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Katie Swenson is a Senior Principal at MASS Design. She joined Mass in 2020 after having worked for many years on affordable housing with Enterprise Community Partners on issues of design and sustainability. Her role at MASS, which has built a reputation as a design practice that embraces issues of economic and social equity, is to help them to define MASS version 2.0.

With a career that has spanned both arts and design, Katie grew up in Washington, D.C. and Boston, and studied comparative literature at Berkeley. Then, for six years she immersed herself in the modern dance community in New York City. When she finally decided to attend graduate school, she chose architecture as her discipline.

After graduating from the University of Virginia, she received an Enterprise Rose Fellowship to help initiate the 10th and Page Street Neighborhood Revitalization Project, working with the local Piedmont Housing Alliance. And that’s when the magic started to happen.

“It allowed me to become a community-based architect,” she says, “one who brings big ideas to the local level and works with the city and community to make things happen.” She founded the Charlottesville Community Design Center soon afterwards, leading it for the next two years, during which time she co-authored Growing Urban Habitats: Seeking a New Housing Development Model, with William Morrish and Susanne Schindler.

In 2007, Katie was asked to head the Rose Fellowship program itself, and went on to spend over a decade at the parent organization, Enterprise Community Partners. She has taught at the Boston Architectural College and Parsons School of Design, and in 2018-19, she was a Loeb Fellow at Harvard’s Graduate Design School.

Listen to Katie talk about the importance of ‘community’ for impactful development.

Insights and Inspirations

  • Diversity is not an abstract word.
  • Katie’s mom was her architectural mentor.
  • Home can mean so many different things.

Information and Links

  • Katie stays tuned to designvanguard.org for the creative edge in design and technology in the social sector.
  • Katie loves listening to Eric Cesal’s social-design-insights conversations with social justice designers.
  • Mia Scharphie is one of the greatest champions of women in design and Katie loves following her buildyourselfworkshop.com and highly recommends taking a Build Yourself workshop.
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.

Eve: [00:00:24] My guest today is Katie Swenson. Katie joined MASS Design in 2020 as a senior principal after having worked for many years on affordable housing with enterprise community partners. There she was, a vice president of Design and Sustainability. Her role at MASS, a design practice that embraces issues of economic and social equity, is to help them to define Mass Version 2.0.

Eve: [00:01:06] Katie’s career has spanned both arts and design, from comparative literature to modern dance. When she finally decided to attend graduate school, she chose architecture as her discipline. And that’s when the magic really started to happen. “It allowed me to become a community-based architect,” she says, “one who brings ideas to the local level and works with the city and community to make things happen.”

Eve: [00:01:37] Be sure to go to rethinkrealestateforgood.co to find out more about Katie 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: [00:02:00] So hello, Katie. Thank you so much for spending some time with me today.

Katie Swenson: [00:02:04] So glad to be here. Thank you, Eve.

Eve: [00:02:07] I’m really fascinated. You’ve built a career around this question: How do we create an equitable, sustainable, affordable city? And I’m just wondering how you would answer that very big question.

Katie: [00:02:20] Yes. Thank you for that question. How do we create an equitable, affordable, sustainable city and communities, I would say, as well.

Eve: [00:02:30] Yes.

Katie: [00:02:30] You know, my work has taken me into communities mostly across the United States, both large cities and small cities, rural communities and tribal communities. And I think at the base of everything that we’ve been trying to do is to understand how people can create lives for themselves and their families that give them the opportunity to become and be the people that they want to be, to live lives with purpose and dignity and have the resources and abilities to contribute to the world at large and to their families. So I think that has to happen and in all kinds of environments, certainly so much of the focus of both the sort of economic engines as well as a lot of the environmental work has been around densifying cities and creating cities as urban centers where so much of our work and life can happen. But I think it’s also important to understand the broad spectrum of communities that we have throughout the United States and understand that we need to address critical issues around housing and jobs and health and education resources for everybody in the country.

Eve: [00:04:01] Basically, one one size does not fit all, right?

Katie: [00:04:04] You know, America is much more diverse, I think, than we necessarily give it credit. I’ve had the incredible opportunity over the last dozen years to really travel quite a lot throughout the United States. And last year, I partnered with a photographer named Harry Connolly and the two of us have been working on a book that we called ‘Design with Love at Home in America’. And we went and revisited 10 of the communities where we’ve been working in partnership for many years with local community development corporations. And the experience kind of re-revealed for me how diverse America really is, from border communities to very rural tribal communities. We worked in geographic diverse locations from the Mississippi Delta through Yakima, Washington, which is sort of the breadbasket of America for produce and fruit production, through inner cities in Baltimore and elsewhere. So, I think one size does not fit all in some ways and in other ways, of course, there are so many common themes that unite best efforts throughout the country.

Eve: [00:05:33] Yes, I think about one size does not fit all, I immediately think about, you know, the very typical residential project that developers will build, which really seems to be one size for all. And what you’re describing is something very much more diverse.

Katie: [00:05:53] Yeah, I think that communities need to grow to reflect themselves. That’s the essence of place-based attitude towards building MASS Design. We have talked too often about the provenence of a building. You think of, let’s say, wine that comes from a certain region and is grown from a certain type of soil. And buildings and communities also have the opportunity to be grown from their place and to be designed, really, in concert with the values and ambitions and aesthetics and goals of the people who both are responsible for creating them and then will live and grow their own communities. So, yes, I think it’s really important to understand that diversity is not an abstract goal, but is the result of, sort of, expression of an environment and that of people and community values that create something that’s unique and individual to a place.

Eve: [00:07:09] Yeah, I love that thought that a building has a provenance. I think that’s great. So, the question of the architect’s role within community has sort of continued to grow and change in recent years, but I don’t think it’s fully formed yet. And how would you like to see that role continue to evolve?

Katie: [00:07:28] You know, through our work with the Enterprise Rose Fellowship program, we’ve learned a lot about a role that an architect can play in local communities. So, just to give a little bit of context, I worked for almost 15 years at Enterprise Community Partners. Back in 2001 to 2004 I participated in a program called the Enterprise Rose Fellowship Program and as an aspiring architect, I was partnered with a community-based development corporation. And the goal was to bring an architect or designer on to the development team of a community development group. The Community Development Group could use the resources of a dedicated designer, and the designer would be able to learn the ins and outs of not only affordable housing development, but also community engagement processes and the regulatory processes that contribute to the creation for affordable housing. So, over these past nearly 20 years, Enterprise has partnered 85 Rose Fellows with community-based groups, and it’s been an incredible privilege to be able to witness the growth that has happened through these partnerships. Each one has looked very different. In all cases, there are definitely some sort of underlying values. The architects who are attracted to this work and who succeed at it are generally very humble people who approach the work with the desire to uplift, first and foremost, the goals of the community, but also have to be able to be both brave enough and resourceful to bring the best resources from the architectural and design communities to sort of bear in the local work. So, it’s been wonderful to watch these relationships and partnerships grow over time, and each one has resulted in very different kinds of outcomes.

Eve: [00:09:49] Do you want to give me some examples? What should a community architect be thinking about that’s perhaps different than a rock star architect might be thinking about?

Katie: [00:09:58] Absolutely, I’d be happy to share a few examples. I think I would start back in the early days, maybe in 2001, when David Flores was partnered with a community group in San Ysidro, California, called Casa Familiar. A local non-profit that is now about 50 years old and has been working as a kind of community organizer in San Ysidro for many years, helping families navigate life on both sides of the border and provide affordable housing and other community development resources in San Ysidro. And David Flores was a member of my class of fellows, so we both started work in 2001. At the beginning, David started building what he called Casitas, small houses along some of the alleys in the historic part of San Ysidro. But I think he quickly started to realize what the larger challenges that families were facing at the border, including, of course, the border itself. And as the San Ysidro land port of entry has expanded and increased its, I guess, militarization of the border process for crossing, it also took up more space and land space in the community, more energy and also, because of the long wait times to cross the border, was creating environmental effects from stalled vehicles. So David, not only has been working as the design director at Casa Familiar, he was there for almost 20 years working to oversee the development of affordable housing in the neighborhood, but he also joined, for a time, he led the Planning Commission efforts and he got involved in the design and planning of the border control station so that it would be more receptive and welcoming to pedestrians and people crossing each way. And he got involved in environmental studies and testing air quality in the region.

Katie: [00:12:16] So I think that architects and designers like David show that an architect’s job is not only on distinct projects, that, absolutely he’s been involved in helping to realize some very beautiful pieces of architecture including a project which just opened recently that Teddy Cruz and Fonna Forman designed for Casa Familiar, a longtime project in development. But that these building blocks of housing and libraries and parks also need to be knitted together into a larger point of view and larger ability to help a community, as a whole, feel supported and able to grow a family’s life and capabilities in some of the most stressful, you know, environments that we have here in the country.

Eve: [00:13:16] That’s a lovely story. So, I’d really love to hear about how you came to be such a powerful advocate for equitable cities and communities and where did that passion come from? I think you started life academically in a very different place by the sounds of it.

Katie: [00:13:32] Yes, I was asked recently who one of my architectural mentors was and, as a child, and I said my mom and the response was one of surprise, actually, and I thought it was so interesting because my mom was a professional, but she was also a home maker. And I’ve been thinking about these words, not homemaker, one word, but home maker, maybe two words. And I think in many ways, I grew up with a very strong attachment to home, the idea of home, the physical reality of home, how both the design and feeling of your home as well as the stability and platform that your home kind of provides you is just a critical piece of this formation of who you are. And I think in high school, while I had a very stable and wonderful home, I also had the chance to volunteer for what started as a month engagement and ended up being a little over a year and a half at a homeless shelter in Boston. And I think that in the mid-eighties, when homelessness was starting to, kind of, take hold of America and we had, kind of, a high point in the mid-80s, I realize now that actually has not dissipated much. So for me, as a high school student, sort of understanding this dichotomy, not just the power of my own home and what it meant for me, but what happens when you don’t have a home and how slippery a slope it becomes and how quickly life can fall apart without a stable home. So I think that this has guided so much of my passion for my work and while it hasn’t necessarily been a linear path in terms of my career, I studied comparative literature as an undergrad and I have spent time as a modern dancer and I’ve done a lot of different things throughout my life, but some core essence around the importance of home and making homes, making my own home and making homes for others has been something that has driven me as long as I can remember and to this day.

