The I Love CVille Show With Jerry Miller! - Bo Carrington Joined Jerry Miller Live On The I Love CVille Show!

Episode Date: June 25, 2024

Seven Development Principal & BlueSky Property Management Partner Bo Carrington joined Jerry Miller live on The I Love CVille Show! The I Love CVille Show airs live Monday – Friday from 12:30 pm �� 1:30 pm on The I Love CVille Network. Watch and listen to The I Love CVille Show on Facebook, Instagram, Twitter, LinkedIn, iTunes, Apple Podcast, YouTube, Spotify, Fountain, Amazon Music, Audible and iLoveCVille.com.

Good Tuesday afternoon, guys. My name is Jerry Miller, and thank you kindly for joining us on the I Love Seville Show. It's great to connect with you through the network. That has been a passion project of ours. We launched this network, I don't know, what, eight, nine years ago, Judah? I'd have to check LinkedIn for the exact date. But we did it for the reason of bringing attention to some of the passions that we're a part of, whether it's real estate, whether it's connecting business owners with financing,

helping broker business deals. And what's happened with the network is it's just kind of taken off. We just enjoy having conversations about Charlottesville and celebrating what's awesome about Charlottesville, highlighting the trials, but celebrating the tribulations as well. Judah Wittkower is the glue guy. I like to give him some props. Sometimes I'm a little hard on Judah, and that's just my nature, Judah. I apologize. Very alpha in personality. I apologize. Every team has a glue guy, a guy that helps the team get to victory lane.

Where stats don't show up in the box score, perhaps, that's J-dubs. No victory happens without Judah Wickauer on this team. I sincerely mean that. Judah, if we can go to the studio camera and then a two-shot and welcome Mr. Bo Carrington to the show. I've been, Bo Carrington to the show. I've been, Bo, super pumped about this. I've been watching you from afar and what you've been

doing and just been so impressed. I'm going to get out of the way and pass the show to you and introduce yourself to everyone that's watching the program. Sure. Well, thank you for having me today. You know, I'm a Charlottesville guy and so it's really fun to be on the I Love Seville show I grew up here in Charlottesville and I went to Covenant school growing up and and certainly have nothing but great things to say about that community and then I went down to school at Duke University which obviously wins me very little friends very few friends here in Charlottesville, but I was lucky enough to come back to Charlottesville and go to Darden, so that's certainly what

I highlight. I had a great experience there, and I'm grateful for that. So professionally, what I'm doing today is running Seven Development, which is a small development company here in Charlottesville. We build small retail projects and small apartment projects, work kind of around the state, but certainly love to work locally if and when we can. Highlight some of the projects, and I'll highlight some of the questions that have already come in that are coming in now for you, but the show is about you. Give us some insight into maybe what

you're working on. I can't even go there yet because I need to talk about the non-work stuff. I live here in the county west of town and I have five kiddos ranging from 10 down to one years old. He's got a basketball team, guys. They're great. And as we were just joking about before the show, certainly the credit goes to the wives for keeping us on the rails with all the busyness and the craziness of having kids. But three of those, the older three, have been in county schools over on the west side at Ivy Elementary now. And we have a fourth headed there next year for kindergarten. So we'll have, we'll send four onto the bus every morning. And, uh, and then we've got a little, uh, like I said, one, one month or a 18 month old at home. So, um, they certainly keep me busy, uh, love coaching them in sports and, and spending

time, uh, with them as much as I can. But, uh, I know we need to now circle back to the professional stuff. Um, and, uh, I failed to mention, you know, kind of my work on the Blue Sky property management side. I'm business partners with Jeff Bloxham there. Jeff is certainly the property management guru, and he runs the show. But I like to think that I can bring something else to the table with him. And we've got a great team over there. It's grown a lot recently, which we're really grateful for. And we are in the heart of busy season at Blue Sky. It's turn season and certainly

keeps everybody on our toes. You guys, in a lot of ways, Blue Sky has become a market leader. Dabble in this space here, I would imagine Blue Sky and Real Property, the two market leaders here in this region, which is so impressive. I want to talk property management. I would imagine Blue Sky and Real Property, the two market leaders here in this region, which is so impressive. I want to talk property management. I want to talk development and real estate. We'll open up the questions that are starting to pour in right now. How'd you get into the development world? Sure. Yeah. So I graduated in 2008, which was that awesome time when the market was going down a thousand points a day and it was a hard time to get a job. So I got a job through a family connection out in Houston, Texas,

doing development in a small shop, and we primarily did single-tenant retail deals, so think banks, fast foods, pharmacies. And I was a part of a small team out there, so got to do lots of different things, some that I had no business doing, but certainly also was the low man on the totem pole. And that's the way it should go. So got into the development world there and then ended up dating long distance my now wife, Carrie,

who was in D.C. at the time, and ended up taking a job with Eden's in Bethesda, Maryland. So lived in D.C., did the commute across Chain Bridge up to Bethesda, and worked for Eden's while we were doing the Shops at Stonefield project. So that was a really fun one. I mean, I don't know how many years that was in entitlement, but it was something like 20 or 25 from the very first iterations of that project. And it was fun to be on the team. You know, there were a lot of teams that came along that couldn't get it done or didn't get it done or walked away from it. And so it was fun to be part of the team that actually got it done,

