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DWELL riffs on Small Change.

“Meet the organization crowdfunding for affordable housing” writes Anjelie Rao for Dwell magazine. “Small Change aims to allow anyone—not just developers—to invest in projects across the country. Its founder, Eve Picker, shares how it’s opening a new lane to community change.

Real estate investment hasn’t always had the best reputation. House flipping, gentrification anxiety, and opaque LLCs have characterized a popular perspective on the industry. But Pittsburgh-based Small Change is a young company seeking to democratize the field and shift who participates in real estate investment—and how. Founded and led by architect-developer Eve Picker, Small Change has become a platform for minority and female developers, among others, seeking crowd-sourced funding to get smaller-scale projects that have positive impacts on their communities off the ground.

Crowdfunding’s heyday was born from ArtistShare, Kickstarter, Indiegogo, and their ilk operating under the premise that anyone should be able to invest in a good idea. But Small Change and other crowdfunded real estate platforms were facilitated by former President Barack Obama’s 2012 Jumpstart Our Business Startup (JOBS) Act and subsequent changes to Securities Exchange Commission (SEC) regulations, which allowed non-accredited investors (whose net worth and income are relatively low) to invest relatively small amounts of money into businesses. For real estate, this meant that anyone, with any income or net worth, could invest in eligible commercial or housing projects and receive returns on the project’s success; developers can raise up to $50 million from crowdfunded sources. While some projects featured on Small Change are for accredited investors only, many are open to everyone.“

Read the whole story here! 

BREIF. Boston Real Estate Inclusion Fund.

Kirk Sykes is Managing Director of Accordia Partners, LLC, a Boston-based real estate investment and development company. Accordia executes large scale public-private real estate projects with a goal of financial and socially responsible investing success. He was previously the head of Urban Strategy America Fund, L.P., an urban investment, development, and redevelopment commercial real estate equity fund focused on investment returns, economic development and environmental sustainability.

Mr. Sykes combines his professional training and hands-on experience in the areas of finance, investment, development, design, and construction to create customized responses to the complex issues of urban real estate development. His approach is grounded in the bottom-line driven perspective gained during his tenure as chairman of the Federal Reserve Bank of Boston, and other roles that included serving on Fleet Bank and BankBoston’s Community Bank Advisory Boards. He currently serves on the Eastern Bank Board of Trustees and Risk Management Committee and on the Board of Directors of Apartment Investment and Management Company. He was formerly a member of the Ares Commercial Real Estate (NYSE: ACRE) Board and Compensation Committee.

Mr. Sykes has attended the Harvard Business School Owner/President Management Program, the MIT Center for Real Estate Development Commercial Development Executive Program, and L’Ecole Polytechnique in Paris. He earned his Bachelor of Architecture from Cornell University.

Read the podcast transcript here

Eve Picker: [00:00:09] Hi there. Thanks for joining me on Rethink Real Estate. For Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich, or poor, beautiful, or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone.

Eve: [00:00:52] Kirk Sykes is managing director of Accordia Partners, a Boston based real estate investment and development company. Accordia develops large public private real estate projects. Kirk was previously the head of Urban Strategy America Fund, perhaps one of the first urban real estate equity funds focused on the triple bottom line. And that brings us to this podcast. Kirk has had a highly successful career, but that is not enough for him. He has always given back. And for Kirk, that means helping the black community he is part of access capital and investment opportunities that have historically been unavailable to them. Listen in to learn more.

Eve: [00:01:48] Hello Kirk. Thank you so much for joining me today.

Kirk Sykes: [00:01:52] Eve it’s a pleasure to be with you.

Eve: [00:01:54] So you’ve had a pretty rock star career in real estate, founding, owning and managing companies in the financial services, real estate and architectural sectors, and even serving as the chairman of the board of the Federal Reserve Bank of Boston. But all the while, you’ve been building your profile. You’ve made inclusion for BIPOC and women in real estate a lifelong mission. My first question for you is a tough one, but how does it feel to be a black man in real estate today compared to, say, 25 years ago?

