Feliciano Vera of Habitat Metro on Downtown Oriented Development in Phoenix

A few weeks ago I had the pleasure of interviewing Feliciano Vera, a partner with Tim Sprague and John Hill in the local development firm Habitat Metro.  Habitat Metro developed Portland Place and is now redeveloping The Oasis Motel on Grand Avenue.  Just recently, they announced that they acquired the Lexington Hotel on Central Avenue and plan to rehabilitate it into a chic, boutique hotel.  Can’t wait!

Feliciano grew up in South Phoenix then set off to Harvard after high school. Fortunately, he not only came back to Phoenix, he also started giving back to the city. If you think developers are insensitive and greedy and the reason we’re a city of smog, sprawl and stucco, Feliciano will make you reconsider.

Below is the first half of our conversation.  I’ll post the second half tomorrow.

Blooming Rock: Can you tell me a little bit about Habitat Metro?

Feliciano Vera: Habitat Metro was founded in 2007 by Tim Sprague, John Hill and myself. It was founded in reaction to what we saw as a huge void in the market for smart, attainably-priced, residential, community and commercial space. It’s a complicated story to tell about how we arrived at that point in time. If you recall, in 2007, the residential market was white hot and the reigning theory about housing affordability was the drive-to-be-qualified theory, where the likelihood was that you could get the financing for a relatively expensive house and if you could make the monthly nut, you were fine. The only problem is that you’re only focused on a monthly mortgage payment and not the negative externalities associated with that monthly mortgage payment. So you were focusing on a solution to housing affordability that forced people out to the periphery at the cost of their quality of life. Because what ended up happening was that if you wanted to find an affordable house, it was out in Buckeye, it was out in Queen Creek, it was out in Maricopa. It wasn’t anywhere in the Central City, it wasn’t anywhere in the urban core, proximate to major employment centers, proximate to multiple modes of transportation. The true cost of housing was substantially greater than conventionally portrayed, because the measurement focused solely on the mortgage payment, it didn’t focus on the transportation payment, it didn’t focus on your utility bills, it didn’t focus on the cost to your quality of life that an hour or hour and a half commute both ways has on you and your family. So we set out to really focus on addressing the need for attainably-priced housing and that was a function of our experience at Portland Place.

Our partnership actually dates back to 2003 when we were working on the Portland Place condominiums. When we started that project, it came about as a consequence of a confluence of conversations between Tim, myself and some other friends of ours about the pending construction of the Light Rail in Phoenix. I sat on the City’s Transit 2000 (The Phoenix Transit Plan) committee in 1999 that came up with the funding mechanism for the implementation of the Light Rail. I actually worked with the City of Phoenix on the 1997 Keep Phoenix Moving campaign that failed by 122 votes. But despite the failure, Mayor (Skip) Rimza decided it was so close he wanted to take it back to the voters as quickly as he could and the soonest we could get that on the ballot was 2000. I had just gotten back to Phoenix from school and ended up just plugging right back in. So I’ve actually been working on transportation and land use planning issues and development issues professionally for the last 15 years now.

But Tim, John and I really recognized the opportunity that existed with the implementation of the Light Rail and submitted a response to a City-issued request for proposals for the redevelopment of what is now known as Portland Place. We were the successful respondent. We started working on that project in 2003, we didn’t break ground on it until 2005, so it took us about 2 years to get underway. And we completed it and delivered it to the market in 2007. As we started to put together conceptual plans for Portland Place for the City, the first thing we did was go out and talk to the Roosevelt Action Association, to the neighbors in the community and ask them, what do you want to see here? I knew from my days working with the City that there was a big concern about how that property needed to develop and the Roosevelt Action Association was one of the toughest and strongest neighborhood associations in the Valley.  Rightfully so, collectively and individually, they’ve taken a significant amount of risk to really pioneer the redevelopment of Downtown.  We understood that and we respected that.