that brought it out of the ground. And, you know, it's fun to visit it now. I mean, it's a trophy property. I mean, it's absolutely gorgeous. We talk about it often on the show. Talk to us, maybe give us the flipbook of that. Why could a lot of teams not push it over the finish line or even start the project? Sure, yeah. I mean, I think, to your point, it's such a high-profile project, right, and it's at such a high-profile intersection that it was really important to a lot of different stakeholders. And it's

certainly in the county, but it's on the border with the city. And so, you know, you have two jurisdictions at some level having their hand in there. And then it's just a big project. And Charlottesville, I think, over the course of that entitlement effort was kind of coming into its own and growing a lot. And, you know, the neighborhood model district zoning is challenging. And so there's a lot of different stakeholders that you're trying to appease. And we always laugh about, you know, sometimes my friends will joke with me about how they don't like the circulation or they don't like the way the layout is done. And I like to joke with them that, you know that certainly that was not our decision at Eden's. It was a collective community decision

at a wide level. For better or worse, it came to fruition like it did. Certainly it has its flaws and doesn't work perfectly, but it's been fun to see that mature. Certainly some of the retailers have turned over, but I think it's coming into its own with sustainable shops that people love going to here. A hundred percent. A hundred percent. So you cut your teeth at a small shop in Houston. You get even more experience at Eden's. You got this experience with Stonefield. How do you then come to Charlottesville and Alamo County to raise a family? And then how do you then come to

Charlottesville and Alamo County to get into business for yourself? Sure. Yeah. I think at the high level, my wife Carrie and I wanted to live in Charlottesville, right? That's the classic story and probably one we can get into when we start talking about the zoning in the city in particular. But, you know, it's a great place to live and we wanted to live here and raise a family here. Candidly, when I started looking at that, I don't think I could find a job that I wanted. I might have been able to find a few jobs, but not that I wanted to do. Inversely, I couldn't find the one that I wanted, and so I decided to create one and see if that would work. I think I was at a point in life where we were able to live inexpensively

and buy some time in hopes of being able to establish ourselves. And I've been really grateful and fortunate to have that come to life. And I've been working for myself now for 11 years and have a ton of fun doing it. What was entrepreneur life or shot caller life, self-employed life, whatever you want to call it, was that always the life you knew was for you?

No, I don't think I ever was one to kind of as a young guy say, hey, this is what I want to do, and I've had that mission and that passion since day one. I mean, we have guys that we all know that from the time they're five, they want to be a doctor or whatever job you might pick. And I don't think I found myself having that, but real estate, I love it. One of the reasons that I love it is just the ability to connect with so many different people in so many different roles. And so for me, that might look like, hey, I'm meeting an asphalt contractor on site early in the morning and then going to lunch with a banker and then meeting with some local politician in the evening.

And those are folks from really different walks of life, and they're different conversations that we're having. You're talking to some about high-level financial stuff, and then you're talking about local politics. It's kind of this intersection of construction and finance and a little bit of local politics baked in there. And so sitting at the confluence of all of those things, I really love. Development in Charlottesville is no easy task. I'm going to start open-ended.

Talk to us about getting into the game in a market like Charlottesville, which is like a small town with such a big personality. I was having this conversation literally this morning. We have this, to use your word, this confluence of high-level education with high-level affluence with the politics piece, with the development piece, with the landlocked piece, with the politics piece, with the development piece, with the landlocked piece, with the labor piece, the financing piece. It's just, I find it exhilarating. That's why I was looking forward to this interview with you.

Talk to us about launching a development firm in a place like Charlottesville, Virginia. Sure, yeah. It is a hard place to do development, and I think increasingly, you know, the more reps you have, you start talking to folks in other municipalities, some of them far-flung. You know, we can talk about the East High Project. At some point, we had projects, partners from down in North Carolina on that one, and so trying to orient them to the way that Charlottesville works, it can be a challenge.

And I think everybody knows that. And it's a reality of the local game. My very first projects, one of them was over in Harrisonburg, and so that was obviously a different set of challenges in that market. That was a retail project. And then locally, at the same time, back in 2015, 2016, was doing a little townhome project that we ended up selling to the Southern Development guys. So worked with Charlie Armstrong really closely and consider him

a close friend and just a really talented business guy as well. So ended up kind of doing some of the entitlement work on that townhome project over by Carlton and Carlton. And then they brought it out of the ground and, you know, it was a joy to work with them. So those two projects really kind of like helped set up shop and were kind of the means to the end, at least on the front end. You got Todd Rath watching the program. He's in real estate. He's also the owner of Blue Toad Hard Cider. Kevin Higgins, one of your counterparts on the, is it football, Kevin? He says, Bo is a great coach.

