Call Transcript

NEW -> Contingent Buyer Assistance Program
SoCal78_IHB

SoCal78_IHB

New member
I see that some of you have requested a transcript.



This is the first 10 minutes.



Although I made reasonable efforts to ensure accuracy, please note that it may not be 100% accurate! Some parts were indecipherable. (Grammatical errors have purposely been left unedited.) Please listen to the downloads that are available in the other threads if you would like to compare notes.



<strong>Part 1</strong>



<strong>DY:</strong> Good evening. My name is Dan Young and I?m the President of Community Development for the Irvine Company?and I would like to first of all, as we start this rather creative session here? thank Larry Roberts, who is the originator of the Irvine Housing Blog for inviting me to address this audience in our unique way here tonight. We?re happy to have an opportunity to talk about Irvine and all the things that?questions that? may come up in regards to Irvine and I?m looking forward to it. Let me first show you that you can participate in this tonight and actually call in for a question? (instructions given)?



?Larry, is that you?



<strong>LR: </strong>Yes, I?m here.(?)



<strong>DY:</strong> Larry, yes, I can absolutely hear you.



<strong>LR:</strong> Yes, and I wanted to thank you for taking the time to hear us. The IHB, we are a community bound together by our appreciation for Irvine and all that it has to offer. We are curious about the future of Irvine and we care about the development that occurs and when villages are going to be built and obviously whether or not we are going to be able to afford the product, so I want to thank you for giving us this time and meeting with us. ? My question, and you?ve probably already seen this one, that I put on the web? We all know that the Irvine Company is pretty much the sole provider of housing in Irvine. I mean, you guys, within political constraints, control the type, the quantity, the location, and the price of all the new homes in Irvine. You could, and you have for the last couple of years, chosen to limit production and tried to hold up pricing. Now, if you choose to do that in the long term, that?s going to price out a whole generation of people that would like to be in Irvine and would like to have some of those products? but then again if the people who are already here would probably prefer you to go ahead and hold that course and keep prices high for them? so if my overall question to you is will The Irvine Company limit supply to try to control price or will you build to meet the demand that is out there in the market place?



3:20 <strong>DY:</strong> Let me give you some of our thinking on that so you can answer your question directly. First of all, let me start with the fact that the housing that will be built in Irvine by us or others, is built to meet a market. It?s built to meet the demand within the market. It is? I think I would disagree with you, Larry, to the extent that we don?t control price. If we did control price, I would tell you that prices would never go down. We?re experiencing a cycle? one of many, since we?ve gotten started in Irvine in the ?60?s? of prices going down, and quite frankly, that?s not good for us. So, prices are really established by the market. Location, quantity, and type is something we can propose. The City of Irvine?through the planning commission and the city council?disposes. We propose, they dispose. We work with them to make sure that we get the broadest range of housing, and I hope that comes up in the other questions tonight too, about how we approach the range of housing that?s offered. But, again, I?ll start with two key concepts that I have seen on your blog that I would like to address directly to you. First of all, we build to meet the market?s demand. It makes no sense, and in fact you?re seeing a lot of communities around the country suffer tremendously from over-building and it doesn?t help either the prospective buyer or the existing homeowner when that over-building is done. We don?t always accomplish that, but it makes no sense to have them(?) over-building. So, the answer is: we build to meet demand. Secondly, we can propose pricing, but that pricing is very carefully pegged to the market place around us. Let me give you an example. Where you might see two, three, five, ten homes sold in Irvine that are new homes? never been lived in, in various model-home programs?you?ll see anywhere from 60 and in a good time, 100, maybe even 150 homes sold that very same week in the resale market. The resale market is the over-whelming influence on pricing. There?s much more of it. There?s great variety of choices, and I would even say, Larry? that?s something for you guys to think about as you dialogue in the future? is that I would even go so far as to say that it?s more important in Irvine?the resale market?and the reason is that because you don?t have older deteriorated areas. These villages that have been built from the beginning have held up very well. They?re all attractive places to live. So, therefore you can be in older communities where a certain area no one wants to live in? maybe it has high crime or whatever. In Irvine, the whole city has managed to really make it through very gracefully. So that resale market becomes even more of an influence on pricing. So, if we could control pricing, you would never see the price go down as I?ve mentioned before. We can?t control price and we do try to go meet a market. We do not try to limit a market. We try to meet the actual demand that we see out there.



7:15 <strong>LR:</strong> For the last couple of years, though, the construction has dropped off so dramatically. There was some market out there for new homes during a time when there was almost none that was being supplied and it?s reactions like that that make people wonder? is this? I don?t want to try to characterize it, but is this an attempt to hold up pricing by limiting supply? And what I?m hearing from you is that the resale market is so much larger than your piece of the new market that you couldn?t do that even if you tried. Is that what I?m hearing?



7:55 <strong>DY:</strong> Let me give you kind of a fine point to help on this issue. There were plenty of model home programs? model homes at varying prices, ranging from Bougainvillea on the lower end of the price range, up to Serra in the higher end of the price range that have been available through this down-turn, and we literally went weeks without a single home selling? weeks! So, my argument? or my point to you would be, Larry,? that the fact of the matter is that these weren?t held off the market. These have been available throughout the down-turn. In fact, the model home programs in Irvine have ranged from 22 model homes programs that were when the recession really started now that we get a chance to look back? to maybe 12 or 13 right on through today. Now, that?s less. But, the fact of the matter is that there?s been plenty of them? and there have been periods when there?s literally no sales. So, there?s been no attempt to do anything other than not have builders have inventory that just sits there.. and Irvine has been (?) by the fact that it hasn?t had large inventory problems like some of the other cities that you see in California and around the country. If I may, Larry? although you?re the host and I want to be very polite to you? I?m told that there are a number of people who are calling? would it be okay if I moved to the next caller?