As we talked about the possibilities, we discussed, well do we do market-rate housing and maybe incorporate affordable housing? Do we do a mixed-income housing project? Neighborhoods said no, we don’t want to see that. There still is and has been a concentration of substandard housing stock in Downtown. The quality of the housing stock has improved over the last 10 years, but the big concern was, we’re trying to stabilize the neighborhood, we don’t want to add more affordable stock and aggravate our ability to revitalize the community down here. We understood that, we respected that, but we were still very much committed to this idea that there needs to be quality affordable housing in addition to market-rate housing. So when we were bringing Portland Place to market, our price points were directed to executives, at partners in law firms, at professionals that can afford a higher mortgage and wanted to be in Downtown, that understood what the five minute rule was about. You know, being five minutes away from home, five minutes away from work, five minutes away from play, (five minutes away from) all aspects of their lives. But, that’s the top of the pyramid.  For every partner in the law firm, you have an army of support staff.  For every senior level manager at Chase, you have an army of support staff.  For every senior executive at the City of Phoenix, or at 1700 W. Washington, you’ve got an army of support staff, most of whom couldn’t afford to live downtown or didn’t want to because of the lack of quality housing, the lack of recreational activities and cultural activities beyond the larger investments that had been made to seed Downtown development to date. So there was this need for fine grain investment.

What we were trying to do when we started Habitat (Metro) was think through a lot of these problems, in multiple dimensions, and figure out a way that we could support the investments that were occurring Downtown, support the investments that were occurring in Central and South Phoenix generally. We were really focusing on those parts of the city that had good transit connectivity and good proximity to employment centers, where people would want to live, where people who were pretty sophisticated about what they wanted would be amenable to living.  So it was and it is a complicated story to tell.  It’s not one that lends itself to a quick headline or 120 words or less.  We have found a great deal of traction, a great deal of enthusiasm, but again, it’s a very different audience, people who want to be Downtown, who want to be in the core, that understand urbanism. They aren’t necessarily the same kind of folks that want to live on the edge urban periphery.  So that’s kind of why we started. We’re still very much committed to Downtown. And we’re very much committed to the notion that in order for Phoenix to mature as a major urban center, we have to have a meaningful urban core and urban fabric that provides the structural framework for the organic development of community.

For me personally, I’ve always had a problem with a master-planned community. Maybe it comes from my own academic background but the idea that you can manufacture community is just abhorrent. Community happens in places like this coffee shop, it happens in a tavern. Revolutions were planned in taverns, they weren’t planned in sterile Phoenix. We’ve got a little revolution in us even though it doesn’t seem like it. That’s exactly why the breadth of our interests range from high end housing condominiums like Portland Place to funky adaptive reuse projects like The Oasis. A healthy city has to have all kinds of residential options, it has to have all kinds of businesses. You can’t just have Kinkaids and Durants, you have to have Sapna, you have to have places like Carly’s in addition to all of that. Those are the fine grain pieces of the urban fabric that make a place.

Blooming Rock: Tell me a little bit about the social capital and the community stewardship that you find so important at Habitat Metro.

Feliciano Vera: We measure everything we do at a minimum of a double bottom line metric. We aspire to measure everything we do on a triple bottom line metric but that doesn’t happen all the time. By that I mean, our first responsibility is that we’re in business and we have a fiduciary obligation to our financial partners and our lenders to ensure that their capital is returned and they’re making a reasonable profit on their investment. And obviously we need to be able to pay our light bills. But that doesn’t mean we’re out to make a quick buck. We recognize that in order for us to succeed in that first mission, we also have to be able to quantitatively measure our social impact and our community impact. So we look at the different dimension of our involvement in the community and how we are positively impacting the community.

One of the big reasons we decided to work on the Portland Place project is that not only was it an opportunity to do something exciting in a transit-oriented development district, but it falls in the Downtown development area. The Roosevelt community core, as strong as it is, is still a low-income community. According to the 2000 census numbers, I haven’t had a chance to take a look at all the data that’s starting to come out and dribble out on a track-level basis yet, but it’s still a low-income community and so there’s still a need to aggressively attract capital to communities like the Downtown core and to tell that story. When we started working on that project, one of our initial partners was Chicanos por la Causa, which is one of the largest community development corporations in the state. They are, in many respects, a non-profit conglomerate in terms of their business because not only do they provide their core social services, but they also do economic development work and provide academic services, all of which are woven around this idea of community reinvestment – consistent community reinvestment and development. So, they were a partner in Portland Place. Part of that was that they saw a fit with their mission to ensure that housing opportunities, job opportunities were being created in the core that were proximate to communities that are traditionally underserved. A lot of people tend to think that their focus is purely on the Latino community but it really is on underserved communities throughout Arizona. It just so happens that they have their roots in serving Arizona’s Chicano/Latino community.  That was how we measured success there (in Portland Place).