His players are very lucky to have him. We've battled on the football field many Saturdays. Great season. Go Chargers. Mr. Kevin Higgins watching the program. John Blair watching the program, and Stanton, we love what John watches over on LinkedIn. All right, so I'll throw, you touched on it, you brought up the East High Street. I think you got a lot of, you were in the news cycle

for quite a bit at East High Street. I'll get out of your way, set the stage for that East High Street project. Yeah, i much prefer to stay out of the news i know you do you do mystery very humble by character no uh you know that project was um we knew it was going to be a challenge when we started it right and that story starts way back in in april of 2022 and um i have a great relationship with the Wood family think really highly of them and just find them them I won't say easy to work with I think they they have a a they're just so sharp right and they're honest and that's what I really appreciate about that relationship is that you know we can we can say what we're going to do and then do it and follow through and there's some trust built there and so when I started having that conversation with Wendell and Hunter

about the East High Project, we knew it was going to be a long road. We knew it was going to be complicated. I don't think we knew it was going to be as long and as complicated as it turned out to be. And it was fraught with some challenges, right? At the high level, you see a 20-acre site on the river in the city. It's got some pretty flexible zoning on it, and yet there's a ton of engineering problems.

And so that's where we started was on the engineering side. And, you know, we worked really hard to come up with a plan that would both deliver some density that 20 acres requires with great zoning on it, but also would be respectful of this awesome asset, which is the river and the trail right there. We put together what we thought was a thoughtful plan and a good plan. It was for about 250 units, all kind of on the high side of the site away from the river and um and we started pushing that through the city entitlement process and it became very clear uh very quickly that um that plenty of people disagreed with that and and um i think i always tell people that one of the things that we learned on that project

was that I didn't fully understand and fully grasp the connection, the deep sense of connection that some people in this community felt to that particular piece of dirt. And that stems from a couple places. One of them was back to the circus grounds days, right? So lots of people around here grew up going to the circus there, and there's some fun memories there. And then another part of it is just kind of the way that Wendell had not enforced any sort of boundaries, and that was a gift, I think, to the public.

A lot of people used that parcel as access to the river or access to the trail. And that was great. I don't think there was no harm there, but it built up this sense that it was quasi-public or public, and that was not the reality. And then more recently, obviously, you can layer in the Ravanna River Company and what they're doing, and Gabe and Sonia have just done an awesome job of kind of getting this community to engage with the river, getting them on the river in a paddleboard or in a kayak or a float or doing their concert series, and so there's so many people who have these fun memories, these touch points with that piece of dirt, and that was not part of our analysis at the front end. And so I don't want to neglect kind of the private land rights component there

because I think that's important. And yet it was very clear to us that there were a lot of people that felt very passionately about that piece of dirt. And so, you know, you kind of have a collision course, right? There's this entitlement process that's going through it. We've spent a lot of time and a lot of money trying to figure out a plan, and it's not very popular. We drew it up as a buy-write plan, and that was very intentional. And so on that

collision course, I really have to give props to Sam Sanders and James Freeze at NDS. Sam Sanders, city manager. James Freeze, now an assistant city manager, was head of neighborhood development services. So we started having a conversation

They watch the show. Well, if they're on, good job, guys. You know, again, think really highly of both of them. Found them to be honest and have integrity and be full of character. And those were the things that ultimately won the day, right? We took what was like really a lose-lose situation where we were, I think, headed to some sort of legal battle. Because, you know, it was a contentious process in some ways. It was one that people felt very passionately about.

And yet then we got off that course through these conversations and found what I think was a real win-win with the city buying the property. So from my vantage after the project, I think that was a total win-win. I think the city should own that piece of property. So, you know, from my vantage after the project, I think that was a total win-win. I think the city should own that piece of property. It's got a ton of waterfront on it. It's accessible to a ton of people. And I'm excited to see what happens in the long term to that. But I don't know if you've been down there recently. It's awesome right now. So Gabe and Sonia are doing their thing at their Vanna River company. Certainly Hogwaller Brewing right there is new and exciting and delicious. Yeah. Sugar Bear. Sugar Bear. Which I believe you own, that real

estate. Is that right? We can talk about that. I bought that parcel during the course of the Zero East High process and did start talking to Emily at Sugar Bear about putting her shop there. Ultimately, it became clear after the city bought the property that Gabe and Sonia really needed a place that they could call theirs. They're leasing that property from the city now, just like they were leasing it from Wendell. But they really needed a place that they could call theirs and own. And so we recently closed on a transaction where they purchased it.

Oh, fantastic. It's the Ravenna River Company now. They're the proud new owners of the former Double Horseshoe Saloon. Yeah. And Sugar Bear, I believe, is reopening tomorrow in their brand-new kitchen and production facility on site, which is going to be exciting for them. That's awesome.