Eve: [00:16:12] You also sound like you’ve had a lot of fun. And, you know, I think people have this idea that your life should be linear. But I think, you know, all of those interesting things that you’ve done must surely feed into what you do now and the way you look at the world and I love that idea. I wanted to talk a little bit about the pandemic as well. It’s taken me a while to get my brain around it, but I’m starting to think about what does it mean? And what does our world look like when and if it comes to an end? And if it wasn’t already bad enough, the affordable housing crisis just got a lot worse with the onset of the pandemic and many people losing their jobs. And I don’t even know how to begin to think about how the U.S. can tackle this monster problem and I’m wondering if you have any thoughts about that.

Katie: [00:17:04] Oh boy. Well, I wish I could say that I was able to get my mind around what this is going to mean for all of us. I think we’re still in this period of profound uncertainty. And I am really grateful for the wide-spread activism that I’ve seen from the housing community, first and foremost, on protecting renters and working to stop evictions and understand that that’s one critical base of all of this is, again, I guess, the importance of having a home right now. We talk about stay at home, right? Stay at home.

Eve: [00:17:43] If you don’t have a home, how do you stay at home, right? Yeah.

Katie: [00:17:47] Oh, my goodness. I mean, that means very different things for different people. And the importance of home has maybe never been so, kind of, revealed, right? I heard Governor Cuomo talking about the subways in New York, ridership is down 92 percent and they were going to start to close the subways in the mid-morning hours because many people were in many ways taking up residence on the subways.

Eve: [00:18:16] Oh wow.

Katie: [00:18:16] So this kind of crisis around home, whether it’s becoming increasingly unaffordable because you’re out of work, whether it’s a place that is not safe, perhaps. I mean, not everybody is living at home in a safe environment or you have no home. So, we think this moment, certainly we all want to, kind of, understand what is the future of, you know, our public transit system, what is the future of our work spaces, what’s the future of the restaurant and food industry? There’s so many questions, but I think one of the most elemental questions is going to have to be what is the future of our housing policy and are we going to use this moment when it could not be more clear how important it is, both for each of us as individuals and for all of us as a society, to be able to safely house every member of our community?

Eve: [00:19:26] Yeah, and more, you know, you can’t really say that home is just a roof over your head because there’s so much inequity around who has a computer and who has broadband, and if you even have a place to work in your home. And I think all of that, surely, has to come into play as well. If we’re really looking at schools being closed, and I know my husband’s a teacher and his university is already talking about online classes only in the fall, all of that is going to really matter quickly. I mean, as an architect, I’m grappling with, you know, what does that mean in the way we even design homes and cities?

Katie: [00:20:07] You know, in some ways, you’re right in that this is sort of exciting time to think about home, right? I think everybody’s looking around and going like, oh, my goodness I have to sort of expect so much more of this space. And I hope that that notion of expecting more from our buildings and our spaces is one of the things that will come out of this time. You know, the idea that our buildings need to keep us healthy is an idea that really attracted me originally to MASS Design Group who started during a tuberculosis epidemic and designing hospitals with the goal of having the hospital itself, the building itself, participate in enhancing the health of the staff and patients and visitors who experienced it. That the buildings have such a role to play. Buildings shape us, they shape our experience. They shape our health outcomes. And so, I hope that this will be a moment where we are understanding that we need to ask more of our buildings and participate in a greater spatial awareness and spatial literacy to understand the profound effects that the built environment in general, and the buildings that we occupy in specific, have on our health outcomes and our quality of life and productivity outcomes and that we gain a sort of awareness and capabilities around our ambitions for the built environment.

Eve: [00:21:59] Yeah, and that, you know, the buildings shape cities. And I think cities, too, will need to be re-thought in terms of how do you make them safe places for larger groups of people? You know, some cities in other countries are starting to think about changes to their transportation patterns or, in Lithuania they’ve given over all public spaces to outdoor restaurants so restaurants can operate again. I mean, these are kind of baby steps but in amongst the misery of all of this, it’s interesting to watch how creative people can be. That’s encouraging, I think.

Katie: [00:22:37] It’s hard to talk about silver linings at this moment. I mean, I think people are going to be experiencing so much grief of all kinds from lost loved ones to lost, you know, hopes or experiences. So, there’s going to be just a wide swath of, kind of, having to recover from this moment but, as you say, there’s also a lot of opportunities that are being revealed. Like in New York City, where they’re coming up with strategies to re-occupy the city streets in a different way, I think that’s so exciting. And I think it’s really important, I mean, if home is important, though is. I guess, you know, the old words home and garden, right? Home is as equally reflected in the sort of outdoor space. and I think our ability to kind of get more creative about understanding how we can use our outdoor spaces more effectively is really important.

Katie: [00:23:39] I also think that different kinds of projects. We have just been involved in a project in a community in West Baltimore where neighborhood leaders started leading the charge to create a park where there had been three homes which, over time in a disinvested area of Baltimore, had been first made vacant and then started to deteriorate and eventually were taken down and the lots that were left had become a dumping grounds. And one of the local neighbors, so a block leader, a block captain on his block, his name is Donald Quarles, started working with one of our Rose Fellows and his neighborhood group and the Bon Secours Community Development Group to clean up first this lot and now turn it into what has become this incredibly beautiful small pocket park that they call Kirby Lane Park. And the process has taken about two years and we figure that in the end, it’s been mostly volunteer labor, but the hard costs have been less than one unit of housing costs to create in that community. And it’s provided this outdoor space, a kind of backyard or a front porch, whatever you want to call it, for this community at large. So I think from big ideas to how do we re-occupy city streets and city parks and beaches, to small ideas of how to prioritize and re-integrate smaller outdoor spaces into our day-to-day lives, there are lots of models and ideas that we need to be working on simultaneously at different scales.

Eve: [00:25:41] I think what excites me is the people I talk to who are incredibly creative and they’re all going to put the brainpower to this. I can’t wait to see how they make things better. It’s fascinating to me. But, in the meantime, I would just like to ask you one final question, and that is what’s next for you? You have a brand, new job with MASS Design Group and where’s that going to lead you?

Katie: [00:26:06] Oh yes, it is so exciting. I started at MASS Design on February 3rd. I’ve been a friend and sort of champion and cheerleader to the organization since 2010 when I first met them and then had joined their board. So, I came on full-time in February, thank goodness, really just in time to be able to participate in this moment with this incredible group.

Katie: [00:26:34] So, the very first morning that we, sort of were all getting on our first Zoom call with one hundred and twenty five people from around the world at nine a.m. Eastern Time on Monday morning, one of our design directors, Chris Scovel, had gotten a call from one of our partners at Boston Health Care for the Homeless, saying that were going to be putting up some makeshift tents to be able to test and treat people without homes in Boston and would we look at the plans? And so, Chris and a team got on to making really makeshift design recommendations. We’re not calling them designs because it’s not about designing a tent or creating something ideal in any way, it’s about trying to apply our experience and design for infection control that we’ve learned over many years through, not only tuberculosis, but also Ebola and cholera, and to understand with our medical partners how Covid19 is manifesting itself and what can we do from a spatial guidance to help limit contagion and keep health care workers and patients healthier. So we started in on this immediately and realized that if one group needed it, as one partner needed it, probably so did others. So, we set off on this kind of larger understanding about, how can we use our spatial cues, spatial literacy, to help respond in this crisis? You know, I think that obviously architects are not on the frontlines of this crisis. Health care workers are on the frontlines of this crisis and make no mistake about it, but the rub is that our buildings are on the front lines. And so, we need to be there, showing up to understand how do we need to adapt? What are the retrofits that we need to do? How can we learn from this experience so that our buildings are able to support health care workers, to be able to support our communities, getting back into our lives in so many ways, but to do it safely?

Katie: [00:29:04] It’s been an incredible process and I feel very, very lucky to work not only with an incredible team at MASS, but also such a robust network of amazing partners both in the medical fields and in all of the sort of social service fields.

Eve: [00:29:22] Well, I really can’t wait to see what comes next. And thank you very much for spending this time with me today.

Katie: [00:29:30] Thank you. Really a pleasure to join you and we’ll look forward to having this conversation evolve and thanks for highlighting all the creative efforts. Appreciate it.

Eve: [00:29:41] Thank you.

Eve: [00:29:56] That was Katie Swenson. I loved that her early professional years meandered through the arts from comparative literature to dance before she landed on architecture. Her trajectory shows that climbing the ladder is not necessarily the path to success. Her career as a community architect started later than most but that didn’t stop her from becoming a star in the field. And she brought with her creativity and a human passion for making better places for everyone.

Eve: [00:30:27] You can find out more about impact real estate investing and access the show notes for today’s episode at my web site, rethinkrealestateforgood.co. 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: [00:30:44] Thank you so much for spending your time with me today and thank you, Katie, 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 Katie Swenson

1,000 urban entrepreneurs.

Lyneir Richardson is a man with a mission. His goal is to help 1,000 urban entrepreneurs grow their businesses, through a nine-month program run by the Center for Urban Entrepreneurship & Economic Development (CUEED) at Rutgers University in Newark, NJ. The program, where diversity abounds, has enrolled about 400 entrepreneurs so far.

As executive director of CUEED, Lyneir leads capacity-building programs, teaches an M.B.A. course in Urban Entrepreneurship and Economic Development and serves as faculty advisor to students consulting with small business owners. About 70 percent of the entrepreneurs within CUEED are African American and Latino, and 62 percent are women. Most have no connection to Rutgers. About 60 percent of the businesses employ fewer than five people but have potential to grow.

Lyneir is also co-founder and CEO of The Chicago TREND Corporation, a social enterprise initially funded by the John D. and Catherine T. MacArthur Foundation and Chicago Community Trust. It acts as a centralized resource for real estate developers, retailers and community development organizations wanting to invest in and understand Chicago’s neighborhoods, that can drive transformative change.

Lyneir was formerly the CEO of Brick City Development Corporation, where he had responsibility for real estate development, small business services and business attraction in Newark, N.J. He is an experienced commercial and residential real estate developer with over 17 years of experience in urban retail development.

Describing himself as an urban entrepreneur who is interested in strengthening economic conditions in underserved areas, Lyneir says he likes to work on bringing together private, public and philanthropic funds to support these kinds of projects. And he does that with incredible energy.

Information and Links

Read the podcast transcript here

Eve Picker: [00:00:12] Hi there, thanks so much for joining me today for the latest episode of Impact Real Estate Investing.

