Momentum

Yes, it's been a long time since I posted, but that doesn't mean things haven't been moving along. We have selected a General Contractor, we have found a lender, and we have solidified the budget. All of these things have good and bad issues related to them.

General Contractor:

Jeff bid out the project to seven General Contractors. Four responded. The bids varied widely, but had one thing in common --- they were WAY over what we had budgeted for. I believe I discussed this before, but there was a lack of knowledge as to what their role would be after the modules come to the site (meaning that the excavation/foundation work should be priced similar to a stick-built home, so the pricing is known). One GC had an idea about putting "known" items under a GC contract and then having them do "Construction Management" for the other elements, potentially paying an hourly wage so that we would pay only for work completed. This was an interesting proposal, but without a firm price was risky to say the least. Also the lenders that we spoke to would not necessarily allow this structure --- they wanted a General Contract for the entire construction project. So this was a no go. So Jeff scrutinized the budget line items and came up with a list, as specific as he could make it, with each line item defined. Two GCs were now in the running, somewhat pissed that they had to work so hard for for this project. Jeff and Michael and I conferred and basically agreed that at this point, it really came down to price. For me, though, it was also an idealogical issue in that I wanted our GC to come on board understanding the significance of this project, realizing that we were breaking new ground (literally) and be willing to work with us on price, or at least as much as they could. Well, when it came down to it, one GC was significantly less than the other, so the option was clear. This did not go down well with the other guy, and words were said and feelings were hurt, and, well, it was a bit uncomfortable. But we feel good about who we have chosen. He seems to have the right attitude about sustainability and has been relatively "drama-free," both good things.

Lenders:

So I have mentioned in the past the fear of prefab by most conventional lenders. We have been working with Gold Coast Bank, a small, local bank, that seemed to be all on board. I know folks have mentioned Land/Home Financial, and Jason Pachl at L/H has been great, but their fees are really high compared to other financial institutions. Specifically, they had a 2% origination fee, compared to others which ranged from .5% and 1%. This small difference was going to make a huge difference for the size loan we were seeking. Also, we did want a Chicago bank to get their feet wet on prefab so that there was a precedent set and knowledge that we were not building a double-wide. Everything was going along swimmingly until I received an email from the lender saying "give me a call when you get a chance." Apparently the bank's board was now uncomfortable with this idea, and although they were not going to leave us in a lurch, decided that they could not fund our construction loan at the level we needed, requiring us to put in cash assets towards the construction that we were uncomfortable putting up.

Now, it's not impossible to do this, but it is frustrating nonetheless, so were undecided on whether to go forward with them, or to go with Land/Home and pay extra fees. Some of you have potentially heard of a new bank opening up in Chicago called Green Choice Bank (http://www.greenchoicebank.com/#/home). We knew about them, and really wanted to use them, but as they are not "open for business" until mid-2010, we didn't think the timing would work. Well, now that it is almost June, it's a possibility that we could work with them. So this is something we are now exploring. In any case, our desire is to break ground in late June --- that's our story and we're sticking to it.

Budget:

Well, I can firmly say that this house is no longer "affordable," but Jeff and Kate have learned some lessons that could potentially make the NEXT person that wants to build this home more affordable than ours is. One of the issues is that the foundation, which has interesting notches to take advantage of natural light, costs way more than a solid rectangle/square foundation. Also, our choice of appliances and cabinetry have increased the price somewhat substantially. Truth is, there are no more changes that we are willing to make to the house --- we want what we want. I still think that, once built, the house will cost less to build because it is prefabricated than it could be built on site. This gives us some comfort, but our bank account is not so happy. Certainly one way to lower the price is to buy cheaper land. Also, the more that can be done in the factory, the better.

Last, but not least, the house, Square Root Architecture + Design, and Michael and I were profiled in the Chicago Tribune on May 21st: (http://www.chicagotribune.com/news/local/chicago/ct-x-c-prefab-housing-0521-20100521,0,5254251.story) which is totally cool. It's all about trying to build prefab in Chicago and the obstacles being faced.

So the title "Momentum" is to show that, albeit with some low points, things are coming together. This may just happen yet!

Reality Check

So there's a couple of things we've encountered which we weren't expecting. First, there's an education problem. Since prefab hasn't been done in Chicago to any great extent, most general contractors are not going to be able to bid on a prefab project in a precise manner. For example, a portion of the electrical work will be completed in the factory, and then a portion of the electrical work is required to be completed on site. Unfortunately, it is unclear to the general contractor what portion of that work he is responsible for until, of course, he is educated on the specifics of what the factory is doing. To get that general contractor to understand the process, he or she has to be selected by the developer (us) so that they will invest the time and money to learn about process. This becomes a "chicken and egg" problem, and that we cannot really know if a particular GC's bid is more competitive until we hire him/her. Now when I say "us" of course I really mean Jeff because him and Kate have been combing through the bids of four general contractors that they solicited the project to to try and determine which is the best fit. There definitely are a couple that are in the lead, so they say, that have shown flexibility and innovation in how they intend to structure the project. All in all, we have remained positive, but this was not something we thought of initially.

