Greening Infill Development with Domus Development’s Meea Kang

April 14, 2014

JOHN SHEGERIAN: Welcome to another edition of Green is Good. I’m so honored to have with me today Meea Kang. She’s the co-founder and president of Domus Development. Welcome to Green is Good, Meea! MEEA KANG: Thank you! It’s such a pleasure to be here. Thank you for having me. JOHN SHEGERIAN: Meea, you’ve done such wonderful work at Domus Development and we’re so honored to have you but before we start talking about the great company you co-founded and that you’re the president of, please talk about the Meea Kang story and how you got the journey leading up to Domus and how you even got there. MEEA KANG: Well, it’s definitely one of those roads that had a lot of twists and turns along the way. I started out in the Midwest. I was born in Cincinnati, Ohio. My father immigrated to The States to get his higher degree in education. He was a Ph.D. and a professor at the University of Illinois for many years in Champaign-Urbana and moved there, the Midwest, spent a lot of formative years there looking at a lot of the world as being pretty flat in terms of corn fields and soybean fields and got a lot of extreme weather conditions and it was a fun place to grow up but kind of hard to understand the rest of the world from that perspective. But we moved from there to the east coast and I lived in Connecticut during my high school years. My father taught at Yale and exposed to a lot of things there and then went off to college, Cornell University, where I focused on studying fine arts and really explored the world in a very creative way, very out-of-the-box thinking and did things like teach myself how to weld and made large-scale steel sculptures, taught in the School of Architecture as sort of a T.A. became really interested in the built environment. From there travelled and did Rome for about a year, Taipei, Taiwan for about another year, really just exploring the world and seeing a lot of different ways people are living and the kinds of densities that we see in especially some of the Asian cities. Came back a little bit refreshed and worked in Los Angeles in the interior design business, where I actually had clients that were somewhat Hollywood stars in their own rights and realized that that wasn’t really my fit and I went back to architecture school to study, really, how architecture can help to solve some of the human conditions, like housing and sustainability and it opened my eyes to really how you can reach a triple bottom line with building the right kinds of buildings for folks and that really led me to architecture and development. JOHN SHEGERIAN: How long ago did you start this company? MEEA KANG: Ten years ago. Actually, 11 now. Let’s say 11 years. It was 2003 when I started. JOHN SHEGERIAN: Eleven years ago. So now, 11 years into it, when you started it and you said, ‘I’m just going to put one foot in front of the other and start Domus Development,’ has it become what you wanted? Has it exceeded your expectations or are you on track for the dreams and the visions that you originally had 11 years ago? MEEA KANG: I have to say I’m very blessed. I feel very blessed. We’ve worked really hard. It really is turning into the company of my dreams in terms of being able to really get out there and take on extremely complex problems and find solutions that really were brought on through a collective action. It was really through a lot of work with community members and defining goals and finding solutions through that process and then not letting anything stop us so we’ve reached challenges like zoning and outdated building codes and we’ve had to go in there and modernize entire regulatory systems. JOHN SHEGERIAN: Well, for our listeners that want to follow along and see the great work that Domus Development had done and is doing, you can go to www.DOMUSD.com. So you’re 11 years — overnight success in 11 years? That’s really what’s happened here. I get it. You know, I’m on your website and it’s a beautiful website. I’ve already studied it, but now I’m on it while we’re doing this interview and there’s so many great things you’ve accomplished already and so many things you’re doing. I want to talk a little about one of things you’re doing with your website and it’s a word that I’m not familiar with. You’ve done infill development projects. Can you explain what these types of projects are versus the standard let’s-go-build-a-building-in-a-hole ideal that we see here in New York City, where I live and I work and I see in big cities? What does an infill development project mean and why are you guys so good at it? MEEA KANG: Well, the term, ‘infill development’ really means on under-utilized land within existing cities and towns and so, frankly, it’s the opposite of sprawl, which is really building on land that may have been open space or former agricultural land and really, especially in the state of California, infill development is really critical to accommodating growth and redesigning our cities to become more environmentally friendly and socially sustainable. And so it really means rather than taking productive farm land out of commission to build more far-flung subdivisions, we really look to rebuilding our cities in existing urbanized areas and you go in there- you know, in any urbanized area, there are vast tracts of neglected and under-utilized land. Often times, they might have contamination on them because they were former industrial uses but they really do have the potential to be transformed and catalyze an entire new resurgence in existing communities. I mean, we see it- we’ve called it, ‘white flight’ in the sixties, where folks really turned their backs on their cities and they