Rethink Real Estate. For Good.

Community

The power of cities.

The world is reeling from the effects of the coronavirus pandemic and the resulting economic downturns. Add to this levels of civil unrest not seen since the 1960s and governments which are more ideologically polarized than ever before. How then do we collaborate to solve the enormously complex problems of our times?

The federal government plays an important part as the safety net for people, healthcare and defense. But pragmatic and localized problem solving might occur best at county, city and local levels. Here, impacted stakeholders can come together to compete and/or collaborate. 21st Century problems are complex and can’t be solved by one bureaucracy. They require multi-sectoral horizontal solutions. As a result, problem solving has become increasingly bottom up rather than top down and delivered by networks of institutions and leaders rather than the public sector.

Bruce Katz calls this phenomenon ‘the new localism.’ He believes cities have the power and ability to harness and leverage all the incredible innovative power in our country to solve local problems and to improve peoples’ lives

“Cities are more than governments, they’re networks. That’s why they’re so resilient, that’s why they’re so adaptive, that’s why in many places they’re so prosperous: they’re ecosystems.“

That’s not to say that the federal government can’t still be a platform or a participant in creating solutions, but issues that require local interaction and local networks might be best solved at the local level. We need to stop believing that all of our problems will be solved by bureaucrats and start believing in ourselves. Solutions can be created by networks. If we want to solve congestion, housing affordability or the integration of Black- and brown people into our economy, we need to bring together different sectors of our society to promote different ways of thinking. We need to develop a system where universities, health care systems, corporations, entrepreneurs, public sector philanthropies and individual stakeholders all work together to find tangible solutions to local problems, and to plan together how our cities will thrive.

Listen to my interview with Bruce Katz to learn more.

Image courtesy of John D Norton

Empowered through the Blockchain.

The blockchain is not as complicated as you might think. “Blocks” are just digital pieces of information and the “chain” is the public database where the blocks are stored.

The block

Each block (or digital piece of information) might include transactions, participants, dates, times or identifying information. This doesn’t necessarily reveal your name as the blocks use digital signatures much like usernames. Each block has a unique cryptographic code called a “hash”, created by a special algorithm, so that no two blocks can be the same. And a single block can store approximately 1MB of information.

The chain

The chain is then a number of blocks strung together. As a block of data is added, it not only becomes part of the chain, but it becomes publicly available. Information about the block such as when, where and by whom the block was added is available for anyone to see.

Distributed ledger

Each blockchain user can opt to connect through their computer to a node, often called a “distributed ledger”. This means the blockchain is “distributed” to their computer, not only providing a live feed of what is happening in that particular blockchain, but more importantly, distributing the information across a network of computers that might connect to it. Because blockchain is distributed in this way, there is no single, definitive account for a hacker to manipulate.

Security and trust

Each block is added chronologically to the end of a blockchain and contains its own hash as well as the hash of the block before it, making it extremely difficult to alter the contents of a block once it has been added to the blockchain. When a hash is created it is transformed into digital information. If this digital information is edited in any way, a new hash is created. Other security measures implemented in blockchain include tests for computers that want to join and add blocks to the chain.

Applications

The advantages of utilizing the blockchain include accuracy, cost reduction, decentralization, privacy, efficiency and transparency. Bitcoin, which we’re sure you’ve all heard about, is only one such application. Others being explored today include banking, healthcare, property records, supply chains, voting and smart contracts.

Michael Lee, a cultural planner and designer with an architectural background, has found a new use for the blockchain. He’s developed a web application called BLDGBLOX. The Bldg app is an online bulletin board which helps to turn community ideas into public action. The user-friendly interface of BLDGBLOX tracks information dynamically in projects created by anyone who wants to start one, as people use it and add to it. The information gathered in the blockchain created can be a useful way to track the impact of a particular project, thereby encouraging people to invest in projects that are impactful for their community. Michael hopes that the data gathered through BLDGBLOX projects will empower people to make more informed decisions. It’s an amazing example of blockchain being used as an organizing tool.

Listen in to my interview with Michael to learn more about how he wants to democratize the power of data.

Image by TheDigitalArtist from Pixabay

The elephant in the region.

Having joined Enterprise Community Partners in 2011, Heather Hood currently oversees efforts in Northern California that ensure low- and moderate-income residents have access to affordable, quality housing. And notably, San Francisco and the Bay Area is one of the front lines of what is a national issue. Enterprise is a national organization, over three and a half decades old, whose mission has been to create opportunity through affordable housing in diverse, thriving communities. Through lending, financing of development and building affordable housing, Enterprise has helped create over 662,000 homes, and invested over $52 billion to date.

Heather has co-authored influential pieces such as The Elephant in the Region: How Bay Metro Can Lead a Bold Regional Housing Agenda, as well as worked to develop a region-wide inclusionary zoning framework and a plan to utilize public land. She conceived Enterprise’s technical assistance approach around the Affordable Housing and Sustainable Communities program, leading to more $400 million in state resources to affordable homes, and co-chaired Oakland’s Housing Cabinet, which released A Roadmap Toward Equity, whose recommendations have mostly been implemented, or are underway.

Previously, Heather was Initiative Officer for the Great Communities Collaborative at The San Francisco Foundation where she was instrumental in the development of the $85 million Bay Area Transit-Oriented Affordable Housing Fund. She has been a lecturer at University of California, Berkeley’s Department of City and Regional Planning and was a co-founder and director of its Center for Community Innovation. Heather also co-authored The Future of Infill Housing in California: Opportunities, Potential, Feasibility and Demand for the California Department of Housing and Community Development. While in graduate school she worked at Places Journal.

Insights and Inspirations

  • We have all failed in delivering affordable housing. But NIMBYism has failed us the most.
  • Zoning needs to allow for higher density to help solve the affordable housing crisis.
  • Entitlements take far too long. This only adds to the expense of housing projects.
  • We need to preserve existing affordable housing units and buildings.

Information and Links

Read the podcast transcript here

Eve Picker: [00:00:10] Hi there. Thanks so much for joining me today for the latest episode of Impact Real Estate Investing. My guest today is Heather Hood, VP at Enterprise Community Partners and Market Leader for Northern California. Heather works to ensure low- and moderate- income residents have access to affordable, quality housing in Northern California. She’s written influential pieces on housing issues, helped to create technical assistance programs and co-chaired Oakland’s Housing Cabinet. Heather believes there are a few reasons why we are in the affordable housing pickle we are in. NIMBYism has failed us. Construction costs and the cost of land have soared. We need to permit higher density. And it takes far too long to get permission to build a building – the production line needs to be sped up, dramatically. You’ll want to hear more.

Eve: [00:01:13] Be sure to go to EvePicker.com to find out more about Heather on the show notes page for this episode, and be sure to sign up for my newsletter so you can access information about impact real estate investing and get the latest news about the exciting projects on my crowdfunding platform, Small Change.

Eve: [00:01:40] Hello, Heather. I’m just delighted to have this opportunity to talk to you today.

Heather Hood: [00:01:44] Well, thank you, Eve. It’s nice to be here. Good morning.

Eve: [00:01:47] Good morning, well, midday for me, but good morning to you. So, you’re working on perhaps one of the most difficult challenges of our time, affordable housing in California. And I was hoping we could start talking about how our real estate industry has failed everyday people. And why is there such a huge gap between housing available and the need?

Heather: [00:02:14] Ah, well, I’m not really sure ..

Eve: [00:02:18] It’s a difficult first question.

Heather: [00:02:18] Yeah … it’s a complicated one to unpack. I want to back up there a little bit and question that it’s the real estate industry that has failed the population. I think we’ve all failed. And we do not have enough homes for the population. And that’s just a simple question of math. There are millions of people who need homes, but we’ve grown, in our state and with our economy, with jobs, too much and too fast without having a housing production keep up with it. So, that’s got our whole system out of whack. We don’t have enough housing at any level of affordability, and especially for low- and moderate- income people.