So that's some fresh news there from Mr. Bo Carrington. I think it's good news. Okay. I think that's great news. I think that's fantastic news. What did you learn from that entire process? This is what I saw from our vantage point. I like to follow the news closely, love having conversations with stakeholders like you. I learned that

you were very sharp and astute. And I watched you do some assemblage. I watched you navigate political headwinds, community feedback and headwinds. I saw you really be, you were right in the middle of all this. And you were navigating it, I thought, extremely well. I would imagine that this project, maybe it didn't go exactly how you had envisioned, but, you know, a lot of times with stuff in business or in life or in sports, the stuff that doesn't go exactly as planned is what we learn the most from. Sure. Yeah, I think that's all astute and good points. I mean, it certainly was very different. You know, never in a million years could we have suspected that the city of Charlottesville would come in and buy that property, right? That was not on the table. It was not part of any sort of

development plan or exit strategy. Especially at a time when the city of Charlottesville was chomping at the bit for more housing density. So it almost in a lot of ways from our vantage point contradicted what the city was trying to do with at the time the draft zoning ordinance. Now it's the new zoning ordinance. They were doing all this policy and years of consulting fees, community feedback, multiple sets of counselors to try to figure out a way to bring more housing density to the market because the thought process is more supply stabilizes price points. So it seemed like exactly what you were trying to do or were trying to do fit exactly what the city was to do or were trying to do fit exactly what the city was looking for at the time. Yeah, we figured some of that. And there was a sense of,

hey, the zoning is in place for this and, you know, for a ton of density on that property. And candidly, it was, you know, we were kind of scoping it for 250 units and I think by a math exercise you could have fit way more density on there. But I think if you're going to ask what I learned it was just the value of being able to listen. It would have been really easy to sit back and say hey we have a buy right project, we're going to jam it through I don't care what anybody has to say about it.

And I again again, think that that would have been a long, hard battle. It would have resulted in a project that would have been unpopular, which, you know, I don't think you're ever going to please everyone. There are going to be some people whenever you're building any sort of building that don't like it, right? They, you know, whether for whatever reason, they don't like the color you chose or they don't like, you know, a big building in their backyard, who knows? Change is hard. Change is hard. But again, arcing back to some of that stuff I was talking about with this passionate connection to that piece of dirt, it was just clear that that wasn't the

right project at the right time on the right piece of dirt. And so you have to pivot, right? And you have to be able to bring a little bit of humility to the table and say, hey, maybe this way that I thought was right is not right. And again, I mean, I think we came up with a really pragmatic solution. I think rather than taking the city. Again, I give the city props for not taking some sort of obstructionist approach or taking some sort of legally questionable approach that we would have had to arm wrestle about or something, and instead found a win-win. And so, again, I'm really excited that the city owns it and looking forward to seeing what that brings long term. I've got so much I want to cover, not even on this topic, but just the zoning in general

and get your take on it. A lot of comments are coming in. This one's coming in from Danville. Travis Hackworth watches the program often. He says, anytime you're dealing with a property with strong connection, it's tough balance between public, private use and access. We're dealing with that on a large project here, 23-acre riverfront white mill project. Ultimately, those struggles and back and forth end up with an amazing product

in the end. He's loving the interview. Over on LinkedIn, we'll highlight Jonathan Nelson, the Senior VP of Development and Asset Management at Anchor Health Properties, watching the program right now, giving you some props. LinkedIn is pretty engaged over here. I think that's the influence of Mr. Bo Carrington and the circles that he runs in. Vanessa Parkhill of Earliesville watching the program. You have multiple five, six elected folks watching Bo Carrington here on the show. I'll throw last question on East High Street. Sure. You know, you're a business guy.

You're a community guy. You're a family guy. And I saw that with this project coming with a win-win-win outcome. You know, I think the city wins. Actually, win-win-win-win outcome. The city wins here. The community wins because this is now a park. I think the woods won here. I think you win as well.

Can you put in perspective, we see how the city wins. We see how the community wins. Can you put it in perspective or give us a glimpse of how 7 Development and the woods also went here? Sure. Again, I don't think that anybody could have scoped up that sort of outcome at the start. It wasn't on anybody's radar. Wendell wanted to sell a piece of land. He's owned it for a very

long time. And over the years, the rules about how to develop that, whether it be on the federal side of floodplain FEMA stuff or down to the local side, they changed, right? And you used to be able to do things along the river that you can't do today, and probably rightfully so. So at the high level, you know, it was a business transaction that Wendell and I worked out where he said, hey, I want to sell a piece of land, and this is what I think it's worth. And we went kind of nose down to the grindstone trying to figure that out. And I think, if I'm very honest, I don't know that there was a very high level of confidence on the front end, right? There were lots of problems to be solved on that piece of dirt. And I think we solved them, right? There are really talented

engineers that were working on it. You're working with FEMA, certainly. You're working with the city very closely. So you have lots of really talented expert people trying to solve these problems. And you know, if there was one thing that was a little bit disheartening, it was the suggestion that there were not experts at the table, right, that somehow FEMA was being coerced into a certain plan or something. And as much as, you know, you'd like to have a federal agency willing to bend to your wants and needs, that's not the way it works. And so, you know, the engineering was sound.