Eve: [00:00:18] My guest today is the energetic Lyneir Richardson. In all that he does, Lyneir is razor-focused on helping urban entrepreneurs. He straddles two roles in two cities, Newark and Chicago. At Rutgers University in Newark, he is the executive director of the Center for Urban Entrepreneurship and Economic Development. There he is intent on helping 1000 diverse urban entrepreneurs grow their companies. And he’s also an entrepreneur himself. He co-founded and is CEO of the Chicago Trend, a social enterprise providing resources to real estate developers and retailers to promote investment in Chicago neighborhoods.

Eve: [00:01:05] Be sure to go to rethinkrealestateforgood.co to find out more about Lyneir 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: [00:01:38] Hello Lyneir, I’m really excited to have you here today.

Lyneir Richardson: [00:01:42] Thank you for inviting me. I’m looking forward to our conversation.

Eve: [00:01:45] Yeah. So, you’re a man with a mission and I’d really love to talk about that today. And like, firstly, in your role as the director of the Center for Urban Entrepreneurship and Economic Development at Rutgers University, and that’s quite a mouthful, you’ve set a goal there of helping 1000 urban entrepreneurs grow their businesses. And I’d really like to hear more about that.

Lyneir: [00:02:09] Great. Well, I have been at Rutgers Business School for six years. In October of 2019 we celebrated the 10th anniversary of the Rutgers Center for Urban Entrepreneurship and Economic Development. During that 10-year period, we really focused on helping a diverse set of entrepreneurs get to, quote unquote, the next level, and that’s how we always talked about, and then made the connection between entrepreneurship and economic development. Let me tell you a little bit about what I mean. We can point to the fact that we directly assisted over 400, now probably almost 500 entrepreneurs, 70 percent are entrepreneurs of color, African American or Latino largely, over 62 percent are women. 40 percent are right in the city of Newark, New Jersey which is an urban city that’s been really revitalizing through local municipal leadership and corporate support. And of those firms we’ve taken now a little over 160 above a million dollars a year in revenue. So we’re really excited about.

Eve: [00:03:22] Fabulous, yeah.

Lyneir: [00:03:23] That was really my, you know, first 10 years of work. And so the next, as we thought about it, all right, we’ve completed our 10 years, what do you want to do next? We really focused on this initiative we’re calling a thousand million. And as you mentioned, the focus is, can we help, you know, a thousand diverse entrepreneurs get to and exceed a million dollars a year of annual recurring revenue? The reason why that’s important for us is, you know, the million-dollar revenue mark is not the end all be all, but it’s an important threshold, it’s when an entrepreneur typically can start to think about either borrowing money or taking on investors. It’s at that point where they have some employees beyond themselves. It’s at that point where they hopefully will start to be able to consistently have some owner’s compensation or some profit to share. You know, they have customer validations and that type of stuff.

Eve: [00:04:21] They’re at the beginning of growth mode, right?

Lyneir: [00:04:24] The beginning of growth mode. And so, while we work with, you know, micro-entrepreneurs, you know, initially doing a hundred or two hundred thousand dollars of revenue, as long as they were in business for two years and we won’t, you know, discontinue working with them, we sort of turn to an intentional effort to take firms who are in the two to three, six hundred thousand dollar range and try to focus on getting them to the next level. That’s been fun.

Lyneir: [00:04:49] That’s our Rutgers Center for Urban…, and Rutgers has been a really supportive university environment because typically entrepreneurship centers at universities are, you know, internally focused. Helping students pursue entrepreneurial activity and helping alumni. Rutgers here, because we have this Chancellor, Nancy Cantor, who’s really made publicly engaged scholarship a strategic priority and a mission, she’s a national spokesperson for it, as well as the dean of our business school who made social impact, you know, one of her top initiatives and priorities we are able to open the doors of the business school to a community of entrepreneurs, many or most of which are not Rutgers students, and they’re not Rutgers alumni, you know. It’s just a community around us, the local coffee shop or the professional service provider in the area, in our state or region that we really are helping to accelerate and grow.

Eve: [00:05:53] Cool. How long is it going to get to a thousand of them?

Lyneir: [00:05:56] You know, it’s interesting. So, if you think about it, it took us 10 years to get 400 entrepreneurs in our program 160, I think by, you know, intentionally focusing, we’re hoping that over the next five years you will start to reach that goal. So we’re talking to a number of corporate partners, we’ve talked to some of the big philanthropy about both making, you know, our in-person courses, expanding them out some, but obviously not just because of the pandemic, but even in advance of it, using online tools so that we can expand our reach. So, yeah, we’re hoping that over the next five years, you know, we’ll start to see more, you know, more entrepreneurs across the threshold. We’re going to research it and track it and celebrate it as well.

Eve: [00:06:43] So what does an urban entrepreneur look like and where are they located? What sort of businesses are they?

Lyneir: [00:06:49] Yep. So it’s interesting. So, you know, urban entrepreneur is, it’s an interesting term. Urban is an interesting term, right? So, you know, what’s urban? Is it, in most instances place? Is it about density of place? I’ve been most passionate about urban with a racial lens. Racially diverse, economically, you know, challenged ethnic and underserved areas. So, in a lot of respects, my urban is really focused on here in the US, who have not been able to realize the full promise of our American dream, right? They have been subjected by, you know, systemic racism and that kind of stuff. So the question is, can I help them get resources and opportunity, you know to folks who have been overlooked and undervalued, right? So that’s really the focus of the urban we do. Distressed urban neighborhoods where we’ll create jobs and create wealth in communities. And then the economic development impact’s all-around quality of life, right? You know, will crime decrease? Will there be better educational outcomes, you know, more amenities and neighborhoods, you know, that type of work, right? And that’s the things that we measure, right? And so, our view is these urban entrepreneurs, as they become more successful, will be community anchors. They support the Little League team, you know, and civically active and employ locally and, you know, that’s the big dream and the vision for it all.

Eve: [00:08:20] Can you give us some examples of the sorts of businesses you’ve helped?

Lyneir: [00:08:24] So, a wide variety. I’ll talk about a few that we’re proud of.

Eve: [00:08:29] Surely, you’re proud of them all, right?

Lyneir: [00:08:33] Right, we’re proud of them all. I just did it off the top of my head, You’re right about that.

Eve: [00:08:35] It’s like your children.

Lyneir: [00:08:37] Well thank you for that, you’re right.

Lyneir: [00:08:38] We have four categories or signature program, sort of, lanes. One we call, which is our bedrock program, the Entrepreneurs Pioneers Initiative. It’s for first generation entrepreneurs. We have a program for media and art in entertainment industry entrepreneurs. We have a program that focuses on helping retail and restaurant entrepreneurs. And we have done a lot of work recently with people of color forming technology ventures and accelerating, you know, those ideas. And typically, after school and on the summer, we will do some youth entrepreneurship programs.

Lyneir: [00:09:17] You know, we have a really cool – I’ll just go walk back up the ladder – so we have a really cool technology firm called WearWorks that have started to raise capital into a number of strategic partnerships. This product is a haptics, sort of a navigation device for people with visual disabilities. Their recent accomplishment is using their product – a blind individual ran the New York Marathon for the first time without any type of seeing eye dog or, you know, used that tool to do it. We hope that they’re going to continue to grow and get resources and use their tools for training and for all types of health outcomes as well. We have put the local right down the street from our business school. We have a number of restaurants and coffee shops. Black Swan coffee, Green Chickpea is a restaurant. These are local businesses that we’ve either helped get contracts with the university, you know, one is soon to announce a second location. You know, the coffee shop I love because the donuts are so great, right? So, you know, I would I should be avoiding the donut shop, it’s really cool right down the street. A lot of professional services firms, PR firms, accounting firms.

Eve: [00:10:33] That’s a really wide variety.

Lyneir: [00:10:35] Yeah, very exciting.

Eve: [00:10:36] So, I wonder, how do you identify these entrepreneurs? What’s the bar they have to reach to be able to get into a program?

Lyneir: [00:10:43] Our initial requirement was in business at least two years, and one hundred thousand dollars of revenue is the threshold for most of our programs. The technology ventures, you know, we knew they were start-ups and, you know, it was, do we believe they could have some type of traction? Either they’ve gotten some other investment or been admitted into some other accelerator programs or, you know, have some indication of probability of success. But the goal really is, is to take people on, you know, a rung of the ladder and help them get to the next rung of the ladder. You know, at the state university where we view ourselves as an anchor, that’s going to be here. And so, we provide resources over many years. The entrepreneurs is not just in a program. You know, we give people student consulting teams over multiple years. We invite them back to universities over multiple years. So, you know, we’re in it for the long haul with the entrepreneurs in our funds.

Eve: [00:11:40] That sounds fabulous. What’s your background and how did you get here?

Lyneir: [00:11:45] Well, I started as a lawyer. I grew up in a family of entrepreneurs. My dad owned a restaurant and bar. We owned popcorn stores., we owned five popcorn stores. So, you know, like, our dinnertime conversations were around, you know, we got a new location or lease, or a truck broke down, or someone didn’t show up. You know, what are you going to do? And I, growing up as a teen, I was a D.J., a clean-up person, a delivery person, so I had all of those roles and saw business firsthand. I went to law school and practiced law initially as a bank lawyer.

Eve: [00:12:19] I have to ask, a family that owns popcorn stores begets a lawyer? How did that happen?

Lyneir: [00:12:25] Well, you know what? Yeah, our parents believed in education, right? And they believed, you know, in the value of education to continue to advance the family. What was interesting in being a bank lawyer was to de-mystify banking. I remember as a child, we’d always talk about how difficult it was to get a bank loan or, you know, and the narrative is, I was probably drawn to be a bank lawyer, and 90 lawyers in the law department there. But I remember every afternoon around 2:00 p.m., I’d start to fall asleep on the bank loan documents. It wasn’t until I got an opportunity to do a community pro bono project of loaning, instead of loaning one hundred million dollars to an airlines or a public utility, I got a project to loan one hundred thousand dollars to a little entrepreneur, a local entrepreneur who was buying the building that I think he was operating his barbershop from. And it was the same documents, promissory note, loan agreement, guarantee, minus three zeros. Instead of one hundred million it was one hundred thousand.

Eve: [00:13:27] Right, I’m very familiar.

Lyneir: [00:13:29] But I loved it, right? It was, all of a sudden, I could see the connection to the work. And, you know, being on that court or in a struggling neighborhood not far from where we initially grew up. Then that community development work became my passion, right. Getting resources to those type of entrepreneurs into the communities, that became my passion.

