We completed and started renting Parkview Mountain House in Park City, Utah about a year ago. Construction took slightly longer than we had initially scheduled, but we finished construction under budget, which is always a good thing. Getting our building permits was easier than expected (thank you, Summit County) and closing them out involved as much back and forth as you would expect for a challenging mountain site. I would happily build another project in Park City.

Some of our greatest challenges happened on the legal and financing side. When we acquired the site, we formed a single-purpose Limited Partnership in Utah that was initially owned by one of Globizen's Canadian corporations, and later with two other partners (another Canadian corporation and a New York LLC).

Limited Liability Companies (LLCs) are very common in the US. They offer a kind of hybrid "sweet spot." They offer the limited liability that comes with corporations, but with the option of having the pass-through taxation you get with Limited Partnerships. However, they don't exist in Canada, and so the legal and tax advice we got was to instead form a Limited Partnership. I'll come back to this later.

The first challenge we had was the seemingly simple task of opening up a bank account for the project LP. Wells Fargo, Chase, and others would not accept a Utah LP owned by a Canadian corporation. Too foreign. Too complicated. We finally managed to get one opened with US Bank, and they've been great, but being Canadian still poses challenges. For example, I can't use their mobile app in Canada. And I can't deposit cheques/checks online without first verifying my mobile number. But I can't verify my mobile number because their system won't send codes to Canadian numbers.

The next hurdle was construction financing. It was frustrating to learn about all of the simple and cost-effective "one-close solutions" available to US entities, but not available to foreign nationals. We could have gotten a great rate, and a construction loan that automatically converts to a permanent facility at substantial completion. Instead, we had to finance construction through a combination of equity, lines of credit, and a private loan. Not ideal, but at least the draws were flexible and easy.

Then came our take-out loan at completion. This proved to be impossible with our legal structure and foreignness. So much so that we ended up having to convert our Utah Limited Partnership to a Limited Liability Company, and become "members" of the LLC personally. This is a clean, common, and widely accepted structure for real estate ownership in the US. But in order to do this, we had to have KPMG advise us on how we could do this without triggering a massive tax liability. We were able to figure that out and close the facility. But our year-end tax filings are going to be a little more complicated this year.

In the end, we overcame the obstacles. But it was certainly challenging, more so than the actual building part I'd say. Every time I mentioned that I was Canadian, I came to expect a pause, where the other person would then need to start processing what to do next. As international as the US is, it feels paradoxically insular when it comes to the things I described in this post. But this is how you gain experience. Now we'll be slightly better prepared for our next US project, whatever that might be.

Note: Nothing in this post should be viewed as legal or financial advice. I'm just sharing our experiences.

So, here's what's happening in the Pacific Palisades right now:

A pro-development organization has sued Gov. Gavin Newsom over an executive order blocking duplexes in Los Angeles neighborhoods stricken by January’s wildfires.

Newsom issued his order in July in response to lobbying from property owners in the Pacific Palisades, the coastal L.A. community that was largely destroyed in the blazes. Palisades residents argued that allowing duplexes and spitting [sic] lots into two parcels would undermine the neighborhood’s character and worsen evacuation efforts in the event of future disasters. Following the governor’s order, all the jurisdictions affected — the cities of Los Angeles, Malibu and Pasadena and L.A. County — banned SB 9 rebuilds in high-risk fire areas. The suit includes each local government as a defendant as well.

This is interesting.

On the one hand, there is, of course, a logic to not allowing too much density and too many close-together houses in an area prone to wildfires and where there are only so many roads leaving the community. But on the other hand, it's not clear that this is really what it's all about.

The counterargument, from groups like the one suing, is that this is actually about perpetuating exclusivity, and perhaps even about "cleansing" the neighborhood of households who don't have the means to rebuild in a way that suits the "character" of the place. Duplexes = rental homes. And smaller lots = less expensive houses.

So, which is it?