Eve: [00:03:02] Yeh.

Heather: [00:03:03] The way that that has happened, really … the reason I was questioning your frame that it’s the real estate industry is because there’s been many proposals all around the state for housing to be built, in the last 30 years. And our population, especially homeowners, have resisted letting it be built. And so that NIMBYism, “Not In My Backyard,” has crimped our production line, construction line, to the point where we’re choking now without enough housing.

Eve: [00:03:34] So, really, we’ve failed ourselves, right?

Heather: [00:03:38] We failed ourselves. We failed to see beyond that thing we, some of us may not have wanted on the end of the street. And we thought, oh, it’s going to cause traffic or change the character of the neighborhood or invite too many kids into our schools or whatever it was. We, the big We, were nervous about it, and wouldn’t let it happen.

Eve: [00:04:00] So, one of the key things going wrong is, is NIMBYism. And, you know, I thought for a long time developers were really focused on building housing for particular markets. Like, you see a lot of these platform projects with small one-bedroom studio apartments aimed at millennials, that isn’t … you don’t think that’s part of the problem?

Heather: [00:04:25] Sure, I think that there are multiple problems within the big problem. The big problem is we don’t have enough housing. And the construction costs have gotten so darn high with fees and materials and labor and so on. Cost of land, because land is at such a premium, that our private developers feel forced into figuring out how to squeeze the most profit out of each piece of property. And one of the ways to do that is to have the smaller and smaller and smaller units.

Eve: [00:04:57] Yes.

Heather: [00:04:58] And that only meets one segment of the market. And in addition, there’s been a push to have lots of amenities, and those tend to get expensive. Dogwashing stations and roof decks with heat lamps and, and jacuzzis, and those sorts of things to create the edge for a particular property, to entice those segments of the market … They, are targeted. So, it’s, in short, called luxury housing. In some parts of the world, it would simply be called regular middle-income housing, but because it’s in such stark contrast to low-income housing that is not subsidized and tends to often be poorly maintained, it appears to be very luxurious. In fact, it is barbells, different types of housing types, it’s a big problem. We’re not building anything, enough in between.

Eve: [00:05:49] The missing middle, right?

Heather: [00:05:50] Well, I’ll call it the missing middle. But to be clear what I mean of the middle is a pretty darn big middle. I mean, most people between 80% to 150 … I mean, the middle of between 30 percent of the area median income, up to 200 percent of median income, a big middle.

Eve: [00:06:06] That’s a very big …

Heather: [00:06:07] A big doughnut hole there.

Eve: [00:06:08] Yeah.

Heather: [00:06:09] Yeah.  Tough to build all of that.

Eve: [00:06:12] What’s it going to take to correct course, I was going to say, take to correct these things, but I’m just going to say, you know, to correct course.

Heather: [00:06:23] There are a myriad of things. I think the first of, to, for the zoning, to allow for higher density. And some time limit on how long projects can be held up. And conversely, some better process for stakeholders to be able to influence the outcome. Right now, there’s just kind of this, you know, this rote and very legal … process that doesn’t invite much conversation or compromise. So, I, something in the zoning. We need to do something about the construction costs, and maybe the answer there is manufactured housing. I hope so, because a lot has been invested in that direction. It also would mean conceiving of projects as being a mix of unit types and income types, where we might start to see some cross-subsidy from the pretty big profit that does, actually, end up being made off of these risky projects, and cross-subsidizing some of the lower income living. Either through getting that to a housing trust fund in the city or county, or by including affordable units.

Heather: [00:07:35] So, that would help … I’d also emphasize something that our industry probably will start maturing and leaning into, which is the preservation of existing buildings that are affordable. So, where there are, especially near transit or other sorts of neighborhood amenities, there are small, medium and large properties that will likely, in the next economic downturn, be for sale. And that’s a really wonderful opportunity for publicly-motivated entities, whether they’re cities or nonprofit developers, to purchase them and renovate them, make them that much healthier and permanently affordable for the folks who live there now. That would help a great deal with the displacement challenges. And that sort of technique is cheaper than building new construction. We can leave the new expensive construction to the, some affordable housing developers and the so-called luxury housing developers.

Eve: [00:08:36] Makes a lot of sense. Do you know of people or organizations that are taking these course corrections? I mean, we’ve all heard about ADUs, which is one way of mixing the market. Right? But that’s only one little way.

Heather: [00:08:53] Yeah. I’ll mention a couple that I’ve worked with. One is East Bay Asian Local Development Corporation. It’s a community development nonprofit developer in Oakland, California, who has been purchasing properties where people live now. These are once-dilapidated apartment buildings with 30 or 60 units. Or sometimes, in the case of one portfolio, scattered around the city, a very different, small and medium properties that they bought from existing owners, maybe they were kids who wanted to get out of the inheritance of owning … different stories. And they’ve been renovating them, bringing them up to code and working carefully with the residents to help them figure out where to live for a little bit of time while the renovations are getting done. And then they end up being much more handsome properties, and less blight in the neighborhood, and appreciated much better by the tenants who know that they can stay.

Eve: [00:09:53] Well, I’m sure, yeh.

Heather: [00:09:54] That’s one organization. There’s another one called the Oakland Community Land Trust. And land trusts actually are doing this more and more. These are, tend to be smaller organizations, like, one to five staff, who tend to be buying just one little building that’s maybe got a cafe on the ground floor and two units above, or a few single family houses in the neighborhood as they come available. This is something where the land remains in the holding of the nonprofit organization and the building itself gets owned by resident or commercial owner. And they’ve been looking for those kind of opportunities for a good while.

Eve: [00:10:34] Yeah, OK, this is, it’s an organic process that looks like it’s going to take a while to correct course. I mean, that’s in California. I don’t know if it’s happening anywhere else.

Heather: [00:10:47] Of course … New York is much more mature as an industry in what we would call preservation. You know, in the three P’s: producing housing, preserving affordability or protecting tenants. The second ‘P’ is, of preservation, is a more mature technique in other parts of the country. But I think we have the potential in California to shift our industry to add this technique at a much bigger scale to our toolkit. And now is the time to do that.

Eve: [00:11:18] Interesting.

Heather: [00:11:19] Yeah.

Eve: [00:11:20] So, what about financial institutions? You know, what sort of role are they taking? I mean, this is an especially difficult time to find financing of any kind. What are you seeing in that, aside from your own organization?

Heather: [00:11:37] So, that’s along the lines of things that could shift to change the outcome?

Eve: [00:11:42] Yeah, I mean, along the lines of, you know, are there financial institutions that are taking a stake in this affordable housing problem and shifting more funds towards it, making it easier to borrow money for that type of project, any of the above.

Heather: [00:12:00] Yeah. So, many of us are. I work at Enterprise Community Partners, and that’s what we wake up and do every day, is finance policy and technical assistance. On the financial team, whether it’s a nonprofit community development financial institution like ours, or others, or a bank, I think what this moment in our history has done is sort of rattle the, you said, you know, what we’ve got to do is take more quote unquote, risk, in projects. So, there’s an, what they call underwriting, which is to figure out if the proposal of a project makes financial sense, if the borrower has the chops to carry it out. There’s a safety net that’s been built in so that if things that could go awry, there’s a cushion. And all that is in the interest of making sure, and the various investors will eventually get their money back, and the project gets done and people get to live there. There, in the underwriting process, there are scores for risk, and in order to get a development done in a, in certain geographies, that would be quote unquote risky, or cities that are quote unquote risky. For some developers who are newer to the stage, especially new affordable housing developers, just … naturally some scrutiny, but we could probably all relax just a bit to make sure that more projects can flow, and the dollars flow. And I’ll have to say that this moment is forcing the financial industry to really look at itself and see that back to the 60s and 70s, the financial institution, through redlining and blockbusting, really made it their version of risky. It’s what was quite racist and is what led to creating some of the marginalization that you see in neighborhoods today that are hot neighborhoods. So, it takes some responsibility, sort of an interesting form of reparation, to see to it that the neighborhoods get a much better chance and the people in them get a much better chance to determine their fate and develop …

Eve: [00:14:17] Right.