[00:13:50] I worked as a bank lawyer. I became an entrepreneur myself in Chicago. I developed, built and sold well over 300 single family homes and town homes, mostly in underserved areas, was Young Entrepreneur of the Year in SBA many years ago, right 25, almost 30 years ago. But then I had all the highs and all the lows of entrepreneurship from, you know, the cover of the Crain’s Magazine and the awards to the doors of bankruptcy court. I ended up selling my company in a fire sale after a tough period. I lost, got fired on the job, we over-extended ourself on a contract, you know, I had, you know personal, you know, the mother died, you know, I had this period of just needing to restructure. But I was able to get a job doing the same work, heading a national initiative with a publicly traded company that was focused on doing retail development in urban neighborhoods.

Lyneir: [00:14:45] And so by now, I start to see this pattern. I was a bank lawyer and found passion and lending in urban neighborhoods. I then started as an entrepreneur building homes in urban neighborhoods. Then I found this big corporate position that had a national focus on getting retail to urban neighborhoods. And then, when the recession hit in 2007, I got this opportunity to work with Cory Booker and head the Economic Development Organization in Newark, New Jersey. Cory Booker, as you may know, very charismatic mayor of Newark, New Jersey, ultimately became Senator Booker. And because of his charisma, we had this opportunity to position Newark as a city that would be a national model of urban transformation and started to do projects. So, we did grocery stores and office buildings and new restaurants in the city – it became a lot of fun. And when he became Senator Booker is when I moved to Rutgers. So that’s the long sort of career journey.

Eve: [00:15:45] I mean, there seems to be a lot happening in Newark. I keep running into people doing…

Lyneir: [00:15:49] Very good. I mean, even now, phenomenal current leadership. Senator Booker is working more at the national level, but we have a phenomenal local mayor who’s galvanized both the business community, the residential community, and really done phenomenal work here. So, a lot’s going on. The last thing I just want to mention is, what initially started out as a research project in my first year at Rutgers has now morphed into a social enterprise that we’re. you know, really excited about. I’m also CEO of a social enterprise called Chicago Trend. It’s a real estate focused social enterprise that now has about 15 million dollars of capital investing in the same neighborhoods, trying to determine when commercial real estate development and retail amenities and services and performing arts, and we’ve been investing two hundred thousand, two million dollars into various projects with the mission of strengthening the commercial corridors that will ultimately strengthen the neighborhoods. And again, Rutgers has been very good in allowing this research work to be in synergy with the entrepreneurial activity in Chicago. So, for me, I am at a high point in my career, both sides of the brain. One side is teaching entrepreneurs and being a champion and cheerleader of entrepreneurs in Rutgers. The other side is, I actually get to put money into ventures and, and trying to make an investment return. So, it really is a fun time. A fun career.

Eve: [00:17:24] Exciting. It sounds like you’re very busy.

Lyneir: [00:17:27] Absolutely. But, when it’s passion work, even though it’s busy, you know, it doesn’t hurt.

Eve: [00:17:32] No, I totally agree with you. So then, what, you know, what does socially responsible real estate look like to you?

Lyneir: [00:17:39] So, again, my focus has been getting resources to people in places that other people overlook and undervalue. And for me, that is, every city has a part of town, again I headed economic development in Newark, so there was a part of town where crime is higher, where there’s more blight, where, you know, educational achievement is not as great, where there’s adverse health indicators. That’s the part of town that I believe, a focus on real estate development and a focus on commercial corridor, inclusive ownership of property, getting amenities, day-care, dry cleaner, urgent care center, grocery store is what people often talk about, sit down restaurant. Those type of investments can change and strengthen a neighborhood. And people also will change, I’m concerned about gentrification. It’s always not bringing Neiman Marcus in, it’s bringing the amenities and services that improve the quality of life for the residents who have decided this is where I want to live, but to also continue to add economic diversity to a neighborhood as well. Additional income so that middle income families and, you know, people with additional educational achievements can say: I grew up here, I have some connection to this neighborhood and I can make this a place where I choose to live because of its conveniences and its history  and, you know, be a part of its continued progression.

Eve: [00:19:22] Yeah, I mean, I think the gentrification line is very difficult because we can’t leave places like that without investment. So, you have to find a way to invest respectfully, I suppose it’s the way.

Lyneir: [00:19:35] Exactly right. And doing it inclusively. So this is, you know, the capital we’ve invested. It’s with people of color who have some connection to that neighborhood. It’s helping residents open a national franchise in a neighborhood. Again, it’s getting capital to help residents and local entrepreneurs own and drive the revitalization, own and drive the economic growth. That’s what’s fun for me.

Eve: [00:20:05] So the fund, the fifteen-million-dollar fund that you’re using, how did you raise that?

Lyneir: [00:20:11] It initially philanthropically motivated impact investors. It is, the MacArthur Foundation in Chicago provided the initial five million dollars of what they call the program related investment, a very flexible, patient capital which allows us to invest it into projects in a patient and flexible way as well. We’ve had a second investor, five million dollars of venture called Benefit Chicago, which was, includes the Coward Foundation. And then most recently we announced a five-million-dollar investment from Fifth Third Bank, you know, again a flexible capital. And we have, some of the religious organizations have also made some. The American Baptist Home Mission Society has provided some equity capital that we’re using also, so really excited about it.

Eve: [00:21:04] So, you know, my next comment is going to be, you know, what about crowdfunding? Letting everyday people invest?

Lyneir: [00:21:11] Again, when I read about your work, it’s something that I would love to figure out how to do. We haven’t and it’s certainly, we want crowdfunding to be a part of our menu. And again, now that we have made investments, have a track record, you know, this thought of can I create vehicles that will allow more local ownership alongside of our investment would be phenomenal. So,

Eve: [00:21:37] Well, we should talk ’cause you don’t need to figure it out ’cause I have.

Lyneir: [00:21:40] Great. We should do something together. I love it.

Eve: [00:21:43] Yeah, it really is an impact fund with impact investors who care about what you’re doing. It’s pretty great stuff. Yeah. So, I have to ask, we’re in the middle of a pandemic and we’re both at home doing this interview, how are you supporting your entrepreneurs through this pandemic?

Lyneir: [00:22:05] Phenomenal question. You know, we have done a few webinars initially asking people, how is the pandemic affecting you? How are you thinking about your business model? How can we be supportive? So, you know, first thing was, instead of just responding, we started to talk to the entrepreneurs and try to understand from our customers how we could best support them. We’ve done a number of webinars and servers around applying for the available resources, as well as thinking about how to innovate business model to a more aligned and my favorite was, one of the entrepreneurs in our program operates a dance studio. But, you know, they’re doing their jazz dance programs via Zoom now. And the one question she wanted us to help her figure out was, you know, do I have legal liability? And, you know, how do I, you know, either get some consents because they’re not in my spaces, if someone gets hurt? So, you know, that those type of strategic questions, right?

Eve: [00:23:05] That’s interesting, yeah.

Lyneir: [00:23:06] That’s really been the nature of the work. Where I am spending a lot of time is on a program that goes deep, right? So, I think right now, everybody is having, rightfully so and thankfully so, there’s a lot of announcements about new programs and small grants, local, municipal, federal, corporate, even philanthropic, to help entrepreneurs sort of survive. I really am spending a lot of time thinking about, and we’ve designed a sort of, I call it entrepreneurial management consulting to help entrepreneurs really think beyond the first three months of opening. But to think about, you know, the economic reality over the next year and two, you know. How do you change your model? How do you create new revenue streams? Is this the time to reposition? Can you raise new capital in addition to, you know, accessing all of the survival and recovery capital and strategies that are out there? How do you really think about this as a moment to become stronger?

Eve: [00:24:16] Yes. The interesting thing is, like, entrepreneurs are wired that way, right? They’re people who think things up and work through challenges and are flexible and figure out how to get through unexpected challenges and it could be a really good opportunity to make a business stronger or different or add some programming to it or whatever. And I have noticed amongst people in general, there seems to be a clear divide between people who say, well, we’re just gonna get back to normal and others who say, well, what’s normal going to be? It’s going to be different. It’s very interesting to me. And you’re clearly one of the people thinking about a different normal, right?

Lyneir: [00:24:58] Absolutely. And again, I think entrepreneurs are thinking about that as well. I guess there’s two categories. There are some folks who say this is the time for me to reposition or to do entrepreneurship, either in a different way or to think about that this is not fun, right. And then again, there’s a lot of parts of entrepreneurship that are not fun. And, you know there’s late nights and there’s accounts payable and, you know, and chasing, you know, opportunity. And so, I think there’ll be some folks who will say, this may be my time to exit or to leave, right? But there’s another subset of entrepreneurs that I believe are, even right now, thinking where’s the new opportunity? How do I get new capital to pursue that opportunity? They’re sitting back at home and thinking about what do I need to do to create a stronger business, additional wealth, you know, when we all are back outside again in the new norm?

Eve: [00:26:03] Yeah, interesting. So, a final question is, what do you think that the Center will look like in a year? Have you thought about that?

Lyneir: [00:26:14] Yeah, so I mean, again, we have already pivoted to all of our capacity building programs now are virtual. And the thought of being able to have a broader reach. You know, we won three of four awards for the effectiveness of our programs. And to be able to have a broader reach because of technology, and it being accepted, that’s the cool thing about using all of the Zoom and WebEx and other tools is before, it always was sort of, well it was a second option, the technology was always sort of clunky. You would never make that even part of the first consideration. I think now our Center’s going to have a whole lot more reach and impact by using, and leaning into, and the acceptance of the virtual tools. And we’re also, you know, embarking on a campaign to endow our Center which will allow us to be, you know, not raising money program by program, to name the Center and to be able to continue to impact entrepreneurs along the scale. From youth to technology to the coffee shop down the street.

Eve: [00:27:30] Well, I really can’t wait to hear, see what happens next and you and I are going to have some coffee on Zoom sometime very soon. Thank you very much.

Lyneir: [00:27:42] What a phenomenal opportunity and thank you.

Eve: [00:27:46] OK, bye.

Eve: [00:28:02] That was Lyneir Richardson, while Lyneir’s work straddles two cities the goal is the same in both places. He’s searching for ways to level the playing field for entrepreneurs and real estate developers in economically disadvantaged neighborhoods. In Newark he’s helped 400 diverse entrepreneurs, growing to a thousand, grow their businesses. And in Chicago he provides resources to real estate developers and retailers to promote investment in disadvantaged Chicago neighborhoods.

Eve: [00:28:35] You can find out more about impact real estate investing and access the show notes for today’s episode at my web site, rethinkrealestateforgood.co. 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.

[00:28:52] Thank you so much for spending your time with me today and thank you Lyneir for sharing your thoughts with me. We’ll talk again soon but for now, this is Eve Picker signing off to go make some change.

