Monday, June 25, 2012

Averting Diaster-One Box at a Time!

Gary Olsen received his Bachelor's Degree in Architecture in 1969 and Master’s degree with Highest Honors in Architecture from the U of I in 1976. After graduation, Gary served two years in the US Army as an officer in the Corps of Engineers with tours of duty at Ft. Belvoir, Va., Ft. Benning, Ga. He was also deployed overseas to the Republic of Vietnam in 1970 where he was the Depot Engineer and Facilities Chief in Danang, RVN, with quarters on China Beach.  Before and after his military service, Gary worked for the Champaign Architectural Firm, Laz, Edwards and Dankert.Gary was licensed as an Architect in 1974 and started his architectural firm, now Olsen + Associates Architects, in 1976. Gary's firm has completed over 2,000 projects involving Historic Preservation,Church, Library, Commercial, Residential and Adaptive Reuse Architecture. He has served in many leadership capacities throughout east central Illinois including Chair of the City of Champaign, Historic Preservation Commission, CCDC (Champaign County Design and Conservation Corporation) and  President of the Central Illinois Chapter of the AIA (American Institute of Architects).

In the last few years he has become a promoter (disciple) of "Modular" Architecture.  He completed his first Modular building, an apartment project that houses 96 students, last year in Champaign. His design for a Modular Fraternity House is currently underway in Urbana.   He is currently involved in the design of a 48 unit housing project located on the site of a former private swimming pool on Windsor Road in Urbana.

ShelterBox Mission:
The mission of ShelterBox is to provide safety and dignity to families who lose everything when disasters strike.  While many aid organizations provide food, water and medical care, Shelterbox gives immediate assistance in the form of proper shelter during the critical period following an earthquake, tsunami, landslide flood or other natural and man-made disasters.  Each ShelterBox supplies an extended family with a tent and life-saving equipment to use while they are displaced or homeless.  The contents are tailored depending on the nature and location of the disaster.

History of ShelterBox
ShelterBox began as an idea of one man, Tom Henderson, for a Millennium (year 2000) project for his Rotary Club in Cornwall, England.  After buying a big Green PVC Box at a hardware store in his local village, he set out to fill it with things that he felt would be useful when a family faced a natural or man- made disaster. After several weeks of gathering and discarding things for the Box at his home, Tom felt he had the right combination of disaster relief equipment and supplies in the Box to bring it to his Club for their approval as the Millenium Project that would last forever.  He began finding manufacturers for the equipment and supplies, finding volunteers to fill the boxes and arranged transport to the nearest airport.  Tom also arranged for volunteers of first responders to accompany the ShelterBoxes to the disaster area.
Shelterbox Deployment Around the World

About  150 ShelterBoxes were deployed with volunteers forming the first ShelterBox  Response Teams ((SRTs)  in 2002. That number more than doubled to 350 in the third year.  The great Tsunami of 2004 quickly exhausted our supplies, but we reached tens of thousands of people by purchasing more tents, and equipment worldwide. We answered the call when Hurricane Katrina hit the Gulf Coast, and we still have 330,000 earthquake survivors living in SB designed tents in Haiti today because there is still no better place for them to live.

America became the first affiliate country to join the ShelterBox Trust in 2002 and now 25 affiliate countries throughout the world have joined to form ShelterBox International .   ShelterBox USA has emerged as the worldwide leader and largest affiliate, training volunteers to become Ambassadors, sponsoring partnerships, and has become the most prolific fundraiser for disaster relief of all the affiliates.  Since 2000 ShelterBox has provided more than 111,000 ShelterBoxes to over 900,000 of the world’s most vulnerable people.
Purchasing a ShelterBox 
Each ShelterBox costs $1000 which includes all equipment, transportation to the disaster site and a team of volunteers who implement the aid.  Smaller donations are combined to purchase a box, and each donor is supplied a tracking number so that they can see where their Shelterbox is being sent.

To watch the interview with Gary Olsen CLICK HERE

Wednesday, June 20, 2012

Apartment Market Shifting Focus To New Supply

CoStar article by: By Randyl Drummer May 16, 2012

Current Lull In Multifamily Fundamentals Expected To Be Overtaken by Demographics, Jump In New Construction

The ongoing recovery of the U.S. apartment market is entering a new phase, one marked by an increasing level of permits and construction starts for multifamily development projects. The upwelling in new development is expected to increase supply across many markets starting in 2013 after years of almost zero growth.