Heather: [00:14:18] … as they would like them to.

Eve: [00:14:20] So, it’s going to take some fairly major shifts in a variety of industries to really solve this problem. And then, you know, I wonder what the role of government is in all of this. I mean, zoning definitely has cramped everyone’s style, but …

Heather: [00:14:37] Yeh. Government can do a lot. My perspective on government, and it’s not all government, so I am going to make a …. but I’ll just make a generalization. That through various tax codes, especially in California, Prop 13, we’ve, through those sort of … larger policies, we’ve forced government, local government, to be looking for those things that would create tax bases. So … wanting commercial private development, because that’s where you get taxes in order to do the things that cities want to do, take care of parks, take care of public works, ensure safety and services, and summer camps and all that kind of good stuff. So, the cities are forced to have to find that through commercial development, and to dissuade residential development, to some degree. So, different cities have responded in their own way to that reality. But if we had a different tax code and cities were not forced into that kind of cattywampus position, they could get back to balancing the various interests, whether they be mission-oriented or private interests.

Eve: [00:15:53] Interesting.

Heather: [00:15:54] Yeah, so they wouldn’t have to be sort of pretending to have this, putting lip service to the public good, but having, in to order to execute on that, do a lot of gymnastics, which capitalism …

Eve: [00:16:08] So, This problem really runs really deep, doesn’t it?

Heather: [00:16:11] Yeah, it does. We can talk at the surface level, but that’s what really, let government be government, for the people and all the people, of all the, with all the interest.

Eve: [00:16:22] Right. I want to shift gears a little bit and just ask you about yourself, because I noticed that you trained as an architect, like I did. And then as an urban planner. And I’m just wondering what prompted that shift?

Heather: [00:16:35] Oh, well, I’d love to know your story, too. But I’ll tell you mine. It’s a little bit of a long story. I’ll try to make it short. I wanted to be an architect since I was a little girl. I loved designing and spatial relations and 3-D things. And so we drew little floor plans for fun, starting on summer vacation, because my parents wouldn’t let us watch TV. And then it just kind of grew into admiring buildings where I grew up in Philadelphia or on trips that we were lucky enough to take. I got to go to architecture school twice, because I was sure that’s what I wanted to do, except that when I practiced it, interning or working in … positions at architecture firms, it really seemed as if the architects were the last ones called …

Eve: [00:17:26] Oh yeh! Absolutely.

Heather: [00:17:28] … the early 90s and mid 90s, and I just thought, now wait a minute, I don’t want to be the last one called in, you know, when you’re under 30 as an architect, you tend to just be sitting at a CAD machine. So, I thought, well, this isn’t the life I want. As much as I love my colleagues and the buildings, and the construction process and all that good stuff, I just love it. I mean, I’m looking from my window right now and I see five cranes in the air and I just love watching buildings get built …

Eve: [00:17:55] Yeah.

Heather: [00:17:55] … just love it. Endlessly entertaining. So, I happened to be at UC Berkeley and I walked down the hall at the College of Environmental Design from the architecture to the city planning department to sign up for a course. And it was, I think it was Women and Planning, and Betty, Professor Betty Deakin, was teaching it and she just had other women from the field – landscape architecture, architecture, industrial design, city planning – come in and … I got really jazzed about city planning. I thought, oh, this is what I want to do, I just didn’t know what to call it.

Eve: [00:18:32] Yeah.

Heather: [00:18:33] I wanted to make neighborhoods in cities with wonderful buildings for people, and then, ok, that’s called city planning. So, it was as simple as that.

Eve: [00:18:42] Yes.

Heather: [00:18:42] Got to go to Berkeley for a couple more years and chase that dream.

Eve: [00:18:48] And then you shifted into finance. Sort of.

Heather: [00:18:51] Sort of, yes. I was lucky enough to work for UC Berkeley doing campus planning. Mostly on the urban, off-campus urban side, and then to be on some boards that were involved in things that affected social justice in cities. And was lucky enough to get to work on an initiative called the Great Community Collaborative, at, based at the San Francisco Foundation, which was a really wonderful way to work with 25 organizations and 14 funders to figure out how can we in the Bay Area make sure that there’s higher density and more community benefits surrounding our transit nodes in the region. And that takes a lot of organizing and envisioning and technical stuff. And so we banded together to make that happen, and I got so excited about that. It was hard, but wonderful sorts of people, and important wins along the way. Except I got into it long enough to know that if there wasn’t money for what was being planned …

Eve: [00:19:51] Yeah.

Heather: [00:19:51] … that things were not going to happen.

Eve: [00:19:55] Yes.

Heather: [00:19:55] It was great to make sure that the density was approved by city council, or that more affordable housing would be built in a place, or that in the building there would be a minimum number of jobs. And that’s all great, except if there wasn’t the financing in place to, underpinning that, there, things would be stuck. And so, I just thought I’ve got to learn how this works and pursued a job at Enterprise, which was the only organization that was a financial institution that I wanted to work for, because … I shared the values and I loved all the things they did around the country, and I was incredibly fortunate to have been hired to take that job. That was the moment. And I’m still learning a lot about financing, right? Endless amounts to learn. I’m not all the way there.

Eve: [00:20:47] Yes.

Heather: [00:20:48] It’s going to take the rest of my life to really get it.

Eve: [00:20:51] Well, I always think that architects are uniquely trained to think through challenges. In architecture school we’re trained to take an idea and to turn it into something, and I, in a very creative way, and I can’t think of another profession where you can really quite do that. So, I love to see architects kind of littered across the landscape in different roles because I, I also think architecture schools fail our students. The students who need to understand that they have so many more options because they have such, I think, special training.

Heather: [00:21:25] Yeah.

Eve: [00:21:25] I actually started as an architect and then went and did a masters in urban design at Columbia, for similar reasons. I was really fascinated by cities more than iconic buildings, and I wanted to know how cities sort of worked together. And when I moved to Pittsburgh, I worked for a planning department as an urban designer, and loved that job. But I worked for an architect for a while and always felt like, you know, we were at the end of everything. There I was sitting doing stair details, whereas, you know, I really wanted to understand how you did development projects and put it together. So, I went to slightly different route and started doing my own projects, and figuring out financing and, and yeah, it is all about money. Unfortunately.

Heather: [00:22:15] So, you became a developer?

Eve: [00:22:16] Yeah, I became a developer. And then when, and then when the funds dried up, they sort of shifted after the Bush administration and the bank meltdown, I sat back and sort of tried to figure out what to do next and then launched Small Change, really, this real estate crowdfunding platform to fill in those pieces of financing that I think are so important to creating new ideas in the physical landscape. They’re the ideas that generally are not financed. So, anyway, this is way too much about me.

Heather: [00:22:56] Oh, no, it’s fascinating. I love hearing how people make decisions to curl into the next … especially when I think of younger generations as I mentor people and people call and ask, what should I do next? Which, I’m not sure how to think about this, and there’s a great deal of worry people have about …

Eve: [00:23:14] Oh, there are so many things.

Heather: [00:23:14] … Yeah. Or they start off their career, and how do I get from here to there? And the truth is, everybody’s career is fairly curly.

Eve: [00:23:21] It is curly, yeh.

Heather: [00:23:22] And you don’t really know the best path from here to there. You might change your mind.