Image courtesy of Lyneir Richardson

Small versus big.

There’s a history to small-scale development. It’s what we did for centuries until industrial modernism brought large-scale development to our cities.

Large-scale development

The scale and cost of large developments falls into the realm of large-scale developers, and not always good ones. They have been the protagonists in the rapid transformation of our urban environment. Large-scale developments have often had disastrous impacts on local communities and small businesses and have led to the decline of diversity and vitality in many neighborhoods.

Some solutions

There have been many studies into how to tackle the problems that large-scale developments have caused. One important step is to involve the locals. Engaging the community plays a fundamental role in identifying negative impacts and understanding how a development will impact its surroundings.

Most important is the relationship between social activities and the urban space. Solutions might include a mix of old and new buildings to keep some of a neighborhood’s character, small blocks where neighbors might get to know each other, a mix of residential and small business to bring people out into the streets and public space to create a local focus and help promote vitality.

Back to small-scale

Large-scale developers have many resources to tackle zoning codes, financial institutions and all the other complications of development. But small-scale development, buildings with less than 20 units, has become a lost art. How do you build a small building in the place you love? Jim Kumon co-founded the Incremental Development Alliance with the goal of “resurrecting the small developer.” The Alliance provides training and technical assistance to anyone interested in tackling those small-scale projects that make your neighborhood great.

To learn more listen to my full interview with Jim Kumon

Image by Peyton Chung / CC BY-2.0

Catalytic in Appalachia.

Generational poverty is a complex problem with no single, easy-to-apply solution. Unlike circumstantial poverty, resulting from a specific event, like an illness or temporary loss of a job, generational poverty involves multiple generations of family and community lacking either the accumulated assets, education or resources on which to build. And in Appalachia, this condition pervades a region long-dominated by the mono-economy of coal extraction, an industry which has been shrinking dramatically for decades.

Brandon Dennison, the founder of Coalfield Development, grew up in southern West Virginia, and saw firsthand many of the issues that both his local community and the larger region faced. Always drawn to service and the idea of social entrepreneurship, Brandon saw that there were many people who wanted to work, but who simply couldn’t find jobs. And outside solutions, such as retraining people in technology skills like coding, were a long shot at best and certainly did not guarantee employment. To create lasting change in communities hit hard by poverty and unemployment, Brandon believed that change can be most effective when it is driven and fostered by the impacted community itself.

The vision

Coalfield Development was built upon three interlinked goals: job training, education and personal development – all geared to breaking that generational cycle and helping to rebuild local communities. Called the 33-6-3 model, it guarantees 33 hours a week of on-the-job training in construction, six hours of community college a week towards a technical associates degree, and three hours a week focused on personal development.

Coalfield started small, using locally hired construction crews to demo or renovate older buildings that were vacant or rundown, often in smaller towns and communities, and often overlooked. Blight was cleared away, and employees were given both job training and free educational opportunities. Next, they became developers, renovating a couple of large structures and seeding those with small, entrepreneurial businesses, which led to some small economic growth and a few more jobs. In addition to the development and construction company, they experimented with a family of social enterprises – selling local produce grown on former mining lands, exploring forestry as a way to reclaim abandoned coal tailing dumps, and starting two wood shops to create artisan furniture and local products. They even helped start the area’s first solar installation company.

In addition to the community-based real estate projects they have worked on, Coalfield Development works with entrepreneurs to innovate and create local jobs. Brandon hopes this will lead to a more sustainable economy for West Virginia. So far, they have helped start 11 businesses from scratch and invested through seed-funding in more than 50 different entrepreneurial projects. The result has been the creation of over 250 jobs and the training of over 1,000 people.

Listen to my interview with Brandon Dennison to learn more.

Image by Tom Fisk from Pexels

The lost art of small-scale development.

Jim Kumon co-founded and leads the Incremental Development Alliance, launched in 2015 as a collaboration between two small scale developers who found that people kept asking them the same question: how do I build a small building in the place I love? They joined with Jim to create an organization with the goal of “resurrecting the small developer.” They built a suite of classroom-based coaching tools and scaled them across the region and the country. In their first year, they did bootcamps in Portland, Dallas, Providence, Fayetteville, Washington DC and Detroit.

Jim’s goal is to help locals strengthen their neighborhoods through small-scale real estate projects. The Alliance provides training and technical assistance to anyone interested in tackling projects that you are probably all familiar with – housing, retail and mixed use projects on main streets and in neighborhoods. Projects typically range from 1 to 20 units. These were once every day development exercises, but have been pushed aside in favor of large, more efficient projects of scale. Today it’s a challenge navigating zoning codes and financial institutions to get projects like this built and that’s what the Alliance focuses on solving.

Over the past five years, the Alliance has grown into a national team of implementers from a myriad of allied real estate industries to create training classes for individuals and provide tactical coaching guidance to cities and community organizations across the country. Having conducted training and technical assistance projects in over 50 cities and with more than 4000 alumni, the Alliance is on the front lines of democratizing access to knowledge about real estate development and help governments, banks and foundations retool the ecosytems to make small scale projects possible.

With over fifteen years experience in the design, transportation and real estate industries, Jim’s career began working in construction management and architecture companies, learning how to deliver multi-family housing, mixed use and institutional buildings in Michigan, California, and Colorado. He transitioned to the non-profit sector in 2013 to become the Executive Director at Strong Towns to follow his long term professional and volunteer efforts in encouraging economically viable, human scaled communities.

In Minneapolis, Jim and his wife, Faith, are also small developers with their company, Heirloom Properties. They focus on backyard cottages, duplexes and small multiplexes. Born and raised in southeastern Michigan, Jim is an alumnus of the University of Michigan with a degree in Architecture.

Read the podcast transcript here

Eve: [00:00:08] Thanks so much for joining me today for the latest episode of Impact Real Estate Investing.

Eve: [00:00:14] My guest today is Jim Kumon who heads the Incremental Development Alliance, which is based in Minneapolis. The Alliance began in 2015 as a collaboration between two small-scale developers who found that people kept asking them the same question: how do I build a small building in the place I love? They joined with Jim to create an organization with the goal of resurrecting the small developer. And they built a suite of classroom-based coaching tools and scaled them across the region and the country. In the first year they did big camps in Portland, Dallas, Providence, Fayetteville, Washington, D.C. and Detroit.

Eve: [00:01:12] Be sure to go to rethinkrealestateforgood.co to find out more about Jim Kumon 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: [00:01:42] Hello, Jim. I’m really happy to have you on my show today.

Jim: [00:01:45] It’s great to be here and actually to see a little bit of Spring coming around the corner here in Minnesota, so it’s actually where I’m at, so it’s good to actually get out to the world and see some things. So, glad we can connect here and talk about stuff since I haven’t been able to leave the house much currently.

Eve: [00:02:04] Right, we’re all kind of stuck. But, you know, I’ve been really fascinated by your organization, the Incremental Development Alliance for a few years now and your work is pretty squarely focused on small-scale projects and small-scale developers, which I really love. So I wanted you to start by telling me a little about why the Incremental Development Alliance exists.

Jim: [00:02:29] Yeah, well, we’re coming up in about five years now of our work as a nonprofit organization. We work nationally to support implementers of small-scale real estate development projects and the ability for local places to have those kind of real estate projects happening in their communities. And so we exist in large part to be able to essentially re-enable and re-share the information that we used to have as a society. All real estate development was largely small-scale development for, you know, really centuries up until really post-World War 2, for the most part, and we did some things in the skyscraper era, you know, the early nineteen hundreds, but for the most part, small-scale, small-lot development was the traditional development pattern. And so, one of the major reasons we exist is essentially trying to re-learn and re-share information that we used to know across a broad spectrum of our society. And it’s now been complicated by the fact that we have had 50 or 70 years of real estate development that has largely become specialized and become highly, highly tuned to scale and largely to scale finance. The kinds of developments that we see in this country are in large part due to the financial mechanisms we have. We see the things we have because they’re easy to finance. And so the traditional pattern that we’ve had up until that point in time in the mid century nineteen hundreds is, is actually the unusual thing now. We can build big box stores and subdivisions and office parks and industrial parks, but the idea of putting a duplex on a 50 foot wide lot is actually pretty foreign in most places. And so we’re trying to help put the knowledge back together within the 2020 framework and not the 1920 framework of what you have to do to follow rules and to get things financed, to make real estate transactions happen. And so we do so.

Eve: [00:04:38] Why is it important?

Jim: [00:04:40] It’s important largely because it’s a lost art. People think it’s, especially when we first started out, in large part people think it’s almost impossible. Like, well, how can we not do this? How can we not be able to do this for so long now? Large part is a) people really hadn’t tried or if they looked into it, they gave up because there were so many barriers. And secondarily, there are places that really want to see this kind of development happen, but they’re missing the know-how within their human resource, their human capacity of a community that’s both public, private and nonprofit sectors. And so really, our organization started as a network of doers who were comparing notes and a couple of my co-founders in particular who were essentially mentoring people on the side. And it got to the point where you couldn’t have that many one-on-one phone calls and still do your job, to make major money. And so, you know, we essentially bound together to help essentially take that wisdom that’s sort of hard earned from the field, in-practice wisdom, and put it into a format that can be shared more widely and both in sort of beginners terms, as well as more advanced work that we have to do, either in markets that are disinvested or in markets that are too hot, they’re over-invested. And so we see the conditions across the US in one or the other. And how you get real estate products done differs greatly, obviously, depending on if you’re in a hotter market or a colder market.

Eve: [00:06:16] How do you help like small-scale developers or places that want to introduce interstitial small projects into their urban fabric?

Jim: [00:06:26] When we started the training work out, we realized that the two biggest issues were: one, the process. Being a small developer was sort of unknown. You had lots of people who are involved in the development industry, people who are contractors or real estate agents or architects. People, sort of, a known kind of related industries to real estate. And so those folks who were in an industry, you know, largely had a sense of the process, but really just knew they’re one stop along the way. And so, many people may have some of the skill sets to put a real estate transaction together, but didn’t have a complete working set, right. And no-one knows everything about each aspect of a development project, there’s too much to know. But you have to know a little bit about each part of the process and know how to find other people who can help you with the things you’re weak at. And so, the ability for us to help, essentially teach people, what is the process and how does it work and particularly how does it work for small scale projects? And we define those projects, you know, 1 to 20 units of housing – they could be mixed use residential or commercial and usually under 15,000 square feet, that’s sort of the max-sized project and really…

Eve: [00:07:40] I fit squarely into that group.