If you look at our Oasis project, it’s the same scenario. We’re working on that with Tom Carmody. Our focus there is to create quality, affordable housing stock. The fact is that we’re addressing the severe gap in available, quality affordable housing in Central Phoenix, we’re attempting to fulfill that need. We’re also working to fulfill in that project a need for affordable retail space.  So with the construction of our live-work units on the Roosevelt façade of the Oasis project, we’re giving entrepreneurs an opportunity where they can hang their shingle and they can go to sleep at night, so they can collapse their overhead and begin to incubate their business with a lower risk threshold then they would otherwise.  Because the whole goal is for them to access opportunity.  Not only are we looking at that, but we’re looking to really build on (what’s already happening on Grand Avenue). And we’re really standing on the shoulders of giants I think, in terms of the folks who’ve pioneered investments along Grand Avenue, like Beatrice Moore and Tom Carmody who’d done some other work helping Derrick Suarez and Gina Suarez with The Paisley Violin. You’ve got a lot of folks that have come out and said hey, this is the place where I want to work, where I want to live, where I see opportunity. We want to help them stabilize their investment and see it grow. We also want to make sure we’re doing so in a way that our redevelopment work is sensitive to the existing community.

The other part of the story is that I grew up in South Phoenix and my mom grew up in the Marcos de Niza projects, just south of Downtown. I’ve had a tio and tia that live in Grant Park growing up and I spent a lot of time in the Marcos, I spent a lot of time in Grant Park, Central Park and 7-11 neighborhoods and that whole area that is now collectively called Central City South. I’m very sensitive to the reality that there are strong communities that remain that have been here, that have been a stabilizing force around Downtown, but just have never been invested in. We’ve never really addressed what these members of our community want, for a variety of reasons on an institutional level, like misplacement and gentrification. Those are two huge issues that we kind of dance around but are very real. There are existing communities and the big challenge we’ve always had and as you have as any area grows and changes is, what are the impacts of that change on the existing urban fabric and how do you address that, how do you honor that in a sensitive way? How do you facilitate the growth and evolution of a city without emulating Robert Moses? Those are big challenges.

Blooming Rock: What does sustainability mean to you?

Feliciano Vera: Sustainability goes beyond simple questions of environmental responsibility to me. That’s (just) the baseline. I’ve grappled with, and I think my partners have grappled with, that question in a very real way because the notion of sustainability that drives us is a definition that addresses the long term stewardship of not only our environment but of our economy. We see the two as being intertwined. We have to have business models that understand and respect the fact that we have to commit to the long term health of our communities that extends beyond the quarter, beyond the fiscal year, beyond the five year or ten year planning horizon. We have a responsibility to assure that our work is undertaken to facilitate the continued growth and vitality of our communities.

If you don’t think about the environmental impacts of what you’re doing, you’re neglecting all of these costs that will have to be accounted for at some point. That’s a big part of the equation. But the other part is, how do we think about our business practices in such a way that move beyond the immediate profit margin? So here’s where I’m coming from with that, a lot of the activity and investment that was going on in the real estate market over the last sixty years in the Valley has been focused purely on growth for growth’s sake. So we’ve had a very strong cyclical economy that was driven by growth. This whole idea that people were going to come to the Valley for the 5 Cs, primarily now for the climate, not necessarily for the copper or the cattle or the citrus.  That system sustained our region in our adolescence and as we mature, the question is, what does our economy look like, what does our economy feel like over the next 50 years, over the next 100 years?  And what are we doing today, from a business planning perspective, whether you’re in the real estate industry, whether you’re in the life sciences industry, whether you’re in the renewable energy industry, or traditional manufacturing?  What are we doing to lay the foundation for future competitiveness, future prosperity? That’s where the question of sustainability comes in, at least in my thinking.

Stay tuned for part II of my interview with Feliciano tomorrow!

Photo Credit:  The old Oasis Motel sign.  Photo by Beatrice Moore.

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