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  This back-and forth takes five months, and Duckworth is still far from the point where he is ready formally to submit a preliminary plan. But he now feels confident enough to finalize his agreement with Dick Dilsheimer. He pays him $110,000, which represents the money Dilsheimer has already spent on the project, and promises to pay him an additional $125,000, that is, $1,000 per lot, at the time of the lot’s sale. Dilsheimer, who has devoted almost a year to the project, is happy to be out of it. “Joe has his own vision,” he says. “We don’t share it. Our buyers like their forty-acre spreads.”

  Dilsheimer is exaggerating, but he’s right that people like space. A 2004 study, carried out in Columbus, Ohio, asked twelve hundred homeowners a series of questions about hypothetical housing preferences such as neighborhood layout (conventional versus neotraditional), density, and the influence of parks and open space. The researchers analyzed people’s preferences in the context of randomized combinations of potential neighborhood characteristics. “Despite the popularity of [neotraditional] projects among planners and urban designers, our survey results indicate less interest on the part of the home-owning public,” the authors concluded. “In general and all else being equal, people prefer low density.”2

  This sounds like bad news for Duckworth’s project. However, the Ohio study also concluded that there was a small market for village-style developments: “Although our results indicate that on average the lower-density choice was preferred, we found that the mean respondent would choose the higher-density neotraditional-style neighborhood under a range of plausible conditions.”3 These conditions include the presence of a park, shorter commuting time, and the adjacency of land in permanent agriculture. The Wrigley tract has most of these characteristics, so while Duckworth knows that popular demand for smaller lots and higher density is probably limited, he believes it will be large enough to make his project successful. He negotiates a revised contract with Dr. Wrigley, the landowner. Since the project is, in effect, starting afresh, Duckworth needs more time, and he asks for an extension of the option to buy, which costs him another $60,000 advance.

  Dave Della Porta is an energetic man in his late thirties with dark, curly hair. He was one of the first people Joe Duckworth hired at Realen. At that time Della Porta was a young lawyer handling real estate in one of Philadelphia’s big downtown law firms who wanted to get into the development business. “Joe taught me the ropes and put me in charge of buying land,” he says. Della Porta quit Realen, shortly after Duckworth left, to start his own development company, Cornerstone Communities. Cornerstone’s business is mostly building low-rise apartments and condominiums in the suburbs, but Della Porta also builds a small number of single-family houses and develops suburban subdivisions. Cornerstone Communities has six employees and operates only in the Philadelphia area. “I want to be able to drive to any project from my office in no more than an hour,” he says.

  Della Porta has collaborated with Duckworth from time to time. He has been the developer on one of Arcadia’s projects and a builder in another, and Duckworth has invested in several Cornerstone developments. Della Porta will be a partner in the Wrigley tract deal. Arcadia will be in charge of buying the land and overseeing the permitting process with the township, while Cornerstone will be what Della Porta calls the “managing partner,” responsible for building the roads, sewers, and other site improvements, and marketing the lots to builders. The equity for the project, about $2.5 million, will come 90 percent from Arcadia and 10 percent from Cornerstone. More than half of the Arcadia share will come from Duckworth himself, making him the majority investor.

  The so-called soft cost of a development project is the cost of the various planning, engineering, and infrastructure consultants. In the case of the Wrigley tract, this will be about half a million dollars. “You never borrow up-front costs,” Duckworth tells me. “That’s the price of getting into the game.” The main expense is the hard cost — buying the land and building the infrastructure — which will add another $7 million. Five million dollars of this will be debt in the form of a construction loan from a local commercial bank. The loan, arranged by Cornerstone with Arcadia’s equity as collateral, will be repaid as lots are sold. That is the real risk. “Two or three years from now, when we start to sell our lots, there could be a downturn in the economy,” Duckworth says. “If house sales slow down, builders will not buy lots, and we’ll be left holding the bag for several million dollars, depending on exactly when, in the five-year process, the downturn occurs.” Even without a downturn, Duckworth may not get the prices he hopes for. Londonderry is a little outside the main development areas of Chester County, and the market for first-time buyers is very price-sensitive, so the success of the project will depend on keeping costs low, and on providing an attractive development that home buyers will see as a good value.

  One of the reasons Duckworth has taken a partner is that he’s busy. He has a conventional development of high-end houses nearing completion in an established suburb of Philadelphia and is shepherding another neotraditional project — Woodmont — through the delicate final stages of the permitting process. At the same time, he is exploring several other possible projects, including a village cluster in nearby Sadsbury Township, as well as a low-rise condominium in downtown Wayne, a Main Line community. That is typical; Duckworth is always looking for new prospects. This is not only because the permitting process for any particular project takes so long; like all developers, he knows that many of his deals will fall by the wayside.