Kirk: [00:02:27] Well as we all know all real estate is local so I’ll answer that from the perspective of being in the Boston market. So, I would say it’s better in Boston. And I didn’t know that I would say that when I first came to Boston 40 years ago. But there has been a substantial improvement from the time that I first came to this market.

Eve: [00:02:53] That’s good to hear, because, you know, my vivid memories of ten, 15 years ago in Pittsburgh were entering a real estate event room and literally feeling like the only woman there. It was a pretty elite club. So, do you think we have come even vaguely close to equality?

Kirk: [00:03:15] You know, it’s hard to say what equality is. Commercial real estate has been notoriously inequitable, you know, due to the demands in terms of capital and access and going back to redlining and even where the banks’ insurance companies wouldn’t lend to people of color and also to women. So, I think we’re getting closer in equity in many ways. I think there are a lot more people, capable people, in the market that I’m in than there were when I started. I was one of a few, or a handful, and now I’d say I’m encouraged by the number of folks that have shown up. I can talk a bit about how we got there, if you like, at some point.

Eve: [00:04:09] Oh yeah. No, I’d like to know. And my next question will be what still needs to be fixed?

Kirk: [00:04:14] Yeah. So, a few things in the Boston market changed in the last 20 years. One of the most significant was something called the Massport Model. So, a public entity, the Port Authority decided that it would make inclusion by women and people of color in all aspects of projects, 25% of its selection criteria for who got to develop sites they controlled in Boston Seaport, which became very valuable over the last 20 years. That process has evolved and gotten better and has led us to BRIEF which we’ll talk about a little later. But I would say I never imagined Boston would be the leader in change in public disposition of valuable real estate assets. But it has evolved into that. And that Massport Model has now expanded to be part of the disposition and expectations of the city as a whole, and not just the state. So that’s quite an accomplishment for Boston.

Eve: [00:05:32] It is. So, it’s gone from being an unusual idea to something that’s sort of part of the fabric of doing real estate in that area, by the sounds of it.

Kirk: [00:05:42] And it’s continuing to evolve. So now there is a request from the city on every development project that developers disclose what they are doing in terms of inclusion and equity, resiliency and affordability. And it is presumed that that may evolve further to be more than just a voluntary disclosure. So, I think the message is coming across that if you want to get approved or entitled to build a significant real estate asset, you need to be doing meaningful things in terms of transformation.

Eve: [00:06:20] So how? I mean, at least in that area, how close are we to equity? Like, how far do we still have to go? You know, you said you’ve been working on this for 25 years. Is it another 25 years? Is it around the corner?

Kirk: [00:06:35] Well, it’s a diverging trend line, isn’t it? If you look at opportunities and the number of people able to execute them. And that’s unfortunately related to access to capital in many ways because there isn’t sufficient accessibility to be in a position of controlling projects, not just to invest in a project, it’s who’s in the decision making position to leverage those projects to be transformational in terms of labor, in terms of occupancy, in terms of, you know, affordable retail, you know, all the transformative things that come along with control are so important. And if, by way of your question of equity, it’s a broad question. In terms of how many people will be able to be, able to own valuable commercial real estate assets, aren’t we playing a 400 year catch up game?

Eve: [00:07:38] Probably, yes.

Kirk: [00:07:39] Closing that gap.

Eve: [00:07:41] Yeah

Kirk: [00:07:41] But there is reason for optimism. When I took over Real Estate Executive Council in the early 2000s as the preeminent organization of African American real estate executives in the country, it grew from 30 to 70 people, but now it’s 250 people. So, that seems to be exponential growth and something to celebrate.

Eve: [00:08:05] Right. Although I have to say this, and people have heard me say this before, when I look at the investments made by VCs in 2023 versus 2000, nothing has changed. I mean, you’re looking at companies, you know, women-owned companies, 2% of the investment dollars, minority-owned companies, 1% of the investment made during that year. That feels to me like we’re never going to get anywhere.

