um that the actual size and an rta1 an rta1 development is supposed to look like twins
is that correct that's one of the allowable developments yes and and when you say one
dwelling unit per property, when you subdivide it like we did in Mr. Ewing's plan,
each of those is compliant with one dwelling unit per property. Is that correct?
Yes. Okay. So now look at the bottom here. All these existing homes,
their backyard goes all the way back to this line. Do you see that?
Mm-hmm. Now, these properties could have gone all the way back to this line as well. Isn't that
correct there's no maximum yard in an rca1 is there no okay so when you say that all this area
is unusable it's not necessarily unusable we could have actually extended these properties back and
use those properties correct correct okay so in your plan you even have more unusable uh area
correct yeah yeah and that was your choice to make it look even less desirable to have an rca1
property um i'm not i haven't compared the plans it's it's immaterial because neither of these
plans would receive over-the-counter approval from all right mr roller you you created a plan
that has a unity of use, correct? So that you want to link up this RM1 and the CMX with all
this RTA on this one giant plot, right? If Mr. Ewing created a unity of use in the same way,
then wouldn't that change your testimony and it's no longer going to be required to be a PUD
because now we have this property is basically a unity of use with all of the rest of the lot.
Your assumption in your testimony, Mr. Roller, is that this is not a unity of use plan versus yours is. Is that correct?
No, I don't think that makes a difference. In other words, this development, whether it's a unity of use or a PUD, however it's governed, it would require, it would end up being multifamily.
If this was all one ownership and these were not sold as houses, but were simply rented, then it could be all one ownership.
But then again, you have one, two, three, four, five, six, seven, eight, nine buildings on plus the nursing home, which makes it 10 buildings on the lot, which is not permitted in RTA one.
Well, these are all subdivided lots, aren't they, Mr. Roller?
So how can they all be on the same lot?
Well, you said it under the unity of use. If you subdivide it, as you show, then L&I will require there to be an entity to manage the alley and the stormwater.
That entity is a Homeowners Association or a PUD, Planned Unit Development, and that existence is what L&I says makes this multifamily because there are multiple families that use it.
even if they do make a multifamily, Mr. Roller, it's going to be a less intense use and it's
going to be a less, a less of a modification from the by right RTA one. It has to be because
these are all RTA one. These are all RTA one compliant. Excuse me, Kelsey. Do you mean RTA
RTA1, yes. CA1 or TA? RT, like T like Tom.
Okay. Okay. Thank you. Let's see here. Your analysis on Mr. Ewing's, your critique
of Mr. Ewing's plan. Number one, you said that the alleys were too small, but you just
conceded that those could be altered dimensionally to make it work, correct?
It would change the plan, but yes.
Okay. How is it administered? You're saying that the city does have a way to administer it.
How it's administered, you're saying that the city does have a way to administer it. Now, you haven't submitted this plan to LNI and gotten any kind of response from them. Is that correct?
It's not my plan.
Right. You haven't found any code bulletin or any instructional advice from LNI that addresses this issue. Is that correct?
I have 20 years experience in designing developments like this with multiples, single houses or twins on a property where L&I has come back and said, this is multifamily.
And we've gotten variances in areas where the units would ultimately conform with the zone except for the multifamily.
And we've gotten approvals on that.
I want to move on to the minimum variance testimony you gave.
In RM1, is there a minimum number of units that you must have in a project?
Okay, so when you say that you designed a project for 76 units, would you have been able to design a project for less units?
We could.
Okay, could it be substantially less?
Not to be economically viable, no.
How do you know, Mr. Roller?
Because that's what the owner has informed us, and that's what the people who handle an analysis of, is this a viable project, that's what they told us.
Okay, so that's hearsay.
Did you do any examination of economic viability for this project?
I object.
I object.
Mr. Feldman, I think if he did, he did.
If he didn't, just answer no.
I mean, I don't. What I would put on the record here is that we had a economic analysis team.
Yeah, I know that. I know that. But what I'm saying, Mr. Feldman, just a question to him is, did he do it or did he?
Mr. Roller, I think it's a simple question. No, that's not within our purview.
OK. OK. So from a from a design perspective as an architect, you could have designed a building with 40 units or 25 units.
There's no minimum. Is that correct?
We could have designed a single family house on that.
That was not what we were asked to by the developer.
And that was not what our client charged us to do.
