BUSINESS AND MANAGEMENT OF TJ DEVELOPMENT, INC. AND DVD DEVELOPMENT, LLC
General Information
TJ Development, Inc.
TJ Development was formed in 1995 as an Arizona corporation and, through its owner, is a licensed general contractor in the State of Arizona. TJ Development designs and builds single and multi-family homes, primarily in urban residential areas located in or around the Phoenix-Mesa MSA, with a focus on affordable housing for low to middle-income individuals and families. The Phoenix-Mesa MSA’s population growth has been significant over the past several years and is fueling what we believe to be a very strong new housing market. TJ Development typically offers single-family homes at prices ranging from $130,000 to $280,000, excluding customized options. TJ Development is wholly owned by Christopher D. Jones, its President and CEO, and his wife.
DVD Development, LLC
DVD Development was formed in 2004 as an Arizona limited liability company. DVD Development was primarily created to minimize business risk and taxation issues arising from the tremendous success of TJ Development’s home building and construction business. All equity ownership of DVD Development is held by Mr. Jones. Since March of 2005, DVD Development has become the main entity vehicle through which new lot purchases are made, developed and financed. As DVD Development is not a licensed general contractor, DVD Development engages TJ Development to construction all of its planned spec or pre-sold residential developments.
Our Philosophy and Market Niche
Our homebuilding and land development niche is focused on affordable residential housing built on small- to medium-sized in-fill land parcels in both established and newly developed communities. As a result, it is not our intent (under or current business plan) to compete with high volume builders; instead, we focus on single lot developments or limited, multiple lot developments that are outside the interest of such high volume builders. Based on our market niche, and through our affordable, volume building approach, we are typically able to target properties with strong profitability potentials and relatively quick completion timetables.
We seek to distinguish ourselves from other production homebuilders and to respond rapidly to changing market conditions through business strategies focused on:
- Targeting the entry-level housing market. Our past (and expected future) success has, and for the foreseeable future will continue to be rooted in the entry-level housing market, which we believe is a market segment that is continuously expansive and has enjoyed relatively stable demand over the last several years. Consequently, our residential housing projects generally target low to middle-income homeowners and first-time home buyers who seek affordable home value, as well as professional real estate investors looking for value-based properties.
- Conservatively positioning our land acquisition thresholds. We seek to maximize our profitability by following an established land acquisition policy that minimizes risks associated with land investment. We accomplishes this by:
- selecting only those properties that meet internal return-on-investment thresholds based on conservative plan budgets;
- focusing on development sites where we expect to have (i) less than a five-month lot inventory period for single-family, single-parcel development projects, and (ii) less than a two-year lot inventory period for multi-family or small subdivision (100 units or less) development projects; and
- completing comprehensive due diligence prior to purchase regarding zoning, utility services and other development expenses.
- Possessing market familiarity. We believe that understanding the communities in which we build enhances our ability to rapidly respond to market changes, as well as identify promising land acquisition opportunities. Consequently, our acquisition and sales departments expend considerable time and effort in understanding market dynamics and in monitoring market trends.
- Effectively managing our costs. Our operations are structured based on overhead minimization principles. Specifically, we seek to reduce costs by:
- using subcontractors to carry out home construction and site improvement on a fixed-price basis;
- obtaining favorable pricing from subcontractors through long-term relationships and stability of our project pipeline;
- shortening the home construction cycle;
- minimizing overhead by centralizing administrative activities; and
- maintaining management information systems to allow the monitoring of homebuilding production, scheduling and budgeting.
- Building consistent plan designs. The use of established home designs allows us to reduce unknown cost-based variables associated with home construction and site improvement activities. As a result, by using “tried and tested” designs, TJ Development and its subcontractors can gain synergistic efficiencies in subsequent built-outs, which can enhance profitability and reduce the home construction cycle.
- Leveraging our relationships with subcontractors. By fostering long-term relationships with its subcontractors, TJ Development is able to have greater quality assurance in the homes it builds and increased control over the risk of incurring higher than anticipated project costs.
- Hiring and retaining key personnel. We strive to hire qualified and seasoned individuals that can bring with them important skill sets that help improve our business prospects. This hiring philosophy is indicative of management, which includes a former division president of a national volume home builder, a CPA and an attorney.