The new phase follows the dramatic vacancy declines and strong apartment rent growth that has occurred in the tightest and more desirable coastal markets, and a rare moment of solid income growth even in vacancy-challenged markets.

The rising supply pipeline, coupled with the gradually improving market for single-family housing, is expected to help bring some equilibrium to an apartment market which experienced strong renter demand and plunging vacancies from late 2009 through middle to late 2011.

Demand has tapered off somewhat since last summer due to slower seasonal leasing -- and perhaps some sticker shock among tenants that have watched asking rents eclipse pre-recession highs in some supply-challenged metros, according to Michael Cohen , head of advisory services for CoStar Group’s economic and market forecasting company, Property and Portfolio Research (PPR).

Cohen, along with PPR’s new director of multifamily research Luis Mejia and senior real estate economist Erica Champion, made the observations during CoStar’s First Quarter 2012 Multifamily Review and Outlook.

"Vacancies have been slipping in the apartment sector for several years due in large part to favorable cyclical demand factors and little-to-no new supply," Cohen said. "But the next chapter in the apartment recovery is going to look pretty different, particularly on the supply front."

Overall, the national apartment vacancy rate has dropped by a precipitous 170 basis points through the first quarter of 2012 since peaking at 8.3% at the end of 2009, with the lion’s share of occupancy gains recorded during the six-quarter period between fourth-quarter 2009 and second-quarter 2011. That's equal to demand for about 270,000 additional units, two-thirds of them occupied in 2010 alone, the single strongest year for multifamily demand since 2005.

Rent Hikes Bring Sticker Shock

But demand has eased in the last six months, with the year-over-year vacancy closing the first quarter at 6.6%, down only 60 bps. Several tight coastal markets have already reached or are approaching pre-recession vacancy lows, however, and it’s likely the seasonally weaker pace of demand over the last two quarters will pick up over the rest of 2012, the analysts said.

Four of the top five rental markets that experienced the sharpest vacancy declines are fast-growing southern metros, led by Charlotte, Austin and Raleigh, NC. Detroit, with its surprising auto industry rally, ranked an impressive fourth place, followed by San Antonio. Apartment vacancies have not dropped as sharply in markets like Washington, D.C. and Seattle, where new supply is already starting to come on line.

The recovery has shifted away from the southern metros and toward West Coast markets in the last six months, much of it driven by strength in technology sector. Los Angeles was ranked first in the nation in the first quarter in year-over-year nominal demand growth with about 12,000 units, followed by Dallas, Chicago, New York and Houston.

Ranked by the percentage rise in demand growth, Richmond, VA, led all markets with a year-over-year gain of over 4%. Charlotte, Raleigh, San Antonio and Houston garnered the other top five spots.

Salt Lake City and the San Francisco Bay Area metros saw the largest declines in vacancy. But at least 30 of the top 54 U.S. metro areas have seen their vacancy rates increase at least slightly over the last six months.

"I’m not suggesting that’s indicative of the health or the trajectory of the market, but it’s not a straight line down in absolute vacancy improvement. There is a little bit of a lull," Cohen said.

Although job losses and the housing collapse are still fresh in the minds of 20-to-34-year-olds who make up the bulk of the renter base, and mortgage underwriting standards are stricter, the math is becoming more appealing for people deciding to buy a home or condominium over renting an apartment, Cohen said.

Those decisions are being influenced by spiking rents that have already pierced their pre-recession highs in such markets as San Jose, Oklahoma City, Denver, East Bay, San Francisco, Chicago, Portland and Pittsburgh.

Apartment Starts Ramping Up

While only 60,000 new apartment units are expected to be added this year, well below longterm average, construction starts and permitting activity are beginning to pick up from historical industry lows not seen since 1993.

"In advising our clients on market selection, we are starting to get calls with concerns about the rate of supply and net completions," Cohen said.

But developers who have delayed decisions to build are seeing the window close as capitalization rates reach record lows.

"2013 will be the first year we’ve seen deliveries above 100,000 units. We need to readjust our perspective on supply for Chapter Two (of the recovery). We haven’t seen 100,000 units come to market since 2009."