Right. But what you're saying is that there's nothing from your, as an architect,
there's nothing from a design perspective that you know of that would limit,
that would make the floor 76 units on this property.
but that that's your testimony right Mr. Barola testimony was that was that was the charge from
our client okay um sometimes I have trouble reading my notes when I take them very quickly
um I think uh I think I'm gonna rest all right thank you um Mr. Feldman could you
could you call your next witness please sure excuse me mr chair um mr feldman did you have
um any redirect of this witness or are you moving on to your next witness i'll move on to our next
witness okay thank you i'd ask uh that greg halquist um from equinox uh development be promoted
Mr. Halquist, if you're in the virtual audience, please raise your hand.
Mr. Halquist, please unmute yourself and wait for the chair.
Hi. Could you state your name and spell for the court reporter, please?
Sure. My name is Greg Halkwist. H-A-L-L-Q-U-I-S-T.
Great. Do you swear for him to tell the truth, the whole truth, nothing but the truth?
I do. Mr. Chair, I have an ongoing objection to Mr. Halkwist's testimony.
As I stated in my opening, Mr. Halkus was not a witness and did not submit any testimony or documents to the board at their hearing.
Therefore, he cannot supplement anything that he gave before because he never presented any testimony or evidence before.
To the extent that he wants to present testimony now, we contend that his testimony is completely excludable because it was.
we contend that his testimony is completely excludable because it would be giving the
applicant a second bite at the apple. There's no other way to really look at this, Mr. Chair and
members of the board, because the applicant had a full hearing plus half of the second hearing
to present their entire case. No one limited them in any way. And they were very comprehensive
and they had many, many witnesses and many experts. They chose intentionally not to call
this witness at that time. Let him finish. Let him finish one minute. Therefore, what they're
doing now is getting a second bite at the apple. And it is highly prejudicial to the objectors
because our main contention before the court was that there just wasn't enough evidence that
Mr. Gelley put forward to justify the hardships and the minimum variance. If they can clean up
by like by like they basically get like like to get a do over that's the courts have said that's
not what a remand is for um so so that's our contention all right i i understand mr fellman
you want to respond to that very quickly absolutely mr masters already made this objection
previously to counsel um for the board and and this objection was denied specifically
the the court's remand and i believe the board's interpretation of it was that this remand was for
supplemental testimony on hardship and on least minimum variance to the extent it included
those elements that were not fully developed at the at the hearing. We absolutely presented
testimony on least minimum variance but that's exactly why the board and the remand was to give
us an additional opportunity. Okay so Mr. Masters I would just say I would ask Mr. Feldman to say
to us. Excuse me, Mr. Masters, we may not talk over each other. We need the court reporter to
get a clear and concise record. Mr. Masters, I'm going to allow the testimony, but Mr. Feldman,
it needs to be supplemental information. Absolutely. All right, proceed.
Mr. Halquist, are you there? Yes, I am. Okay, thank you. Can you provide to the board your
your name and address? Sure, it's Gregory Holquist. I think I did that already, Brett.
And he's sworn in too. Great. Mr. Holquist, can you provide your title and your current title
and your employer? Sure. My title is Senior Vice President of Development and Construction
for Equinox Management and Construction. Okay. And what type of work do you do
in that capacity? Sure. So Equinox is a development company. We've been around for 25 years
and we develop in Philadelphia projects like this. We also provide development consulting
services for developers who need help or hand. And we do multi-residential apartment buildings,
condos. We also do townhomes, duplexes, a significant amount of experience doing that.
I've got 40 years of experience in the development and construction industry.
Last, say, 20, 25 years, heavy development background.
And when you say development, that's also not just construction, but that's also economic
feasibility studies, correct?
That's correct. Yeah. And that talks also to the development consulting, but effectively we help clients look and evaluate projects.
They might come to us with a site and we help them determine, you know, financial viability of different scenarios and different options.
So we also help them optimize projects that they have already.
Great. Now, did you have a chance to review?
Can I just have a little cross on whether he's an expert or not, please?
Could you repeat that, Mr. Masters?
Oh, can I just have a little cross-examination opportunity to whether he's going to be recognized as an expert?
I think we're going to allow him to go on and testify.
I didn't hear a request for an expert.
I think what we want to do is just take his testimony and you'll have a chance to cross-examine him, okay?
Well, Mr. Chair, if he's not an expert, then he's not allowed to give opinion testimony before the board.
Only an expert can give his opinion.
I think I'm going to allow.
