Baugruppen: A German Housing Model to Bring to San Diego

In the past, I've expressed my longing increased density and housing affordability in San Diego.  One idea I floated was a non-profit developer model, where a non-profit corporation builds housing for sale on the general market, but with a focus on maximizing value and quantity. I have no idea if that's a good plan, and at least one local housing guru, Dave Gatzke, provided some well-deserved skepticism in a comment to a subsequent post.  There are obvious flaws in the idea, but I have remained intrigued with the concept of somehow staying true to typical market forces while still creating housing in a quasi-altruistic model.

Running parallel to the desire for increased density is my interest in improving quality of life based on how we live.  A recent post by Dave Roberts at Vox sent me on my favorite type of journey: the internet rabbit hole.  The post is worth reading.  It discusses how our land use and choice of residences makes adult friendship more difficult.  Roberts does a better job explaining it than I ever could, but the synopsis is that our creation of friendships is predicated on repeat, spontaneous encounters, which are far more likely in walkable, urban neighborhoods.  Of course, many people want to live in such neighborhoods, but San Diego's land use decisions make that nearly impossible, especially for families with young children that want to live in urban areas.

Roberts' first post led me to an older post that he wrote.  In that post, Roberts introduced me to the idea of Baugruppen, a common form of housing development in Germany.  Again, read his post for the details, but the general idea is that a group of people buy land, hire an architect, and design their ideal housing units.  This isn't a commune, and each unit is usually sold as a condo upon completion.  But by cutting out the developer, the groups is able to both lower costs slightly and build a multi-unit building that doesn't follow normal building design.  The group may decide to build a common group playroom, or a central garden, or other tweaks that only work when designed this way.  As described by Roberts, the Baugruppen model fits what I dream about; almost a college dorm shifted to function for adults, even those with families.  Urbanist Mike Eliason wrote a series on posts about the idea: go give them a visit and then come back,  or open them in a new tab for later reading.  Here's another example.  If you want to skip the homework, here is how Roberts explains his ideal Baugruppen:


The building (or buildings) I lived in would be a type of cohousing, which is to say, it would be shared by a group of families who co-owned it. There would be a large common area with a big kitchen, eating space, and lounge, where families could take turns making meals for the whole group. There would be a shared outdoor area with a large garden and stuff for the kids to play on. And each family would have its own (modestly sized) unit, say, two bedrooms, two bathrooms, an office, a kitchen, and a small living room. To reach the individual units, you’d have to pass through the common area, which would encourage spontaneous socializing.
The families who lived in my building would be my friends, basically — a group of us at similar stages in our lives, with common interests and values. (This would include some childless friends, perhaps some grandparents too, just for a nice age mix.) We would share child care, tools, and time with one another. It would be an intentional community.
The building(s) would be modern in aesthetic and built to passivhaus standards, with tons of insulation, natural light, and fresh air circulation. It would have solar panels, batteries, a natural gas microgenerator, a geothermal heat-exchanger, and smart appliances, all networked together by a smart whole-home energy management system. It would create more energy than it consumes. It would have the ability to island itself from the grid in the case of emergency. And it would be located near a transit hub.

In Germany, Baugruppen are an established housing development model, making financing easier and the existence of incentives in many cities favoring these types of projects.  In the United States, there are many hurdles to development of the same model.  Getting down to the broad requirements, a baugruppen requires (1) the formation of a group of like-minded individuals, (2) founding an LLC or other shared entity to handle affairs, (3) obtaining a construction loan, (4) buying land and holding it for multiple years, (5) hiring an architect, contractor, and other professionals to design the building, (6) agreeing upon a design, (7) dealing with permitting and subdivision maps, impact fees, and other entitlement hassles, (8) actually building the place, and (9) closing the construction loan and refinancing each condo unit.  All of these actions are well beyond the skill set of most people.

But I see the value in this model; the question is how to make it easier.  You could possibly hire a developer to guide the project through this process, but that introduces new costs that eliminate the cost saving of cutting out the same developer.  But what if, instead, we pulled in the affordable housing groups? 

Here is the idea.  In California, the "density bonus" law allow increase density and other incentives when a housing project includes affordable units.  Imagine a baugruppen that consists of 7 families.  These are generally middle and upper-class families with good credit and assets able to cover a good downpayment.  To realize the Baugruppen, they retain a non-profit group that specializes in affordable housing development.  The non-profit uses its expertise in developing to streamline the process for the group.  In return, the Baugruppen includes three units reserved for sale to low-income families.  I haven't done the math, but let's assume that the "lost" profit from these units can be added to the overall construction costs in a way that is less than the cost that would have been paid to a developer if this were a typical market-rate project.  In the end, the members pay for the cost of these units out of their own pockets.

What's in this for each group?  The Baugruppen members get the building of their dreams and by including affordable units, they get a density bonus and assistance from a non-profit builder.  The non-profit builder gets to fulfill their goal of building affordable units and their costs would be covered by the agreement with the Baugruppen members.  Once the non-profit becomes experienced, the efficiencies only grow and design plans could be repurposed. The low-income members not only get a place to live, but (and not to sound too paternalistic) they are added to a vibrant community.  The whole project can be built sustainably and in the urban core, also helping the city reach its Climate Action Plan goals.

The idea is scalable to a certain degree, although the community would fall apart once you get another 50 or so units I would think.  With a project of that size, you could have a ratio of 35 normal income members and 15 affordable units.  Each project is small, but the cumulative effect could be big.

Is it a fully formed idea?  No.  But I think it has potential.  Even if any cost savings are wiped out by adding affordable units, I personally would be happy to join in if it meant getting a well-designed house and knowing that my money was going to affordable housing rather than a developer's pockets.  What do you think?