continued to kind of build new track homes further and further away outside of our cities and we find that that development pattern is really not sustainable. Not only do people travel long distances to commute to their jobs, but the cities and the small towns are really hampered with needing to support the infrastructures of those suburban areas that are based on densities that might be ten units to the acre. JOHN SHEGERIAN: And so basically, you’re a real estate recycler. You’re recycling products that have been in use before and need to be repurposed again but instead of going out on the hinterlands and building anew out on the farmlands, you’re just redeveloping our cities. MEEA KANG: That’s how I feel. I feel very lucky and fortunate. Sometimes I call it, “reweaving our cities.” JOHN SHEGERIAN: I love it. MEEA KANG: And sometimes, there’s a lot of emotional around neighborhoods, especially with people who have seen the transitions over the years and often times when I come into a community, there’s a lot of emotions that run high in terms of, you know, there are a number of neighbors. Infill is not easy. Primarily, you’ve got to deal with your neighbors. You’ve got to hear your neighbors, you’ve got to work with you neighbors, and you’ve got to bring about a type of change that not only works for you as a developer from a bottom line but can also bring benefit to the community and I think neighbors want to see that and they do expect that development infill areas are taken to a higher level of standard. JOHN SHEGERIAN: And you’re also straddling the legacy that they’ve seen but also the new generation that wants new and bright and shiny and stuff like that so you’re also on that straddle as well. MEEA KANG: Absolutely. And what’s interesting about California- California’s population is estimated to grow by over five hundred thousand people a year. JOHN SHEGERIAN: Wow. MEEA KANG: And so by 2020, the state predicts that over forty-five million people will be living in California. And at that point and you know, even now, with that many people calling California home, it’s beyond imperative to use our resources more efficiently and improve our quality of life and we can do this by building more compact neighborhoods. JOHN SHEGERIAN: And your firm does infill developments in all sorts of settings; suburban, urban, rural, but does infill actually always have to mean high density, or squeezing the last inch out of that space, or can it be a varied type of infill and recycled resource? MEEA KANG: You know, in my opinion, infill is a very- and densities- really are catered to the existing areas so if you’re in an urban area where most of your buildings are ten stories, twelve stories, say San Francisco where you can do tall towers, you’re looking at big densities. You’re looking at a hundred units to the acre or even beyond, two hundred units to the acre, especially in Manhattan but, of course, that one size doesn’t fit all so in smaller cities, there’s usually a zoning that exists on various sites. Infill often will increase the zoning that’s there but only by, say twenty percent, thirty percent maybe, at the most. So you can see projects- we did a project in a rural community, up in a Lake Tahoe community and it was three thousand people so small town, unincorporated part of the county and the densities there were seven units to the acre and they were very small parcels, one hundred long by about twenty deep, twenty wide, and the maximum number of units you could build on these sites was two units to the acre. We were able to work with everybody to increase those densities from seven units to the acre up to thirty units to the acre. JOHN SHEGERIAN: Good for you! MEEA KANG: And that was an example of how we can work in a rural setting but as far as stories on the building, because we’re building smaller units, because apartments tend to be smaller footprints, you could actually work a lot within the form of a building to fit the topography of the area, to fit the typological sort of vernacular of the area so we built these in maximum three story buildings and they were very much in keeping with the look of the area and it added actually a little bit more dimension and character to the neighborhoods. But by doing so, we dispersed the density amongst the community. We did what we’d call a, ‘scattered sites development,’ and we went from about twenty-six to thirty units to the acre, which is vastly the densest they have ever been approved in this region. JOHN SHEGERIAN: For our listeners that just joined us, we’ve got Meea Kang on with us this morning and she is from Domus Development. She’s the co-founder and president and it’s www.DOMUSD.com. Meea, what is the term, ‘brownfield’? I know what that means but for our listeners. You’re an expert at brownfield site redevelopment. Why is that a challenge and what is a brownfield site to start with? MEEA KANG: Well John, you more than anyone know, when companies have waste- back when there were no regulations, most companies just dumped that waste either into the groundwater or into the rivers or into the land so brownfields are often abandoned, closed, or underutilized industrial commercial facilities and often, these brownfields are located, say in an abandoned factory town or in a former industrial area where, of course, changes happened. Regulations happened and business may have shuttered but what they leave behind is a footprint of, you know, frankly a lot of really nasty contaminants that somebody needs to come and clean up and often times, the business may no longer be in business, they won’t have the resources to clean these sites so sometimes they’re called, ‘orphan sites,’ where either the city- in many cases, redevelopment