9:30 / 1:23 <strong>LR:</strong> Certainly. I?d be happy to listen. ?





(... more to follow.)
 
I'd like to see the transcript from Supa's question. He spoke a little too fast for me to understand. Was he asking how does the Irvine company insure that speculators don't buy the new homes? He spoke a little too fast for me to understand. And Dan's answers was they have to be saying they will occupy to buy?



I'm surprised Dan didn't ask anyone to repeat questions.
 
[quote author="25inIrvine" date=1248790464]I'd like to see the transcript from Supa's question. He spoke a little too fast for me to understand. Was he asking how does the Irvine company insure that speculators don't buy the new homes? He spoke a little too fast for me to understand. And Dan's answers was they have to be saying they will occupy to buy?



I'm surprised Dan didn't ask anyone to repeat questions.</blockquote>


c'mon, are you seriosuly going to get on TIC for allowing speculators into the community. No home builder has any recourse against a homeowner who rents their home out.



Dan didn't ask anyone to repeat their questions because he's heard them all before. The IHB audience didn't challenge Dan with any issue that he hasn't heard before. Dan even got a chance to talk about Irvine's pedestrian trail system! How pathetic is that?! No one on the call had any more questions to ask that he was forced to default to responding to some random post about irvine not having "walkabilty". You people basicly tee'd up a pr homerun for TIC.
 
[quote author="tkaratz" date=1248791078][quote author="25inIrvine" date=1248790464]I'd like to see the transcript from Supa's question. He spoke a little too fast for me to understand. Was he asking how does the Irvine company insure that speculators don't buy the new homes? He spoke a little too fast for me to understand. And Dan's answers was they have to be saying they will occupy to buy?



I'm surprised Dan didn't ask anyone to repeat questions.</blockquote>


c'mon, are you seriosuly going to get on TIC for allowing speculators into the community. No home builder has any recourse against a homeowner who rents their home out.



Dan didn't ask anyone to repeat their questions because he's heard them all before. The IHB audience didn't challenge Dan with any issue that he hasn't heard before. Dan even got a chance to talk about Irvine's pedestrian trail system! How pathetic is that?! No one on the call had any more questions to ask that he was forced to default to responding to some random post about irvine not having "walkabilty". You people basicly tee'd up a pr homerun for TIC.</blockquote>


I wasn't getting on TIC for alllowing speculators. My question was simply whether that was what he was asking and if that was Dan's answer. I was basically just asking if I heard and understoood correctly.





And I meant, I was surprised he didn't ask anyone to repeat their questions because some parts were very hard to hear.
 
<strong>Part 2</strong>



<strong>DY:</strong> Ok, do we have Debbie on the line? Or is it David?... I think what we have here is an email question, so let me restate the question and give an answer for it. If this is a little awkward tonight? all of you on the phone and myself included, are pioneering a whole new technology, so allow for a little clunky-ness? (Instructions given on calling in). The question I?ve got here that just came in was? ?I would like to know if there are any plans for green development or LEED certified buildings.? This is from David Fry over in Quail Hill. The choice that we made?. LEED certified is a national ? in fact, it?s an international program - that establishes standards for building green and there?s various levels of LEED. There?s silver, and gold, and platinum?(?) can achieve. It?s worked very well within the commercial area. It hasn?t necessarily been applied as well to residential and it?s just now being experimented with at the village or neighborhood level. The choice that we made is to take the lead from the City of Irvine. As many of you know, that are in the City of Irvine, they have a strong value for environmentalism and expressed in the building of housing and they have pushed very hard to put green standards in place. In fact, we see green standards expressed in a program that they called ?Irvine Green?. Now, that program is changing just a little bit. They are kind of upping the standards as we speak, but nevertheless, Irvine Green has been a program that we?ve followed in every one of our homes lately? now, remember, there haven?t been many lately? but, the ones that are moving forward will be built to Irvine Green standards. I think you?ll find them to be more appropriate to building houses versus the LEED process which is very appropriate and well worked-out in the area of commercial buildings. So, I hope that that answers David Fry?s questions? (Instructions given to dial in)?



4:27 In the meantime, people are e-mailing here, so we?ll pick those up as well. I do have one here that I?ll try to address? and Larry, you brought this up about people?s interest in the build-out of the other villages. We have several villages where we?ve installed some or all of the infrastructure but we haven?t started the homes yet. Stonegate has been called out as one? Laguna Crossing has been called out as one? and Orchard Hills has been called out as one. So, let me give you our current thinking. First of all? our first priority? our first, second, and third priority? is to complete the villages that we?ve already started. There?s residents living there. There?s all kinds of facilities operating there. There?s schools operating there. So, we want to make sure that all of the resources that we can put into the market place are put into places where those villages are started and people are living. So, Priority One is to complete Woodbury, Woodbury East., and Portola Springs neighborhood one and two. Those were active and now we see new homes being built soon. We think the first of the year? to get more new home choices for people in those villages. What that means is? if you try to guess at how many homes are going to be absorbed over the next year or two as we move out of this recession, and we?re assuming that we are, in 2010, going to start moving out of this recession?. then, you might have a good guess and that?s really all it is? that Stonegate might open up in 2011 or 2012. Again, assuming that we?ve made great progress and are mostly finished with the build-out of Woodbury and Woodbury East. So, we?re continuing to look at the schedules, and quite frankly it requires you to be an economist and follow the national economy and we try to do that as best we can?.but based upon our best guess, the absorption that we?ve projected? it might suggest that Stonegate is in 2011. Laguna Crossing would probably follow shortly after that, as would Orchard Hills. But, what we?d really like to do? first order of business? is get those villages completed. (Instructions given for asking a question?)



