Shortly after sharing news that the Center for Offsite Construction had been invited to present Handshake at ACREL’s next meeting, Jason Van Nest sat in his office at NYIT and opened a new conversation with Senior Research Fellow Edward Palka, who joined remotely. Their discussion ranged from housing policy and rent regulation to offsite construction, legal reform, and the regulatory changes needed to make better building outcomes possible.

Jason: When you joined the CfOC, you said you were moving from “architect as problem-solver” into “architect as policy operator.” Looking back over the last 12–18 months, what’s the clearest moment where you realized: if we don’t change the rules, we can’t change the outcomes? 

Edward: There was not a single specific moment, but it really came out of the constant project friction we would see while working at Assembly OSM. This ranged from specific zoning constraints that made volumetric modular non-viable on most sites in NYC, to single lines of prescriptive code language that slowed project approvals by months, to varied state-by-state approvals for factory processes that added time, cost, and risk. The backdrop of this was (as with most off-site companies) the bulk of the time and effort was focused on perfecting the physical product, but it became clear that the physical product was not the issue. With that idea in mind, it then became clear that if I really cared about making this work, that’s where I should focus my time. 

Jason: In your Vital City piece, you argue that NYC’s rent stabilization is trying to govern radically different building realities with one blunt annual percentage. A few months into the Mamdani administration, what do you most hope the article continues to cause inside city/state decision-making — not as commentary, but as a change in how power gets exercised?

Edward: I hope it helps lead to modifications in how the Rent Guidelines Board (RGB) regulates the affordable housing stock in the city. I think the administration has demonstrated that while they have a bold vision, they are also grounded in reality. I hope they recognize that what I propose is not in opposition to a “Rent Freeze,” but makes the intent of the policy promise achievable and sustainable. 

The RGB should not approve blanket rent increases (or freezes) for the entirely of the regulated stock as they currently do. Instead, they should create subcategories of buildings and approve different rates depending on the real needs of both the residents and building operators. The RGB already does approve different rent increases for “Lofts.” A similar approach could be taken for buildings of different ages, sizes, AMIs, and based on the operating income and compliance record of owners. This can ensure a more affordable city without putting the aging housing stock at risk. 

Jason: Staying with that argument: your proposed “smarter framework” basically reconnects revenue to performance (i.e., conditions and compliance), instead of treating every building the same. If you had to translate that into one sentence for the public: what’s the principle New York should adopt — and what’s the biggest political or administrative obstacle to implementing it?

Edward: Residential buildings across NYC are different in location, size, age, typology, affordability, and ownership, and our regulatory environment should acknowledge (and actually encourage) that variation. 

Uniform percentages are legible. They’re easy to message. A performance-based framework (or, at least a slightly more nuanced one, which is likely more politically viable) requires data, administrative capacity, and negotiation. But, it’s the prudent long-term move. It would be more work upfront, but it would create a more affordable and sustainable housing stock, and also take the yearly RGB vote out of the front-page news. 

Jason: You’ve been researching Operation Breakthrough and called it a “hidden successful legacy.” When you look at how offsite construction is discussed today, what’s the most painful “nothing has changed” déjà vu you see in the rhetoric — and what’s the under-told lesson from Breakthrough that today’s leaders still refuse to absorb?

Edward: The painful déjà vu is how the promise of the industry is discussed: offsite construction as an innovation that will dramatically improve the speed and cost of housing, solving affordability issues and closing a productivity gap that has persisted between construction and other industries. That was the exact conversation in 1969, and it still is today. (As an aside, it’s hard to have a discussion about ‘modular’ without someone talking about planes and the aerospace industry; Boeing was the developer of one of the Operation Breakthrough sites!) The industry keeps framing modular as a product disruption, decade after decade. 

But Breakthrough’s hidden success wasn’t a physical system (although precast panels did gain reasonable market purchase). It was the development of the HUD Code and a move towards state adoption of building codes. 

The HUD Code is a national code specific to “manufactured” housing (which is distinct from ‘modular’). The HUD Code helped raise the quality of manufactured housing (from “trailer-homes”), but also allowed companies to actually “manufacture” the homes because there was a single federal approval tied to them. Not the fragmented jurisdiction by jurisdiction codes, approvals, and inspections that govern for all other types of construction. This allowed for more housing to successfully be standardized, and produced more efficiently and affordably. The push for the HUD Code was directly inspired by the difficulties experienced in trying to implement Operation Breakthrough at sites across the country. The ROAD to Housing Act is currently being proposed to expand the HUD Code.