agencies- would come in and find funding, say from the EPA to get enough money to do the type of analysis on the site to determine what the contaminant levels are and come up with a lot of different scenarios of how they’re going to remediate, in other words take out- all of those contaminants and bring that land back to a buildable state. According to the EPA, there over a half million brownfield sites in the U.S. today and that really only counts the ones that have been studied and documented so the EPA believes that the actually number of brownfields is vastly more than that and they’re difficult. There’s a lot of risk. A lot of times, your consultants can only determine the levels of pollutants based on whatever they’ve dug up and often times what happens is, once you get in the ground with your plan, you find that the levels are frankly much greater than anyone had studied or anticipated and so you need to have great resources and the ability to take it from beginning to end and actually clean it all the way up an it often requires getting another certification from your local regulatory agencies to confirm that no further action is needed on these sites. So it’s expensive and it’s difficult but often we find, especially as our cities have grown, that these brownfield locations, these former industrial areas, are right either in the middle of a growing new community or revitalizing community or they’re really on the edges of what actually needs to change in order to sort of really bring the community together. So they’re critical pieces to the equation of infill development and sustainable communities going forward. JOHN SHEGERIAN: Meea, you’re an expert. Domus is an expert at cleaning up these challenging locations and you don’t learn that stuff in architecture school so what gives you the eye, the sense, the gut to say, ‘This one’s a good one. We can take this ugly duckling and make it into a diamond’? MEEA KANG: Well, I definitely do a lot of due diligence. I will work with excellent consultants. I’ll read a lot of reports. I’ll really study up on the situation and the solutions that we need to undertake and frankly, it’s plan, plan, plan, and then plan for failure so you really have contingencies and a lot of plan Bs in the event the plan A doesn’t work. So it’s a matter of just making sure you’ve got a mitigation strategy that can work and then frankly, part of it is that you make sure you’ve done all your homework and you’re going to hold your breath and you’re going to jump in and then you’re just going to go for it and solve problems. And I think often times, we often work with a great team, a development team and city partners and we’re all in it together so it really does help in terms of analyzing and underwriting and because I work with often institutional money, we have a lot of attorneys looking at everything and a lot of people vetting and double-checking what we’ve assumed and so really, I think all those checks do help the process in making sure we have the adequate resources to address these problems. JOHN SHEGERIAN: I’m on your website now and, again, I’ve read about your recent national award and congratulations on winning this national award from the EPA for Smart Growth Achievement from the La Valentina built project in Sacramento. So there was seventy-seven applicants across thirty-one states. You’re group was chosen. Domus was chosen to win this. Talk a little bit about why. How come you stood above and beyond all these other applicants across this great country? How did you win this? Why did you win this? And why does your company continue to achieve and overachiever and hit levels of greatness that others are just missing? MEEA KANG: Well, thank you. I’m still surprised and honored all at the same time. It certainly is a great honor to be recognized by the US EPA, especially because we took on this site that was frankly, a bit of an ignored site for twenty years. The site was about one point two acres and it was just on the sort of gateway into downtown Sacramento. The main thoroughfare that this building faces is a former highway. It’s called one sixty and this is how the highway kind of slows down as it goes into the city. The traffic pattern on this road is about fifteen thousand cars a day commuting into work as well as light rail and it’s a one-way street and it drives everybody into town and so people are passing at speeds of probably thirty, thirty-five, forty miles an hour. The people are just kind of going from point A to point B and for a long time, this area was industrial and these sites were auto body repair shops and people just ignored it, partly because the area had had a long history of crime. And there is a large homeless population that resides near the river. This is the path from the river to connect people to social services. Often what people will see and what people think about is, frankly, homeless people and loitering and whatnot so it’s been a challenge fight over the years and one that didn’t necessarily rise the level of importance from a city’s perspective. It was always just, ‘Oh yeah, let’s try to get something done’. So in a way it was sort of a sleeper that we were able to take this very small site, one point two acres, complete brownfield, and turn it into a mixed use COD community that’s really taken the city of Sacramento and the project to a national level so it’s really a great honor. The site, being that it was incredibly challenging, really led us to find and seek solutions that were out-of-the-box. The existing zoning on the site allowed us to build, at a maximum, thirty-five apartments and at a maximum height level of three stories and we felt that that was just not enough. Those were just