I think we have a call coming in right now and is it Suppa?... Hi, this is Dan?



<strong>Suppa:</strong> Yes. Hi, my question is how Irvine homeowners are protected by builders not(?) selling for investors like second-home buyers and like how it happened in Corona? they all(?) sold for investors and they all(?) are in foreclosure now.



<strong>DY:</strong> That?s a great question, Suppa, because we?ve very concerned about the impact of speculation in the market place. Let me approach it first philosophically. The Irvine Company is a long-term player. We?ve been a company in California since 1846?



<strong>Suppa:</strong> Yeah, the fact is to me, that doesn?t matter at this moment. I understand Irvine Company philosophy. I am a homeowner in Quail Hill and I want to make sure who is living in Irvine? homeowners are protected by not?(?)? people? (indecipherable)? It is greedy (?) to say I am some investor skill? some other builders? bad practices to sell their homes? but they are not looking at the Irvine homeowners to come?(indecipherable) and Americans.



<strong>DY:</strong> The short answer of it is? we try to validate that anybody buying a new home is buying it for owner-occupied purposes. However, having said that, to be honest with you ? once that home has been sold, and let?s say you buy it? then we begin to lose any authority over what happens to it in the market place after that. What we have seen in the past frequently? is you buy it and see that you can make a quick profit, then sometimes you?ll say, ?Well, gosh, let?s do that? ?cause I didn?t think I could afford a four-bedroom and I bought a three-bedroom. ? And you may be selling that to somebody who is not owner-occupied. At that point, we?re out of the equation. There?s nothing we can do. It?s private ownership. So, Suppa, I want to thank you for your question? appreciate it.



Let me get back to some of the other things that were brought up. One thing I did want to make sure that we touched on? because on the blog, as Larry knows, there was considerable questions? and I?ve got an email here? on affordable housing and how it?s approached. I think the writer.. the email came in to the effect of? is there going to be affordable housing in Irvine and then what?s the process for it moving forward? First of all, let me mention that affordable housing is a central part of the city?s requirements in order to get a project approved. Roughly 15% of all the new housing in Irvine is expected to be in affordable range. That 15% is largely met by apartments because that housing is available to people within the incomes that they?re trying to reach. But, 5% of that 15%... one-third of it.. is targeted toward lower-income families. The way the program works in the City of Irvine is that we give to the City of Irvine, land that is developed for the most-part with all infrastructures in and available to build for affordable apartments. That land goes to the city. They?ve set up, in this last? maybe two years? a land bank, where they?ve received the land? and then non-profits are competitively-selected? non-profits who specialize in affordable housing? and they then take over the process of the building and the renting of it. Then it?s held through the land bank in perpetuity as affordable housing?.



(end @ 12:00. More to follow... in the morning!)
 
3:20 <strong>DY:</strong> Let me give you some of our thinking on that so you can answer your question directly. First of all, let me start with the fact that the housing that will be built in Irvine by us or others, is built to meet a market. It?s built to meet the demand within the market. It is? <strong>I think I would disagree with you, Larry, to the extent that we don?t control price</strong>. If we did control price, I would tell you that prices would never go down.

7:15 <strong>LR:</strong> For the last couple of years, though, the construction has dropped off so dramatically. There was some market out there for new homes during a time when there was almost none that was being supplied and it?s reactions like that that make people wonder? is this? <strong>I don?t want to try to characterize it, but is this an attempt to hold up pricing by limiting supply? </strong>And what I?m hearing from you is that the resale market is so much larger than your piece of the new market that you couldn?t do that even if you tried. Is that what I?m hearing?



7:55 <strong>DY:</strong> Let me give you kind of a fine point to help on this issue. <strong>There were plenty of model home programs? model homes at varying prices, ranging from Bougainvillea on the lower end of the price range, up to Serra in the higher end of the price range that have been available through this down-turn, and we literally went weeks without a single home selling? weeks!</strong> <strong>So, my argument? or my point to you would be, Larry,? that the fact of the matter is that these weren?t held off the market. These have been available throughout the down-turn. In fact, the model home programs in Irvine have ranged from 22 model homes programs that were when the recession really started now that we get a chance to look back? to maybe 12 or 13 right on through today. Now, that?s less. But, the fact of the matter is that there?s been plenty of them? and there have been periods when there?s literally no sales.</strong> So, there?s been no attempt to do anything other than not have builders have inventory that just sits there.. and Irvine has been (?) by the fact that it hasn?t had large inventory problems like some of the other cities that you see in California and around the country. If I may, Larry? although you?re the host and I want to be very polite to you? I?m told that there are a number of people who are calling? would it be okay if I moved to the next caller?