Kirk: [00:08:37] It’s easy to be disheartened and it’s hard to continue in the face of the challenges. But, you know, you mentioned venture. I think something has changed. I have the good fortune to be the father of the founder, one of the founders of black VC and, BLCK VC didn’t just try to promote people going into venture as investments, but creating an ecosystem where BIPOC and women venture platforms could be launched. So now, while the numbers are still pretty small, you know, I think when Sydney Sykes went to the Valley after Stanford Business School, it was 300 folks of color in venture platforms. Probably hasn’t gone up a lot, but there are a lot more people nationally in that ecosystem of venture investing platforms which didn’t exist before black VC. So, I’m encouraged, I guess, and I’m an optimist. I’m a developer, I got to be an optimist.

Eve: [00:09:40] I tend to be discouraged and encouraged in cycles, you know, with my platform. Small Change. What I’ve seen in that, the world of democratized investment opportunities is that there’s a very large percentage of women and minority owned businesses looking at that tool as a way to startup businesses. And I think that will eventually Sort of become part of the status quo. So that’s also I think a check mark, right?

Kirk: [00:10:07] Yeah. That’s true.

Eve: [00:10:08] Okay. So, what initiatives in particular have you tackled over the years in an effort to move this needle?

Kirk: [00:10:15] Yeah, interesting. You know, I’ve had a few hats, as you’ve mentioned, from architect to developer to investor. So, I guess it depends on which hat I’m wearing. But I like to say I’ve built community with a pencil, a dollar and a brick, and building community is important to me. They’ve all worked well at different times. So, if I were to point to some specific opportunities or, I should say, initiatives, going back to the 90s we changed the point system on the largest highway construction project in America, the Big Dig, $20 billion.

Eve: [00:10:56] Oh, I remember that.

Kirk: [00:10:57] But we found out people were winning contracts by a very few points. So, when we gave value and attention to including first time and diverse team members or companies, it automatically, out of greed, kind of propelled opportunity for those companies to grow. In 2000 we got involved with developing the first African American owned branded hotel in New England. And it was in an Empowerment Zone. And we learned how to use Empowerment Zone financing and tax preferences to create the most diverse workforce, in terms of construction and union labor. The first African American general manager, a hotel staff that was 98% people of color, mostly women. So, leveraging the Empowerment Zone objectives to create change. And then coming into early 2000s with the launch of Urban Strategy America Fund, which I started, which was sort of the early socially responsible investing private equity strategy, which included all the banks and a number of institutional investors and pension funds, we created change in terms of keeping track and measuring investment with women and people of color and transformation of communities and we found investors that wanted to invest in that. And so, you know, I could keep going, I guess what the theme is that over the years, not only the initiatives have changed but the tools required to create change have changed. And so, I keep trying to evolve to stay one step ahead. And now with the BRIEF vehicle we’ve launched with Small Change, we’re trying to figure out how to make large scale commercial real estate opportunities that typically don’t see commercial real estate investors out of the diverse communities more available and accessible. So, thank you for helping us with that.

Eve: [00:13:15] Oh sure. Well, it’s been a little bit disappointing in some ways, but we can talk about that too. But let’s talk about that BRIEF and what and who is BRIEF and what inspired it.

Kirk: [00:13:26] BRIEF, Boston Real Estate Inclusion Fund, kind of came out of that evolving leadership in Boston to want to create opportunities for people of color and women to invest in some of the growth that’s happening and has been happening specifically around the life science industry, but in other industries as well. And so, three partners came together. We were once competitors and, you know, we joined up to identify commercial real estate investment opportunities in the city and then bring retail investors together with Basis Investment Group. And Basis as the largest woman of color owned platform in commercial real estate, having done about 6 billion, had the ability to come in and finance investments and underwrite investments with large scale developers who had very attractive opportunities. And then we came along and syndicated out a portion of that to make it available to smaller retail investors, qualified investors, who could invest $50,000 or more. And now we’re putting about $3 million into one venture, which Basis has put $11 million into with related companies.