Jim: [00:07:42] Yeah, and we’re usually more talking about buildings between, you know, 500 and 5000 square feet, you know in reality. And so, those buildings are the ones that are overlooked and kind of caught in the the seams, in the cracks and crevices of our regulatory system and our financial system, because the rules change. So one of the things that we teach people is how to line up the financial regulatory system and banking system, how to line up the land use system that actually controls what you can put where and the building codes. And so, the thing is, is for larger projects, most projects fall under the same set of rules. Like there’s certain zones of a city, there’s the international building code, which is basically everything over three units of housing and largely commercial buildings. And the, you know, the financial mechanism of the commercial mortgage, right. The rules are largely the same for big buildings. And what makes it hard for small projects is they straddle an intersection of all three of those elements where the rules shift, right? One in two family zones are different from three and up in zoning land. There’s a completely different building code that regulates one to two family buildings from from how you build a building in its construction. And then we have a financial mechanism for residential buildings that allows for one to four unit buildings. And you have to make sure that you know how those pieces intersect, because otherwise you find out, usually at the most inopportune time, that you’ve got a discongruent operating requirements, right. Hey, I didn’t know that when I went from a duplex to a triplex I need a sprinkler system now. And that’s not the kind of thing you want to find out on accident because sprinkler systems are not cheap. And so that’s kind of how we got people.

Eve: [00:09:40] I’ve had this sort of experience myself when I built a small, it was supposed to be a four residential unit building in downtown Pittsburgh, and I got all the approvals, everything, permits, everything, started building. And one day on-site, the building inspector said, hold on a second, you can’t do four units without an elevator. Because one has to be handicapped accessible. So we had to really on the fly completely redesign a couple of the units because it’s a tiny little site and we could not put an elevator in. So, it seems to me that not even the city kind of really understands how difficult they are for small buildings.

Jim: [00:10:23] Well, and the question, in large part, probably was who is the last person before you tried to build a new construction four unit building? Probably a long time. Yeah. And a lot of folks who are alumni are exactly that person that you were. Right. They’re the first person broaching these subjects within their building departments and zoning departments and with their local officials and their neighbors.

Eve: [00:10:47] This could be my entire career in development that you describing.

Jim: [00:10:54] Right, you did it all the hard way, didn’t you Eve, yeah?

Eve: [00:10:55] Damn, it was fun.

Jim: [00:10:57] Yeah, well, and that’s a part of this shared wisdom that we’re trying to…We don’t have enough time with, especially in the housing sector, we’ve got a lot of housing to build in this country and we don’t really have time for everyone to make the mistakes and to to go through the vagaries that that you went through yourself and others who are faculty members went through, right, to find all this stuff out the hard way.

Eve: [00:11:21] Small-scale development could be perfectly efficient and make developers money except for all of this. Like when you have a banker telling you, oh no one’s going to live downtown and they just won’t give you a loan because you happen to be the first to the loft development in a downtown, that’s a problem even beyond the written regulations that we’re talking about. That’s now a cultural issue that you’ve got to also break through, right?

Jim: [00:11:47] It’s much harder, actually, the part between the between the ears is a way more difficult issue, especially given that even though if we were talking about the US, while we’re one country we’re many subcultures. And so, the way that different parts of this country and different real estate markets in different parts of the country behave, and the way that people believe that their communities should be, is vastly different. Tinkering with your zoning code is pretty straightforward, it’s mostly numbers and a couple of pictures, if you’re lucky, I can sit down with someone’s zoning code and help them remove things that are barriers fairly quickly. But, you know, banks, neighbors, even people in the construction industry. I was, we were, there were some small houses that one of our faculty was looking at some small houses with one of our alumni in, in Tennessee. And the local building culture in that city basically was like: two by six construction, well, we don’t do that. That’s gonna cost more, I mean, if we gottta take this one stud off the truck and it’s a different size than what used to, that’s just gonna cost way more than putting in a two by four, I mean, obviously, you know. And you’re just like, what?

Eve: [00:13:04] I had a really bizarre issue in Pittsburgh, when I was building a tiny house here and, when a lot of people left and houses were abandoned, people just sort of collapsed them into the basements, so you end up with land that’s pretty unbuildable. And I was talking to Jonathan Tate in New Orleans and he said, well, we just have these little trucks with pile drivers that drive around and drive piles past all of this stuff, right, which is brilliant. But not in Pittsburgh. I couldn’t find a small pile driver. It would have been a very large rig that would have been deployed for a tiny little project. So, from region to region you have like these weird issues popping up.

Jim: [00:13:48] Basements, no basements, right. You don’t put a basement in Louisiana, right, cause you’d be…

Eve: [00:13:53] You had to do something with the ground, so it was like…

Jim: [00:13:58] Years ago I worked in, in a city in, outside of New Orleans, it’s further out, further afield in the state and so a little bit swampier land of the states. And so, there was a local joke about some infrastructure projects was, you know, “my daddy used it to fish for crawfish in your basement” which, of course, there was no basement. Which is to say you built your house in the low ground. You shouldn’t wonder why it’s flooded over and over and over again.And so these, these kind of, you know, climate and regional issues is what is another thing that kind of makes our approach different than most real estate training and technical assistance is that our our commitment to urbanism, our commitment to neighborhoods, and that’s really where we operate, the neighborhood scale, all of our cities and towns in this country are really just increments of neighborhoods.

Jim: [00:14:54] And so what’s important from our perspective is there’s both small scale as well as incrementalism. Those two things go hand-in-hand, but they’re really separate. And one of the things that ties them together is the idea of time and scale. And so, you can be thinking through how something, a process, works in a place for how you build a building. But you have to think through the ways that those technical elements fit together and what’s, how it’s really going to work when you, when you set out. So for us, thinking through a housing project for a small building, you have to really take it into its parts and you can’t strip out the financial piece from the physical piece. And so, most of the real estate training that I took and other people took that are involved with our organization, they were so strictly focused on the financial pro forma. If you can make the numbers work, somebody else would figure out how to make a vertical three-dimensional building out of that spreadsheet later, right. If we could just get these rents and the costs isn’t over this, it’ll be fine. And it’s like, no, actually, you know, what goes in that building matters. If you build the building, that, as you found out, unfortunately requires an elevator, that’s not, that’s not an inconsequential thought process. So our belief that the built environment and its regulatory framework has to be front and center and iterative in the process, along with the financials, along with the the most usually forgotten part, which is the humans, right? Who is the occupant of this building and how is this building achieving needs of humans? And, as I was an architecture student as an undergrad, I always kind of thought that, and in my time when I was in school, I was looking at inspirations like the rural studio. People who were actually going out there and trying to build things and think about the humans, you know, part and parcel and the economic conditions that they were a part of, in that part of the country. And so, to be able to actually look at these things and say, know what? we can’t separate this idea of the financial part of this building from the people and the actual built edifice, we have to think of them together.

Jim: [00:17:23] And small scale buildings are so critical because it’s not, it’s a jewel-box, right. I mean, our buildings, our built environment, is largely an aggregation of many, many, many small buildings. The big building is actually the outlier, the exception in the built environment we have. And so, one of the challenges we have in this country today is that we forgot how to build neighborhoods. We know how to build complexes. We know how to build parks right, of.. the office parks and industrial parks. But the idea that fine-grained elements that differ in use and size can fit together, that’s a skill we lost post-World War Two, in planning, design and construction. And so, being able to teach people how to use that part of their brain, how to use that part of the thought process, is the critical missing piece in implementation, right. We have the ideas, we have desire. We were missing the actual how to. And that’s why we created the Alliance was to sort of fill in that void.

Eve: [00:18:23] Really, what I’m hearing is, and I know this to be true, that small-scale is incredibly challenging, is, you’re sort of up against, you know, the same issues as a large scale development, but maybe even more because of cultural beliefs, because of the way the banks like to lend, because of zoning codes that aren’t really geared towards small. So it can be a lot more challenging than something large and efficient.

Jim: [00:18:51] Yeah. And we like to say and this is one of the, one of the old analogies by one of my co-founders, John Anderson, who said that small developers operate on the economy of means, as opposed to large developments, which really are, as you say, the economy of scale and efficiency. And the economy of means is largely about relationships and time. There’s a finite amount of people and resources that a small-scale developer has. And so, what is important to understand is that small-scale development isn’t inherently hard, it’s only hard within the context that our American society has built its habits and practices about how we finance, value and built. And so what is important and what were some of the ideas that we hang our had on about, you know, what can you do with a 30 year mortgage? That was a question that came out of the last recession, as I’m making the broad assumption here that we are already in a new recession. With the last recession,  is, was a question of what if commercial finance, as we know it doesn’t come back? And so, John was one of the people who was staring, looking at this and saying, gosh, what could I do with a federally backed mortgage product? What does that allow for?

Jim: [00:20:15] And so being able to look at something very basic and very simple really shows what the power of that is. Because if you think about the millions upon millions of 30 year mortgages we have in this country today, it’s a ubiquitous tool, except that there were features of that tool that were underutilized. And so really we were exploring and trying to cross-pollinate what could you do with 1 to 4 units if that was your framework? And so, one of the things that we’ve developed over the last three to four years and my colleague, Grayson Johnson, and co-founder, this is one of her big pieces and contributions to our work, is helping us catalog. And my background comes out of the built environment in architecture and I did housing in California in the boom years and saw all kinds of crazy things that were going on when you could build a courtyard apartment building, which has got 42 units, which is like 42 custom homes like stacked on top of each other and beside each other, all selling for, you know, six hundred thousand dollars. This is sort of the the rarified air of Southern California real estate in 2007, right? And you get down to this, you know, like, wow, this is an amazing building type that no one’s done in 40 years, 50 years. And you realize, gosh, these are all these different ways we could do this. And so that idea of a building type from something very complex, like a courtyard apartment building, multifamily house to something as simple as a duplex or a triple decker as we have in the Northeast or all the various kinds of cottages you find in the south where you’re trying to spread out and keep air between buildings, right, and battle humidity. All these different building types that are from a climate perspective and a local culture perspective akin to a place.

