In our little Minneapolis office, called Shelter Architecture, we set out to deliver truly sustainable design to the underserved middle class. We tried everything: reducing our fees, limiting our services, streamlining our processes, outsourcing work, accepting payment by credit card—even waiting until after the project was half built before getting paid. All were met with a relative degree of failure. It wasn't until we were graced with a mortgage broker as a client that we began to formulate a solution.
Dixon Diebold started Minneapolis-based Uptown Mortgage and quickly established a network of financiers who understood the value of sustainable design. “We established relationships with the right partners to ensure sustainability is a factor in how a home is appraised,” he says. “In finance, it's all about the appraisal.” When Diebold approached us to design him a LEED-certified home, we described our usual struggle. From now on, he said, “Just have your clients talk to us first.” On the surface, this strategy seemed a little self-promotional. Underneath, it was genius.
What we developed was a simple way of moving financing so it precedes rather than follows the design process. “By using a bridge loan, homeowners can finance design fees while in transition from their existing home to their new home,” Diebold explains. In combination with a “one-time close loan” (one close for land acquisition, construction, and end mortgage), we're now able to know our clients' true project budget before we even start designing. The budget is no longer a fictional number the clients have come up with; rather, the financing that proves exactly what they can afford is already in place. Obviously, this assures we stay within the budget, but more importantly, we can conceive of the project as an investment. With hard numbers in front of us, we can evaluate paybacks for green building methods and assess design decisions based on the client's long-term financial goals.
For the client, the process is very simple. We have an initial conversation; ask some basic questions about their site, program, and design preferences; and put them in touch with Diebold or another good green lender. Together, the lender and client arrive at a budget and set up the best way to finance it, and we start working with the client on the design.
This integrated process is also cheaper. When all aspects of home building are consolidated into one financial process, about 5 percent to 6 percent of the total fee can be eliminated from closing costs. You also get better rates and lower monthly payments. Add to that the value of green design, and architectural fees have an immediate payback—even before construction begins.
The best part? Because the whole project is financed beforehand, it can be done with as much or as little out-of-pocket expense as our clients want. “All the homeowner needs is about 10 percent of the new project cost in equity,” Diebold says. “That can be in the form of savings, equity in their current home, or other investments.”real answers
With integrated service, we were still left with one key unanswered question: How do we help those who aren't sure what they can or should do? For this, we developed a focused service, turned it into a product, and called it The Reality Check. For $300 to $500, depending on distance, we can deliver in less than three hours one or two design solutions, along with ballpark cost estimates and some real estate market data. The Reality Check can be purchased online or given as a gift. We've even auctioned the service for charity.
Of course, this is just the tip of the iceberg. To really start serving the other 98 percent, we need a movement. As a profession, we need to collaborate with each other and the rest of the building industry to develop better and more affordable ways of delivering design. Let's end the days of proprietary information and start sharing.
John Gavin Dwyer, AIA, is a founder and principal of Shelter Architecture in Minneapolis. He also teaches at the University of Minnesota.