And I think, you know, it's mostly math exercises. There's very little subjectivity to it. And so there were some people shooting that down. But, you know, there was a lot of care and thought and time and money spent on that engineering exercise. And then, again,velopment wins because, you know, we were able to successfully exit a project that looked headed for a long, drawn out, expensive fight. And, you know, it was never going to be contentious to the point

where anybody gets really upset. But it was just not on a good path. And I was really grateful for that exit ramp that was offered, right? Because you get two years into a project and you've spent a lot of money on it and a lot of time and your options start to dwindle and your ability to, like I said, pivot and listen, that starts to dwindle too, right? And so at some level, you have to go create the economic engine that you've spent time trying to produce. But then this was this great exit ramp that, again, 7 Development came out a winner for sure.

I think Wendell came out a winner because he sold his land at the price that he wanted to sell it. Certainly, I think the city, I just am excited. I think that's going to be an awesome long-term asset, right? Like whether you agree or not with the price that the appraisal came up with or something, I don't know. I can't tell people whether it's worth that or not. But we were able to find common ground on that. And I think there was a little bit of pessimism on that side, but we were ultimately able to close that gap and get to a place where everybody said,

hey, this is the best outcome for this project. Olivia Branch, watching the program here in Keswick. A lot of the development community on the show right here will get off this topic, and I just want to throw an open-ended topic to you now a new zoning ordinance years of getting to this point we talked a few weeks ago as of a few weeks ago and Sean Tubbs had great reporting on this as well 15 projects pursuing the new zoning ordinance of those 15 we've been told by the folks literally in the know, four of them are legitimate. The rest kicking the tires.

We highlighted what we think is going to be the first one on this talk show with Roger Voisinet and Richard Price. Any viewer and listener that wants a master class on bringing a development project to market with the new zoning ordinance, listen to the show. We did about 10 days ago or two weeks ago with Roger Voisinet and Richard Price. It was fantastic. Your take, maybe it's a State of the Union on the new zoning ordinance from Bo Carrington. Sure. First of all, it's just a ton to digest, right?

It's 450-some pages, I think, and obviously the work product of a lot of different experts and different community stakeholders and beyond. And our business moves so slowly. I don't know that people always grasp that. They see a shovel in the ground, and they think, hey, I'm going to drive by this in 9 or 12 months, and it's going to be done, and that seems fast.

And yet that doesn't recognize kind of the 12 to 18 to 24 months of entitlement effort prior to that. So it just moves really slowly. And I don't know that we're going to really have a ton of clarity for another, you know, 12, 24 months. From today? From today. Yeah, because I think, you know, these plans are starting to trickle in. you know, there's a lot of digestion that has to happen of the new ordinance, and then, you know, you got to give your engineers time to go solve those problems and come up with the plan that meets the new code, and so it's just a slow roll. At the very highest level, right, it's right back to what you were saying is, you know, housing is too expensive in Charlottesville. And it comes back to the economic...

Is that the case? Do you think that's the case? I think there's a general consensus of that. We need to be a more affordable city. And it is economics 101. You were talking about supply and demand. And it's real easy to say, hey, housing is too expensive. And maybe even villainize the greedy real estate developer or the greedy owner or landlord. And yet I think ultimately we have to come back to the supply side.

Right. And so I am excited that that supply challenge is addressed in this new ordinance. I think I don't think anybody would say it's perfect, right? Even the counselors that voted for it, I don't think would say it's a perfect ordinance. And that's okay, right? We can tweak it downstream. And I think that's fully their intention. Councilor Pickson even highlighted this. He said, this is a living, breathing document that will forever evolve. Yeah, which is good, right? That's problems that come up should be fixed. Obviously, in the development community, what we're really interested in

is knowing the rules that we've got to play by. Right. And so to the extent that they're changing often, that's hard. Yeah. But certainly there are going to be challenges that come up and then questions about how to bring this thing to life. I think, you know, obviously the two highlights, I think,

are the inclusionary zoning piece where we've got to deliver the affordable units and then the zero parking, the no parking minimum. Those are two of the highlights to me. On the inclusionary front, right, we had a lot of discussions about what the percentage of units should be, whether it should be 5% of the total units or 10% of the total units. Then we had conversations about what that level should be. Should it be 60% of AMI?

Should it be 80% of AMI? And then how long, right? Like how long do those units have to be affordable? Should it be 30 years to match up with a lot of conventional financing? So let me offer a little color here, and then I'll get out of the way. And John Blair says you're doing a phenomenal interview right here. He's watching on LinkedIn. He says, with the current NZO, New Zoning Ordinance, a development project that is 10 units or more,

10% of those units have to be affordable tied to area median income at the 60% level for a whopping 99 years. Explain to me, just trying to learn from you, how someone can get financing for a new project when 10% of the project, if you're doing a 10-unit project, has to be tied to AMI, 60%, for 99 years. Who's going to offer financing for something like that? Yeah, I don't think we have a very good answer for that yet. I'm sure it'll get done. There's a development community here that's really smart and really talented. And it is an efficient market, right? We've got a bunch of people that are going to bring a lot of resources to try and answer that question. But what I was going towards was we had

conversation about what percentage of units should be there, what AMI percentage it should be, and then how long it should be. And ultimately, the counselors decided that it should be the mix, which is the most onerous on developers, right? What John was referencing, the 60% AMI for 99 years and a full 10% of the units. And so I don't think anybody has a good answer for that quite yet. In my sense, if I have to guess, is that it creates a lot of strain on pro formas. I don't have a ton of confidence that anything that is small, so I think 10 units to maybe 100 units. Pencils out. I don't think it pencils out right now.

