; he knows it has a university. The real appeal of Culdesac is the idea of being part of something new.

The start-up bug is something people take with them everywhere, so he uses phrases like “co-create the culture,” and he expects that the first few months of living there will be echo the feeling of traveling and making easy friends. “There’s not an established hierarchy of ‘Hey, I can’t talk to you yet,’” he said.

“It’s a bunch of people who are willing to pick up whatever they had in their life and move to try this thing,” he added. “I don’t know who they are yet, but that sounds like a group of people I would be interested in meeting.”

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How a Century of Real-Estate Tax Breaks Enriched Donald Trump

Twenty-five years before he was elected president, Donald J. Trump went to Capitol Hill to complain that Congress had closed too many tax loopholes. He warned that one industry, in particular, had been severely harmed: real estate.

The recent demise of real-estate tax shelters, part of a landmark 1986 overhaul of the tax code, was “an absolute catastrophe for the country,” Mr. Trump testified to Congress that day in November 1991.

“Real estate really means so many jobs,” he said. “You create so many other things. They buy carpet. They buy furniture. They buy refrigerators. They buy other things that fuel the economy.”

Mr. Trump was sounding a theme that has made real estate perhaps the tax code’s most-favored industry.

Legislators lapped it up. Mr. Trump and his fellow real estate investors got much of what he wanted, including the ability to fully deduct losses — sometimes only on paper — against other income.

Mr. Trump’s low taxes over the years were largely a product of his businesses hemorrhaging money, according to federal tax records obtained by The New York Times. But the records also show that so-called depreciation losses and other benefits for the real estate industry have helped Mr. Trump reduce his federal income taxes. In 2016 and 2017, Mr. Trump paid $750.

From the beginning, the real estate industry, with its claim to be a bedrock of the American way of life and its formidable lobbying power and lavish campaign contributions, has held disproportionate sway over how tax laws are written.

Tax breaks for real estate have been embedded in the federal income tax law for a century. New benefits sprouted up every few years. Even when lawmakers cracked down on business-friendly tax treatment, they often made special exceptions for real estate.

“The real estate industry has enjoyed the most lucrative tax breaks for decades,” said Victor Fleischer, a tax law professor at the University of California, Irvine, and former chief tax counsel for the Senate Finance Committee. The industry “thinks of the tax code as a basket of goodies to feast on rather than a financial obligation of doing business.”

The perks come in many varieties. One allows real estate investors to avoid capital-gains taxes when they sell properties as long as they use the proceeds to quickly buy others. Another gives developers a big break on taxes when they spend money on historical preservation.

Foremost among them is a deduction for depreciation, a provision originally included in the federal tax code in response to lobbying by the railroad industry.

Taxpayers are allowed to deduct from their annual taxable income a portion of the cost of an asset such as a locomotive or a building, as well as money spent on improving that asset. If you buy a building for $270,000, you can deduct $10,000 a year from your taxable income for 27 years. A profitable business can actually report losses on its tax returns because of depreciation deductions.

The tax benefit was meant to reflect the deterioration in value over time of an asset. But for the real estate industry, it can be a boondoggle: Many buildings kept in reasonable repair increase in value over time, unlike, say, cars or computers.

Depreciation is the ultimate tax shelter, critics say, because it permits real estate investors to take deductions for spending other people’s money. If a bank lends an investor $70 million to buy a $100 million office building, and none of the principal gets repaid for a decade — a common structure for such loans — the investor still gets to deduct that $100 million over several years, even though only $30 million of that is his own money.

In 1962, Congress passed rules that made the depreciation tax break less lucrative when someone sold the asset on which they had been taking deductions. But Congress exempted real estate.

“The real estate lobby always had a stronghold,” recalled Donald Lubick, at the time a top tax official in President John F. Kennedy’s Treasury Department.

Credit…Zach Gibson for The New York Times

Mr. Trump has taken hundreds of millions of dollars in depreciation deductions, his tax records show.

Most but not all of his depreciation expenses since 2010 stemmed from money he spent improving his golf courses and on transforming the Old Post Office building in Washington into a luxury hotel. Some of that spending was done with nearly $300 million that he borrowed from Deutsche Bank.