---------



</blockquote>This is not to say that TIC is wrong or right. Whatever they do is their rights as a business entity. But in reading the question posed by Larry with regards to whether TIC control the new homes pricing and Dan response was in essence, "No, we don't control pricing." I would have to disagree with Dan. By not building out during the downturn, TIC did control pricing. Dan saying that there were 22 models available and no one bought them. Hence, Dan went on to say there was "no market demand". Therefore, TIC stopped building out. That is controlling pricing. How so? Had TIC kept building out, prices would have dropped. Just look at Stadium Lofts and Harbor Lofts in Anaheim; Santiago Lofts and City Place in Santa Ana; and Riverbend in Orange. All these projects had to continue building out during the market downturn. And the prices in these new communities have plummeted.



Again, I am not saying TIC controlling the supply side and pricing is wrong. But Dan should be more forthcoming in his response. Instead of a direct honest answer, Dan's lenghty reply seemed like an attempt to blur the original question. I would rather he replied with, "TIC is a business. We do look out for our bottom line. Just like any other businesses that want to survive in this trying time. And if controlling pricing is a way for us to survive. Yes, unfortunately, we do control pricing. It's just good business." </blockquote>
 
[quote author="irvine123" date=1248780485][quote author="roundcorners" date=1248779932]That was a great call... I missed the beginnings of it.. what is the time frame for PS and OH...



did anyone else detect any subtext?



For instance:



your graphics are not scientific = your charts (graph) are not reliable

the IE does not build any schools = the IE is a bunch of idiots, unlike us

we are a unique city = Irvine will be completely insulated from the macro economics of the country

we are agnostic with our buyers = money talks, whoevers gots the mula gets a house

we are absolutly facinated with new technologies such as social media and blogs = we didn't see this coming, but need to get up to speed</blockquote>


It is interesting that Dan said they are agnostic to their home buyers, while their retail division seems to have a reputation of contrary to that.</blockquote>


in taking this from the other thread, I also second Irvine123... to some degree, TIC does dictate which population they want in... the simply pick which retails gets to open... which comes first, the people or the shops
 
Interesting that they would do Stonegate and Laguna Crossings BEFORE Orchard Hills.



Based on his comments about build-out and residency, Orchard Hills seems to have more of that than the other two. Their shopping center alone probably has tenants crying for OH to get homes already.



Methinks it has more to do with affordability and desire, we all know that OH was going to be more of an upper tier community so they would rather concentrate on their more mid-level projects. Plus OH would stomp on PS whereas LC is a good place to start breaking ground since there is nothing immediately in that area to compete with it.
 
<strong>Part 3</strong>



12:00

<strong>DY:</strong> I will tell you? and these numbers have born out through the state?s department of housing? Irvine has one of the best, and I may dare say it may be the best? affordable housing program in the state for three reasons. Number one, all of the cities in California post affordable housing goals. Very few meet them. Irvine does meet them. Two, in meeting their goals, they have a partner with us in that we take their requirement and the obligation seriously and we provide the land on a timely basis through our build-out so we have built literally thousands of affordable units. Three, the units have largely been very well accepted within the community, because we have a rule in The Irvine Company, that an affordable housing project? an apartment building, or whatever the case may be?houses? will be designed to the same architectural standards as the market-rate housing. So, if I drove you through the city, you could not tell me the affordable units because they?re designed with the same quality. So, with that, we?re able to accomplish the city?s affordable housing needs. (Instructions given to dial in.)



We have a caller here. May I ask who?s on the line?



<strong>Tom:</strong> This is Tom.



<strong>DY:</strong> Tom. What?s your question, Tom?



<strong>Tom: </strong>First of all, thank you for participating in this. I think it?s a great?(?)? for those on the blog. The question I have is? as an individual, I relied on this blog and other blogs. I was about to buy a home in 2005 and this blog and others scared me clear from buying a home, and I?m very grateful. I?m wondering if The Irvine Company, or you in particular, uses the information on this blog for the company?s purposes? Do you feel like it?s a group of bitter renters? Or do you feel it?s a sentiment shared by a lot of people and how do you use this information, if at all? Or, is it just something that is entertainment for you?



<strong>DY:</strong> Well, I appreciate it. Let me address it this way: We have enough respect for this blog that I?m spending my evening on the telephone with all of you. So, we see it as a legitimate, innovative, creative way for people in the city to communicate with each other. We?re fascinated by it. I?m personally fascinated by it. I think it?s extremely interesting that people would care enough about the community?whether your thoughts are positive or negative? to share them with each other and that, in response, people would help you work through your opinion., give you facts, give you contrary opinions. I think it?s terrific. So, in that respect it?s a positive. We really don?t know exactly how it can be scientifically measured because? let me just share with you that we do a lot of research, and I?m going to touch on research here, Tom, as I answer your question. This is a point of research. What are people on the blog saying and thinking, and what are their ideas for housing? It?s all part of the input that we take in, in order to design the communities and design the homes. It?s all part of the input. Having said that? because people are on there anonymously? there are some pretty creative names on there, by the way. Some of those graphics are kind of interesting. There are some these people I?d just like to meet to associate the graphic with the person, or the name with the person. That might be fun. Having said that, the issue is that it?s not scientific. We don?t always know who?s a resident, who?s not. We don?t know whether or not we?re getting input for a $600,000 house or a $300,000 house. So, you?re not providing it in order to give us scientific information and therefore we?re not using it as scientific information. We do use it as valuable input and a reflection of what?s going on in the community and in the market place. With respect to research? and I?m going to stray just a little bit, Tom, on this? the research that we?re doing, we?ve been very intensely involved for almost two years in focus groups? and I know some of the people on the blog have been in the focus groups, or at least heard about them. We try to use the internet to push out surveys, and I know some of you have taken those surveys on villages and village planning? products and product planning. From that, we can get, through these polls, focus groups, and internet surveys? we?ve got a lot of scientific data to guide the next round of product development and housing in the city. It?s really been terrific. But, one of the great things that you like about a focus group, if I could use an analogy with you? is that when you do a poll and somebody is on the phone getting a yes / no answer, and they?re not hearing any of the color. They?re not hearing any of the background and nuances, and you don?t get to depart from the question because you?re trying to keep it scientific. So, that?s why you always want to use focus groups. Focus groups bring people together and they work in a workshop format and they answer a set of questions, and they play off of each other. So, what forms is a collective opinion about a topic you?re doing research on. Blogs, have somewhat of the effect? if they?re managed properly, if they?re robust and respectful of each other? they have the opportunity to be something of a focus group, and I think that?s the best way we would characterize them? is something like a not very scientific focus group but something to be listened to. So, we?re experimenting with email communication. We?re experimenting with all kinds of different ways to communicate and to learn from people, and what Larry and all the rest of you have created is terrific.