Jim: [00:22:11] And really because we’re a national organization, we gathered up all these different types that largely had a start in a local place and have, you know, regional sort of preferences or regional sort of ability to, you find them often, right. And we said, look, well, how can we use these building types in many places? And so we created this idea called Step Buildings, which would be a way to help people organize through these important thresholds of finance, building code and zoning code and Step Buildings is an important idea, largely because we’re having to reintroduce things that are in plain sight in many places in this country, but we don’t recognize what they are. And the term STEP is also an acronym. It stands for Small-scale, Time-enhanced, Entrepreneurial and Purposeful. And really, the ability for us to understand what these buildings are, and having spent time in Pittsburgh, I love, especially in the working class neighborhoods, the just sheer variety of sizes of building, right, and attachments and additions and that incrementalism of, before we had the 30 year mortgage, we only built as much housing as we could afford, which was not very much. And if we have kids or a family or parents, you know, we made these little additions and, you know, cultivated up a structure. And so as humans, we had all kinds of ways to house ourselves. They just didn’t fit into the model we started doing after World War 2, which was a single family house stamped out in great scale and volume in, sort of, cookie cutter tranches of financial thresholds, right? Like, well, this subdivision is going to be for houses that will cost between two hundred and ten and two hundred twenty five thousand dollars and we’ll build a hundred of them. And then get another plot of land next door and build one hundred that are between three hundred and three hundred ten thousand dollars, right. Somehow we went from this fine-grained ability to house people at different points of their life cycle to, you have to pick up and move yourself to a new hunk of land every 10 years in order for, you know, your housing type, that need that you have, to happen. And so, we’re trying to catalog all the different ways that you can mix and match buildings together and be able to explain them to people who may not realize that they live in a place that has all these things.

Eve: [00:24:44] Can you share an example of a project or a place or a developer that you helped through the alliance that you are proud of, or you think is particularly interesting?

Jim: [00:24:55] Well, there’s a couple different conditions by which we end up coming to a place, Now, first of all, we don’t just show up in a town and do a training class. We only go places that invite us and our sponsoring spills through their hustle and through their financial support. So we go to places that want us and want this type of work. If you don’t want this type of work, it doesn’t get anywhere. And we’ve been to a couple of places who said they really wanted this and then when we got there, they weren’t really all that serious, right. They were checking a box, they were, you know, throwing something, throwing a bone to a neighborhood that’s been overlooked. And they weren’t really serious. There were some people on the ground there who really cared about their place. But the people who brought us, or maybe who paid the bill, not so serious. And so people ask me a different version of the question you just asked me, which is, you know, who’s, what is success or what happens when someone makes it? And the challenges right now is that there’s a lot of people who want to get something going, and for some of things I’ve already mentioned, can’t, right. There are some deal-breaking issues that stop people from getting going. And so, one of the things that’s important, and why we do work that’s both for the individual as well as for the city, is that they need each other. right. Cities, we talk to people in government all the time like, gosh, I would love to make sure that we can legalize cottage courts and then sometimes they go off and do it. And then, like Jim, so we went changed our zoning code and tinkered with a couple of local practices for our infrastructure and, gosh, you know, cottage courts should just be no problem. And I’m like, does anyone know how to build them? And so. Like, has anybody had the idea of putting five small single-family houses together in one lot? Does anyone understand how that fits? Don’t like hah, no, I guess not. Well, that could be why no one’s building them.

Jim: [00:26:43] So, we’re at an interesting point in time where there is now, you know, especially compared to five years ago, a much larger acceptance of a lot of great ideas that could happen and could happen in your place. And so, we’re working through trying to figure out what’s the path of least resistance. And so I can describe a couple of those examples of people who are are finding that first step in their place.And we have a couple of longer-term relationships with places, which I think is where our best examples come from, from alumni. We have a bunch of, up on our Web site, we have incrementaldevelopment.org, we have a bunch of little alumni stories about people and projects. So I’ll just cherry-pick a few of those. But it is a project, a couple places that we’re working that we have some really exciting products going on, one of which is South Bend, Indiana. And we’ve been working on and off there now for a little over two years, specifically on the northwestern and western parts of the city. We are brought in typically for two reasons to a place. One, because there is uncontrolled or unhealthy growth, right, which is to say the place is a little too hot, that the real estate market is too hot. People are being either displaced or threatened to be displaced. Or we have the opposite. The place maybe got the wrong end of a bulldozer for a few decades. And the question is now what? How do we piece this back together? And so, interestingly enough, the tools by which we bring to the table are the same, but the the math in many cases is the part that’s really different.

Jim: [00:28:25] So in South Bend, you’ve been brought there by, we were originally brought there by the private sector, a gentleman who really used, he’s a retired professor and really just cared about the area adjacent to where he lived. And he was kind of right a the cusp between two neighborhoods and, sort of, a typical, especially Mid-western legacy of segregation, you know, the white neighborhood and the black neighborhood, he lived kind of right on the edge of it and was like, why is it that right across the, sort of, main street here that I live next to, there are, you know, half the houses are torn down and gone. And on my side of the street, you know, largely the neighborhood’s intact. And so, when you have a neighborhood that is, you know, economically in a down cycle, you know, the first thing you have to do is start the rehab project. And so he came to one of our early training classes and began to understand that, well, rehab is where I have to start.

Jim: [00:29:19] But he originally said, well, I don’t really want to own and lease buildings. I just want to fix some things up and sell it off to somebody else and have them be able to gain wealth. But then he realized that the math problem of when you fix up a building, sometimes it doesn’t appraise for the amount that you’ve now put into it, to buy it and to fix it up. And he realized he couldn’t sell it and couldn’t finance it. You know, he had to kind of hold it for a while and lease it and try to kind of nurse it back into financial health. And this is true of both a couple of residential products and a couple of commercial buildings that he and a few partners bought. And so, the thing that was different about him and is different about the approach that we espouse, was that, while there are a lot of really difficult physical things to overcome – most of the houses in this neighborhood were over 100 years old, many of them were beset with typical issues of neighborhoods of that age where you have a lot of lead paint or other environmental things – and so, you know, these are definite headwinds to doing even rehabilitation of buildings, you know, cheap ones. Not even getting too fancy, but just enough to make it a decent place to to live. And so, I think the story there was that he began to build friends, not only people who were doing work alongside him, but folks who might want to move to that neighborhood, who might want to rent in that neighborhood, people who want to start businesses in cheap commercial spaces that have been largely left vacant.

Jim: [00:30:42] And so, when all else fails with math and with the physical rules, relationships are the thing that bind us together, that helps us overcome when we have issues with rules. And so he’s been slowly building a group of people in the neighborhood to begin to help him. He didn’t want to be the hero. I don’t want to buy up every lot in the neighborhood. And then I have to be responsible for everything that happens. He wanted to have many people share in that work and to support each other. And so, I think His name’s Mike Keane. Mike is one of the success stories, not only of getting a couple of projects off the ground, rehabbing a few things and now he’s working on, probably will be one of the first few non-subsidized, deeply-subsidized new construction buildings in the neighborhood in probably 50 years. And so, you know, but none of that work would be possible unless he’d started with picking up trash in the neighborhood and building relationships with his neighbors and buying a couple of buildings for cheap and fixing them up and finding a few people who would be in them to bring life to those buildings. That’s, that’s one of the places that we are starting to see that the compounding effects of many people like Mike, who are now working there, both in the private and nonprofit sectors.

Eve: [00:32:03] So just generally, how do you, how do you think we need to think about our cities and neighborhoods so that we build better places for everyone?

Jim: [00:32:12] Well, first of all, neighborhoods are living organisms. They’re not static things. And that’s one of the key aha moments that we have to have with government officials and particularly planning and economic development and housing department folks. They’re largely in place to disperse funds and make sure people follow the rules. We like to reframe their job descriptions as: you are stewards of resources and you’re responsible for creating a productive tax base because, you know, that’s really what our public sector has to do for us. Our public sector has to create a ability for services we want to provide as a place and we have to have a tax base for that,  we have to have a productive economy and a local productive economy, not one that’s relying on state or federal subsidies to make it’s ends meet. And so, one of the ways that we need to do that is that we have to make sure that our place is constantly evolving and it’s wherever it’s at now, there’s another place that it can go to to be either economically or socially more welcoming and more accessible. And so, the building types and the Step Building thought process is we actually have little cards we’ve built that essentially have a picture on the front and on the back explain, hey, this building is in the, this building code type and, is largely found in these kinds of zoning codes or have these kind of attributes. These buildings require sprinklers, these ones don’t. These buildings are financeable by a 30 year mortgage or they, or they’re not. And it gives people a sense also for what’s possible, right. An owner-occupied duplex is like one of the most accessible building types you can put in any neighborhood. And yet, you know, most of those types you’re going to find are buildings that are over 100 years old. We don’t have a mechanism that is widespread in this country that takes advantage of the fact that you can build a building that has someone living into it through the wall for maybe you as the owner that’s helping pay the mortgage and also allows us to have a finer-grain control over what rents are charged in a neighborhood. And, because we’re not looking, you know, you, as an owner occupant probably have a day job. And, you know, you’re using this as income or maybe as a long term retirement strategy, right. And so, you don’t need the top-level rents over time. Now, you probably need decent rents upfront, though, because our financial system, unless you’re independently wealthy and can build a duplex out of your own pocket via cash, requires certain amounts of money upfront and requires a certain amount of, of conservative cost estimating.

Eve: [00:34:57] Well, this is something that you and I need to talk about because you’ve been fixing on a 30 year mortgage. But while you’ve been building the Incremental Development Alliance, equity crowdfunding has been [indeed] gathering steam. I really believe that we’re going to see different types of financing available more readily for projects like this. And I don’t know if you’ve been thinking about that at all.

Jim: [00:35:24] Well, I think there is a fantastic role to get into a little bit of of wonkishness for folks who maybe have not, don’t have any background in how a general real estate transaction works but typically, whether you’re building a new building or an old one, you have two components, right? You have debts, right, if you are going to buy a building and finance it, you have the loan, you’re doing it from the bank and you have what we call equity, which is essentially your skin in the game that you or someone who is investing with you provide to basically have a stake in the game. And that is sort of, you know, that the bank security, that somebody has the financial wherewithal to be supporting this project.

Jim: [00:36:09] And so I think where there is a great opportunity for crowdfunding and small dollar funding in terms of aggregation, isn’t that equity piece because, you know, people typically show up and when they come to our class before they go through it and we disabuse them, this idea is that, gosh, I don’t have enough money to be a developer.Well, do you have enough plywood to become a developer and build a building? Well, what do you mean? Well, you say you don’t have enough money. Well, do you have enough plywood? Do you have enough screws? Do you have enough, you know, do you have all the things necessary upfront? No, you don’t go out and buy a truckload of plywood just to have it on hand, right. When you need plywood, you go to a lumber yard and you buy it. That’s the same way loans work. The trick is to get a loan, you need to bring money with you. And so that is the case, right? You do need to have some money, but people have money.