And that may evolve, right? AMI, it changes every year. The 2023 HUD number was $124,200 family household income for the Charlottesville-Fort Pratt. $124,000 and change family household income median in this area. Right. But we're asking, you know, these pro formas to do a forward look, and we have no clue what that AMI number is going to do. It could go down, right, and then your rent caps go down.

Sure. Or it could go up, which has, you know, been the trend recently. But you don't have any insight into what that's, it's total non-controllable, right? And so when you are giving 10% of the units, you know, doing this inclusionary zoning piece at 10%, you're right. Yeah, you have to have a ton of scale to be able to cover that 10%. And so my personal opinion is, yeah, that the smaller projects are going to be really hard. I don't foresee very many of those being done in the city in the near future.

I 1,000% agree with you. I see some of this news already going. Just a guess. No, I think you're 1,000% right. The NZO is going to have an impact to the extent of maybe some basement apartments, some granny flats, some conversions of stuff that's already structured, maybe some ADUs in the backyard. But if anyone prices out an ADU in the backyard,

you're looking at a quarter million to $300,000. The return on investment for putting a $250,000 to $300,000 ADU in your backyard is never, ladies and gentlemen. You would be doing this maybe for convenience to get a family member there, but if you're looking for financial gain, it's just probably not going to happen in your lifetime. I'll throw this to you here. Is the new zoning ordinance going to create, in your vantage point, any kind of price stability or affordability? From my vantage point, it makes of price stability or affordability, from my vantage point, it makes

the land more opportunistic. If the land is more opportunistic, it has more value, means acquisition price is more expensive. If acquisition price is more expensive when the model is created, then you're going to have to come to market with something that's at a higher price point than if it wasn't more opportunistic. A great example of this is 303 Alderman Road in the Lewis Mountain neighborhood. We're talking about something that was marketed by a fantastic agent, Luke Cole of Logan Foster, at a million dollars in the Lewis Mountain. It traded for 835, fantastic builder, Evergreen buys it. I'm going to be watching very closely to see what Evergreen does with this project. If it is density, more units,

or if they just take an 1,800-square-foot rancher that needs tremendous TLC and double the size, finish the basement, put new roof, do HVAC, and create a posh and tony house in a posh and tony neighborhood. Right. Yeah, I don't have the answer yet. I don't think anybody that tells you they have that answer I think is making an educated guess at best.

But one of the challenges, right, is that we talk about this increased density. Well, in many cases, especially in an apartment developer's world, is that that density is achieved by going vertical, right? And so when we go vertical, generally, you know, above three stories, we start getting way more expensive every square foot that you build. And so that extra density comes by going vertical, which gets more expensive every per square foot. And so I don't know if it translates to affordability in the short run. I think, yes, overall, the supply growing will help stabilize, will hopefully bring prices down or at least not make them go up as fast as they would have. But I think it's important to remember that that density comes at a cost on the construction side. And then just to

tack on, on the land side, on these projects, oftentimes the land is just such a small piece of the overall project budget, especially if you're going vertical, right? And so, you know, a percentage creep on the hard cost side hurts you a lot more than a percentage creep maybe on soft costs or on land. How about this that's come in via DM? What's the best example of your opinion of a vertical project in Charlottesville? A vertical project in Charlottesville? We don't have that very many tall buildings. What are we probably looking at? The flats or the standard on West Main Street? Yeah. I mean, and this new... Maybe what Chris has done at Dairy Market? Yeah. Dairy is pretty vertical. I think that's as urban as a project as we have, and it's a beautiful building.

And, you know, we can get Chris on the show to tell us how expensive it was. I know it was an expensive project, right, and the rents that you have to get behind that, they're high. Just math exercise. But it's a beautiful building. It is beautiful. And it is, you know, probably a great example of going vertical. But yeah, it gets more expensive, right? More stops on your elevator, more drywall, more fire requirements, all the things.

Did you follow how he tried to bring phase three, dairy market, and he caught tremendous – I mean, he just cut to the chase. It was a lot of negative feedback from the 10th and Page neighborhood, and he chose to put the project on hold. And I found that almost flabbergasting because we want the added density and we want more housing to stabilize prices. But I, and I've said this previously on the show, but we don't want it here by 10th of the page, or we don't want it down by the river with your project. We can't cherry pick the projects, right? It seems like that's what a lot in the community are trying to do. Cherry pick where the projects go. Sure. Yeah. I mean, it's probably one of those conundrums where, you know, you're never going to have somebody say,

hey, I love that location, right? There may be a few and far between. Maybe that might come from, you know, a nonprofit or someone who's like studying accessibility and walkability, but, but it's not going to come from the community. Generally, the passionate responses are going to be folks that live near it that don't like that location, and that's a challenge, and, you know, we do need more housing, and it's really easy to say that, and yet when it becomes tangible in the form of a plan on a certain piece of property, it's really easy to shoot it down because you don't like certain elements of it. But yeah, when it becomes tangible and you show somebody a rendering or some sort of site plan, I think that tangibility just translates to the potential for a lot of negative feedback.