some of the challenges we had to face. The brownfield remediation, just building in general, and we thought to seek higher zoning densities and so we were able, on our station building, which is the mixed use four-story building, we were able to be approved at seventy-eight units to the acre. And we built a four-story building and ground floor retail and apartments ranging from studios, one bedrooms, and three bedrooms as well as one-to-one parking but when we started, the city wanted a hundred and sixty-five parking spaces. We had all these rules and regulations that really did not permit the kind of development we wanted to do so frankly, our vision was, quote, end quote, “illegal”. It was not permissible so what we had to do is completely change the zoning to permit this site and what that meant was about sixteen different variances in special permits. We had to be out there every single time. At any point, someone could try to throw a stone at us and try to bring the entire project down. We could have been sued at any point in the game, especially during the entitlement phase when you’re trying to get a project approved, and it was really wrought with a lot of challenges but we were able to overcome and get our community to support it because, for so many years, they were tired of the crime. They were tired of the fact that there was no investment in this area. We were able to get this approved. We were able to get financing during the height of the Great Recession. JOHN SHEGERIAN: Unbelievable. Unbelievable. MEEA KANG: Thank you. Financing was difficult but we managed to pull it together. JOHN SHEGERIAN: It was non-existent, let’s be honest. Difficult? You’re being humble, oh my gosh! MEEA KANG: And at the same time, we knew everything was going to be difficult so we just kept adding challenges to your plate and one of the challenges we took on — so we have two components. It’s La Valentina Station, which is our four-story building, and then we have Valentina North, which are eighteen town homes that are basically stacked town homes over flats and we were able to work with the utility company, SMUD; Sacramento Municipal Utility District. They gave us a grant so near net-zero energy apartments in all of Sacramento, which means that we can generate as much electricity by solar panels on the roof for, not only the common area uses like your outdoor lights and the building, but also for the interior and for the residence uses. One of our residences told me that before she moved to La Valentina, her energy bill was about a hundred and twenty-five dollars a month. She pays five dollars a month. JOHN SHEGERIAN: And this is a great point. We’re down to the last couple of minutes or so, but this is a great stepping point. So, I know you do so much great work. You recycle communities, you recycle pieces of land, brownfield and infills but you’re also working, you’re very analogue. You’re very nose-to-nose with your long list of people who want to come and live in your great communities and your great projects. Talk a little bit about reducing footprint. I mean, you just talked about this lady who went from a hundred and twenty-five and she lives in your property and she’s paying five now. For our listeners out there, what are two or three things people can do to reduce their carbon footprint? MEEA KANG: Absolutely get out of your car and start moving! You know, if you have a nearby grocery store or some errand that you can run without getting in your car, take that route. Take the options that are non fossil fuel driven. I mean, it will dramatically start to change the way we commute, the way we move, and ultimately, not only , save money from not having to go to the gas station all the time. We’re going to have better air quality. We’re going to be healthier people because we’re moving around and you know, I think if we’re going to do one thing- you know, you’re not going to put solar panels on your roof. You’re not going to compost because you live in an apartment- try not driving every day. In our development at La Valentina, forty percent of our residences does not use their car on a regular basis. They will either walk, take transit, or ride their bike. JOHN SHEGERIAN: That is great advice. We’re down to the last minute or so. What project is coming up that you want to give a shout-out to that Domus has in development right now? What are in the works? MEEA KANG: Well, we’re excited to start construction on a new senior TOD, which means Transit Oriented Development, here in Sacramento. We’re hoping to break ground later this summer. It’s called Curtis Park Courts and what’s exciting is we’re actually building higher density senior housing in a former brownfield that has been remediated and it is within five minutes of the local community college so it’s going to bring access to seniors to a variety of educational experiences as well as to a new retail shop that’s opening and it’s in a very desirable area in downtown Sacramento and we’re excited to see that project move forward. We’re also doing a lot right now with community clinics and trying to integrate community clinics with affordable housing to reach a greater range of availability in affordable housing and we’re also looking at doing several veteran’s projects in areas that really need some revitalization at the same time that are home to where a lot of vets are moving to so we’re excited about the different things we’re working on. JOHN SHEGERIAN: Now, for all of our listeners out there that want to learn more about Meea Kang and Domus Development, go to www.DomusD.com. Meea Kang, thank you for being an inspirational leader in sustainable real estate development. You are truly living proof that green is good.