Related to the above, Operation Breakthrough is credited with the move to state level building codes (which govern buildings besides “manufactured” homes). During and immediately after Operation Breakthrough, roughly 30 states were in various stages of adopting state level codes; a number that has stayed nearly unchanged until today. That push was directly a result of advocacy that started with HUD during Operation Breakthrough to make it easier for industrialized construction techniques to gain traction because of a more predictable regulatory environment. While not a federal level code, it did considerably consolidate a very fragmented code environment, allowing for more standardization to be applied to projects within states. This was coupled with a consolidation of model codes into the ICC, which further helped align codes across states. 

So, on both fronts, Operation Breakthrough directly shaped the regulatory landscape we have today. 

Jason: Let’s connect that history to the present: in your view, what are the top zoning/code constraints in NYC that most directly prevent offsite construction from becoming a normal procurement option (not a novelty project). How would you prioritize fixing them?

Edward: The two changes that I see as being most discrete (and therefore actionable) and impactful would be:

• Zoning Height Bonus for Modular Projects: The NYC Zoning Resolution is based on a 15’ ground floor and 10’ floors above. While not specific to a construction typology, modular approaches have thicker floor and ceiling assemblies, meaning that depending on the number of floors in a building, a modular residential building might lose 1 or 2 floors compared to a concrete building. That makes the project not “pencil” from a developer’s perspective. If modular projects were given an extra 1’ in height per modular level, projects would become viable without becoming meaningfully out of scale with their underlying zoning districts. This could be done through a single exception in the zoning resolution, similar to what the city has done in the past to encourage buildings to include additional insulation.
• Cross-Project CCD1s and Public Database: A Construction Code Determination (CCD1) is a formal ruling from the NYC Department of Buildings on a question related to the building code for a specific project. These are a very helpful and essential tool, especially for modular projects where exceptions are often needed because modular systems typically don’t comply entirely with rigid prescriptive code language. These determinations, however, can take months to receive and need to be submitted again for each project. If there were a public database of these CCD1s, or even better, if they were valid across projects, project risk and timelines would be meaningfully reduced, and projects could build on and learn from each other. 

There are plenty of other things that should be changed, but I think those two are the most potentially impactful and immediately actionable. 

Jason: Handshake has now been in the room with serious legal minds (including going in front of JEBURPA) and you’ve watched it evolve as it finds its audience. What did you learn by watching that conversation land (or not land) with legal experts, and what are your hopes for what Handshake becomes over the next year: a provocation, a drafting agenda, a coalition tool, or something else? (And what would “success” look like in concrete terms?)

Edward: What landed was the issue: housing production is constrained not just by technical capability, labor and material costs, capital, and land, but by outdated legal structures. 

What didn’t immediately land was what the specific change being proposed would mean in practical terms. Although it has a clear corollary to other industries, the change in fundamental contract structure was hard to wrap one’s head around in any meaningful detail. 

Over the next year, I hope it becomes less of a provocation and evolves into a template contract document. 

Jason: Related, a lot of industries don’t change until there’s a new default legal stack that matches the business reality. When you look at housing/offsite, what’s the single most important legal “unlock” you want Handshake to help create? What are the things that would make CTO-style catalog procurement feel normal rather than exotic?

Edward: I think there need to be a few people/organizations willing to stress test the new contracting structure. Until there are real case-studies demonstrating the new approach, wider buy-in will be impossible. No amount of drafting and redlining will amount to anything substantial without real life projects. 

To do that, of course, a first version of a full template contract document testing the CTO framework needs to be drafted that can be iteratively refined over a few small case-study projects. 

Jason: Turning to the Road to Housing Act, the CfOC notes frame CTO as a market that only works when it’s pre-organized by interface standards and pulled through by aligned federal procurement incentives. If you could add one CTO-oriented provision (or strengthen one that’s implied) to improve the bill’s odds of producing real-world adoption, what would you target? What would you want legislators/staff to understand about why interface standards are the enabling technology (not a technical detail)?

Edward: You never want to be stuck in a “sole-source” situation. It makes you entirely reliant on a single supplier, which is incredibly risky. Without interface standards, that risk is ever-present, with each facility producing their own slightly different events. Interface standards are essential because they remove that risk and also allow suppliers to compete based on their actual capability to deliver a product, not based on IP, or the fact that they are the only compatible option on a bespoke project.