Question and Answer: Apartment development from an urban point of view
As a developer of small, passive-design apartment buildings on urban infill sites, Cody Fisher, founder of Footprint Development, sees residential construction through the lens of the average, environmentally conscious citizen.
“When I started in development, I discovered the really strong intersection between urbanization, our housing crisis, and the climate crisis,” Fisher said. “That really drove the way I wanted to approach development. That’s why I decided to do it on my own, rather than working for someone else, right out of the gate.”
Fisher founded Footprint Development four years ago. His projects include the 23-unit Passive Home certified Solstice Apartments and Carbon Smart Apartments, which include six energy-efficient, low-carbon footprint apartments. Both are in Minneapolis.
Footprint’s latest project, also designed to Passive House standards, will bring 32 apartments and 1,553 square feet of commercial space to a triplex site at 3561 Minnehaha Ave. In Minneapolis.
In the following interview, Fisher talks about his development philosophy, opportunities and challenges in residential construction, and other topics. It also examines the drama surrounding the Minneapolis 2040 plan, which was put on hold last week in response to a judge’s ruling.
The interview has been edited for length and clarity.
Q: Tell us about developing the imprint and how it started.
a: I started working in real estate development on my own about four years ago. I came into real estate development kind of through the back door as an urban engineer. I have lived in Chicago, Washington, D.C., and London. Great cities with great urban spaces that really come alive in the streets and that middle level of density that I found really attractive.
I’m from Minnesota, and when I moved back to the Twin Cities with my family, it was just after Minneapolis 2040 — the corporate plan that was really groundbreaking from a land use perspective — was taking hold in terms of actual policy. And I had a few parcels that I had as rental properties for a few years. Opportunities to develop on those opportunities have been opened up as a result of the corporate plan.
My interest was initially from an urban lens. But also, when I had my first child nine years ago, I became increasingly concerned about the climate crisis and became really interested in that from an advocacy perspective. And so, as I started developing, I discovered the really powerful intersection between urbanism, our housing crisis, and the climate crisis. And that’s what really led me to the way I wanted to approach development. That’s why I decided to do it on my own, rather than working for someone else, right from home, because I didn’t see anyone building in a way that I think is critical in terms of climate resilient communities. Means and methods of carbon-smart housing and construction.
Q: I know you develop certified projects for passive houses. Can you explain the meaning of negative verse?
a: It really comes down to the orientation of the building. The way a building faces directionally affects how much heat it gains from the sun and how much it gives off. It is about building airtight buildings and highly insulated buildings to reduce the energy consumption needed to heat and cool the building. It is all about the health of the occupants, so when you are building airtight and well insulated for energy efficiency, it also becomes very important to have proper ventilation to maintain air quality.
In the multifamily space, my passive buildings are designed to be approximately 80% more energy efficient than the comparison baseline, which would be other buildings in the surrounding area. Therefore, maximum energy efficiency is what ultimately reduces the need for energy consumption and the utility bills that people pay, and makes things more resilient in the face of power outages.
Q: What do you see as some of the opportunities and challenges out there? We’ve all heard about the challenges facing debt markets now. How do you navigate that?
a: I’m a mission-driven developer, so the stuff I create is at market price. But overall, it’s reasonably priced given the way we design and try to evaluate it. And I only do this in Minneapolis. I think of myself as kind of picking an area that I want to farm and doing a lot of projects in and helping to build and cultivate the urban fabric of our community here over time. I build and preserve the things I do. So I have a slightly different point of view.
Also, I believe the assets I’m building will be increasingly valuable over time, as people care more about indoor air quality. Whether it’s the upcoming pandemic, or the constant air quality alerts we have due to the increasing number of wildfires, this type of construction will be increasingly in demand.
I think the Midwest, and Minneapolis in particular, is well positioned as a climate haven over time as migration and resettlement patterns shift away from the Sunbelt, flood-prone areas like Miami, and hurricane-prone areas like it.
In terms of overall headwinds, construction costs are still really high. The fact that interest rates have risen, stayed high, and will remain high for the foreseeable future, does not seem to be catching up in terms of correcting some of the imbalances.
I have a really great debt partner at Sunrise Bank here locally. As a Community Development Financial Institution (CDFI), they are in a unique, mission-oriented position where they can invest heavily to try to achieve some of the mission-oriented outcomes that my projects have, and they are a really supportive, enthusiastic partner. So I’m confident that you’ll be able to continue to secure debt terms that make projects work to generate market rate returns in our market that include those sustainable capacity and housing components that I’m trying to achieve.
Question: We talked briefly about Minneapolis 2040. A judge has ordered the city to return to the 2030 Comprehensive Plan within 60 days amid a challenge from some environmental groups. How will this impact small businesses in the city?
a: For smaller scale — let’s call it less than 40 or less than 30 unit, infill projects — I think it’s really disruptive. There’s a lot of risk and uncertainty that (younger developers) don’t know about. Or maybe it’s the general contractor that’s doing it and taking advantage of their extra capacity or something like that. They bring a kind of egalitarian element to the race.
None of those prototypes I mentioned were well capitalized. And in general, the pursuit costs and the design costs that you incur just to get entitlements — even under a system that is supposed to provide certainty, like the 2040 plan, as to what the city wants — those costs are significant.
He’s basically throwing a bucket of ice water at anyone who would consider doing something like this, especially on a small scale. (Small developers) can’t stomach that level of uncertainty and extended lead times when you’re putting in the limited capital you have to pursue the project. So I think that really puts the brakes on people who might be thinking about doing this kind of thing.
I just had the Minnehaha project get Planning Commission approval. If I don’t pull the permits in the next 60 days, if nothing changes, this project will basically remain on ice until the lawsuit is resolved or the city does an environmental impact study. But the same groups that sued the city over the corporate plan are sure to sue the city (again) and call its environmental impact study into question.
This, in my opinion, will waste valuable public resources and slow down the addition of the vital housing we need to continue building, both to keep Minneapolis in particular an affordable city, which is commensurate with most major urban markets and to make it more resilient to climate change by focusing Housing where people want to live, work and play.
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