“That’s Trump’s story,” said Michael Graetz, a top tax official in the first Bush administration and now a professor at Columbia Law School. “His losses are somebody else’s money.”

Mr. Trump has publicly credited depreciation with lowering his tax bills. “I love depreciation,” he said during a presidential debate in 2016.

In reality, the fact that his businesses were losing money was a major factor in reducing his taxes.

For example, for Mr. Trump’s commercial real estate properties that reported losses between 2010 and 2018, about half of the losses — $54 million — came from depreciation, his tax records show.

Jared Kushner, Mr. Trump’s son-in-law and senior adviser, also has benefited from depreciation. The Times reported in 2018 that he likely didn’t pay federal income taxes for years, largely because he took deductions from depreciation.

In 1986, Congress reined in depreciation benefits and capped the amount of losses that real estate investors could use to offset other income.

The changes were meant to combat a proliferation of tax shelters in which investors put money into real estate partnerships that, thanks to depreciation, generated enormous only-on-paper losses that then canceled out income from other sources.

“The tax shelters were out of control,” said Daniel Shaviro, a tax professor at the New York University School of Law who worked on the Joint Congressional Committee on Taxation and helped draft the 1986 law. “Every lawyer and dentist had one.”

Knowing the real estate industry would mobilize, the congressional tax committee kept the proposed changes under wraps as long as possible. The industry “was caught flat-footed,” Mr. Shaviro said. Even so, “I knew they’d get it back thanks to their raw political power.”

It didn’t take long.

Mr. Trump, who blamed the 1986 law for a subsequent fall in real estate prices and a deep recession, was one of several developers who urged lawmakers to restore the breaks in full.


Credit…Marcy Nighswander/Associated Press

In 1993 Congress restored those breaks. At the same time, it carved out another advantage for the real estate industry. For most businesses, canceled or forgiven debts had to be recognized as income. Real estate investors for the most part got a pass, though they had to relinquish some future deductions. Mr. Trump has benefited from those rules, such as when his lenders canceled about $270 million of debt on his Chicago skyscraper, his tax records show.

Then Mr. Trump ran for president. On the campaign trail, he acknowledged that he had been a big winner from the tax code’s favoritism toward the real estate industry. He said his expertise on the subject would help him close loopholes and make the tax code fairer.

“The unfairness of the tax laws is unbelievable,” Mr. Trump said in 2016. “It’s something I’ve been talking about for a long time, despite, frankly, being a big beneficiary of the laws. But I’m working for you now. I’m not working for Trump.”

But Republicans’ 2017 tax overhaul, which remains Mr. Trump’s signature legislative achievement, expanded and enhanced several lucrative tax breaks for real estate developers. For example, while the law barred people and companies from avoiding capital-gains taxes by selling one property and buying another, one industry was exempted: real estate.

The law was a boon to people, like Mr. Trump, who owned golf courses. It permitted real estate investors to immediately write off the full cost of various expenses, including improvements to golf courses.

In recent years Mr. Trump has also taken advantage of a tax credit that covered 20 percent of developers’ costs of rehabilitating historical structures, which is meant to encourage the preservation of old buildings.

Mr. Trump has said that he spent $200 million transforming the Old Post Office Building in Washington, a designated landmark, into a luxury hotel. That could translate into a tax credit of as much as $40 million, which Mr. Trump could use to offset his taxes for up to 20 years. (The caveat is that such tax credits reduce a developer’s ability to take other tax deductions in the future.)

Mr. Trump’s tax records show that in 2017 he used at least $1.5 million in historical preservation tax credits. That was one of the reasons his federal income tax bill that year was only $750.

The 2017 law made that tax benefit less generous, reducing it to 4 percent from 20 percent of the rehabilitation costs. But properties opened before 2017 were exempted. Mr. Trump’s hotel opened in 2016.

Russ Buettner contributed reporting.

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California Tax Revolt Faces a Retreat, 40 Years Later

OAKLAND, Calif. — In 1978, a Los Angeles businessman named Howard Jarvis led an insurgent campaign to pass Proposition 13, a ballot measure that limited California property taxes and inspired a nationwide tax revolt. The law has been considered sacrosanct ever since, something California governors and legislators challenge at their peril.