Let's allow. Yeah. And Mr. Alcus, your company has had actually experience in this specific
neighborhood, correct? In development projects? Correct. We developed a 120-unit apartment
building at 40th and Pine a few years ago, which we now operate. And that's within a couple blocks
And that's within a couple of blocks of this area.
of this area? Yeah. Cool. Great.
Great. And as part of that, I'm sure you did the same type of economic analysis that you prepared for this project.
Correct. Yes.
With that, I would ask that he be entered as an expert for the purposes of providing economic analysis and feasibility studies for this project.
I'm going to object and ask for cross-examination.
um I'm going to allow it to continue and I'm not I'm not saying he's I'm not going to recognize
him as an expert with this I'm just going to allow him to testify okay Mr. Hawquist you heard
Mr. Roller you heard Mr. Roller testify um as to the infeasibility uh of of the various um RTA1
projects. The option that he laid out, the option that another individual laid out.
Did you have a chance to study those scenarios? Sure. Yes. We were asked to look at
the approved plan, the 76-unit apartment building. And we were also asked to look at the duplex plan
that was presented previously of 11 duplex buildings, 22 units.
And we also looked at a scenario in which the top floor was removed, reducing the number
of units to 63.
So turning to this general layout, and it's not necessarily how it's exactly laid out,
but it's the number of units put on the plan.
Do you have an opinion as to, can you tell the board what you concluded as to the economic
viability of this project?
I'm just going to keep an objection that.
Mr. Masters, I understand.
So what we look at when we do a financial viability analysis is effectively a cash on
cost metric, which basically is the measure of real estate investment performance and the ability
to, in our experience, the ability to get financing and have the project deliver a return
on investment. And that is the cash on cost figure in the middle of the page that you're
showing there. Our experience is a cash on cost viability threshold of 6.5 is the minimum that
would enable a project to be viable within a few percent or maybe 10%, but that's the threshold we
look for. That's this line right here, this cash on cost? Right. And basically that your net
operating income divided by the cost of the project. And what that determines is, you know,
the ability to get financing at an interest rate that, you know, might range from five to, you know,
currently it's higher, say six, six and a half, and still deliver return. So if your cash on cost
is not above that threshold or at that threshold, it's difficult to achieve a financial return for
the investment. So we look at cost and then we look at income. So you ran this scenario with,
I guess the first scenario you did was a duplex arrangement, correct?
Correct. So we looked at the duplex arrangement, both rental and for sale. And one of the
considerations when we look at this is what is the infrastructure requirement for the project?
In this case, there's a very high cost for infrastructure.
Mr. Roller mentioned it earlier, the stormwater management system that would be required is rather expensive.
There's a significant amount of site work, utility work, and so on on development like this.
So that cost is spread over, you know, you look for that cost to be spread over enough units to make it viable.
If you have a very high infrastructure cost with a small number of units, it can be very difficult to make the project work.
So that's a consideration as well as the construction costs.
We're currently developing, we just finished construction on duplexes.
We're currently developing ourselves 22 townhomes, which are very, very similar to duplexes.
So we have a very good sense of the cost, the construction cost.
So we look at that for the building itself.
And we also look at soft costs, financing costs, and a development contingency that most banks would require in any development that you do.
And what did you determine as to the viability of a rental duplex project?
um a rental duplex project uh well basically that it's it comes in at about a 5.18 percent
uh well
cash on cost which you know was not a surprise to us given this this site and the amount of
infrastructure the acquisition cost of the property and the sunk cost that the developer
already has into the project with all of the the work that's been done to date
And as a result, based off your experience.
Based on our experience, that's correct.
And what would be your, based on your experience and your capacity, would this be a project that you would consider viable or not viable?
Not viable.
Because of that number, correct?
Yeah, the cash on cost return delivers a negative overall return to the project, just not viable.
Okay. You also looked at this, the same, another scenario, and that would be an apartment building
with 63 units? Correct. And again, some of the costs, the acquisition and the site costs are
constant for the most part. And so with 63 units, you're just not delivering enough revenue to
offset you know those those costs as well as the construction cost and why did you look at 63 units
because we we heard what why did tell why did you pick 63 units well we took the top floor off of
the building basically the fourth floor yeah okay and why did you why did you take the fourth floor
off well because we wanted to look at is there a way to have a yield with uh lesser units and uh
get a lower, you know, a lower, you know, a lower, what's the word I'm looking for?