Management
TJ Development has several key members of its management team who greatly contribute to its success. These individuals include the following:
Christopher D. Jones – Mr. Jones is currently the President and CEO of TJ Development and is a manager and sole member of DVD Development. Mr. Jones began his career in the land development and construction industry in 1993 through his employment with Kaufman & Broad, Inc. Home Builders and later to Fulton Homes where he learned the track home building business. In 1995, Mr. Jones became a general contractor and formed TJ Development, which is currently 100% owned by Mr. Jones and his wife. Since founding TJ Development, Mr. Jones has built or remodeled over 200 homes. From the rehabilitation and remodeling of distressed homes and apartment complexes to the construction of 5,000 plus square foot custom homes, Mr. Jones has experience in many aspects of the residential construction industry. Additionally, Mr. Jones has had the opportunity to work with various neighborhood associations and groups to successfully build or renovate homes to meet the expectations and guidelines set by homeowners, subdivisions and local interest groups. Mr. Jones is a 1992 graduate from Arizona State University where he received a bachelors degree in real estate.
William K. Washburn – Mr. Washburn started in the construction industry in 1991 as a contractor and supplier and currently serves as the Vice President of Operations of TJ Development. Mr. Washburn understands well the nuances of the construction industry from both the small contractor perspective and from the viewpoint of large production builders, including his experience with Pulte Homes, the largest homebuilder in the nation. It was at Pulte Homes where Mr. Washburn was instrumental in starting up a subsidiary in Arizona for Pulte Homes focused on entry level product, speed and efficiencies; he also had the opportunity to work directly with Bill Pulte (founder of Pulte Homes) on various R & D projects testing new products and processes. Most recently, Mr. Washburn has been involved in the start up and massive growth of one of the nations largest public homebuilders, TOUSA Homes. He was instrumental in creating, implementing and managing all Arizona-based construction processes and systems for the company from it’s inception in 1997 with 4 total deliveries through to 347 deliveries in December 2005. Concurrent with his responsibilities, he has participated in various homebuilding associations, boards and as an adjunct-professor at ASU’s Ira A. Fulton College of Engineering.
L. Craig Shelley – Mr. Shelley currently serves as the Vice President of Marketing for TJ Development, Inc. Prior to joining TJ Development, Mr. Shelley served as Senior Vice President-Consumer Choice Division of the American Community Mutual Insurance Company of Livonia, Michigan and as Vice President-Marketing of HealthEquity, Inc., a leading administrator of health savings accounts, where he successfully lead the development and implementation of the company’s sales efforts in Arizona and the Upper Midwest. Mr. Shelley started his sales and marketing career in 1977 with the Metropolitan Life Insurance Company where he participated in Metropolitan Life’s MBA Management Development program and where he was the recipient of multiple sales and sales management awards. In 1984, Mr. Shelley expanded his sales and marketing experiences by becoming the President and Founding Officer of Great American Financial Services Corporation, a wholly owned subsidiary of Great American Bank, FSB in Phoenix, Arizona, where he achieved profitability within only three months after its formation. In 1992, Mr. Shelley shifted his marketing efforts to real estate sales and real estate franchise sales as a Vice President of RE/MAX International, Inc. in Denver, Colorado where he initiated and managed the Affinity Marketing Division, the Total Quality Management system and the RE/MAX-Latin America franchise marketing program. Mr. Shelley is bilingual in English and Spanish and received a Master of Business Administration–International Business degree from The American Graduate School of International Business (Thunderbird) in 1977 and a Bachelor of Arts in Education degree from Arizona State University in 1976.
Marlin D. Porter – Mr. Porter currently serves as the Vice President of Finance for TJ Development and is a manager of DVD Development where he manages the companies’ financing, private lender relationships and contractual matters. Mr. Porter is an attorney by profession and practiced law with the firm of Powell Goldstein in Atlanta, Georgia. In private practice, Mr. Porter concentrated in banking and finance law with emphasis in general corporate and securities matters. Mr. Porter has extensive experience in handling both public and private offerings for various types of entities, in forming new entities and resolving initial and ongoing regulatory and contractual issues for various business entities. Mr. Porter is also experienced in mergers, acquisitions, share exchanges and other corporate consolidation and restructuring transactions for both public and private companies. Prior to joining Powell Goldstein, Mr. Porter was employed by First Interstate Bank of Arizona, N.A.; Caliber Bank; and Norwest Bank of Arizona, N.A. In the course of his employment with these banks, Mr. Porter was responsible for risk rating commercial loans, as well as advising loan officers on the extension of credit to new commercial clients. Mr. Porter is a 1999, magna cum laude graduate of the J. Rueben Clark Law School at Brigham Young University and a 1996, summa cum laude graduate of Northern Arizona University where he received a juris doctorate degree and a bachelor’s degree (corporate finance), respectively.