This coming in... But Chris is a great listener. He'll listen and he'll get it done. Oh, I mean, I already had huge respect for Chris Henry. He's a Stony Point guy's development. And then he goes and he sits in front of the community and is just taking all this feedback. I mean, it was tough. But that just shows you that he's a high-character guy.

I mean, we want developers like Bo and Chris Henry doing projects in town because, I mean, they live here and they want what's best for the community. This is coming via Twitter, via DM. He's number one in our family. He goes by the nickname Deep Throat. He's watching in Montana. He summers in Montana.

He said, so Bo could be right and that Charlottesville is not expensive or Bo could be wrong. I'd be curious what he thinks about what sort of development can really compete with student housing. Student housing seems so much more profitable than any other form of housing, and that type of housing is cannibalizing a lot of stock on the market. Certainly as UVA is expanding its student body, it's doing that.

I remember I went to UVA 2000 to 2004. First job, we talked about this all fair, was working at the sports department at Daily Progress for Jerry Ratcliffe, who was here this morning. This guy was a star lacrosse player at the Covenant School. And one of my first gigs was covering lacrosse at the Covenant School, where I think you had like five goals and three dimes, and you guys won. I mean, it was just, you stood out. You picked a good day to come, Jerry. No, you stood out on the lacrosse field. Anyway, so the question from him is, if student housing where landlords are basically maybe taking advantage of wealthy mom and dads who will do anything for their students as they go to UVA with high rents, and with UVA expanding its student body and not requiring all those students to live on grounds, there maybe is a push for second years to live on grounds. Why would landlords just go after student housing to maximize models as much as possible?

Sure. You know, I mean, yes, UVA is obviously the engine, and there is, you know, that's a huge component of the rental market. You know, I have some concerns about the current student housing that is on the fringe, right? You know, maybe it's way down JPA or something like that. You know, the students want to be where they want to be, and you can't control that. And if you happen to be where they want to be, then they will certainly pay to be there in a way. But you can't just, there's not an endless supply of students. And, you know, I think the vast majority of UVA students, you know, they want to be close, they want to be walkable, they want to be close to their friends. And there's just

really, you know, limited options there. You know, in particular, a lot of that land is covered by the BAR, right, and so it's a historic district, and, you know, you tack on, we were talking about long timelines, you tack on another year. We just got a project on Wirtland Street, 13th and Wirtland, worked with the BAR really closely, but it took a full 12 months. And design developer, I know you're good friends with, Kevin Schaefer over there, he took it through and he did a great job. But it's just a long process. And then you can start on your site plan.

Wahoo 89 is watching on Twitter from Gallatin, Tennessee. Comments continue to come in. I got some of my own, and then I'll get to you guys, viewers and listeners, and we're also mindful of this man's time. Which jurisdiction locally would you find the easiest to navigate with projects? Well, that's a good question. You know, I don't want to hurt anybody's feelings. Yeah. But right now I would have to say Albemarle is probably at the top of the list, but not for any other reason other than Charlottesville, there's just so many unknowns, right?

We don't know lots of things. This new zoning ordinance, we think it's really long. We know it's really long. We think it's really thorough. It's produced by experts over a long period of time, a lot of study, a lot of stakeholders, a lot of iterations. But when the rubber really meets the road, when you're working on the engineering, you're working on the architecture, there are questions that come up, even in the best laid plans. And those gray areas are what concern me right now about just wasting time and money trying to solve them, right?

So we hope that we have a really thorough document, we think. And then where there are holes, because we know there will be holes, it forces staff to make determinations, right? And that's just the part that staff's going to have a tough job with that. And there's probably going to be a lot of it on the front end just because we don't know what we don't know yet. I was thinking about, you know, I serve on the Albemarle County Board of Zoning Appeals, and I would be really interested,

and I'm going to be really interested, to watch the city Board of Zoning Appeals because ultimately if there are enough of these determinations, you know, we hope that they're being thoughtfully considered and well-reasoned, but yet that's the place where you end up is at the Board of Zoning Appeals when these gray areas turn into squabbles about how a gray item should be handled. How about this comment?

When people talk about their regulatory costs, often they are conflating many different kinds of regulation. Which is the most difficult for you, Beau? Is it the zoning? Is it building code? Is it just the speed, slowness of response and simple things like inspections or ministerial reviews like site plan reviews?

What's the most challenging? That's a good question. I mean, each municipality would come probably with its own answer there. You know, some municipalities have it dialed in and their process on the engineering side is more quick than another one. But ultimately, I mean, I think the time is really what people don't have, you know, maybe the appreciation for is just, you know, the time is money, right? And we're taking risks with capital. And you're making a bet that you can solve a problem and come up with a project that works.