Eve: [00:23:28] Yeh, and you should enjoy the journey, you know.

Heather: [00:23:29] Right, us planners have to be more relaxed with improvising. I certainly am learning that.

Eve: [00:23:35] Yup. Certainly, there was a period when I really worried about people looking at my resume and thinking, she can’t stick to anything. You know?

Heather: [00:23:44] Uh huh.

Eve: [00:23:44] I think that time has passed. And I think now, you know, people are in jobs for much shorter times because there’s really a much wider array array of opportunities, which I think is really fascinating.

Heather: [00:23:57] Yep.

Eve: [00:23:58] Thanks for sharing that. I wanted to ask you, what do we need to think about to make our cities and neighborhoods better places for everyone?

Heather: [00:24:07] Oh, goodness, that’s a (laughter) really big question.

Eve: [00:24:11] Well, in terms of, even financing, you know, how can we make places more equitable and better places for everyone? Because we know that’s, we’re far, far from that, right?

Heather: [00:24:21] Yeah. Well, I had the good fortune of studying in Denmark and living in Copenhagen for only six months in 1988, but I have never forgotten it.

Eve: [00:24:30] Oh, lucky you.

Heather: [00:24:32] Yeah. Yeah. I was supposed to go back this May, just for … and I can’t because of COVID, but absolutely in love with the Scandinavian way thinking about this. Where you’ve got big taxes and they carefully pour them back into the public realm, in both services and in the physical landscape. And so what we have here, it seems like we just think in terms of, maybe, you think of all the properties as being separate, and maybe there’s some design codes and zoning codes that keep things what we think is harmonious, but we still think of them as separate. And the only thing that ties things together is the streets. And did you do know that about 25 percent of most urban landscapes is streets. And in suburbs, even more.

Eve: [00:25:15] Oh, yeah. And they’re very highly occupied by cars, instead of pedestrians.

Heather: [00:25:20] Yeah. So those are the things that hold us symbolically, if you think about that, that cars and concrete and, or not concrete, asphalt is what ties all these things together. And that doesn’t set the mood the right way. So, if we thought of these places as for everyone and we put much more emphasis in the public realm, that would be a really good start. But what do we want to put there? Asking the people who are there and really listening to them and learning from other places. And getting ideas and making trade-offs and so people don’t think that they’re going to get everything, but make conscious decisions about what they prefer. I think that would be a great way to start. In order to execute we need those public dollars. Goodness gracious, I don’t even know, 10 times the scale that we have now, to, to have that. Yeah.

Eve: [00:26:10] People have spoken about that. If you think about the Open Streets program … I launched an Open Streets in Pittsburgh, and it’s been wildly successful. People just love it. That is a lineal park for one day a month. It really should be a lineal park the whole time. But they flock to events like that all over the country, all over the world, and that’s kind of speaking to what people want, right?

Heather: [00:26:37] Yeah, well, when I took my son to Disneyland, I was fascinated at how much Disneyland had so much public space and walkability and water features and cafe-like settings. And I find it fascinating that we are, as a culture, willing to pay enormous amounts of money to have that experience as if it’s an entertainment, rather than to pay enormous amounts of money into our own environment, to have that same sort of actual feeling on a daily basis … with the Open Streets and the way that cafe culture has come back and outdoor beer gardens have come back, where you can see that there’s a hunger there. I think we just haven’t quite figured out how to go beyond the property line.

Eve: [00:27:28] Yeah, but Copenhagen sure has.

Heather: [00:27:31] Oh yeh.

Eve: [00:27:31] Get easily run over by a bike there. A beautiful city.

Heather: [00:27:36] I love it.

Eve: [00:27:37] One other questions, what community engagement tools have you seen that have really worked?

Heather: [00:27:41] Oh …

Eve: [00:27:42] You talk about really listening.

Heather: [00:27:44] Yeah. So, Eve, I’m calling that into question myself and I have seen people demonstrate what’s possible using apps, for stakeholders to put in their preferences, or to note where there is a click it – fix it, kind of, I see a pothole or speed bump problem or whatever, or a tree is dying …

Eve: [00:28:04] Yes.

Heather: [00:28:05] … those things seem pretty good.

Heather: [00:28:08] Admittedly, my planning thesis in grad school,1997, was about how planners could engender democracy through better participation. And I had a particular angle on how that could happen, which was making sure people had the information that they need, and a forum for conversation and decision-making. I stand by that, except I don’t know what the best technique is. I’ve been searching for that for over two decades. It is not an evening meetings …

Eve: [00:28:38] No, for sure.

Heather: [00:28:38] …in a dank community room with somebody with a mic and people sitting in cold chairs with cold food and no child care and no language translation, listening to somebody say here’s, responding to a plan that’s already been pretty well baked. It’s not that. It’s not endless council meetings that go until 1:00 in the morning. You know, there’s a private organization that I’ve been inspired by, called SUDA it’s the developer Alan Jones and Regina Davis, who are doing a really interesting project in West Oakland. And to hear how they got community feedback was really interesting because it wasn’t necessarily these meetings. It was spending a good deal of time, and I mean years, in a community like West Oakland and listening to what people were saying on the streets and going to barbecues and churches and hearing what it was that was on people’s minds, and forming relationships with people more in the immediate surrounds of the West Oakland BART where they’re going to be doing four blocks of development. So, that they were building up a sensibility for what the community said it wanted and building the trustful relationships to then eventually present an idea, and respond to that in an iterative basis. So, something along the lines of actually really listening, and taking your time with it, and not just doing an app, but some face-to-face activity seems to be on to something.

Eve: [00:30:22] Yeah, yeah. That’s a lot of work for tiny developers. I think, you know, we’ve got to figure out something better.

Heather: [00:30:29] Well, the city planners who are doing the neighborhood planning or the district planning could be doing a lot of that over time and then let the smaller developers who are filling in hear all about it, take the time to do that.

Eve: [00:30:44] Yeah, I’m hoping that equity crowdfunding can play a little role too, because you know my platform, anyone over the age of 18 can invest, and I think if people can have a stake in development in their own neighborhoods, that’s certainly what I learnt in Pittsburgh, that people wanted to have a stake. So, it doesn’t have to be very big. It’s just, meaningful.

Heather: [00:31:05] Yeah.

Eve: [00:31:06] And then someone else talked to me about ‘power mapping,’ which I thought was really interesting as well. An interesting idea to kind of understand where the power in a neighborhood lies and talking to those people, and really, I suppose, I’d want to say enlisting their help, but that, it’s like almost like a pyramid, reaching everyone in the neighborhood. I thought it was really fascinating.

Heather: [00:31:31] There’s ‘power mapping,’ and there’s ’em-power mapping.’ Because in the power mapping we tend to want to go to the people who hold the power to make the shifts and create the influence we need. But we also have the opportunity to figure out, well, who doesn’t have power who should.

Eve: [00:31:47] Oh, I think all of that.

Heather: [00:31:49] Yeah, yeah, it’s hard to do. All of this takes a great deal of time, and in our lives when everybody’s rushing to get things done. Like we all do …

Eve: [00:31:59] Yes.

Heather: [00:31:59] Or rushing to sort of make sure that things are going to pencil out. It’s very hard to slow down a little bit and do that, although it can really go a long way. I’m excited about the crowdfunding you’re talking about. I mean, at one level, real estate always been crowdfunded, it’s just bigger chunks and formal legal entities, and to have it available to the individuals. It sounds so neat and interesting, I can’t wait to see it where it goes. It also seems like we don’t learn about design, often, or construction, or how cities are made or all the systems that go into that, in our American school system. And so, kinda no wonder we haven’t really built up a sensibility for it. And I’m thinking that maybe through crowdfunding, people will feel more connected to whatever it is that they have invested in.