18:45 (Instructions given to call in)



Let me address, if I could, please? the issue of John Laing Homes and the bankruptcy that occurred. It was something that happened here this past year. We actually had a homeowner declare bankruptcy, who had projects in both Portola Springs, Woodbury, and for that matter? mode homes in Woodbury East. We?re dealing with the final details of that bankruptcy as they emerge and it?s just about over, as I understand it. The judge has made the decision and there?s now a determination that the assets will go back to the creditor. So, for the projects that haven?t been completed in the City of Irvine, we?ll be getting those lots back. We?ll work next to figure out how to get those finished up in those couple of communities that were started and not finished. So, the bankruptcy was unfortunate. We?ve seen them go through the entire proceedings, which have ended, and the trustee will have the assets out I think very soon, and then we?ll pick a builder? a new builder? to complete those uncompleted projects and then move forward from there. So, if you have a call... (instructions given).



I?ve got another email question that has come in? what?s my personal feeling about where the market will bottom? I don?t want to make any economic predictions for the marketplace out there. I think we?ve all experienced some very unusual circumstances. I?m 58 years old and I haven?t gone through an experience of watching the kind of extent of bank failures and credit crisis failures that we saw on Wall Street and within the banking system. It?s very difficult to gauge how that banking system?how long it will take for that banking system to move through the bad assets, re-trade them into the market, regain their capital, whether it?s from the federal government or otherwise, and go lending into the marketplace again. Having said that, it?s very clear that the housing market here in Irvine has been stabilizing. If you look at the number of resale homes that are available today for sale? it?s about 600. In other words, if you had access to the multiple listings, you?d see just under 600 homes from top to bottom? very expensive to very inexpensive, available today. That?s about half the number of a year ago, which is significant, and in fact it?s about the same number as were available in 2004 when there was a perceived shortage in the market. Now, I?m not suggesting that the number today suggests a shortage in the market, because we still have the factors of the credit crisis and unemployment to deal with. But, the fact of the matter is ? the number of resales is down considerably. There?s multiple offers, we hear, on the more affordable units. So, there seems to be a clearing of the market in those areas. So, we think that as, on a comparative basis, the Irvine resale market is actually in substantially better shape than virtually any other market that we can think of compared to ours.



23:05 I think we have a caller here. Is Sylvia on the line?



(to be continued...)
 
Would you guys like me to put all of his responses in blue to visually separate them from the questions, or would that be too hard on the eyes?
 
[quote author="SoCal78" date=1248827691]Would you guys like me to put all of his responses in blue to visually separate them from the questions, or would that be too hard on the eyes?</blockquote>


Socal, no. The way you have it is fine.
 
<strong>Part 4</strong>



<strong>Sylvia:</strong> Yes, this is Sylvia Walker.



<strong>DY:</strong> Sylvia, may I ask what your question is?



<strong>Sylvia:</strong> Yeah, I have two, if that?s alright. The first one is about the Ivy development. Did you have a lot of success with that?... and, I?m wondering if you have information on who the buyers were. Were they young families, young professionals, maybe empty-nesters, or even investors? Do you have information on that?



<strong>DY:</strong> Let me tell you what I can tell you. The information on the buyers is largely privileged, for privacy purposes, on the buyers themselves. But, I will tell you that the buyers are? virtually all of them work in Irvine, most of them currently live in Irvine. They are significantly younger than me, and I?m 58. That might be the extent of what I can characterize without getting into the privacy side. As to the first part of your first question, was it a success? It was an immense success. We had over 2,000 people? I guess it?s between two and three thousand, actually? people who showed up over the opening weekend a couple weeks ago. All 13 of the first phase units were sold and in fact, I think they were actually sold ? I?ve been told by the builder ? within the first couple of hours. So, it was a big success, and I?ll say this ? to link it back, Sylvia, to my previous comment ? I think it was a reflection of where the resale market is in respect of that price point. So, people really saw an opportunity to come in at an attractive price point and decided to go for it. So, we were thrilled with the response and my understanding is people are still calling on the builder for the next phase.



25:25 <strong>Sylvia:</strong> You talked before about wanting to build out existing neighborhoods. Some of those are higher in cost. So, will that mean that any designs or plans for lower-cost homes will be shoved back, or will this push them up to the front, or how would that work?