But that starts, you know, generally on the engineering side. And then it flows into the architecture. And maybe that's a good example of saying, hey, I still have X number of questions on my engineering side. When am I willing to take the risk to pull the trigger and start spending money on the architecture side? Or when am I going to start retaining a GC for pre-construction services? When are you willing to risk that capital? And the more unknowns you have, the slower you're going to be on that. What is, two more comments here for you.

And guys, we're not going to get to all the questions and comments from Bo Carrington, popular guy here with a lot of them are coming in. 123, so we've gone 53 minutes here. Time flies here, Bo Carrington. I had a conversation at a real estate event last week with a guy that buys multifamily across the Commonwealth. And he, I won't use the name,

but he mentioned to me, he said, he doubts he will buy multifamily in Charlottesville or in this area because the yield just is not there. Right. The yield just is not there. Unpack that for me. And what are your thoughts on that comment? Sure. I'm curious on what you got to say. Yeah. I mean, so ultimately it comes down to, you know,

I don't know this gentleman, but what, what his acceptable yield level is. And everybody has a different cost of capital. Everybody has a different projection on rent growth for certain municipality. And so that's, everybody's doing a little bit of their own machinations behind the scenes, but everybody's trying to get to around the same number, right? That's why you see these really tight spreads on cap rates. You know, everybody wants to earn six, seven, eight, nine, 10% on their money, right? And, and yes, there's some variability in there in terms of product type or location. But everybody's doing pretty similar math exercises.

You know, I think there's a case for to be made that, you know, yeah, people love to own stuff in Charlottesville just to own stuff in Charlottesville. Yeah. Trophies like, yeah, maybe I went to UVA and I don't live here, but I want to be able to drive past something that I own when I come back for a football game. And so the market, it's efficient and those folks own stuff here. It doesn't mean that they own all of it or that that really wins a day, but I do think that that's impactful here. I mean, people want to own something that they can drive by and say, I own that. What product type would you most invest in right now? I know people are asking your take on commercial. Commercial. So that's a two-part question. Yeah, that's a good question.

I mean, I will say... We don't have the commercial cliff here. I'm not seeing that here like we're seeing other markets. I keep trying to highlight to people on the show, it's just not... A lot of the commercial owners in this market are not having their financing piece refinanced every six, 10, 12 months. A lot of it's, you know, P money, family money, old guard money, or it's no debt on their holdings in this town. But, you know, I'll get out of your way on this.

No, I think that's right. You know, I grew up in this business as a retail guy. And so I watched that sector more closely than others. So when we talk about commercial, there's some different subheaders under there. I don't know the office game very well, but it feels like we've built a lot of office recently, and that's obviously overlaid by a macro-level trend of COVID and beyond. Working from home, hiring. People working from home, and maybe there's the

pendulum swinging back. I don't know. But I guess what I will say is I've been surprised by the resilience of the retail sector. There was a day where we thought, hey, Amazon comes to my house and your house maybe three times a day. But there was a day where Amazon was going to kill all retail and shopping online was going to kill all retail and shopping online was going to kill all retail. And I think we've seen a little bit more resilient retail sector, both locally and nationally, than a lot of people expected. Well said. This interview is fantastic. I could spend another hour with this man, but I'm mindful of his time. Any closing thoughts? Any perspective that you think that should be out there?

Anywhere you want to go? I love the comment that you made earlier in the show that it's easy to villainize or stigmatize like a developer or landlord. But from my standpoint, the local ones, I mean, you, I highlight Chris, some of the other folks that we talk about on the show, these are the guys that we want doing the projects because they live here. And they're committed to making the community, you know, one where he can race his five children in and still love living in the community. Yeah, I mean, I think we feel that, right? All the local development community feels that. We want to bring great projects. And it may not be even that different than, you know,

the guy that wants to drive past his trophy project when he comes to the football game. It might just be that, hey, we want to deliver a project not that's fun to look at but that the community loves because we're here. And so that's a real piece of the puzzle. I think in general, local development turns into long-term holders far more frequently than kind of the merchant developer that's going to come from some other place that's just, you know, likes the numbers and then is going to sell. And not that that's a bad model, but I do think it's a different approach and probably to come full circle, maybe back to

the listening piece. It's one where you're not going to be willing to listen to the community as much because you don't care about the local community as much. Fantastic show. You crushed it, man. Thank you for having me. I really appreciate it. It's fun to be on. It's our pleasure. Bo Carrington, guys, principal of 7 Development. He was sensational today. Judah Wickauer, off camera. He's got another show this afternoon. Thank you, Judah. Three shows for

Judah today. This is the I Love Seville show. We just want to have a conversation about stuff that's going on in the community with people that know what's going on in the community. That's the whole gist of the show. We're back tomorrow with an interview that's tied to public schools

and our guest is Shelly Norden. she is of the SBMA it's an acronym that stands for the school board member Alliance of Virginia and they're offering public school systems an alternative from the Virginia school board alliance we're seeing a lot of public school systems leave the Virginia school board Alliance for this one because they're looking for a more politically neutral council from their alliance. That topic tomorrow. Thank you for joining us. So long, everybody. Thank you.