Now, as a pandemic tears through local budgets, a well-financed campaign backed by teachers’ unions has mounted a serious challenge to a major portion of the law: its application to commercial property.

If voters approve the effort next week, they would give labor and progressive groups a striking victory in raising the low tax rates that longtime property owners enjoy. If it fails, the campaign will have spent tens of millions of dollars only to affirm that Proposition 13 is untouchable.

The new initiative, Proposition 15, would amend the state’s Constitution so that properties like offices and industrial parks would no longer be protected by Proposition 13. By creating a “split roll” system, in which residential property would continue to be shielded from tax increases but commercial property would not, backers hope to capitalize on Democratic energy to raise taxes on large corporations without alarming homeowners.

“We can’t afford to continue to give large corporations a tax break they don’t need when we desperately need to invest in infrastructure, first responders, public health and public education,” said Catherine Bracy, executive director of the TechEquity Collaborative, a nonprofit group that mobilizes tech workers on issues of economic inclusion.

Proposition 15 would raise $6.5 billion to $11.5 billion a year for public schools, community colleges and city and county governments, according to a nonpartisan state agency. The Yes campaign, called Schools and Communities First, is backed by a number of public employees unions and the Chan Zuckerberg Initiative, the philanthropic organization founded by Mark Zuckerberg, the Facebook chief executive, and his wife, Priscilla Chan.

The measure’s opponents, including a number of business associations and large property owners like the Blackstone Group, argue that the tax increase would hurt small businesses. They have also tried to frame the measure as one that, if successful, will soon reach for residential properties.

“They want to do this because they believe now is an opportunity to break up Proposition 13,” said Rex Hime, chief executive of the California Business Properties Association, a trade group for owners of offices, industrial parks and shopping centers. “They’re coming after homeowner protections next.”

The two sides have raised more than $60 million each for their campaigns. Support is also evenly split: A recent poll by the Public Policy Institute of California showed that Proposition 15 has split the electorate, garnering the support of 49 percent of likely voters, with 45 percent opposed and 6 percent undecided. It has won a number of prominent endorsements, including those of Gov. Gavin Newsom; Joseph R. Biden Jr., the Democratic presidential nominee; and his running mate, Senator Kamala Harris of California.

Proposition 13’s lock on California politics began with the bouts of hyperinflation that shredded household budgets through much of the 1970s. In addition to the rising cost of food, electricity and other staples, the value of housing — and by extension, property taxes — also soared. In California, residential property values rose 250 percent from 1970 to 1980, while household income remained flat.

As tax payments consumed a larger share of homeowners’ budgets, Mr. Jarvis, a retired businessman turned anti-tax gadfly, mounted a 1978 citizens’ initiative, eventually called Proposition 13, that would cut California property taxes and limit future tax increases to no more than 2 percent a year, unless the property was sold. It passed with just under two-thirds of the vote and has since endured various legal challenges. In 1992, the U.S. Supreme Court upheld the legality of Proposition 13 but called it “distasteful and unwise.”

Credit…Associated Press



Proposition 13: Mad as Hell

In 1978, California voters passed Proposition 13, which lowered property taxes for millions of the state’s homeowners. Decades later, what has it meant?


In 1978, California voters passed Proposition 13, which lowered property taxes for millions of the state’s homeowners. Decades later, what has it meant?

Mr. Jarvis, who died in 1986, framed his campaign as a way to make the tax system more equal, but Proposition 13’s legacy has been the opposite. Because property values are reassessed for tax purposes only after a building is sold, the law has created a wildly disparate system in which new buyers pay vastly higher taxes than longtime owners.

It is not uncommon for neighbors to pay double or triple the taxes of a similar home on the same block. A recent analysis of property taxes across the Bay Area is rife with eye-popping comparisons, like a $9 million home in an exclusive neighborhood of San Francisco that has lower property taxes than a $331,000 home near an oil refinery across the bay in Richmond.