Eve: [00:32:46] Perhaps. It requires a lot of education, but I suppose everything does. So, what’s next for you? I mean, the big project, that you can talk about or anything that’s got your interest at the moment.

Heather: [00:33:00] Well, I have a team of about 15 people in the Northern California office at Enterprise. We have, typically we have a San Francisco office and a Stockton office, but right now everybody’s home. I am excited to have, to work with such a great team and we’ve organized ourselves around a couple different big principles. And so just getting to organize ourselves and be clear about that is important. And we have two things. One is strengthening community resilience, and the other is building sustainable neighborhoods. So, one is about making sure that we’re sort of holding ground in neighborhoods and help people figure out how to stay where they are, if they want to stay. That’s through renter protection work or preservation work, like we talked about earlier. And work in public housing, and then also in resilience, and by that I mean both community resilience in a cultural way but responding to all these disasters, the fires and earthquakes and all the stuff that is happening in California. So, it’s sort of having gotten clear with the team about that’s what we’re about. In that body of work it’s about strengthening community resilience in a myriad of different ways. And then the other part is creating these big new systems. Like, I’m really excited that my team and I had this idea that there really ought to be a regional housing entity, that the little city, the many cities just don’t have the bandwidth or chops and finances to execute that they mean well to do for affordable and market rate housing. But at the regional scale it makes more sense. And so feeling very, very happy that this has been accepted by the state legislature and the governor and we’re actually doing it here in this region with the Metropolitan Transportation Commission and ABAG.

Eve: [00:34:46] That’s fabulous.

Heather: [00:34:48] Yeah, it is. And it’s just a fantastic group of people who really want to see it happen. So those things are exciting for me. I also think that there’s something exciting happening, in general, which is that maybe one of the silver linings of this awful pandemic that is so awful for so many people. And it’s … going to bring down potentially our whole economy. In all of that …

Eve: [00:35:16] Yes.

Heather: [00:35:17] … we might get a chance to rethink zoning and think about how, you know, you can’t shelter in place if you don’t have shelter. Therefore, it’s in all of our self-interest to really make sure that everybody has a home. So, I’m excited that maybe this has been a real wake up call that will help my industry hurry up and figure out how to get out of our own way and make sure that people are not homeless and people have safe places for their souls to rest that they can call home.

Eve: [00:35:52] Yes, I think that’s a really exciting end, and I really enjoyed our conversation, and hope your work meets great success and I’ll, I’ll be following it.

Heather: [00:36:03] Thank you, Eve. It’s really nice to hear your story too.

Eve: [00:36:16] That was Heather Hood. She’s fully immersed in the affordable housing crisis, working to help solve it in Northern California. Heather believes that NIMBYism has failed us along with zoning, too. We need to permit higher density to fill the need, and it takes far too long to get permission to build a building. The production line needs to be sped up dramatically. Heather’s also astonished that we’ll spend a fortune visiting places like Disneyland, where we can enjoy walkability, but we won’t spend that on the places we live in. I’m right there with her. You can find out more about Impact Real estate investing and access the show notes for today’s episode at my website EvePicker.com. While you’re there, sign up for my newsletter to find out more about how to make money in real estate while building better cities.

Eve: [00:37:18] Thank you so much for spending your time with me today, and thank you for sharing your thoughts. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Heather Hood, Enterprise Community Partners

Power mapping and impact.

Impact investing has grown globally in both depth and sophistication and is now valued at $USD715 billion according to a 2020 study by Global Impact Investing Network (GIIN). But there are still many challenges. Here in the US, most of those funds are invested into cities and gentrifying areas, and although many low-income communities are beginning to see more capital investment, the most marginalized are still left out. For poor Black, native and other marginalized groups, opportunities to build wealth have historically been systematically denied. Redlining, made illegal in the 1970s, still occurs today and we know that all lending is not equal. Now the coronavirus pandemic is exacerbating the problem.

In recent news Netflix announced that a 2 percent share of its cash will go to financial institutions that serve Black communities and PayPal has also announced a $500 million fund to support black- and other minority-led start-ups. This is a promising start but to really effect change requires an understanding of the systems we operate in. They may have been built for everyone, but they don’t work for everyone.

Cynthia Muller, a thought leader of the impact investing ecosystem and director of Mission Driven Investment at the W.K. Kellogg Foundation, believes that power mapping is an important tool to help gain an understanding of how to structure a project that will be meaningful and beneficial to a community. The parties brought to the table for any particular project might include residents, real estate developers, planning departments, investment banks, venture capital, community development corporations and others. With a power map as a visual aid you can begin to recognize the roles and relationships of all parties and identify the decision makers with power who might be influenced to make change. Here are the steps required to make a power map:

  • Identify the people involved, the problems and the decision makers.
  • Place the person or institution that can make the decision or enact changes to fix the identified problems at the centre of the map.
  • Think about any associations or relationships. This requires thinking about any connection including family, neighborhood, religious, political or financial that might influence the central decision maker. Place these in a ring around the centre.
  • Look carefully at the mapped network to determine any connections, including secondary connections like family members. These are the relational power lines.
  • Identify the people with the most relational power lines as well as those with less and mark them differently. If there are no connections, plan to learn more about that person.
  • Make a plan of action. Using the relational power lines and work out the best way to access people or institutions.

Power mapping is a great community engagement tool which helps to conceptualize networks and spheres of influence. Listen to my interview with Cynthia Muller to learn more.

Original artwork by David J Allardice

Back to the Future!

Christopher Leinberger has had a singular career embedded in urban land use issues – as a strategist, teacher, developer, researcher and author. Recently retired from academia, he most recently taught at George Washington University as the Charles Bendit Distinguished Scholar & Research Professor and chair of the Center for Real Estate and Urban Analysis. His new venture is a startup, Places Platform, developing tools and methodologies to measure economic, social equity and environmental conditions in cities and metropolitan areas.

Growing up in the 1960s and 70s, Chris learned early the value of connecting coursework and theory with hands-on community engagement. Although he first put his business degree to work in the corporate world, Chris found he wanted to run his own organization and opted to take over management of Robert Charles Lesser & Co (now RCLCo), a one-office real estate consulting firm in Southern California, first as executive vice president, then as an owner and managing director. By 2000, RCLCo had become one of the largest real estate advisory firms in the U.S., with four offices nationally. Chris then moved to work as a developer full-time, co-founding the Arcadia Land Company, for which he is still a managing partner.

From 2005-18, Chris served as a fellow at Brookings’ Metropolitan Policy Program researching, writing and speaking on issues of walkable urbanism and metropolitan governance. He also helped found LOCUS (Responsible Real Estate Developers and Investors), serving as president from 2008-16, to help push political advocacy at the federal and regional level for a walkable urban future. In addition to George Washington University, Chris has taught at the University of Michigan, University of New Mexico and Harvard Graduate School of Design. He is the author of two books, Strategic Planning for Real Estate Development Companies (1994) and The Option of Urbanism, Investing in a New American Dream (2008).

Insights and Inspirations

  • There are no new ideas.
  • “Back to the Future” got it right.
  • We should be able to urge cities into an upward spiral by providing them with data, showing what returns best results.
  • “NIMBYS are the most pernicious force in urbanism. In large part, they have caused the housing shortage and crisis we are in.”
  • Equity should be patient money in the capital stack.

Information and Links

Read the podcast transcript here

Eve Picker: [00:00:17] Hi there. Thanks so much for joining me today for the latest episode of Impact Real Estate Investing. My guest today is Christopher Leinberger. Chris has had a singular career working on urban land use issues, as a strategist, teacher, developer, researcher and author.