Eve: [00:14:50] So this opportunity is on Small Change, but it’s accredited investors only, or qualified investors. That’s my disappointment and for yours too, right, that it couldn’t be non-accredited investors, because if you can’t get your foot in the door, then it’s pretty hard to start building wealth. But nevertheless, the rules dictated that. And so, you’re trying to raise 3.75 million towards this pretty spectacular life sciences project in Boston. Do you want to tell us a bit about the building and the tenants and developers?

Kirk: [00:15:25] Yeah, yeah, the building is exciting in that it’s a life sciences building for Vertex Pharmaceuticals, which is a fortune 100 pharmaceutical company. The project itself is about $418 million, 344,000ft². But what’s more exciting is that Vertex is the 100% commercial tenant for the building, and it’s expected to come in as a equity investor alongside the retail investors. The sponsor is equally impressive, related companies, which build projects like Hudson Yards in New York, is the sponsor for the venture and is quite qualified and capable in the Boston market. We’re excited to make this available in much smaller retail investor increments to qualified investors than has typically happened before. And with your help, we’re making that possible.

Eve: [00:16:26] Yeah. So, the disappointment is that because this is such a small piece of the pie, right, of a very large project, it’s really a passive investment into that project. And so therefore non-accredited investors are not permitted to invest through regulation crowdfunding, which is a very big disappointment. But maybe someone at the SEC is listening.

Kirk: [00:16:50] Well, we’re happy to at least, this is a very cutting-edge effort in our opinion. And hopefully it will continue to get even better in terms of its availability as time goes on.

Eve: [00:17:03] So what is the ultimate goal for BRIEF?

Kirk: [00:17:06] Yeah. So, you know, BRIEF is ultimately trying to promote opportunities for diverse investors, Bipoc and women investors, who don’t get a chance to participate in these investments. But our ultimate goal is for transformational real estate investments that do well and do good. And, specifically, in the terms of inclusion and all aspects of inclusion, which is a dimension of this project. 50% of the project’s participants are women and people of color. It is a LEED-certified building and aspires to be Net Zero. So, in terms of ESG dimensions, this is a home run. So doing well and doing good, as was the case back when I launched my triple bottom line fund in 2005 is People, Planet, Profit. And I like to say that there are not the other two Ps without the profit P but the same is true in terms of the People and Planet dimension. And we will look forward to chronicling how this building is transformational and we’re excited that people can actually also be profitable in doing that.

Eve: [00:18:32] So for anyone who’s listening, if you don’t already know, we are at SmallChange.co. So you started life as, or at least your career not life, as an architecture student. And what led you to start a fund? It’s a pretty big step. Yeah.

Kirk: [00:18:49] Big step. You know, I think the cornerstone of everything I’ve done in my life has been about building community. And that sounds rather broad, but, you know, my family came out of the black community in Alabama, and my great grandparents were involved in setting up the education system in Alabama. And, you know, we’ve always been part, not only of building community in the black community, but standing up for civil rights. Grandfather testified in the Scottsboro trial, helped black people have a voice up to the Supreme Court to be on juries in America. So, there’s an obligation where to much those who’s given, much is expected. And I think that’s a roundabout way of saying I see real estate as my vehicle for giving back. And you heard me say earlier, I built community with a pencil, a dollar and a brick, and they’ve all worked at various times. I’m kind of agnostic. I want them all to be, all the tools on the table, to achieve the outcomes we want to try to attain. And so, that’s the path I’ve chosen for my life. And the fund vehicle has been maybe the most transformational, because you’re leveraging capital and you’re able to leverage that to create the change that sometimes doesn’t get attained without capital leverage.

