SUmmit 2019

Keynote Speakers

Featured Panelists

Breakout Sessions

Regulation Track

Overcoming Regulatory Barriers to Using Offsite Construction [Session 1A & 2A]

Carol Galante, Faculty Director, Terner Center for Housing Innovation, UC Berkeley; Scott McKown, Assistant Director, Minnesota Department of Labor and Industry

The regulatory side of offsite construction encompasses many areas, including building codes, inspections protocols, and local regulations. The regulatory track looked at changes the state of Minnesota has already made to enable offsite construction, and regulatory approaches that have been used in other states. The top insights included:

• The state of Minnesota uses a straightforward and modernized approach to approve and inspect prefabricated modules and panels for residential construction. The state has a streamlined process for interacting with manufacturers and local officials. This is a competitive advantage for Minnesota, but it is not well-understood

• There is a similar regulatory process in place in California, where state approvals have been relatively smooth. Although there have been some initial problems with local officials, largely because they lack familiarity with the state process, they are beginning to overcome any problems through education and transparency

• Successful education approaches include factory tours and high-quality detailed video documentation of manufacturing and inspection processes

Finance Track

Financing a Business Model in Offsite Construction [1B]

Justin Van Leuvan, Director of Sales & Business Development, Katerra; Christian Lawrence, Chief Executive Officer, Rise Modular

Financing Developments in Offsite Construction [2B]

Dan Smith, Senior Vice President, U.S. Bancorp Community Development Corporation; Chris Wilson, Senior Director of Real Estate Development, Project for Pride in Living

The Finance track looked at the implications for financing both individual projects and entirely new factories. Participants considered the financial implications of this radically different approach and explored several models now in the marketplace. Top takeaways:

• 45% of construction funds are needed upfront to pay the costs of manufacturing the modules before they are delivered to the construction site

• While traditional construction carries a real estate risk, offsite construction carries both manufacturing and real estate risk. It will take time for lenders to learn to account for this, and consistent partnerships will be needed to validate the model

• Offsite facilities are capital intensive and risky, creating challenges to get upfront capital, but a steady pipeline of projects could reduce this risk substantially

• Banks are unlikely to be innovative risk-takers. Early projects may need to explore new sources of funding. Both Katerra and Rise Modular received large up-front capital infusions from non-conventional sources for initial investments

• Developers believe that a key benefit of using modular is to complete a project in less time and start generating revenue sooner, and that later projects should also enjoy construction cost savings. There is a steep learning curve, and the developer, working with the manufacturer, likely must take the lead in educating the architects, general contractors and lenders

Market Dynamics Track

Market Acceptance and Building a Demand Pipeline [1C]

Jamie Stolpestad, Managing Partner, Minnesota Opportunity Zone Advisors; Paul Mellblom, Principal, MSR Design

Offsite Construction Techniques in Minnesota – Lessons Learned [2C]

Harry Melander, President, MN State Building and Construction Trades Council; Jim Boo, Principal, Team Boo at High Pointe Realty; Darrell Debele, Wall Plant Manager, Frana Construction; Paul Okeson, CEO, Dynamic Homes

This track focused on bringing together a wide range of participants in the existing housing eco-system to demonstrate the similarity of physical components within different housing typologies. These sessions illustrated several lessons:

• Key element of buildings are consistent approach price points and can be thought of as “modules” (e.g., bedrooms, bathrooms) which are combined into a final product in consistent, predictable ways.

• The exterior skin of a building, (e.g., colors, window finishings, balconies) can drive a wide range of architectural styles and differentiation without changing the basic structural model.

• Interior finishes can also vary widely, allowing for differentiation in final product and price point

• By distilling a project down to its core components, repeatability and cost-efficiencies can be achieved and partnerships across different final product type allow for the depth and consistency of demand needed to sustain offsite modular manufacturers.

• Minnesota businesses in the past and the present have experimented with offsite construction – some have been successful, some have not. Past barriers have included challenging regulatory environments and a lack of necessary partners

  Keys to local success include labor retention, standardized roles and responsibilities, and overall workforce acceptance of offsite construction

Design & Engineering Track

Sustainable Building: Opportunities for Improved Environmental Performance [1D]

Moderator: Richard Graves, Director and Associate Professor, Center for Sustainable Building Research, University of Minnesota; Panel: Simona Fischer, Architect, MSR Design; Pete Kobelt, Director - Mass Timber, Katerra; Ivan Rupnik, Partner, MOD X

Tailored Designs and Customer Specifications [2D]

Jason Landry, Founder, Jason Landry Consulting LLC

The Design & Engineering track focused on past examples of offsite construction, internationally and within Minnesota. Environmental sustainability was also a theme within the track. Highlights from these discussions included:

• Offsite construction offers a host of benefits for environmental sustainability, including improved efficiency and reduced waste in the manufacturing process

• Several other countries, including Sweden, have embraced offsite construction. Notably Japan has widely adopted modular construction in part because it offers improved climate and earthquake resilience

• In general, other countries were able to develop offsite and related sustainable building practices when they invested in robust research and development efforts, supported by a triad of academic research and education, government support, and private sector pilots. This triad of support is needed in our region to make the same advancements

Production & Delivery Track

The Power of Vertical Integration: Seamless Supply Chain [2E]

Pete Kobelt, Director - CLT Mass Timber, Katerra

The Production & Delivery track examined in detail Katerra’s approach to supply chain and logistics as well as Skender’s approach to labor and workforce issues. Some of the most important highlights included:

• Katerra was founded on the belief that it can achieve efficiencies by fully owning its supply chain, from sourcing its raw materials through to installation

• Katerra has achieved integration through venture capital and acquisitions of existing firms. It can ‘work with anyone,’ and is currently offering a catalog of products to general contractors and other customers nationally