<strong>DY: </strong>Let me tell you this ? the new product that?s in planning is very much in the full range of housing that you currently see in Irvine today. If there?s more of one type or another? it?s actually meant to be a balance. We always try to build a balance within the community. We view housing in Irvine like a housing ladder, in that, you always have to have a good supply of affordable housing so that people can get on the ladder. Otherwise, they can?t get to the top of the ladder. I don?t know if you know this or not, but just about 50%, in fact I think it?s about 55% now, of buyers of new homes in Irvine are already Irvine residents. Which is to say that somebody got on the housing ladder at three, four hundred, five hundred thousand dollars, planted roots in the town, decided to stay, and decided to go buy a $600,000 home or a $700,000 home. From their equity, they?ve been able to move up as their family needs? more kids come along, more space is needed, maybe there?s a better job and you can afford more(?). We have always followed a policy of trying to meet a market in the full price range. So, directly to your question ? will we see more housing affordable like what you see at Ivy? Yes. Exclusively? No. It will be part of a full range of offerings from top to bottom. Sylvia, thank you for your question. Really appreciate it. We do have another caller so I?ll let you go. Thank you so much.



28:04 (Instructions are given to call in. A call is lost in queue.)



Peter, are you on the line?



<strong>Peter:</strong> I am.



<strong>DY: </strong>Peter, what?s your question.



<strong>Peter: </strong>My question is trying to get Irvine Company?s perspective on a debate that has been long-raging on the forums which is that The Irvine Company owns all their land at such a low price they can tolerate or withstand waiting forever to develop it. There?s a lot of debate over what are the actual short-term needs. Why does Irvine want to develop anything now when the value of the land will always be worth more in the future?...and I?m not saying I even have an indication of what the right answer is? but there are people that basically think they (TIC) are building communities so they must need to do it for some reason and there are others that say, ?No, they really don?t. It?s just kind of their choice.? Could you provide any insight on that?



29:24 <strong>DY: </strong>Sure. First of all, it?s a choice. The Irvine Company is very conservatively managed. We?ve been around a long time. We are structured in order to be around as long as we?ve been around so far, so, since 1846. We?re not going to be the ones to let this place go, so we?re very much long-term thinkers. Having said that, our entire approach? and I want to emphasize this to add to what I said earlier? our entire approach is to go meet a market. We never have a discussion of: ?Well, here?s some land that could sell now or 10 years from now. If it?s going to be worth more 10 years from now, let?s wait 10 years.? We go out and meet a market. Because of the size of our holdings, we can meet markets over several decades. That?s just by virtue of our size. But, we are steadily, prudently, hopefully thoughtfully developing this land, building the homes in order to meet the market that we see. So, we don?t try to build more than the market wants and we don?t try to under-serve the market. It makes no sense for us to under-serve the market. Let me help you out with maybe a reason why. I can see where somebody would say, ?Well, wait a minute. That doesn?t make any sense when it?s worth more tomorrow.? We build shopping centers in this city. So, having homes in this city that will go down and shop at the shopping centers. That helps us. We?ve got office buildings and those people move into those office buildings because there is a robust supply of new housing. It?s one of the main reasons that people move into the office buildings in the city? because, in fact, there are new homes available. If there weren?t any new homes available because we were sitting on our land in order to develop it downstream, then you wouldn?t see the kind of commercial market that you see around the Spectrum. A lot of those people move there because not only is it a great place to have an office and there?s retail nearby and it?s centrally-located, but they can tell their employees, ?Look, you can live in a great community right next door and have a five minute commute.? So, there are a variety of influences and reasons that cause us to really never have a discussion here about waiting for values to go up sometime in the future. We are simply focused on meeting a market. We are now in a down-cycle so there?s not as big of a market to reach so you?re seeing less housing because of the market. In an up-market, we will expand that to go meet that market, and we have ? to many, many more homes than you see, for example, within this year. So, if you understand some of the influences on us? shopping centers, trying to build commerce within the city, fill up office buildings and have a great business center. We?ve got our regional shopping centers, not just our neighborhood shopping centers. All of those things are important to keep to us, and therefore, keep us focused on the fact that we are structured, focused on meeting a market? however large or small it is, depending on the cycle. I want to thank you, Peter, for your question. We might have another one, but thank you so much.



33:13 Do we have Christina on the line?
 
<strong>Part 5</strong>



<strong>Christina:</strong> Yes. Hi, Dan. Thanks so much for coming on and giving us your input. We?ve all been very anxious to hear what you have to say. My question is regarding Mello-Roos. I?m curious, with the current state of the housing market, if new communities? Mello-Roos will increase or if there will be a decrease to help lend affordability to the new plans.



