A Developer's Perspective

9:09 AM: Presentation by Jason Wheaton, President, Greenstone Corporation

9:11 AM: Jason came from California, which he likes, but this area is paradise. They consider themselves as a communication company rather than a developer. When things go wrong it may be because they failed to communicate well with their internal and external customers. They tell themselves that 30% of everything they're doing is wrong. It's a hard thing to say. If you have the attitude that 30% of what you're doing is wrong, you can always get better. 30% of environmental regulations can be better, too.

9:15 AM: Market Conditions...job growth and interest rates will be the driving force in the recovery. With efforts to reduce the deficit loom, the effect on local and regional governments should be monitored. Vacancy rates are leveling off. There are opportunities, and there is some optimism.

9:17 AM: Housing inventory is beginning to be depleted. California still has a great deal of inventory. We're in a better situation. But, our market is fragile. They closely monitor the Spokane MLS Quintile Analysis. Greenstone tries to serve the middle three quintiles. There's little margin at that level for brownfield remediation.

9:21 AM: Spokane is a relatively affordable market for nice housing. The community is "tremendously appealing." With the medical base, there's good economic prospects. There are existing opportunities as demographics change. The current housing mix isn't good for our future demographics. "Investment Capital is very difficult to attract." Money is currently going to markets which were hardest hit. Spokane isn't in that category.

9:25 AM: Greenstone has adjusted to the new market, bringing down their labor force by 25%. "Hope is not a strategy." Buyers are purchasing homes for shelter, not investment.

9:26 AM: How does out region manage growth. Greenstone is pursuing a "Sustainable Growth Model." "We need strong urban growth in the next 20 years." The baby boomers are aging and are looking for a different kind of lifestyle. Empty nesters will increase by 244%. "This will be a huge burden on our government."

9:29 AM: We spend about 32% of our income on housing, and 17% on car ownership. That's 49%. If we can develop lands to reduce auto dependency, then more can go to housing and less to cars. "Shelter isn't going to be less expensive." Health care is getting more expensive. What's happening is that discretionary expenses are going away: entertainment, clothing, household furnishing, education, pensions and social security contributions. It's an attack on what made the middle class feel prosperous.

9:35 AM: Municipal infrastructure is crumbling, and it will be expensive to repair. $21.8 billion annual need for over 20 years just for transit. $131.7 billion and $9.4 billion annually for deficient roads and bridges. Water will be $151 and wastewater will be $390 billion.

9:37 AM: Only 10% of the growth is occurring in the areas which are designated as centers and corridors. Development is happening in the wrong places. There are several incentives to encourage development in the right places, but it's not happening. The brownfields in Spokane are so intense, the original map was impossible to read. There are significant areas which cannot be utilized because of this. You can follow the rail line through town on the brownfields map.

9:39 AM: Jason recommends very strongly the Department of Ecology's "Guide to Leveraging Brownfield Redevelopment for Community Revitalization." (Publication number 10-09-054.) He read the full first page of the document.

9:41 AM: There are benefits to brownfield development: creating jobs, leveraging existing infrastructure, neighborhood revitalization, new local revenue and taxes, clean up environmental problems, reduce urban decay. "Neighborhoods are always getting better or getting worse."

9:43 AM: Developers need information about the land in order to create economic certainty. Financial institutions resist investment due to "perceived long term liability and marketability issues." Brownfields depress land values, this prevents investment for remediation, so it perpetuates the problem. Most of the brownfield projects are downtown because land values are higher. This is highly inelastic, small price changes eliminates the ability to build. Worse, it affects adjacent properties' value that discourages continued investment.

9:48 AM: A review of Kendall Yards and its changing ownership. Had to leave to prepare for next section, entitled Q&A with the Deal Makers.