Second, and you are probably not surprised by this, things are more expensive than we originally thought. We were happy to float along thinking we could afford things like floating staircases and FireOrbs, but in reality, this is not necessarily the case. At a minimum, we are going to have to make some changes, and some hurt more than others.

One change that should be a substantial savings is to eliminate the full basement and replace, instead, with a crawl space. In theory, I like this idea. Generally, when you have a giant place to store things, you end up filling it up with crap that you don't need. I'm reading about living a simpler and more meaningful life (The New Frugality by Chris Farrell) and like the idea of deciding what is or isn't important. On the other hand, I was thrilled to think we could put the cats' litter box downstairs and avoid the discomfort of having it on display when guests come over. Supposedly we can save between $50-$65k by eliminating the basement --- no litter box embarrassment is worth that.

Another change we are making is forgoing the floating staircase. Jeff assures us that we can still have a modern staircase with bamboo treads and steel handrails, but the floating quality is going to have to go (apparently this type of staircase alone could cost in the area of $30,000).

As it stands, we are still going to have to "value engineer" this project at all ends. We have been faced with tough decisions, such as, how important is a garage (important), how important is hardwood floors on the second floor (not that important). Can we save money by contracting out certain line items ourselves, rather than have the GC do them --- interior painting is a good example of this. Can we postpone some of the improvements at a time when we have additional funding. As it stands, it looks like the solar and PV panels may need to be but on hold.

I hope I'm not sounding disappointed with the project, because I'm not. It's become a challenge, now, to bring in the best possible project for the least possible costs, without sacrificing the things that are most important to us. Yes, it looks as though the price point is going to go up to, say, $175-$200 a square foot. I know this is not affordable to everybody.

One area that we probably could save money, but are sticking to our guns, is the high-end appliances and cabinetry from EcoUrban. In the big scheme of things, the EcoUrban cabinetry is not going to cost an outrageous amount of money, especially compared to some of their European competitors, but, yes, the Miele refrigerator is expensive. What can I say? We're suckers for integrated appliances, and don't want to compromise on these items. We are willing to pay a premium for them. Can we compromise on other things? Yes, indeed we can.

What I will leave you with is a positive thought --- one of the bidding GCs told Jeff that if the project we are building would be built on site, it would cost thousands, potentially hundreds of thousands of dollars more to build, and certainly would be assessed that way in the market. So essentially, even though we are spending more than we thought, it will be worth more than we paid the minute we move into it. That certainly helps.

Is Prefab in Chicago Impossible?

Well, that's what I have been told by developers. My husband and I have been in love with modern prefab designs for years, but did not think it could ever be done in Chicago. We were actually thinking of relocating to Seattle --- well, for other reasons, really, but partially because they are sweet on prefab in Seattle. Not only do we love the modern design, but the sustainability features and cost are attractive as well.



Michael and I like clean lines and modern spaces. We had looked for homes that were "modern," but in our price range we could only find condos, and we really want a single-family home. There are many beautiful modern single-family homes, but they didn't fit our needs for several reasons: 1) they were over a million dollars, 2) they would have over 4,000 square feet of space, which is completely inefficient for two people who do not expect to have children, 3) they would often be attractive, but not necessarily energy efficient, and 4) did I mention that they are over a million dollars?



We toyed with the idea of buying an older home or two-flat and rehabbing it, but the expense and the inconvenience of living through it seemed overwhelming to us.


Well, lo and behold, I was able to find, through the help of some colleagues, an architecture firm in Chicago that has the same philosophy that we do. Square Root Architecture + Design http://www.squarerootarch.com/ is a local Chicago architecture and design firm headed by Jeff Sommers. Apparently he has this same prefab dream, and also is sustainability conscious, and has been working on a design for a prefab model for a while now. He and his staff have designed what they are calling the Urban C3 or U-C3 http://c3prefab.squarerootarch.com/. Take a look at the website and see what they're all about. We fell in love with it right away.

Square Root is ideally trying to design a model that not only is incredibly energy efficient, but also affordable. They are currently modifying the design to make the model as cost efficient as possible --- ideally the U-C3 baseline model will cost approximately $125 per square foot. Also, Square Root has designed the building to meet all the zoning and building codes in Chicago - no small task. I will continue to discuss this model in future posts.

So, long story short, Michael and I are signing on --- we want to build the first U-C3 in Chicago, and, as far as we know, the first prefab in Chicago. Our goal is to have this home built before the end of 2009! My hope for this blog is to highlight the process for anyone else who is interested in this type of architecture, so that they may learn from our successes and mistakes. More to come!