  Duckworth has recently suffered two setbacks. The first was a development for a beautiful 483-acre tract called Betty’s Neck, overlooking Assawompset Pond in southeastern Massachusetts. The land belonged to a family of cranberry growers, driven to sell by collapsing cranberry prices. The town of Lakeville wanted to buy Betty’s Neck for a park but was unable to raise the funds. The family’s planner contacted Duckworth to see if Arcadia could develop the site, leaving the land around the pond accessible to the public. Duckworth made a proposal for developing five hundred lots in several village layouts on half of the developable land, conserving most of the site in its natural state. He was enthusiastic about the project. Not only was this an exceptionally attractive location but it promised to be very profitable. “It’s just within commuting distance of Boston. Over the life of the project, house prices will likely rise as high as six hundred and fifty thousand dollars, so you don’t have to be a Wharton grad to see that it’s off the charts.” The planner’s strategy was to present a conventional subdivision plan to the town and then unveil Duckworth’s village option. But events took a different turn. A land trust, which had been encouraging the town to buy the land, stepped in. Thanks to a last-minute grant from the state, the town and the trust made an offer that the family accepted. Duckworth suspects his proposal may have been used to leverage more money from the state, but he’s philosophical about it. “That’s the way the game is played. The trust option is easy money, without any of the headaches of development,” he says.

  Betty’s Neck didn’t get as far as the planning stage, so Duckworth didn’t lose any money. That wasn’t the case with another project. Fairstead was a large development planned on three hundred acres in Lancaster County. The land belonged to Armstrong Industries, which has its world headquarters in Lancaster. The planned development was to include a village center as well as a full range of housing types, fifteen hundred dwellings in all. Fairstead had all the makings of a flagship project for Arcadia, including a sympathetic — and patient — corporate landowner who was interested in the long-term future of the site. The township was enthusiastic. After three years of planning, just as approval was to be granted, Armstrong, weighed down by asbestos-related lawsuits, suddenly declared bankruptcy. Under Chapter 11 proceedings, the contract with Arcadia was canceled, and Duckworth and his two developer partners were out almost a million dollars.

  Duckworth has a personal reason for asking Dave Della Porta to become involved in the Wrig
ley tract. Duckworth’s eldest son, Jason, has just joined Arcadia, and Joe wants Della Porta to work with him and train him, just as he was trained at Realen. Jason Duckworth, thirty years old, tall and slim, doesn’t resemble his father. Nor is he an MBA. He graduated in urban studies from Princeton, where he was Phi Beta Kappa and received a scholarship to Oxford. There he learned Mandarin in the summer and got a master’s degree in geography. While still in England, he was recruited by McKinsey, an international business consultant, and moved to New York City. “When I graduated from Oxford, Arcadia didn’t exist yet. In any case, I didn’t give much thought to working in real estate,” he says. “I had an exciting, well-paid job in New York, working for a high-profile company.” At Oxford he had met Angela Lee, another McKinsey recruit, and they married. In 1998 he moved to a venture capital firm in San Francisco. Angela, who had left McKinsey to teach math in a New York charter school, got a teaching job in a public school. “It was the beginning of the dot-com boom, and San Francisco was the entrepreneurial capital of the world. I was the first of my group at McKinsey to go. A year later, twenty percent of my class was there,” Jason says. Through his father, Jason met Robert Davis, the developer of Seaside, and his wife, who had just moved to San Francisco. The couples became friends. “I had been an urban studies major,” Jason says. “So I loved talking to Robert about town planning and architecture.”

  The dot-com boom peaked in 2000. Jason could see that his firm’s investments were not performing as expected. “I liked the work, but I was concerned that, with my liberal arts background, I wasn’t likely to be one of the stars in this more difficult environment. And Angie was expecting our first child, so I was thinking about the future,” he explains. Jason knew that Arcadia was getting lots of work and thought that, with his background in urban studies and his experience in business, he could contribute to the company. “But it wasn’t an easy decision. I had so much invested in the other career path,” he says.

  Finally, he left the venture capital firm and joined Arcadia’s San Francisco office. I ask Jason if he had been influenced by working with Robert Davis. “Oh my gosh yes,” he says. “Robert’s story is inspirational.” Jason and Davis spent a month at Seaside, where Jason worked on a plan for the sale of the final properties. He loved Seaside. “I’m a wannabe architect,” he says. “I took every architecture course I could at Princeton. To be able to do something like Seaside is great. From Robert I learned that, quite apart from the money, real estate development can be really satisfying.” Jason spent the next eight months in San Francisco, helping Davis on several Arcadia projects. Finally, he decided to go back to Philadelphia. His father had more work than he could handle and was thinking of recruiting an MBA from the Wharton School. “Mainly for personal reasons — both our families are in the area — it made sense to go back,” says Jason.

  “It was a big move for Jason to join Arcadia,” says his father. “To his peers, developing residential real estate is one step above running a garage.” Duckworth is obviously pleased that his son has joined him. “When I was at Toll Brothers, I was always against nepotism — I was afraid I would have to work under some incompetent person,” he says. “But now that I have my own company, I’ve brought Jason in, and I’m trying to get my other son, the seminarian, involved.”

  7

  On the Bus

  Narrow streets in neotraditional neighborhoods make for slower traffic — and lemonade stands.