Eve: [00:00:47] Growing up in the 1960s and 70s, Chris was actively involved in community affairs and social change issues. He learned the value of connecting coursework and theory with hands-on community engagement early on. Although he first put his business degree to work in the corporate world, Chris found he wanted to run his own organization and opted to take over management, and then ownership, of Robert Charles Lesser & Company, now RCLCo. At the time, it was a one-office, real estate consulting firm in Southern California. RCLCo became one of the largest real estate advisory firms in the U.S., with four offices nationally, by 2000. Chris’s new venture is a startup – Places Platform. This is a project he audaciously hopes will become “the Bloomberg of real estate and the built environment,” developing tools and methodologies to measure economic, social equity and environmental conditions in cities and metropolitan areas. Be sure to go to EvePicker.com to find out more about Chris on the show notes page for this episode. And be sure to sign up for my newsletter so you can access information about impact real estate investing and get the latest news about the exciting projects on my crowdfunding platform, Small Change.

Eve: [00:02:25] So, welcome to the show, Christopher. It’s really nice to have you here.

Christopher Leinberger: [00:02:29] Really pleased to have a chance to chat with you.

Eve: [00:02:32] I read some of your bios, and the common theme in your development work is the one you discovered when you were eight years old, the value of well-developed, walkable urban land. And I’m wondering how that theme came to take center stage in your professional life?

Chris: [00:02:50] Well, it took me about 20 years to realize that that was what was driving me, from the age of eight – how we build our cities and why are certain blocks, certain places, vital and other places are not. And I didn’t know that at age eight. But that’s the basis of urban economics. But I thought that was just kind of a childhood fancy. And after business school, I went to work for two corporations and found out very quickly that I make a terrible employee and went to work with a small consulting firm in Beverly Hills, California, that I eventually bought three years later, Robert Charles Lesser and Company. And that, basically, was a firm that I could now explore how we build our cities and what makes certain places vital and others not so.

Eve: [00:03:47] And what did you discover along the way? It must have been pretty difficult setting out on this path.

Chris: [00:03:55] Well, certainly, this is back in the early 80s, and drivable suburban development was the thing in vogue. And in fact, this consulting firm, which did market studies, financial feasibility, I introduced strategic planning for both real estate companies and places, like downtowns. And I expanded the company from just a West Coast operation to a national, in fact, you know, we did a lot of work abroad, until I sold the company in 2000. It’s still very active today. It’s much bigger than when I was running it, back in 2000. But it was a little depressing to look at the fact that the market seemed to only want masterplanned communities and subdivisions and, you know, strip malls. And that’s what we were doing in the 80s. The market studies and the financial feasibility were all about, you know, this drivable suburban stuff that we in this country invented. But then towards the end of the 80s, it really kind of started with a project I did in Downtown Chattanooga, which was a strategy for Downtown Chattanooga, the first downtown strategy I’ve ever done. And we pulled this strategy together with the city, with the place manager, River Valley Partners, and the county and the banking community and all sorts of … and the great civic sector, just a remarkable civic sector. And we put together a strategy. 14 points to it. And within three years, 13 of the 14 were done.

Eve: [00:05:37] Wow.

Chris: [00:05:37] And it was off to the races. And so, I’ve stayed in, I’ve stayed involved with Downtown Chattanooga for the last 30 years. It’s just been a remarkable turnaround. So, there I found that, good lord, people actually may want this walkable, urban stuff that, that really was so attractive to me when I was eight.

Eve: [00:05:55] Right. Yeah, I think I always dreamed about living above a coffee shop in a downtown.

Chris: [00:06:04] I always dreamed of living on a penthouse of a 1920s apartment building, you know, condo, co-op, whatever, and having a deck all around you and having the cage elevator take you up to it, and so …

Eve: [00:06:21] Fabulous.

Chris: [00:06:22] Anyway, I got the cage elevator. The building I live in, it’s five stories on Mass Ave, and it has the oldest elevator in town, which is a cage elevator that comes right up to our floor.

Eve: [00:06:35] How about the deck all around? No?

Chris: [00:06:38] No, didn’t get that. The ‘deck all around’ is just about to become about 108 solar panels.

Eve: [00:06:45] Oh wow, and I got the coffee shop after about 20 years of trying so … Just an aside, I’m especially in awe of your advisory role in Walk Score, which is a tool that I use every day, apparently with four million other people. So, that’s an amazing tool that’s emerged out of your interest, as well.

Chris: [00:07:06] Yes, I was on the initial board of Walk Score before, and then, of course, it was bought by Redfin, so that board went away. But I have loved the folks at Walk Score. I still use them, you know, in my research at Brookings and George Washington University. And now, in my next phase of life with Places Platform, which is my startup, that is basically Sim City for real, and Walk Score is foundational to that.

Eve: [00:07:37] So, I use it. I developed a Change Index for my crowdfunding platform, Small Change, and I use it to identify, you know, where projects are that walk in the door are located, like every day. It’s a fabulous tool.

Chris: [00:07:51] It’s remarkable. And the other thing that a number of us have found is that in walkable urban places, Walk Score above 60 yields tremendous value enhancement. You know, here in D.C., on the for-sale residential side, one Walk Score point above 60 yields about a 10-dollar-per-square-foot increase in value of a house or a condo.

Eve: [00:08:22] That’s pretty amazing.

Chris: [00:08:22] That’s huge. Places Platform just did our beta test in Grand Rapids, Michigan. So, this is a Midwestern town, small Midwestern town, not exactly a bi-coastal sort of place. And in the office market, one Walk Score point increases office valuations by a buck a square foot.

Eve: [00:08:44] Wow.

Chris: [00:08:45] And that’s, again, for a town that an office sells for 180 to 200 bucks per square foot, one Walk Score point equals a one percent increase in valuation. That’s pretty significant.

Eve: [00:08:58] So, I’m proud to say my Walk Score is, I think, 99.

Chris: [00:09:01] Wow, well that’s impressive. My Walk Score’s 92. I live within about four blocks of Dupont Circle.

Eve: [00:09:11] I live downtown in Pittsburgh, so you really, no, that’s pretty simple.

Chris: [00:09:14] Yes, it’s great.

Eve: [00:09:16] You know, I first became aware of your work when, when I was struggling with a capital stack for a little catalytic development project. And I heard about the Albuquerque project and ‘patient money,’ and those of us who do this sort of development know that it’s very difficult to get traditional financing to accomplish groundbreaking projects. And I just love you to talk a little bit about how you approached that when you started that project, and, in general.

Chris: [00:09:45] It starts with an understanding that there is no such thing as new ideas. As you may have also seen or heard, my favorite urban movie is “Back to the Future,” and it’s the most important urban movie ever made that is popular because it shows the two ways of building: drivable sub-urban and walkable urban, in three different time periods. The 1950s, which was really a reflection of the early 20th century, 1985 when the movie came out, which showed how we completely disinvested in our downtowns and all the energy, and all the money, shifted to regional malls and business parks, and, of course, subdivisions. And then the near distant future, that again this 1980s view of the near distant future, which showed downtowns coming back. And the suburbs going into decline, and who’d have thunk that …

Eve: [00:10:46] Yeh.

Chris: [00:10:46] … in the 1980s. Well, that near distant future was 2015. So, these writers of the movie nailed it, and none of us in the 1980s were thinking that the cities were going to come back that quickly and that well. So, you look at how we used to finance, and much of the money in the capital stack… You know, the capital stack is going to be comprised of two basic categories – equity, you know, cash at risk, and debt, money you get from banks at very cheap interest rates. So, by definition, the equity is the risk capital and it goes in first and comes out last. And with a ‘Back to the Future’ financing approach, that, you’ve got to have 40, 50, 60 percent of your capital stack being equity, and most of that being ‘patient equity.’ It’s not looking for an internal rate of return of 25 percent. It’s going to be put in. It’s going to get paid back when the project matures. You know, don’t bother measuring it. Just recognize that it’s there for the mid- and long-term. And if you realize that, in walkable urban real estate, you can make a bloody fortune. But you just can’t make it in three to five years.

