The Montage in San Antonio
By Mark Fogarty
6 min read
ION’s Water System Reduces Use, Adds Efficiency for Kittle
There are two ways an affordable housing manager can run a more efficient shop. One is the efficiency gained from experience, and the other is savings from new technology. Kittle Property Group is using both techniques.
The Indianapolis-based developer has added an aggressive water conservation management system from ION Water of Louisville, KY to achieve additional savings beyond what it has learned to conserve from decades of operations.
Jeffrey L. Kittle, president and chief executive, pointed to the Montage in San Antonio as a recently completed project, 60 to 70 percent leased, that shows both kinds of efficiencies.
At the 216-unit Montage, Kittle is using ION’s systems in an effort that has saved a total of 800 million gallons of water throughout its footprint.
The average savings achieved per unit is about 58 percent, from 100 gallons per bedroom to 42 gallons. The firm has almost 10,000 ION water meters in use at its properties, submetering water and sewage. It also uses ION’s leak detection system that saves water by finding leaks much sooner than by management’s observation or by the tenant’s reporting.
And while leaks are unavoidable, the system makes it easier to get in front of unusual situations.
“We had high usage out of one property, and we were digging into it, and we had one unit where we found out that someone’s child wanted ‘white noise’ so they kept the faucet running all night long,” says Kittle.
Water usage is one facet of Kittle’s environmental efficiencies, designed for “reducing expenses, creating savings, cash flow, durability and adding value.”
ION Water says, “Our water optimization platform helps clients use 50 percent less water than the industry average, saving customers 30 to 70 percent on monthly water bills. Property developers can use these savings to validate improved proforma during underwriting, benefiting loan terms with equity and debt partners.”
ION hopes to reduce water consumption in multifamily by 30 percent by 2030. Other affordable housing clients using ION’s system include Dominium, VestA and Bayside Communities.
A Long History
Besides the savings from water usage, Kittle also details the management efficiencies his firm has developed in 75 years of operation.
“We are trying to use prototype designs across our projects that we develop, in order to have cost predictability and cost efficiencies when we build, and then as important as that when we operate the property, so they can operate efficiently for at least the 15-year compliance period,” he says.
Currently, Kittle has several prototypes that can be adapted to a mix of unit sizes.
“And we did try to utilize the prototype designs at the Montage property, for the 216 units there.”
Using these standardized plans to ensure time and cost savings, Kittle was able to achieve a cost-efficient $123,000 per unit, bringing the total construction cost for the Montage to $26 million.
“We use prototype designs that we built in the past, and then we make tweaks and improvements to it after each job or where we would see some problem or issue or inefficiency. And then we try to implement that in our plans as we go forward,” he says.
“On the development side, we only have certain types of sites that work for us. We’re not going to be doing urban infill sites that are a couple of acres with 200 units because our prototype designs are between one and four stories.”
A good amount of land is required for Kittles’ efficiencies. “We generally need ten to 20 acres to do that, though. The site in San Antonio is somewhere in that 15-acre range. So, it allowed us to put our prototype design in whereas we couldn’t do it on a smaller infill site, it wouldn’t work for us.”
Kittle’s prototype calls for new construction only, of one- to four-story buildings.
At Montage “there are five buildings, a clubhouse and a pool and it’s 216 units. And this is a previous design that we’ve used and enhanced where its three-story garden-style walk-up buildings,” Kittle says.
The firm looks to achieve a balance between efficiency and livability, Kittle says, “by doing it in such a way that the exterior building is pleasing to look at and the interior of the apartment homes are practical and livable.”
A Few Curveballs
Reusing prototype models achieves efficiencies of scale on construction commodities. However, there are things the developer can’t control, like prices going haywire on lumber during the pandemic.
“It got as high as the low- to mid-$30,000s a unit for lumber at the peak. And now it’s in the $11,000 to $14,000 a unit range. So that’s a huge difference.”
But in normal times the efficiencies are dramatic, Kittle says.
The prototype “allows for national vendors supplying similar materials across our footprint so we can get the best national pricing, both on construction commodities and standardized appliance packages.
“We have standardized kitchen, cabinet and plumbing layouts. Also, the three-story product for families or the three- and four-stories for seniors have high efficiency.”
The Montage is mostly a family development, with a few senior renters scattered here and there.
Kittle also strives for efficient use of rentable interior space.
“That target is that 90 percent of the space we’re building is rentable. So, there’s not much common area, which helps our costs overall. And then we have standardized base files that can be shared or coordinated with mechanical, electrical and plumbing and structural designers,” he says.
“Our unit plans continue to be refined to meet minimum square footage requirements for the different locations that we’re in as costs have gone up over the last three years.”
Canny design helps achieve this. Kittle says the firm asks itself, “Are there ways that we can continue to keep the livability high, but if a two-bedroom, minimum square footage is 1,000 and we’re building out 1,050, can we take 50 square feet out to save on costs, but still keep the livability?”
On the financing side, Montage used four percent Low Income Housing Tax Credits. Enterprise Community Partners was the syndicator/investor and Redstone Capital was the lender. The total development cost was in the $195,000 per unit range, Kittle says.
