Day 10

Michael took this picture on the way home from work. Major progress! We are meeting with Helios and Jeff tomorrow so will definitely get status report and more pix.

The Shape of Things to Come...

In the beginning, there was a foundation. And a beautiful foundation it was. I can picture the den, right there in the front. WE ARE SO EXCITED!

Yes, things have been happening. We closed on our financing in late August, and construction on the site began earlier this week. Construction on the modules is supposed to start next week and be finished and delivered to the site in November. If things work out as planned, we will be moving into our new home in December!!! There is a lot of excitement in the air, and I had to share it with you, bad blogger that I am that I have kept you out of the loop for so long!

We had a little entanglement (no pun intended) with our neighbors about the 6 foot high weeds that were growing on our lot before construction began. I guess being a land owner comes with responsibilities that we are not used to. We don't want to start out on bad footing, so, much to our appreciation, Helios, our GC, went out with a weed-whacker and took care of it. Just to be clear, this was not in their contract, so it was much appreciated.

Will definitely keep you updated on weekly progress. Would love to print the address but afraid of union workers erecting a giant inflatable rat on the site, so want to wait until the modules are on site before doing that (probably prudent).

Out of the Weeds

How is it possible that I haven't posted since May!!! So much has happened. Actually, there is a pretty solid chance that we may be breaking ground in the next two weeks!

Ok, ok, let me back up. Last you heard we had selected a general contractor. Helios Design + Build, and their representatives Hans Fedderke and Aash Desai, have been great. They are really into the spirit of the project. I know we made the right choice. It turned out that Indiana Building Systems (IBS), the manufacturer, decided that they wanted our GC to manage their contract, not the owners (us), so unfortunately for us that meant that Helios needed to add a fee for managing that contract. It took a while to get that settled, but ultimately we received a competitive bid from Helios and currently have a signed contract.

We also (and when I say " we", I mean Jeff) went back through the whole zoning and permitting process as we made some modifications to the house that rendered us back to the beginning of the queue. Fortunately, after some modifications and corrections, and because we still qualified for the green permit process, we are approved and all but have the permits in our hands.

Jeff told me today that he amassed all the big wigs from the Chicago Department of Buildings to brief them on this project as well as to determine how the inspection process would go. Lo and behold, DOB is embracing this project and is even starting to reconsider some of their inspection policies to help more development like this in the future. Additionally, they all want to be present for the "house setting," that is when the modules will be set on the foundation. Personally it makes me nervous as hell, but I will have every faith in our crane operator...I think.

Lastly and most importantly, we are now working with Green Choice Bank. Finally at the end of July they finished the acquisition of Family Federal Bank, a local community bank. This was the final act they needed to complete before they could start "doing business." Fortunately, Green Choice really believe and embraces our project, as opposed to the other lending institutions we've spoken to, and are moving mountains to make this happen as quickly as possible. The longest lead time item is the appraisal, which is underway now, and is expected to be completed next week. Fortunately this appraiser (forgive me, but I don't know who it is) will take into account all the green components of our home. And just to name a few that I didn't even know, here is the list we gave them:

• Seeking Platinum LEED-H certification
• Seeking Energy Star certification (we may also be certified for ES's new indoor air quality program as well)
• Achieve 600+ points with the Chicago Green Homes program (qualifying the project for expedited permit, and permit fee waiver)
• Meets IL DCEO building standards
• Achieve a 46 HERS rating (prior to blower door test)
• Building envelope: R-30 walls, R-55 roof, with R-4 (u-.25) windows
• Ductless mini-split heating/air-conditioning system with 21 SEER condensers, 10 HPSF heating
• Indoor ventilation provided by 94% efficient HRV
• Solar thermal system, dovetailed to on-demand hot water heater to reduce water heating costs
• Energy efficient lighting, water conserving plumbing fixtures, and Energy Star rated appliances
• Indoor finishes are water based, low-VOC
• Exterior materials are low-maintenance, made from recycled content and are recyclable
• Recycled content for interior finishes as well as construction materials (steel, concrete, gypsum board)
• Roof is engineered to receive a future vegetated (green) roof
• Building is pre-piped for future photovoltaic panels (once the PV panels are installed, our HERS rating goes from a 46 down to a 35

Pretty impressive, huh? I don't even know what most of this stuff means, but I know it's good.

So, GC contract in place, financing pending, we are well on our way to making this thing happen! I hope you are as excited as we are.