CoStar's outlook for supply is moderate through 2015, with between 100,000 and 130,000 units delivered per year, a rate expected to achieve equilibrium between supply and demand, Cohen said.

Homeowner Distress Continues To Help Apt. Investors

Meanwhile, apartment investors continue to reap benefits from the current weak housing market, with the flow of distressed homeowners-turned-renters still above average, while the flow of renters turning into buyers is still quite low, according to Mejia, who recently joined PPR as director of multifamily research.

A comparison of homeownership and foreclosure trends confirms that the homeownership rate could continue to decline -- possibly falling below 65% -- until the delinquencies and foreclosures that have plagued homeowners finally ease.

In the early 2000s, optimism about rising home prices and loose underwriting standards helped push the ownership rate up to almost 70%, leading to a price bubble that began to deflate in 2006, causing a surge in foreclosures and sending the homeownership rate tumbling.

"Apartment markets will continue to see additional demand while the foreclosure rate remains above pre-crisis levels and potential home buyers are cautious about committing to a purchase, even amid all-time low mortgage rates," Mejia said.

Mejia also pointed that as foreclosures remain elevated and renters mull their home-buying decisions, the ownership rate will likely continue to decline, although the extent of the decline depends on the length and strength of the housing recovery.

Tuesday, June 12, 2012

Basell III and Dodd-Frank Update

The Federal Reserve Board of Governors met on June 7th to publicly discuss proposals for implementing the Basel III capital requirements and Dodd-Frank capital requirements in a simplified manner, as well as to vote on a final market risk capital rule (Basel 2.5).
The Board unanimously approved the release of three Notices of Proposed Rulemaking (NPRs) for Basel III and the final rule for Basel 2.5. Basel III requires that a bank hold 4.5% of its risk-weighted assets (RWA) as common equity (up from 2% in Basel II) and 6% as Tier 1 capital (up from 4% in Basel II). Total capital (Tier 1 plus Tier 2) must be at least 8% of RWA. Additionally, Basel III requires that banks hold another 2.5% capital buffer, made up of common equity. Restrictions are also to be imposed on what assets can be counted toward Tier 1 capital.
The Board is under the impression that most banks already meet these requirements at the present time (especially those under $10 B). The approach for calculating risk weighted assets would also change the treatment of residential mortgages, making it more risk-sensitive. Under the NPR, residential mortgages are divided into two categories and the risk weights would depend heavily on LTV and would range from 35%-200%, while High Volatility Commercial Real Estate Exposure (HVCRE) risk weights would jump to 150% from 100%. Governor Elizabeth Duke raised concerns about this portion of the proposed rule reducing the willingness of banks to make mortgage loans.
While the new capital rules won’t take effect until 2019, concerns have been expressed by both industry and some Fed governors, that such an increase in capital requirements would have negative economic effects, as there would be less capital available to lend. The Fed’s rule-writing staff said that these effects were likely to be modest and would largely be mitigated by having a long phase-in period. Furthermore, the staff said that banks could largely meet requirements via retained earnings, and would probably not have to issue more equity.

The Federal Reserve surprised the banking industry by forcing even the smallest lenders to comply with Basel III -- all 7,307 U.S. banks. Many bankers had expected regulators to exempt smaller, community bank lenders. While the core Basel III rules will apply to all banks, other aspects of the new regime single out the biggest, most complex banks for tougher treatment than their smaller peers. The banks will have more than six years to fully comply with the new rules, with the phase-in period starting next year.
Potential Impact on Credit Capacity

While the goal of the new regime is commendable, requiring banks to hold far more capital to prevent financial disaster could further exacerbate credit challenges for real estate and broader credit capacity. There is grave concern among many in the banking community that stricter capital rules may curb economic growth by making it more expensive to lend.
As proposed, there is concern that the measure is not appropriately calibrated and could lead to disproportionately higher borrowing costs for commercial real estate borrowers. Setting excessive capital requirements will limit the availability of funds that support new investments and job creation – particularly for commercial real estate.
The current risk weight under Basel II for commercial real estate loans, including acquisition, development and construction (ADC) loans, is generally 100%. However, the Accord permits regulators the discretion to assign mortgages on office and multi-purpose commercial properties, as well as multi-family residential properties, in the 50% basket subject to certain prudential limits. Under Basel I, commercial real estate was assigned to the 100% basket. The proposed Basel III measure would increase the risk weighting to 150% for High Volatility Commercial Real Estate Exposure (HVCRE) and, which could also deter banks from making real estate loans and reduce credit capacity.
Importantly, however, the NPR specifically permits regulators the discretion to exempt certain commercial real estate collateral from HVCRE treatment that fall under certain guidelines. Such collateral would generally be treated as corporate debt position, with a 100% risk weighting. These CRE exemptions would apply to:

(1) One- to four-family residential property; or

(2) Commercial real estate projects in which:

(i) The LTV ratio is less than or equal to the applicable maximum supervisory LTV ratio in the agencies’ real estate lending standards;

(ii) The borrower has contributed capital to the project in the form of cash or unencumbered readily marketable assets (or has paid development expenses out-of-pocket) of at least 15 percent of the real estate's appraised “as completed” value; and

(iii) The borrower contributed the amount of capital required under paragraph 2(ii) of this definition before the banking organization advances funds under the credit facility, and the capital contributed by the borrower, or internally generated by the project, is contractually required to remain in the project throughout the life of the project. The life of a project concludes only when the credit facility is converted to permanent financing or is sold or paid in full. Permanent financing may be provided by the banking organization that provided the ADC facility as long as the permanent financing is subject to the banking organization's underwriting criteria for long-term mortgage loans.

Next Steps

The Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) must also review the proposed Basel rules before they take effect, and are expected to do so on June 12th. Comments on the three NPRs' will be due on September 7, 2012.
NAR is currently reviewing the measure and its potential impact on commercial and residential real estate credit capacity. We are already working with a number of industry groups to develop consensus viewpoints in an effort to begin raising concerns about the economic consequences of proposed rules in advance of the comment deadline.

The documents may be found at CLICK HERE

Saturday, June 9, 2012

GEMBA and Lean Management in Healthcare

For the past 13 years, Alan Gleghorn has been the CEO of Christie Clinic, one of the largest physician-owned, multi-specialty group medical practices in Illinois. Faced with a challenging economic environment and fierce competition upon his arrival, he quickly sought to guide the organization to a stronger financial and strategic position by empowering his team members to focus on continual organizational improvement. In moving the organization from a command-control leadership to a dispersed/consensus style model, he implemented Lean Healthcare and created a true cultural transformation at Christie.

As Systems Manager, Stephanie Van Vreede is responsible for network coordination at ThedaCare Center for Healthcare Value.  She handles the organization of Gemba visits for attendees of the 53 organization-strong healthcare organization. The HVN is a consortium of like-minded healthcare organizations from North America that come together to share and learn, while leveraging their unique perspectives to accomplish a shared goal of fundamentally improving healthcare delivery through lean thinking.

Change is bearing down fast on healthcare in the United States. The good news is that competitive, choice-driven care is still possible, as long as we focus on three essential elements:
The ThedaCare Center for Healthcare Value is a resource hub that brings together in one place the important insights, examples and worthy experiments from across health care. We provide the framework and tools needed to unite leaders behind an integrated approach focused on better patient value.

 Gemba has several different meanings, so to start let’s use the literal Japanese translation and define gemba as meaning ‘the real place’.
In traditional (i.e. manufacturing) Lean, gemba is frequently used synonymously with ‘shop floor.’ (You may hear the term genba-with an ‘N’-used interchangeably with gemba. Lean is funny that way. There are many ways to say the same thing.)
But as Lean has migrated to the office, gemba has a new meaning. This ‘real place’ can be in an engineering cubicle, at a cash register in a retail store, or in front of a computer where orders are entered.
It is not as common to hear the term gemba specifically used in the Lean office, but the principle behind ‘going to gemba’ (meaning the real place where the work is being done) is just as strong.

Alan has incorporated GEMBA principles in his Lean Management at Christie Clinic with such success that many health care groups have come to look at Christie Clinic as an example to follow.  In this interview Alan and Stephanie Van Vreed discuss Lean Management and its applications in the healthcare industry.  To watch the entire interview with Alan Gleghorn and Stephanie Van Vreed CLICK HERE