Douglas V. Dawes – Mr. Dawes is currently a Vice President of TJ Development where he manages the Company’s accounting operations. Mr. Dawes is also a manager of DVD Development. Prior to his employment at TJ Development, Mr. Dawes served as Nordic Energy’s Controller where he implemented new accounting and billing systems, while managing Nordic Energy’s revenue and profit growth, which exceeded 50% a year during his tenure as Controller. His responsibilities at Nordic Energy included human resources, billing, accounting, regulatory compliance, and taxation matters. Before working as Controller for Nordic Energy, Mr. Dawes served in various financial and operational positions at Ford Motor Company in Dearborn, Michigan. His responsibilities at Ford Motor Company included plant and departmental budgeting and reporting, foreign consolidation and subsidiary reporting, financial intranet development, implementation of financial consolidation systems, completing quarterly and annual SEC reports and ultimately serving as primary editor for the financial section of Ford Motor Company’s annual report. Mr. Dawes is an active member of the AICPA and is a licensed CPA in the state of Illinois. He received his Bachelors and Masters degrees in accounting from the Marriott School of Management at Brigham Young University.
Bryon M. Reid – Mr. Reid began his career in the land development and construction industry in 1986. Notably, Mr. Reid served as a Division President (from 1994 to 1997) for David Weekley Homes, a national builder which was twice voted national builder of the year by Professional Builder magazine during Mr. Reid’s tenure at the company. As part of his responsibilities with David Weekley Homes, Mr. Reid was responsible for expanding the company’s building presence in the cities of Raleigh and Charlotte, North Carolina. In 1997, Mr. Reid became the Vice President of Housing for Suncorp. Development, a subsidiary of Pinwest Capital. As the Vice President of Housing, Mr. Reid designed and instituted Suncorp.’s entire housing program for the State of New Mexico. Since his employment with Suncorp. (until 2003), Mr. Reid had been a building consultant and general contractor and continues to hold a commercial construction license in the State of Arizona. Mr. Reid currently acts as our exclusive sales agent for new home sales through Revcorp., Inc., a real estate agency. Mr. Reid is a 1986 graduate of Southern Methodist University, with bachelor degrees in economics and history.
Daniel J. Good – Mr. Good currently serves as a Vice President of TJ Development and has been a primary force in streamlining the land acquisitions/purchasing process. Mr. Good is also a manager of DVD Development. During his tenure with us, Mr. Good has been able to increase the purchase of lot inventory by over 130%. Mr. Good’s involvement in real estate and property management began as Vice President of Valley Concierge, Inc., which involved resident amenities for “Class A” apartment communities in Arizona, Texas, Florida, and California, and included communities developed by Mark-Taylor Residential, Gray-Development Group, Carbon Residential, The Related Group and Garden Communities. Concurrently with his activities with Valley Concierge, Mr. Good was involved with a property investment and management company, Blues Development, Inc., where Mr. Good was responsible for purchasing new investment properties, writing/negotiating tenant and investor contracts and overseeing various property management functions. Prior to this experience, Mr. Good gained additional skills in sales and marketing through his tenure as a Sales and Marketing Manager and Office Manager for various service and retail organizations. Mr. Good holds an active real estate license in the State of Arizona and is a 2000, summa cum laude graduate of Ottawa University in Business Management with extended education in English, Education, Real Estate Law, and Land Development.
Development and Construction
Our development activities include site planning and engineering, obtaining environmental and other regulatory approvals, constructing roads, sewer, water, and drainage facilities. Development activities are performed by our own staff, together with independent architects, consultants, and subcontractors.
TJ Development acts as the general contractor for the construction of our projects. Virtually all construction work for such projects are performed by subcontractors. Employees of TJ Development, specifically its superintendents and scheduling personnel, coordinate the construction of each project and the activities of subcontractors and suppliers, and subject their work to quality and cost controls and compliance with zoning and building codes. TJ Development enters into binding agreements with its subcontractors, which may be amended from time to time and are typically based on a fixed-fee pricing model. Because TJ Development primarily utilizes subcontractors to complete its construction projects, TJ Development works hard to established long-term relationships with its subcontractors. Consequently, while TJ Development reserves the right to use other subcontractors on a project-by-project basis, it recognizes the benefit of using reliable subcontractors on a routine and reoccurring basis.
Sales and Marketing
We normally sell all of our homes through exclusive sales agents. Our sales representatives and sales staff are available to assist prospective buyers by providing them with floor plans, price information and walk-through tours, and to assist them with the selection of options and upgrades, if desired. Sales representatives attend periodic meetings at which they are provided with information regarding other projects in the area, construction schedules and marketing and advertising plans.