My view is that this should be looked at from an overall population standpoint, and not from a housing type standpoint. According to 2023 census data for zip code 90272, the Pacific Palisades had a population of approximately 21,438 residents. This is a decline of just over 10% over the last 23 years. (Source: U.S. Census Bureau Decennial Census 2000 & ACS 2023)

On top of this, the number of households has also declined from ~9,319 in 2000 to 8,282 in 2023. So by all accounts, the area is shrinking and becoming less dense. There are fewer residents and fewer occupied homes. This is a directionally good thing if your primary concern is evacuation congestion and the safety of residents.

But then, what's the concern with duplexes and smaller lots? Is the concern that the area might regain its previous population and household count? Is the objective to continue shrinking and reach some more optimal set of numbers? Should there only be 15,000 residents, or maybe even 10,000?

Because if that's the case, then I think a more effective policy would be: "This neighborhood can only support X number of residents and Y number of households, because otherwise people can't evacuate quickly enough in the case of emergency. Once we reach these limits, we will stop processing building permits for all housing types."

When a policy only restricts specific housing types, as opposed to more directly addressing a stated problem, it suggests to me that the stated problem is not actually the primary concern.

Cover photo by Beau Horyza on Unsplash

Before laneway homes were permitted as-of-right in Toronto, many people couldn't imagine them being a viable housing solution, let alone a desirable housing solution. I vividly remember some critics arguing that only people of questionable moral fiber would want to live in a laneway. Toronto's laneways were only suitable for garages, cars, graffiti, and degenerates, apparently.

If you're a longtime reader of this blog you'll know that I've always felt differently. In 2014, I wrote a post calling laneway homes the new loft. And in 2021, after Mackay Laneway House was finished, I wrote that "slowly but surely, we will start to think of our lanes not as back of house, but as front of house." I went on to surmise that, one day, our laneways could even become the more desirable side of a property.

I was reminded of this prognostication earlier this week when a friend of mine, who is very active in the multiplex space, was touring me through one of his construction sites. What struck me is that he said that on every single one of his projects, the highest-grossing suite is always the laneway or garden suite. It commands the highest rent and it's what gets the most showings.

This, of course, makes sense. It's a standalone structure, whereas the other homes in a multiplex building are not. And if you have the site area to do two storeys, these suites can become relatively large — oftentimes between 1,200 and 1,400 sf. Laneways are also intimate and largely pedestrian-oriented streets, so a nice place to live.

But there's some hindsight bias in this obviousness. It wasn't that long ago that most Torontonians couldn't imagine a "house fitting behind a house." It was an unthinkable solution that would ruin the character of our low-rise neighborhoods. Now we have planning policies that not only allow them, but that are, in a way, promoting an inversion in the way our low-rise neighborhoods function.

Toronto's policies allow up to six suites on the "front" of certain properties, plus a laneway or garden suite at the "back," for a total of 7 suites. The effect is that an entirely new single-family house layer is today getting built on our laneways. An alternative way to think about this is that it's like taking an existing single-family house, pushing it to the back, and then building a small "houseplex" in the front.

Ironically, all of these policies were born out of a deep desire to not change the character of existing neighborhoods. It's why no one would dare call these six-unit structures anything resembling an apartment. They are house-plexes, which are just like single-family houses, but with an added plex in the name. Nothing out of the ordinary to see here.

But our neighborhoods are changing and they will continue to change. The market is already speaking in terms of which new homes it finds most desirable. And in the end, that's a good thing. Change and evolution are features, not bugs, of cities. When Toronto stops growing and adapting, that's when we need to start worrying.

Back in 2014, I compared laneway housing to lofts because of the latter's origin story. When manufacturing began to leave cities and warehouses started to get converted to apartments, they were viewed as dangerous, illegal misuses of commercial spaces. It was housing that no respectable middle-class person would want to live in.

Then the opposite became true. Loft living became a symbol of urban cool, so much so that every new apartment somehow became a "loft." I'm not suggesting that Toronto's laneway suites are about to stage a global takeover in quite the same way, but some 11 years later, I do think it's following the same arc of desirability. The things we desire aren't as enshrined as they may seem.

Cover photo by Nikhil Mitra on Unsplash