Eve: [00:20:26] Yeah, I personally agree. You’re a real estate developer, what sort of projects are you working on today?

Kirk: [00:20:33] Our singular and greatest focus beyond BRIEF, and BRIEF has the ability to be in lots of investments in an investor role as it’s evaluated and underwritten, and we’re able to be confident that we can share that with retail investors in a way that they can make an intelligent investment decision. Beyond that, we are developing 6,000,000ft² at a place called Dorchester Bay City, and this is a 15-year capstone project. We’ve been at it for four. It’s 36 acres on a peninsula on the Red Line in Boston, on the water next to the third largest park, next to an urban beach, next to the third most diverse university in the country. And we are extremely excited about that project. So, for me, I’ve gotten more focused in my efforts, and they are really bifurcated between the retail opportunities for diverse investors that BRIEF affords and the transformation and placemaking and inclusion that can be attained through a 6,000,000 square foot, $5 billion project.

Eve: [00:21:52] So what have been some of your very biggest challenges over the years and maybe disappointments?

Kirk: [00:21:59] Yeah. You know, it’s interesting. I guess I don’t see barriers, I see opportunities. And so, I suppose in that regard everything’s a disappointment, right? Or anything that gets in your way.

Eve: [00:22:16] Yes.

Kirk: [00:22:17] But, you know, I’ve been very fortunate to take advantage of opportunities that have been presented to me, and many of them have showed up in ways that I never expected. So, I go into life looking for a great story. If I come up with a great outcome, then it’s an additional success. And so, I try not to be disappointed, but, you know, I would like to have been where we are now 20 years ago, in terms of being able to access 36 acres and do a 6,000,000 square foot project. But, you know, it wasn’t the time. And by that, what I mean is I didn’t have the capital relationships. I hadn’t spent the time in financial institutions and environments. So, I’m not answering your question because, as an optimist it’s really hard for me to look at and find the disappointments. I just see them as impediments that can be removed.

Eve: [00:23:23] Interesting. So, they just even, they just become bigger challenges.

Speaker3: [00:23:28] Well, you know, makes life interesting, right? I mean, if it were easy, everybody would do it. And many of the opportunities have come out of adversity. When we acquired the Crosstown site, we were unable to test for anything by the agreement on the contract. There was a lead paint factory underneath it.

Eve: [00:23:50] Oh.

Kirk: [00:23:51] So a guy with no money had a project for a city block. But he had a lead paint factory he had to get rid of. So, we created an environmental risk transfer company with an insurance company and an engineering company. We fixed the problem. We got the regulatory closure. I sold the company back to them. They went on and did it for other people. So, I guess the story of that is, maybe the opportunity was there because somebody else knew there was a lead paint factory, or maybe they didn’t know how to solve the problem, but once you can remove it, it became a valuable asset. And we own that asset today. But if I gave up…

Eve: [00:24:33] You wouldn’t own it. That’s right. I’m going to go back to BRIEF at the moment and the 22 DryDock offering. What will success look like for you with that offering?

Kirk: [00:24:45] Yeah. You know, success here, because it’s all about the qualified investor and their ability to obtain the expected outcome. So, we’ve been able to scrub a lot of the risk in this project. One of the advantages of coming in later, which is not always where people of color are invited to come in, usually it’s in an effort to win something. If you come join me, I’ll tell you what you won. Win, win. This is the exact opposite of that. We’ve reverse engineered inclusion. And so, to your question, success will look like a predictable outcome where people attain the 1.7 equity multiple that they’re expected to get and the 17% internal rate of return. But the only way to do that is to have risk adjusted returns that are based in fact. And so, 22 DryDock project is unique in that 60% of the project has been bought out in terms of construction costs. Normally, you don’t know that when you go into a project, it has a tenant for 100% of the space. Normally you don’t have a tenant before you start a project. It has the success of a very viable fortune 100 pharmaceutical company who has a building across the street already in their headquarters in it. So, there is certainty of tenancy. And so, I guess I’m describing to you predictable outcomes that track along the lines of the underwriting that we offer to our investors. The by-product is that we can engage a lot of people of color and women in the execution of this project, and that we can prove that doing well is not at the exclusion of doing good or the opposite.