<strong>DY:</strong> Let me talk about Mello-Roos. First of all, let me define the terms here real quickly. In the city, Mello-Roos is a legitimate term and it?s meant to sort of be all of the special taxes, but let me be a little more specific. We really only use, for all intents and purposes, two Mello-Roos-type vehicles. One is an assessment district which essentially finances the infrastructure and the other is the community facilities district which builds the schools. So, you?ll hear me talk about assessment districts and community facilities districts. One of the reasons that they got high in the last round of housing was the inflation in construction costs. We had so much of our basic construction material going out of the country to China and India and other places that we saw a lot of construction commodities sky-rocket. Labor went up. There were a variety of influences on it. So, the cost of building the infrastructure, the cost of building the schools went up significantly. We?re now on the other part of the cycle. So, what we?re trying to do now is? for all of the infrastructure that we?re putting in going forward, as well as helping the school district with the schools? we would hope that the next round, and I think that it will bear out to be true, that the next round will be more affordable. Secondly, we?re working specifically with the school district on the CFD, or community facilities district component? to see if we can help in doing two things. One, making the cost more affordable to the consumer?. to the homeowner. Number two, making sure that now that we?ve got a much better idea of what the build-out of Irvine looks like, that we absolutely have all of the school facilities that are needed for the school district. One of the highest values that we place in our planning questions for a new village is? do they need a school? Does the district need a new school? And making sure that new school arrives in time for the students. As you know, you go out to especially places like the inland empire?and what you?ll find is that whole communities are built and the school doesn?t come along until years later, sometimes never. That affects, in our opinion, the quality of life in the community, and I would even go so far to say it affects the values for homes in that community. We have always worked with the district to make sure that the classrooms are arriving around the time, if not before the time, they?re needed. So, we?ve done a lot of master-planning with the school district to say, ?Just exactly what do you think you need in order to meet the needs of all of the remaining villages??? Adding up all those dollars and then working on a more affordable community facilities district cost as we move forward. But, I think what you?ll find is construction costs will drop, financing costs will drop, and we?re hoping that translates into lower AD and CFD costs as we move forward. But again, inflation and other things will determine a lot on that. But, we?ve very focused on it. We know they?re high. We?re working very hard as a priority to bring them down. Christina, I want to thank you for your question? really appreciate it.



37:58 (Instructions given on dialing in. A call is dropped in queue.)



What I?d like to address, if I could please, is one of the emails that came in on open space and specifically on trails. I was rather astounded, if I could offer a little editorial. You guys are pretty good at editorializing with each other and I?m trying not to but I?m going to offer one here. You had one writer come in and say, ?Hey, I just don?t think they?ve got a good trail system, a walking system, in the City of Irvine.? I found that a rather shocking comment. Not that I?m taking it personally, but let me tell you why I think that to be the case. I don?t know of any other city of this size in America that has a more inter-connected, extensive, city-wide, walking trail system including a ring of wilderness? dedicated wilderness? around it, as Irvine. The original Irvine Ranch was about 100,000 acres. Roughly half of that ranch is in open space, and of that portion that is in open space, about just under 40,000 acres is in wilderness open space that is directly accessible on both the north and the south of Irvine, that could take you from Irvine all the way up to Anaheim where the 91 meets the toll road, or take you down to the water?s edge in Newport Beach. In fact, if you want to try it sometime, we have something called the Mountains to the Sea Trail that runs from Anaheim to the sea and passes through Irvine and gives you a great sense of the trail system that?s in Irvine and how inter-connected and robust it is. It?s really one of the great gems of the city, is their open space system. So, if you really don?t want to take a 40 mile hike and you want to take an hour pedal around the neighborhood, you?ve got great sidewalks, community parks and trails that connect into it. I don?t care what village you?re in. All of them. If you?re taking a more robust hike and you want to move through the entirety of the north of Irvine, we?re putting in the Jeffrey Open Space Trail and you can see the first elements of that in Woodbury itself. If you really want to get aggressive, then you can get hold of the Irvine Ranch Conservancy. That will take you on a Mountains to Sea trail hike. I?ve actually done it. I was in the first group that went from the 91 and the toll road, clear down to the water?s edge and I can tell you? if you saw my picture on the website? it was no easy task. I recovered from it about two weeks later. But it was an absolutely gorgeous tour through the Irvine Ranch and you can see the extraordinary value of the natural open space as well as, and I say this to all of you in Irvine, the incredible asset that you have in that trail system within the city. I went through the city without touching a street. If you move your way around, it?s absolutely fantastic what?s happened through the master-planning process. I think it?s one of the things, along with fantastic schools, that?s created the value that we have?.



42:54 ? We?ll go on to the next call. Are you on the line, David?
 
I'll admit when I heard him say "are you on the line, David?" I went "oh crap, they let AZDavid through! This should be interesting." But he didn't mention how low prices are in AZ or anything else too tough so figured it wasn't him.
 
<strong>Part 6 & Final</strong>



<strong>DY:</strong> My understanding is David wants to know where Dan lives and how much it costs to build a home per square foot. I?m not going to answer what it costs to build a home per square foot for two reasons. One is the company really does not talk about the cost component of the business that it?s in, and secondly, I will tell you that there is no one number. It ranges all over the map. If it?s attached, it?s at one cost per square foot. If it?s single family detached, it?s a whole ?nother cost per square foot. Three stories is more costly than two stories. There?s no one standard cost. But we really don?t talk about what the pro-forma elements are because people then people would generalize and say, ?Well, wait a minute. If the house costs x dollars per square foot, then here?s what something else costs.? They?re not figuring that there?s fees, engineering, infrastructure, schools, parks, and the rest that goes into it.



