Jeffrey Willis, vice president of land acquisition and sales at Shea Homes, feels lucky. "I was fortunate enough to be there from day one," he says. That's the day in 1998 when Shea started talking about developing Reunion, a 2,500-acre "next generation" master planned community in northeastern Denver. The community would be in what seemed to be an auspicious location--just 20 minutes from downtown Denver, 10 minutes from Denver International Airport, and 20 minutes from the Denver Tech Center.
But in 1998, the space had not seen any growth at all, recalls Willis, who has been with Shea Homes for almost nine years, five of them in Colorado. "There was a certain stigma to the area. It was known as industrial and lacked infrastructure," says Willis. There were restrictive architectural guidelines in place and a mobilized citizenry opposed to growth. Reunion would be located near some of Colorado's greatest natural preserves: the Rocky Mountain Arsenal National Wildlife Refuge, Barr Lake State Park, and the Prairie Gateway area.
Worst of all, there was a severe drought in the area, and water use was restricted. Some residents doubted that the area could sustain residential growth on the basis of the water shortages alone, recalls Willis, a native of Arizona who is familiar with water issues. "People said, 'I can't water my lawn; how can you issue a building permit?' "
Yet Shea was looking at a huge opportunity: Reunion anchored a 3,400-acre "mixed-use" development that would include 12,000 homes, 900 acres of commercial and retail development, 10 miles of walking trails, 150 acres of parks, and 170 acres of open space. And while other builders would eventually get parcels to develop, Willis found himself in a unique position to shape the planning process as much as Reunion's development itself. His approach and the approval Shea eventually won, however, would prove even more distinctive.
Mitch Black, Reunion's lead planner and architect from the Denver-based firm of Norris Dullea, sounds awestruck about the outcome. "This was a dreamlike process," he said. "We annexed and zoned 3,000 acres in 15 minutes at a public hearing."
The largest landowner, Cal Fulenwider, who spearheaded the project, knew what could go wrong. "I sat on the community land development council for 14 years and frankly was unimpressed [by some of the large publicly traded builders]," he says. But Fulenwider says Shea impressed him. "Shea has done everything that we wanted them to do, and everything that they'd say they'd do. They really have created a community."
A New Legacy
Fulenwider, the president of L.C. Fulenwider Inc., in Denver, had more than community interest at stake. He was concerned about his legacy: The land near the Denver International Airport had been in his farming family for generations. "We recognized we had a real opportunity, but it couldn't be sprawl. Doing it right was paramount for us." He approached the city to build a master public golf course named Buffalo Run, designed by Keith Foster. "If you build a golf course, they will come," Fulenwider says. "It builds credibility in the area." The course was completed in 1996 and then Fulenwider approached Shea Homes.
Brett A. Limbaugh, who is now the community development director, was then the senior planner of Commerce City, which Reunion will be a part of. "The nice thing is that we already had our preliminary planning done before Shea came in," he notes. Fulenwider, swayed by Shea's reputation in Colorado, and with the belief--rightly or wrongly--that a privately held company would not "develop and flip the land to please Wall Street," eventually determined he would sell his land in stages to Shea.
The city council and a consultant had worked on a detailed planned unit development document (PUD) to which development had to conform: from streetscape preferences to porches and recessed garages. It required varying colors and materials so the houses would not be identical.
Commerce City's nine-member city council started working with Shea in 1999 on the concept of the master planned community. Trish Layton was deputy city manager at Commerce City when the planning began. "We approached [the project] as a partnership," she recalls. From the beginning, Shea dispelled certain myths about builders, she says, adding that some of the opposition to growth comes from people who view developers as the enemy. "Yes, they're there to make money, and our mission is to serve the community, but there are usually more common interests than people recognize. Sometimes, municipalities lose sight of the fact that it's the developers who help you create your community," she says.
Come On In
The planning--or what Willis calls the "visioning"--process is usually internal, with the builder tapping some external consultants for their specialties and then approaching the city council and its staff for their comments with a proposal. But Shea invited the council and staff members to sit in at every stage.
This also gave Shea an opportunity to make a good first impression. "They saw what they were looking for--a builder with a solid reputation for quality homes," says Willis. It didn't hurt that a J.D. Power survey came out about the same time as the initial meetings, and Shea Colorado topped the charts in the state.
It is rare in Colorado to have large sit-down meetings at preliminary stages, says Norris Dullea's Black, but soon many people got used to coming together on at least a monthly basis to see the plans unfold and to work out differences.
On one hand, the municipality wanted affordable housing, says Willis. But they also said they wanted luxury homes to attract business executives.
But most of the disagreements came not in the residential building, but in the commercial arena. Many retailers want large parking lots in front of their establishments. The council was adamant about not having big-box retailers behind a sea of cars, recalls Layton. Eventually, compromises were reached: Parking lots can be broken up by landscaping; a lot can be done with architecture; stores can circle a lot. "We tried to find the middle ground," recalls Limbaugh. "If you don't have any standards in place, you'll get a hodge podge of ugly commercial development."