When Proposition 13 passed, commercial property taxes were almost an afterthought. But since skyscrapers and shopping malls do not change hands as often as homes do, the law has shifted the property tax burden from corporations to homeowners. In 1975, a little under half the property taxes in Los Angeles County were paid by commercial properties. By 2017, commercial properties accounted for just over one-quarter of the property tax roll.

“It boggles the mind how ingrained this thing is in our culture, given how regressive it is,” said Christopher Thornberg, founding partner of Beacon Economics, a consulting firm in Los Angeles.

When backers started collecting signatures to qualify Proposition 15 for the ballot last year, the measure was framed as a way to make the state’s tax collections broader and more equitable by raising rates on commercial property holders. Now, as the state, like the nation, begins a difficult recovery from the coronavirus recession, it has become as much about backstopping essential services when budgets are under stress.

In addition to keeping homeowners under the 1978 limits, the new measure would not affect apartment buildings and agricultural land. It would be phased in over several years, and it has exemptions for business owners with $3 million or less in holdings in California. Because of the exemptions, various studies have shown that Proposition 15’s tax increases would sidestep most small businesses and instead fall on corporations that control huge parcels of real estate, like Walt Disney’s studio lot in Burbank, or 555 California, a San Francisco office tower owned by a partnership that includes Vornado Realty Trust and President Trump.

But with the economy still hampered by Covid-19, and many stores and restaurants on the brink of extinction, the opposition message has resonated with people like Barbara Stelzriede. Ms. Stelzriede is the general manager of George & Walt’s, a sports bar in the Rockridge neighborhood of Oakland, and a fourth-generation member of the family that has owned the bar’s building and surrounding property since 1945.

On a recent afternoon, in addition to neon beer lights and a 21-and-over sign, the bar’s window was emblazoned with a bright yellow sign that had “Vote NO on 15. It will put small corporations out of business!!!” in Ms. Stelzriede’s handwriting. Sitting on a bar stool, among a mess of hammers, drills and extension cords that were being used to install a plexiglass barrier around the bar and plastic curtains around the tables, she discussed her anxiety about the bar’s pending reopening, what business would be like afterward, fears that the Proposition 15 money wouldn’t go to schools as proponents have advertised, and suspicion that the measure would open the door to higher taxes on apartment buildings and houses.

“There couldn’t be a worse time in the world right now for them to be doing this,” she said.


Credit…Jim Wilson/The New York Times

Credit…Jim Wilson/The New York Times

Some of her neighbors disagree. Last week, someone taped the window with a passionate response to Ms. Stelzriede’s sign. “MILLIONS upon MILLIONS of school kids suffered for more than 40 YEARS,” the letter said. “Disneyland + other MEGA CORPORATIONS are still assessed at their same property values from decades ago. PROP 15 = FAIR + JUST! It’s TIME.”

But it’s not just businesses that own their buildings that are worried. Across the state, landlords construct commercial leases so that tenants are responsible for a portion of the property taxes (doing this increases the value of the building in the event the property is sold and the taxes are reassessed).

“Virtually no landlords give Proposition 13 protection,” said Gerald Porter, founding principal of Cresa, a commercial real estate company in Los Angeles.

Clauses like that have Laurie Thomas, the owner of two small restaurants — Rose’s Café and Terzo, both in San Francisco — worried that she and other restaurant owners will be hit by higher taxes if Proposition 15 passes. Today, as part of her lease, Ms. Thomas is responsible for about $6,000 a year in property taxes at one of her locations. She estimates that would jump to about $40,000 if the building was assessed at market value. “Our lease clearly says that I am on the hook for 50 percent of the property taxes — it’s a direct pass-through,” she said.

Mr. Thornberg, the economist, doubts that this can happen on a large scale. Much more than property taxes, he said, lease rates reflect market fundamentals like size, location and a building’s particular amenities.

In a recent study for the Silicon Valley Foundation, Mr. Thornberg’s firm tried to gauge the impact of Proposition 15 on leases by analyzing commercial rents in similar buildings with different tax bills. “The owners of these buildings who are paying well below market tax rates are not passing the savings to their tenants,” he said. “In other words, they are charging what the market will bear and are unlikely to be able to pass along additional costs.”