  Before the Arcadia Land Company can present a plan for approval, Londonderry must amend its zoning. A conventional zoning ordinance is a straightforward document. The ordinance that currently governs the Wrigley tract, for example, consists of only three pages that describe the permitted uses, minimum lot sizes, and basic building characteristics, such as maximum footprint and height. A neotraditional ordinance is slightly more complicated, since it defines not only lot sizes, setbacks, street and lane widths, and the required area of open space but also various architectural features of the houses.

  The new ordinance is needed to allow Arcadia to build 125 houses instead of 86. Without this increase, the development will not be economically feasible. Work on drafting the new ordinance begins at the same time that the planning commission reviews the first sketch plan. Tom Comitta has written a similar ordinance for a nearby town, and Jason Duckworth, who is now working on the project, volunteers to rough something out using Comitta’s ordinance as a model. “It might sound odd to have the developer involved in this way,” says Comitta, “but Jason is a bright, energetic, resourceful person, and since the township is interested in getting a successful project, we appreciate his initiative.” A working group is formed that includes Comitta; Jason; Bob Harsch, the township engineer; John Halsted, the township solicitor; and David Sweet, who advises Londonderry on zoning.

  Over the next three months this group meets half a dozen times, usually in Comitta’s office, drafting the language of the ordinance. One point of contention between the developers and the township is the precise definition of open space. Jason feels that anything not a private lot should be considered open space, while Comitta maintains that open space has to be accessible and usable. Another issue is the width of streets. Londonderry ordinances typically call for a fifty-foot right-of-way, which means that the actual pavement is thirty-four feet wide. Arcadia wants the pavement on minor streets to be twenty-four feet, with parking on both sides as well as two narrow lanes of traffic. Narrow streets are a crucial ingredient of neotraditional neighborhood design since they bring buildings closer together, creating a more intimate and defined street. Narrow streets also slow down traffic, which makes it more pleasant — and less dangerous — for pedestrians (a person dies if hit by a car going more than forty miles per hour). According to traffic studies, a twenty-four-foot-wide street with cars parked on two sides slows traffic down to fifteen miles per hour, since cars are obliged to stop to let each other pass, something that traffic engineers call yield movement.1 Of course, narrow streets will also mean lower construction costs for the developers. But the township is worried about traffic accidents and legal liability. The two sides finally compromise on a twenty-four-foot-wide street but with parking on only one side, which raises the speed of traffic slightly, to twenty miles per hour, but produces the street dimension that Arcadia wants.

  Finally, in mid-July, the ordinance is ready for review by the township planning commission. The seven commissioners, who meet publicly once a month, represent the three established groups of the township: estate owners, farmers, and longtime residents. “The Arcadia proposal is unprecedented,” says Tim Cassidy. “Our commission is not generally well-disposed to residential development, and reducing the number of units is considered a great victory. And here is a developer asking for a fifty percent increase in the number of houses.” Despite the earlier favorable reaction to neotraditional development, and their stated desire to try something new, it turns out that the planning commissioners are far from unanimous. One, a farmer, is dead set against anything that increases density. Another, who owns a large horse farm, is concerned about where the new development will get its water. What finally sways the debate is a comment by a man in the audience. “We’ve been doing conventional development and we hate it,” he says. “Why don’t we try something new, and if we don’t like it we won’t do it anymore.” It is, as Cassidy, who votes in favor, puts it, an epiphany moment. With one commissioner absent, the vote is four-to-two in support of the neotraditional ordinance.

  Although the final decision on the new ordinance will be made by the supervisors at another public meeting, the recommendation of the commission carries weight, so Jason is pleased with the result. A month later he learns that the situation has changed. It turns out that there was a procedural slipup. When the minutes are read at the planning commission’s next meeting, they reveal that the four-two vote was not on the ordinance itself but only on a motion to advertise it. (The township is obliged by law to publish any new ordinance in advan
ce of the supervisors’ meeting.) A second vote is required. This time, one of the original supporters, a veterinarian, is away on a trip, while the previously absent member, now returned from vacation, votes against the motion. That makes it a three-three tie.

  Jason fears that a divided planning commission will make it harder for the supervisors to support the project. To make matters worse, there is disturbing news from the county. Pennsylvania counties have no authority to issue permits or approvals — theirs is strictly an advisory role — but state law requires that they review any zoning changes. The Chester County planning commission has contacted Londonderry and asked for an extension to its customary thirty-day review period. The commission has some unspecified reservations about the new ordinance that they want clarified before they vote. If the county raises serious objections, there is a real possibility that a skittish board of supervisors could vote against the ordinance. “I don’t think this is a cakewalk any longer,” Jason e-mails Dave Della Porta.

  While a vote on the Londonderry ordinance is slowly coming to a head, Arcadia is in the early stages of a project in nearby Sadsbury Township. This development requires a controversial zoning change, from industrial to residential. To build support in the community, the Duckworths have organized a bus trip to Kentlands, a large neotraditional development in Maryland. They have invited the Londonderry supervisors and members of the planning commission to come along, too.