Layton emphasizes the "mutual respect and honesty" of the meetings, which were generally led by Shea's Willis. "We heard the thought process behind an idea. If something couldn't work, they'd say, 'Here's why it won't work,' " Layton explains. "Some of the credit goes to Shea. I think that community building was part of their mindset from the start."
The Shea team listened to the desires of the city planners, and the council looked to Shea for education as well, says Willis. "Surprisingly, our visions were well aligned." This was a city that had seen very little growth in its history, but they were not opposed to the concept of growth, he discovered. "To their credit, they embraced it, but [they] asked for parks and architectural guidelines," he says.
The anti-growth forces were well organized. A vaguely worded anti-growth amendment was on the ballot for the elections of 2000. It could conceivably have stopped all growth. The amendment did not pass, and in the end might have had a positive effect, in that it moved the process forward quickly.
The two major hurdles to clear were the poor image of the area and the water shortage.
The image problem was rooted not only in the area's lack of development, but in its location in close proximity to an active superfund waste site. The site is soon to be de-listed, adds Willis hurriedly.
Water availability was not a problem overall, but water available for specific, residential uses has long been an issue in Colorado. The process of negotiating water rights was the most painful and painstaking part of the process. "It was becoming very expensive, by our standards," to negotiate water, says Willis.
At various times, Shea employed anywhere from two to 25 people, plus numerous consultants, land planners, engineers, and attorneys, to resolve the water issues with the City of Commerce. "Water has been a bigger challenge than we thought," says Willis. Eventually, Shea negotiated several deals to purchase water in bulk from a water provider that will deliver the water directly to Reunion homes.
It's the Process, Stupid
The city visioning process, which began in the latter part of 1999, concluded with the plan approved in July 2000. Shea broke ground in June 2001, the sales office opened in October 2002, and the first home closed in December 2002. The first community, called The Park Neighborhood, offered 727 homes in the low-to-mid-$200,000s. The focal point of the community is Reunion Park, a 52-acre expanse featuring an eight-acre lake, landscaped trails, an amphitheater, multi-use athletic fields, a recreation center, playgrounds, and picnic facilities.
Shea ultimately won the rights to build half of the homes in Reunion. Shea's homes range from $210,000 to $370,000, says Willis. To ensure a variety of architectural styles, Reunion parcels also went to other builders, including Richmond American Homes, a division of MDC Holdings, and U.S. Home, owned by Lennar Corp.
Ultimately, the open process allowed the community decision makers to contribute their input and see their suggestions and concerns reflected in the master plan, a year or two before typical master plans are presented to community boards for the first time, says Norris Dullea's Black. The approval process, which can take months or years, took a matter of minutes. The savings in money and time are incalculable.
A faster process is a more congenial one, concludes Willis. There are real financial benefits, too. "The northeast corridor of Denver has now become a competitive market, and we've been able to gain a much greater share of that market, at a higher price point, because of the end product of the community. In the past couple of months, our sales have really pulled away from the pack," he says.
About the only losers were aspirin manufacturers.
But Steve Ourisman, vice president of planning for Shea Homes, was determined to meet the educational needs of what everyone knew would become one of the fastest-growing school districts in the country. Dubbed Brighton 27J, the school district includes the municipalities of Commerce City, Thornot, and Brighton.
It took 18 months and several comprehensive meetings, but a partnership was created among city, county, home builders, and all the school districts to create the 27J Capital Facilities Fee Foundation. The $18 million entity allows builders in the area--including Shea, Ryland Homes, and Gateway American--to voluntarily contribute $1,010 per home built to fund the construction and renovation of schools.
It was difficult to get the different parties to work together, recalls Ourisman. "There was suspicion at first," he acknowledges. "Usually, school districts and builders are at odds in cases like this." But the problem of funding capital facilities, such as schools, was well known.
David Foster, an attorney with Denver's Foster, Graham & Huetner, represented some of the landowners and developers at the early meetings. Foster helped bring all the parties to the table. "You need to get buy-in very early from all of the impacted parties," he says. "A wise man once told me that if you're not invited to the table, you're probably the entree." The collective effort was amazing, says Foster.
Ourisman says he believes there is a desire for a new approach to school construction funding. "We needed a new suburbanist approach," he says, founded on partnerships among everyone concerned. They found that the 10-year capital facility needs amounted to about $100 million, Foster says, and the current assessed value was about $82 million. Thus, they needed a mechanism to raise $18 million. They looked at a 10-year projection of growth in the district and divided that figure by the number of homes that they saw being built to determine that a voluntary fee of $1,010 dollars per home built would cover the shortfall. "We heard that as long as a fee is voluntary, uniformly applied, and reasonable, people would agree to it," says Foster. Indeed, 90 percent of the builders are participating. (Some of the smaller builders, who are constructing just a handful of homes, declined to participate.)
The foundation, which resembles one recently developed in Douglas County to serve Denver, can provide grants and act independently.
The strongest support for new concepts came from builders who had done home and school construction the traditional way, in a variety of different municipalities, says Ourisman. "They want to build communities, and that includes schools," he says. "They had an impact."
Attorney Foster says he thinks the foundation is a "unique solution to a common problem."
Learn more about markets featured in this article: Denver, CO.