I live in Coto de Caza, to answer your question. I moved out there after I finished my term as mayor of Santa Ana. I wanted to enjoy a little bit of the wilderness and I got right on the edge of the Cleveland National Forest in a home. I?ve been there through the entire time of raising my three kids. My wife and I raised three kids out there. We would be typical of what we try to build for in Irvine in that our customer is somebody who wants to drop anchor and raise a family. I wanted to move to Irvine. I?ve tried to sell it twice. When we opened Shady Canyon, I was down looking at those villas. I actually took my wife down there the day before it opened and tried to convince her of it. She was convinced. We went back home and we lost on a three-to-two vote. My kids wanted to finish high school with the same kids they went to elementary school with. So, we are in our community, as I hope you are in your community? raising a family and dropping anchor, and not fretting about the value of homes at any given moment. Don?t look at them as a stock. Look at them as a prized family possession?



45:35 Raymond, are you on the phone?



<strong>Raymond: </strong>I am. Thank you for taking my call. I have a two-part question. I apologize if one of the questions, somebody might have already asked. My first question is ? is there a lot of affordable housing that has been planned? An operator told me somebody has asked this question before. I?m not sure if you touched on this subject of how Irvine Company is viewing (?) in terms of how this might or might not affect the current value of the current existing homeowners. All it takes is a couple crimes and people will start to shy away from certain villages and consider it a big deal. ?. Second part question is ? how is Irvine Company planning the community to make sure Irvine continues to be a very diverse community? You probably know this ? Irvine has a huge group of certain Asian population. It?s very big. People love Irvine because of schools and all the amenities around here. But, there?s a tipping point and when a certain group of people gets overwhelmingly popular then other people? Caucasian or Hispanic or whatever their race is? they start to migrate away to other communities. My concern as a Irvine homeowner is how do you do enough planning to make sure Irvine doesn?t turn into a Monterey Park and a Garden Grove, which at the end of the day, as you know, some of these communities? housing prices are not very good.



47:15 <strong>DY:</strong> Even though I did touch on affordable housing, you did bring up an aspect of it that I think is fresh and new and I do want to talk about it. First of all, just a very quick summary. The City of Irvine has a very ambitious affordable housing program? 5% for very low? 10% (indecipherable)? 15% overall for affordable. The 5% for very low, requires that we provide the land and non-profit organizations come in and build that affordable housing. From your question, I hear a concern about maybe does affordable housing have an influence on the value of the community. Let me suggest to you, and I take this position being somewhat of an expert in affordable housing over my years in the business? that it has had virtually, and I will say it has had no effect on the value of homes in Irvine, and let me tell you why. When we made our commitment to work with the city to provide permanent affordable housing utilizing non-profits, we made a simultaneous commitment that all of that housing would have the look, feel, amenities, everything about it would be similar to the other parts of the community, other buildings of the community. So, as I?ve mentioned before, if you move through some cities that have built affordable housing, it?s just painfully obvious as to where the affordable housing is because it?s stripped of all architectural quality and the landscaping is half of what the neighboring market rate building is, etc. We don?t do that. All of the housing in the city gets the same treatment, scrutiny, and quality for architecture, landscaping, access to schools, parks, etc. So as a result, it hasn?t been an issue in the community and it?s been widely accepted. I will tell you from the polling we?ve done in the community, people strongly support the program. Yes, it does have from time to time its detractors, but if you look at the population at large, I?m very confidant about the support that exists there. The second part of your question relates to diversity and what are our thoughts on it. We go completely out of our way to do nothing to steer the community in any direction or another. Whoever shows up to buy a house, we follow the law and sell them that house. Communities evolve and they evolve over time. There are sometimes a large population of people that come in from one part of the world or another and they fall in love with a particular community and at other times they migrate back out. That?s really none of our business. We go out of our way to say that we find it extremely interesting that Irvine has turned out to be as diverse as it is?. There are people from all parts of Asia. There are Iranians there. There are people from every part of the world there in the city of Irvine. I think it?s one of the things that makes it a success. When you look at the level of education of our homeowner irrespective of where their cultural roots are, it?s just extraordinary. If people have a common cause here, a common thread between them, it?s their love of the education system and their love of the look of the community and its amenities and the consistency and quality of the amenities. The fact that one group might like it at one period of time over another is really none of our business and we would never do anything to steer it, if you will. We?re agnostic. Whoever moves in, we?re delighted to see them. We just ask you to contribute to the community as we all do. I would like to thank you for that question. We?re going to take one more from Larry Roberts, who will end the session with us. Larry?



51:48 <strong>LR:</strong> I just wanted to thank you again for taking this time to speak with us. I must say, I?m pleasantly surprised at the content and the real information that you?ve delivered to us. I?m going to tease you for a moment here. When I saw your r?sum?, I saw that you had actually been a city councilman and mayor of Santa Ana. I figured, ?Ok, here?s a guy who will know how to dance around a question if he really wants to?? and you didn?t. You really gave us substantive answers and I want to thank you for that. I just want to say to everybody on the phone that I hope you?ve enjoyed this. I?m glad to have played my little part in it. With that, I?ll turn it back over to you, Dan. Thank you.



52:31 <strong>DY: </strong>Thank you very much. I?ll just say, in closing, that we?re intrigued with this incredible new world of the media. ?? (Insert personal family anecdote here)... We?re all gravitating to this new platform of the new media. It?s absolutely fascinating. I think we?re all going to have a ball doing it. I commend you for communicating with each other and trying to help each other through understanding the largest investment decision you?ll make in your life. I think it?s fabulous. I congratulate you for picking Irvine as your investment of choice. I thank you for it. I thank you from the bottom of my heart. I look forward to hearing the feedback on this on the blog. I?ll be watching you, Larry. Thank you.



53:53 <strong> - END - </strong>
 
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