So, in real life, things are more complicated. We are expecting the home to be complete (in move-in condition) by mid-October. Yes, I know, I know, things can happen that can delay this, so we need to be flexible. I get it. The problem is, our llease ends September 30th and our landlord will ABSOLUTELY not let us extend our lease for two more months. Not even one more month. They claim that October 1st is the only time of the year that you can rent an apartment and they will not forgo this opportunity to help us (or at least that's the way we see it). So we are SOL as of now. We are exploring all our opportunities. In fact, tonight I've been scouring Craig's List for temporary housing opportunities. Trouble is, we have three cats. Most places don't want pets at all, but three cats seems to be too much for folks to take. Fortunately my sister has graciously offered to host Maude in her home (with her twin 6 year old boys to play with), so we are very appreciative of that. That takes care of one problem. Hopefully one of these Craig's List opportunities will come through. Most are fully furnished apartments that folks rent out for short term stays. We are trying to save some cash, so this would be the most affordable option. So hopefully we can get that taken care of soon.

The other issue, although slightly humorous, is that our once bland, gritty site suddenly blossomed with 6 foot weeds seemingly overnight. One of our new neighborhoods kindly alerted us to this fact. Michael and I...how can I say this...are very "urban." We showed up at the site with two kitchen knives and a pair of scissors thinking we could tackle this simply. When we arrived to see these towering beasts, we realized we were idiots and promptly went to Home Depot to buy some real gardening tools. Fortunately our idiocy provided entertainment for many people, including our new neighbors.

I know I should have been posting this stuff more frequently, and then I throw all this out in one blob. As construction progresses, I promise to post more frequently.

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!

Bank Blues

So, I'm learning in our quest to get construction financing that (1) there are not a lot of lenders that lend for single-family new construction, and (2) prefab is apparently a dirty word.

I have had two lenders tell me that they will not consider lending to us because their loan committee is scared of "prefab" housing. Somebody actually asked me, "What happens if something needs to be fixed?" Huh? Oh, of course, you bring the house back to the factory. Duh! Anyway, part of the problem, as you may have guessed, is education. Jeff has suggested that I do not tell lenders that the house is prefab, and perhaps that is the right way to go, but it is ridiculous. Jeff did contact an Illinois Manufactured Housing Association rep about this and she stated that she had never heard this as a problem, although the banks we have been considering were Chicago banks, so it is possible that they have never dealt with this before.

So, in the meantime, we are working with Jason Pachl at Land-Home Financial that has a modular financing program. They are based out of Minnesota, which is fine except that I really wanted to use a local bank.

In other news, and this may be a boring topic, but we really wanted to find a "modern" fence to surround the property to go with our modern house. This is a lot harder than you would think. What we have decided we like is a horizontal slat fence (see above). I actually found this picture on a website for Advanced Fence and Gate, which is a local company, but the sales rep kept telling me how expensive this was and that we would be crazy to do it. That's not the spirit I'm looking for. We are talking to a few fence builders to see if they can accomplish this for a reasonable price.

The other item that we may have to forego is the custom garage that Jeff had designed. It is just going to cost too much to build, and we could save $5,000+ on getting a garage company to build it. Good news is that we can upgrade to Hardie board that matches the house, so it won't be too boring, but it is a disappointment.

As to timing, we still have to select the General Contractor. I won't go into all the nuances that is delaying our decision, but we hope to have a selection by next week. That will be a relief.

All in all, we are still calm, knowing that we are doing something new and that it could have a larger impact on the way sustainable and affordable housing can be built. We knew there would be a few snags. In any case, keeping positive.

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.

Construction Loans

So, we've been rolling merrily along, firming up pricing, in order to finally apply for a construction loan. What I've found is that there are very few banks in which will provide new construction loans for single-family homes. This isn't very surprising, but it is a concern nonetheless. What is surprising is that Abraham had found a lender that specializes in financing the construction of modular homes. This company, based out of Minnesota, is called Land Home Financial Services Inc. (http://www.land-home.net/modular_program_details.html). They offer a "One-Time Close" which modifies the construction loan into a permanent mortgage at completion. While this sounds perfect, it doesn't look like we will have a lot of opportunity to shop around for rates, so we are hoping that Land Home is competitive.

I did call Land Home and spoke to Jason Pachl who handles the territory that includes Illinois. He was very helpful. He said that the average time it takes to get approved for a loan is 30 to 45 days, so if we want to really start this project in March, we will hopefully get our final pricing in soon so we can apply with full knowledge of what the loan amount will be.

In other news, Jeff has bid our project out to several general contractors who he feels will be on board with what we are trying to achieve. We should get bids back in the next couple of weeks, so then I can announce with better certainty what the pricing will be. So far we are estimating that the complete home, including our fancy tastes (i.e. floating staircase, PV panels, high-end appliances, etc.) will estimate at $175/sf. Jeff still believes that the home could cost $125/sf if completed at the factory with their specifications and selections, so this can still be a model for affordable housing in the city. The nice thing is that it can be modified to the owners specifications if they (we) are willing to foot the bill. I still think $175/sf, if that's a solid number, is pretty amazing for all that we are going to get!

By the way, we were interviewed by reporter Lisa Skolnik for a piece in the AIA's monthly trade magazine's March issue. Once it comes out, I will certainly post here. Very exciting!!