Eve: [00:12:18] But we have pretty impatient investors right now who want to make that sort of return quickly. Two years.

Chris: [00:12:25] Oh, yeah, oh yeah.

Eve: [00:12:26] That’s frustrating for me with my platform, because, you know, some … these projects that I think are so important for the future have a very hard time getting equity.

Chris: [00:12:41] So, you have to be creative, of course, and most the important thing to be creative about is making sure that the land invested in your deal is invested patiently. So, the best example… I’m in partnership with Robert Davis in my development company. Now, we’re both, at this point, limited partners with our development company, which is called Arcadia Land Company, based in Center City, Philadelphia. But Robert’s best known for the project, Seaside, on the panhandle of Florida. And it’s the first New Urbanist project. And Robert got 80 acres from his grandfather as his inheritance on what was then known as the Redneck Riviera. This is where the country boys from Alabama would go down to the beach and drink. And Robert looked at this as a patient equity investment, and slowly but surely came up with a great urban plan, and slowly invested in the infrastructure, block by block. And he sold his first one eighth of an acre lot for ten thousand dollars. He sold his last one eighth of an acre lot for two million dollars …

Eve: [00:14:02] Oh wow.

Chris: [00:14:02] … 25 years later.

Eve: [00:14:04] Wow.

Chris: [00:14:04] And he still owns Downtown Seaside. It’s worth a bloody fortune, with condo prices at 1,500 bucks a square foot. That’s what the ancients knew how to do. And that’s what the Grosvenors in London knew how to do 400 years ago. They were just, you know, farmers that happened to own this farm that became the West End of London. And they never sold the land. They just had long-term leases, and became one of the top 20 wealthiest families on the planet because they invested long-term. So, we have lots of examples, just not that many currently, as we have this ‘get rich quick’ mentality

Eve: [00:14:49] We really do, don’t we? Interesting. What’s your favorite project that you’ve worked on?

Chris: [00:14:56] My second project. I was still running and owning Robert Charles Lesser and Company and got hired by a Seattle family to redevelop a shipyard in Kirkland, Washington, right on Lake Washington, right across Lake Washington from Downtown Seattle. They built Liberty ships there during the Second World War. And this family also happened to own the Seattle Seahawks at the time, and they had their practice field there. And so, they asked me to figure out what to do with it. And we came up with this pretty, at that point, wacky idea of high density, mixed use, walkable urban – a new marina, office, hotel, retail around a plaza, rental apartments, condos, and from day one, decked parking, highly expensive to build, so we could get the kind of density that we needed. And the east side of the Seattle metro area, at that point, you did not charge for parking. So, this was an incredible investment with zero return as far as the parking goes. And everybody, you know, Urban Land looked at it and said, you’re crazy. And I mean, even the office brokers who have no skin in the game, said this is crazy. And we came up with this set of recommendations. And the family, the Skinner family, old mine family up in Seattle, said to me, great idea! Now can you build it? And I said, holy smokes, I’m a consultant. What, do you want me to do something? So for about two years, I was the fee developer and it came out of the ground, it just … to this day, it gets the highest office rents and rental apartment rents in the northwest of the U.S.. Because of its high density, walkable, urban nature.

Eve: [00:16:57] Wow. And you were hooked, right?

Chris: [00:17:00] Oh, yeah, I saw the power of it. It was just really impressive. And, you know, this is your ultimate doing well while doing good. And you can feel really proud of Carillon Point, which is what it’s called … because it’s a long-term keeper. And I asked the family, so, you know, why do you want to do something that’s, that’s so unconventional from the finance point of view? And they said, well, we’ve been around Seattle for 100 years. Our family’s going to be around for at least another 100 years. We’re building with 100 year perspective.

Eve: [00:17:30] Wow. So, then what led you to launch Places Platform?

Chris: [00:17:35] This is kind of a culmination of all the work I’ve done, going back to age eight. You know, I mentioned earlier, it’s the Sim City for real estate and place management and city management. It also could be viewed as the Bloomberg of real estate. Michael Bloomberg, with his original company that made him worth 40, 50 billion dollars, basically created a data set, a database of all the stock and bond markets back in the 70s and 80s, that … and so on one screen in front of you, or actually two or three screens, you could understand anything about any stock or bond that was being traded on public markets worldwide. And that was a huge step forward. Well, real estate is worth about twice as much as all the publicly traded assets in this country, of all the publicly traded companies. And we are not yet at that point, but we have 100 percent database of all the real estate, we’re real close, and that’s what Places Platform is creating. Working with Walk Score, working with Co-Star, working with Zillow and Collateral Analytics, and a variety of other databases that are in their silos, we’re bringing them all together. And we’re looking at it from an economic performance point of view …  meaning we can do gross regional product, GRP, at the place level, at the city level. At this point, we can’t get GRP below the metro level, at least officially, you know, throughout the country. But Places can take it down and tell you what the GRP is of Downtown D.C.. We look at the net fiscal impact, how much does the city net at the place level? How much does Downtown D.C. make for the city of the District of Columbia? The revenues coming in from property taxes and income taxes and sales taxes and all the rest, minus the cost of services, the net fiscal impact. And these walkable urban places almost always make the bulk of the money for a city to pay for public schools, and to pay for welfare and other social benefits. And then, of course, we look at the real estate valuations for all the real estate.

Chris: [00:20:05] We also have three other metrics. One is social equity. What does it mean for somebody who is a low-income household? We also look at it from a public health point of view, and particularly with COVID. And the fourth one that we have not yet developed is, of course, environmental. So, what Places Platform is trying to do is to have a quadruple bottom line. To analyze public policy, infrastructure investment, major real estate development, and understand and quantify what the economic, social equity, public health and environmental, you know, hopefully benefits, are from those investments.

Eve: [00:20:47] Is your hope that this information will propel cities towards the right sort of development?

Chris: [00:20:57] That’s it. I’ve come to realize in my career that there’s either a downward spiral for cities or an upward spiral. And the 80s and into the 90s was the downward spiral. No matter what you did, no matter what federal program, whether it be UDAG grants or Model Cities or you name it, redevelopment, there was a downward spiral that no matter what you did, no matter how much money you spent, it would not change the downward spiral. Well, we’re now in this upward spiral, with, you know, the market share gains for walkable, urban development is just through the roof, and the price premiums are two, three, four times the price per square foot of drivable suburban places. So, we have this upward spiral. And I have found that the upward spiral, if you have correct public policy, can both give you economic returns and social equity returns and public health returns and environmental returns. And this will be a measurement tool to make sure you are achieving all four of those returns. You do not have to sacrifice social equity for these economic returns.

Eve: [00:22:15] So, then I have to ask the dreaded question, do you think that COVID-19 is more than a blip on that upward spiral?

Chris: [00:22:25] To be flip? It is just a speed  bump, it is just a blip that, you know, a year or two from now we’ll look back and just say, that was kind of a weird couple of years. But having said that, I’m not saying that a lot of changes are being sped up. Changes that were in place …

Eve: [00:22:46] Compressed. Yep. Yep.

Chris: [00:22:48] The head of global research for Cushman and Wakefield asked me a couple of months ago to work with them to help figure out what’s the ‘future of office’ in the U.S.. And so we’re in the middle of that work right now, and certainly there’s going to be an impact, particularly on the office market. There’s going to be, in my mind, it’s pretty clear, that there’s going to be a repricing, i.e., a reduction in value of offices. It’s going to affect different metro areas differently, and we’re going to be looking at it, looking at the 30 largest metros to figure out what the impact will be in each of those 30 metros. But, like with every crisis, there’s opportunity, and the opportunity, if we see a repricing and a reduction in occupancy in the office space as more people work from home, and, you know, it’s not going to be 100 percent work from home. We know that. But it will be more than what we had, which is about 11 percent in 2018, according to the census, worked from home during the most recent week that that survey was conducted. It’ll be higher than 11 percent.