Jim: [00:37:07] What we lack in small development, and this is what our one day workshop, which is sort of our flagship training is focusing on, is actually teaching people A, there’s a process B, this is how the process works and C, one of the biggest things that we lack to make small scale products happen is someone who knows how to put together the “if I could, would you?” proposition, largely in writing? If I had 20 percent down of whatever cost it would take to build or to buy a building, could I get a loan at this rate at this..so much. And so, what we lack is people who actually know how to put the transaction together. We can find people who have money and it may come through one deep-pocketed investor. But it also may come through 10 or 20 neighbors pitching in, you know, five hundred or fifty or five thousand dollars a piece. Now, what’s tricky about that is this little thing called a loan guarantee. This is, this is a tip I can, listen to, leave with your listeners today. If this is the first time you’re hearing about real estate transactions and how they work and why we don’t see the things that we think you should see, one of the tricks about figuring out good ways for us to be able to use small dollar capital is this problem we have that banks want somebody on the hook if something goes wrong, just want a kind of a loan guarantee. And so somebody who has enough net worth to functionally backstop, you know, all of a sudden all your tenants not paying rent or something else going out bad financially. And so, small-dollar capital, while we might be able to amass the capital necessary, unless you are the person who has the balance sheet necessary to backstop a large loan, we need other mechanisms to be able to make that loan guarantee work.

Eve: [00:38:52] Yes, but small-dollar equity can help a developer like Mike Keen do, want a project or another. He may have the balance sheet. He just may not enough to get it going.

Jim: [00:39:01] Indeed. Yes. Absolutely. Yeah, it is, it is absolutely way more accessible to normal people with normal jobs. My wife and I, we know we have two incomes. We don’t either of us make a ton of money, you know, we just, you know, we have a regular, you know, two regular, you know, white collar jobs. But yet, you know, we would be, we would have enough, between some retirement savings that we have, we don’t have very much debt, which is important, especially for qualifying for a 30 year mortgage out the backside is having a low amount of debt and we don’t really have any but the house we own. And so, you know, that’s enough to get a fourplex going, you know? So for most of these buildings you would finance for a 30 year mortgage, you don’t need really that much and there are people you can find who have it if you don’t. And you can just pay for that purpose as well.

Jim: [00:39:52] We’re also finding if you, if you’re working in a neighborhood that is maybe disinvested, though, that’s one of the great places that we’re working to try to get local governments, foundations and institutions, whether they’re hospitals, universities or corporations who are civically minded, to be a part of that because if, and we’re working on a project in Memphis that is sort of structured this way, we’re essentially creating a consortium, kind of an umbrella for, as sort of a master developer who sort of say, hey, you know what, we’re gonna create an ecosystem by which many small developers, of which we’ve trained through the Alliance, can actually have the backstop where they don’t need to go get, you know, a huge loan guarantee, right, where, there’s going to be capital and we’re going to be able to know that when we’re going to build five or 10 or 20 buildings at a small area, because there’s a bunch of empty lots and they’re controlled by property owners, we can use one at a time, help each other build up the value in those buildings so that they do regain their value. The first one’s going to be difficult to get the right appraisal for. The second one, less difficult. The third one less. And hopefully by the fourth or fifth or sixth that are all on the same block or nearby to each other, we overcome some of those structural problems that we have in disinvested neighborhoods.

Jim: [00:41:09] And so, I think the biggest thing that we stress when we come to a place and we talk to people in both public, private and then sometimes nonprofit sectors, is that you’re all gonna have to come to the table and think a little bit differently, right. We can band together as neighborhoods and as neighbors and put together enough capital to have the downpayment to buy that house on the corner that Miss Mary used to live in but, you know, she passed and the house got boarded up because people were breaking into it and now it’s sitting vacant but what a great house that was. But, there’s a couple of things we have to overcome and so, being able to have a have a community dialogue about how do we help a bank make a loan in a neighborhood it’s supposed to be making a loan in anyways, but banks are regulated. We have to make sure that banks can check their boxes, too. Well, how do we do that? So community resources being able to bring together different aspects. Governments don’t want to be responsible for buildings, right. But they can provide balance sheets. They can provide downpayment assistance. They can provide facade grants. So if everybody comes together and understands the process, they can figure out how to work it out.

Eve: [00:42:20] Yeah, they could provide relationships with banks and banks to the table. They could provide a lot of things. This has been really fascinating but I want to ask you one wrap-up question before we finish for today. Or actually two, I have to say, and that’s what’s next for you and what’s next for the Alliance?

Jim: [00:42:37] Well, two things. Myself, personally, my wife and I have a small development company called Heirloom Properties. So, we have been evaluating both opportunities we have on our own lot, we have a single family house on a lot that at one point in time, in the past before we bought it, had a garage on it. And so as rules in Minneapolis have changed over the past couple of years, you know, we were looking into an accessory dwelling unit, a backyard cottage. And then, and now with the new rules we’re contemplating, hey, why just stop with a backyard college? Why not a backyard duplex? And so we started thinking about that. But in the meantime, as that happened, we were saving some money up to work on a project like that. There was another vacant lot in our neighborhood that we are pursuing to build a small multiplex. And so, my wife works in affordable housing and so she does project management for big projects. But even, even affordable housing these days is not what it used to be. And so she’s spending a lot of her time trying to figure out how to provide housing for folks who are not at the lowest of low income levels, because at this point, most of our federal and state subsidies are going toward the lowest of low income levels. And that’s great. And that’s desperately needed. But the challenge is, is that’s not enough to house the rest of the folks need to house. And so both her projects at her day job, they’re a bit larger, maybe 60, 70, 80 unit buildings and then some of the products that we’re looking at that are 2 or 6 or 12 units that we’re looking at personally in our in our neighborhood are kind of getting at that in-between scale that we luckily now, as a city, have come to a conclusion that we’re actually going to allow again, we’re actually going to make sure that it’s possible to put more than a single family house on, you know, 60 or 70 percent of the land in our city that was previously allowed to only have one unit on it.

Jim: [00:44:31] So we’re seeing in the last five years that the Alliance has been around, we’re seeing places start to get some of those pieces of the puzzle right. And we’re happy to have been a part both politically as well as from a technical perspective of some of those changes here in Minneapolis. But the work is is large. There are a lot of lot of places that need both cultural and technical changes to the way that they look at real estate, especially at the small scale of buildings, and so the Alliance is kind of doing a couple of things moving forward. We are expanding our services to support governments and non-profits and institutions, many of which have neighborhoods directly, either target neighborhoods if they’re a city or if they are an institution where they have a neighborhood adjacent to the place that they maybe have their campus or facilities. And so, largely those places are trying to help jumpstart a real estate process and/or if you’re, if they’re in a hotter market, provide housing. If you’re a hospital and you employ a massive cross-section of humanity in terms of income levels and household sizes and you’re trying to make sure your workforce is nearby and doesn’t have to commute an hour one way, there’s probably a lack of housing of some type. And so we’re trying to help those places create or recreate a viable housing market in the neighborhood. We’re also helping to make sure that there are neighborhood services. So just because you have housing doesn’t mean you have all the services you need that make it desirable to live there. And so, we’re doing mixed use buildings, especially older ones that you can rehab, which is its own sort of trick in itself. How do you help those pieces come together and in assisting in that way? So, sort of, master developers as well as we continue to expand our services both electronically as well as in person to help cities get their rules right and get their processes to re-legalize, in many cases, the developments they already have, the neighborhoods they already have which have 30 and 40 and 50 foot wide lots and small buildings that don’t quite conform to the rules that were created after those buildings were built. And so we’re unwinding a lot of things, but we’re also starting to create really fun new things. And one of the projects that we’re gonna be working on here this Spring, especially as we have a little downtime, as many of our in-person events have been postponed, is working on getting some of these technical tools to all line up, to have the right financing tool box, to have the right building and zoning recommendations and policies, to be able to use the tool Step Buildings to help people envision the kinds of buildings they want, not just the buildings that someone has figured out maybe they can make some money at doing and we’ll just keep doing it over and over and over. But to say, hey, you know, we want these kind of buildings in our neighborhood. How do we make those happen, and how do we join together as neighbors to maybe do it ourselves if no-one’s going to come for us to do it? And that’s largely the case. No one’s coming to your neighborhood to do the real estate development you want to see, most likely. If they were, they’d be there already. And so we’re trying to help democratize the information so that people can use their relationships and create the local systems to encourage the kind of things and to make them happen, actually just to make them happen. You know, we’re here. We can run around the country and as an organization and just train people all day or give them advice. That’s not what we’re here to do. Our goal is really here to actually help people learn the skills, but to use those skills to actually make the buildings happen, to rehab them, to make, to build them new. That’s that’s what we’re here to do. We’re not here just to talk about this. We got plenty of advocacy and policy organizations. And so we hope that those of you who may be listening to this hearing about us for the first time. If you’re waiting for someone to come, that person you’re waiting for might be you and your neighbor. And so, think about what your role could be as a small developer and even if that’s not your role, we need champions for many of the changes we need to re-legalize our places, to make them vibrant, to make them, and especially in the wake of our current crisis, ant-fragile. To be able to grow in strength through adversity, not just survive. So we think small-scale development is probably the way forward, once we get over the near-term humanitarian crisis of warding off a virus. We’re still going to have the very same housing challenges, the very same economic challenges that we did six weeks ago. And so how do we deal with that as a country and as our neighborhoods?

Eve: [00:49:11] Well, this has been really, really fabulous. And I think that in the next five years, we’re going to see a whole lot more incremental developments. So thank you very much for your time. and I’m sure we’re gonna be talking again.

Jim: [00:49:22] Appreciate the opportunity, Eve. Thank you so much.

Eve: [00:49:27] Bye.

Eve: [00:49:27] That was Jim Kumon who leads the Incremental Development Alliance. The alliance is focused on helping locals strengthen their neighborhoods through small-scale real estate projects. They provide training and technical assistance to anyone interested in tackling projects that you are probably all familiar with. Housing, retail and mixed uses projects on main streets and in neighborhoods. Projects typically range from one to 20 units. These were once everyday development exercises, but have been pushed aside in favor of larger, more efficient projects of scale. Today, it’s a challenge navigating zoning codes and financial institutions to get projects like this built. And that’s what the alliance focuses on.

Eve: [00:50:34] You can find out more about impact real estate investing and access the show notes for today’s episode at my website rethinkrealestateforgood.co. 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: [00:50:51] Thank you so much for spending your time with me today. And thank you, Jim, 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 Jim Kumon