Eve: [00:24:07] Yeh, yeh.

Chris: [00:24:07] So, those offices will experience a lot of pain. And the other thing is, that then allows that office space, which is in remarkably great locations, particularly the walkable urban space, to be recycled, probably as residential.

Eve: [00:24:28] Yeah.

Chris: [00:24:28] We are short anywhere from seven to 12 million housing units in this country. That we’ve not allowed the real estate development community to build. We have mandated that they could not build them. And that has created this horrendous affordable housing and homeless situation. And so a lot of those office spaces, as well as a lot of the hotels, are going to become assets that we can convert into housing in great walkable urban locations.

Eve: [00:25:03] Right, right. Aside from that are there any other current trends in real estate that you believe are most important for the future of cities?

Chris: [00:25:12] Yeah. We collectively in real estate and the built environment, you know, urbanists, in general, we really need to address, forcefully, the need to ‘up-zone.’ Up-zone land, and in particular, in cores and corridors. The cores are walkable urban places, both in center cities, but in particular the urbanizing suburbs. Probably 50 percent of new walkable urban development will be in urbanizing suburbs. Metro D.C. is leading the way, not just in this country, but worldwide in the urbanization of the suburbs in Arlington and, you know, downtown Bethesda, Silver Spring, Reston Town Center, National Landing, National Harbor. But it’s a massive up-zoning battle …

Eve: [00:26:07] Yeh.

Chris: [00:26:07] … fought by NIMBYs. NIMBYs are the most pernicious force in urbanism right now, and I am quite ashamed of my generation, I’m a baby-boomer, that are leading the NIMBY charge and it’s the most selfish movement ever. And they’re basically saying, you can’t come here. And if I stop you from coming here, my house is worth more. And it’s all in the land. So, we need to flood the market with more up-zoned, walkable urban land. But it’s only going to be a small percentage of total metro land. Here in D.C. only two percent of the metro area is walkable urban. That’s it. Two percent. And that’s where all the action is.

Eve: [00:26:55] You know, you’re probably familiar with this, but over the last 10 years or so, I visit Melbourne, Australia regularly, and they up-zoned their key commercial corridors in the way you’re describing. And it’s been really interesting to watch it. Are you familiar with that?

Chris: [00:27:10] Very much so. I’ve been to Melbourne quite a bit.

Eve: [00:27:13] Yeh, yeh.

Chris: [00:27:13] You may have run into Mike Day, who’s the leading urban planner in Australia, who’s based there, and he has an urban planning firm that is the largest in the country. And he and I have been working together, particularly in Melbourne and Sydney. Yeh, they really need to up-zone. I mean, they obviously, you know …

Eve: [00:27:32] Oh yeh, Melbourne is sprawling badly.

Chris: [00:27:34] Oh, god, it is horrendous. And the same with Sydney. But, you know, their downtowns are among the top five on the planet.

Eve: [00:27:43] Yeah, they’re fabulous.

Chris: [00:27:44] When you get out of the downtowns, and it’s just suburban hell.

Eve: [00:27:47] Not all of it. Like Melbourne has a really great train network and a wonderful bike network that really connects some of the neighborhoods around downtown, really, pretty well, which is, you know, one good thing.

Chris: [00:28:01] Well, the downtown and the downtown adjacent places are tremendous in Melbourne, as you know better than I, you know, the region of Melbourne is comprised of, like in the U.S., many, many, many jurisdictions. And so the center city is one jurisdiction, downtown and downtown adjacent. So, then all those suburban jurisdictions just don’t get it …

Eve: [00:28:27] Yeh.

Chris: [00:28:27] …and they are beginning to get it. A lot of efforts going into it. So, I have no doubt that they’re moving in the right direction.

Eve: [00:28:35] Well, a city like Melbourne, too, I think it’s one of the fastest growing metros … It’s certainly the fastest growing in Australia, and …

Chris: [00:28:42] And it’s such a lovely place. It is just …

Eve: [00:28:44] It’s a lovely place.

Chris: [00:28:45] Charming as can be. Remarkable people.

Eve: [00:28:49] Ok, then, do you think equity crowdfunding can play a role in building communities for everyone? We’re talking about social equity and how people can get a stake in their own community.

Chris: [00:29:02] I think it’s a critically important trend. And again, it’s ‘Back to the Future.’ This is how we used to build the great real estate. I always used to wonder back in the 80s when I was really trying to noodle through how did the ancients of the late 19th, early 20th century build these buildings that were so well built? They were over-engineered. They were architecturally significant. They were built for the ages as opposed to the junk that we were putting up in the 80s and 90s that were, you know, just slam bang, thank you, ma’am. Throw them up. Assume that in 10, 12 years they’re going to become a slum, and you didn’t care because you got your money out. And it was because of crowd funding. And it was local folks coming together to build, in particular, you see this with hotels that, every city needed a glamour hotel that would show off the best of that city. And all the business folks would come together and put in money to build this hotel, to demonstrate that this city has come of age. And those hotels are with us today as the grand, marvelous anchors of our downtowns. Every city throughout the country has one. But the same thing applies to much of the commercial real estate, that a lot of small investors came along and dropped in the equivalent of a thousand dollars and they owned a little piece of their community. And that did a lot of things. One is they would economically benefit from the vitality. They would walk past it and they could say to their friends, I own that building. Point of pride. That’s the great thing about real estate, is that, you know, unlike software development, which is viper … just vaporware, you can point to a stick and brick building and say, I own that. Great pride, great emotional return. And it also gives you a reason to care about and patronize your hometown. It’s the ultimate doing well while doing good.

Eve: [00:31:10] Yeah, I think you’ve described exactly why I started a crowdfunding platform. In Pittsburgh, you know, in the neighborhood I lived in for a long time, some of my neighbors would just band together to buy a vacant house to make sure that it wouldn’t fall into a slumlord’s hands. And, you know, that was exactly in that era. And I was, I was pretty impressed with that. I thought it was pretty fabulous.

Chris: [00:31:36] Yeh, yeh, I’ve seen that kind of thing happen throughout the country. Chattanooga, again, my favorite small town, has an organization called Chattanooga Neighborhood Enterprises that has redeveloped low-income neighborhoods surrounding downtown with zero, zero displacement.

Eve: [00:31:56] Wow.

Chris: [00:31:56] And it’s just remarkable. You know, there’s so many great examples out there now, over the last 20, 30 years.

Eve: [00:32:04] Well, I’ve really, really enjoyed talking to you. And I can’t wait to see how your new venture evolves. Thank you very much for joining me.

Chris: [00:32:11] It’s been very good to catch up with you.

Eve: [00:32:13] Thank you. Bye.

Chris: [00:32:13] Bye. Bye.

Eve: [00:32:26] That was Chris Leinberger. His fascination with cities started at a very early age and evolved into an astounding career working on urban land issues as a strategist, teacher, developer, researcher and author. He built an enormous advisory company and then moved on to focus on development as a co-founder of the Arcadia Land Company, a progressive New Urbanist development company for which he is still a managing partner. I hope you enjoyed listening to this interview as much as I enjoyed recording it. You can find out more about impact real estate investing and access to the show notes for today’s episode at my website, EvePicker.com. While you’re there, sign up for my newsletter to find out more about how to make money in real estate while building better cities.

Eve: [00:33:20] Thank you so much for spending your time with me today. And thank you, Chris, for sharing your thoughts. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Chris Leinberger