Eve: [00:26:46] Well, on that note, I thank you very much for joining me. You’ve had a pretty spectacular career. I’m not sure what else to say. I was gonna say, what’s next for you? But it sounds like you have your hands full.

Kirk: [00:27:02] You know it’s interesting. I keep finding things that I should do. I took over as the president of NAIOP for the largest national…

Eve: [00:27:14] Oh, I know NAIOP well, that was one of the real estate industry events that really turned me off a while back.

Kirk: [00:27:22] Yeah, but that’s been exciting because there’s a whole regulatory piece. I’m skiing every continent of the world so I’m off to New Zealand in August.

Eve: [00:27:33] Oh, close to my home country.

Kirk: [00:27:35] That’s right. And I’ve been there and love it. And Oceania is a destination for us. So, you know, I think BRIEF will be a wonderful thing to bring to fruition and bring ten more BRIEF projects to Small Change and have them bring lots and lots of retail investors into the fold. It’ll be great.

Eve: [00:27:57] Well, we would love that too. So, we’re ready for it.

Kirk: [00:28:00] I know you are.

Eve: [00:28:01] Thank you very much, Kirk. It’s been it’s been a pleasure.

Kirk: [00:28:05] Thank you Eve. You take care.

Eve: [00:28:12] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. Please support this podcast and all the great work my guests do by sharing it with others, posting about it on social media, or leaving a rating and a review. To catch all the latest from me, you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing, head on over to smallchange.co where I spend most of my time. A special thanks to David Allardice for his excellent editing of this podcast and original music. And a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Kirk Sykes

Manufactured authenticity.

Scott Snodgrass is a founding partner of Meristem Communities, a Houston-based real estate development firm committed to creating Places for People™️ with mindful, fine-grained developments. Meristem is a resiliency-focused developer whose guiding principles create human-centric design by thoughtfully, sustainably, and holistically connecting the land and its natural resources with people.

Scott is an innovative entrepreneur and former farmer who leads with respect for the land and the environment, carefully strategizing an interconnected resilience of all systems—natural, human, and built. His vision has always been to create neighborhoods that honor and nurture local ecosystems, empowering people to live a more holistic way of life with renewed appreciation for their natural surroundings. This vision is being brought to fruition in Indigo, one of Meristem’s first developments in the suburbs of Houston, designed with a foundational connection to agriculture and built around a human-scale working farm and pasture. The Meristem belief is that it’s the sum of a thousand small decisions that create more engaging, more interesting, and more livable neighborhoods.

Alongside his work at Meristem, Scott works collaboratively with developers and consultants to create unique and exceptional agricultural amenities (agrihoods) within master-planned communities through Agmenity. He has become a thought leader in the national agrihood movement, regularly speaking on the topic at regional and national conferences. Scott is a member of several community organizations including the Urban Land Institute (ULI), currently serving on a national committee and most recently contributed to their 2018 ULI Agrihood Report. Scott holds a Bachelor of Arts in political science and government from The University of Texas at Austin.

Read the podcast transcript here

Eve Picker: [00:00:06] Hi there. Thanks for joining me on Rethink Real Estate. For Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich, or poor, beautiful, or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone.

Eve: [00:00:43] In real estate development, envisioning how future societies will live can often feel like masterminding a high-tech work of science fiction. Just outside of Houston, a new development of the future is emerging. But instead of flying cars and skyscraping utopias, this version of Tomorrowland has its roots firmly and sustainably planted in days gone by. Indigo, a 235-acre community, is being developed by Scott Snodgrass and his partner Clayton Garrett, both farmers. They have thoughtfully gone against the norm in every aspect of this project, focusing first and foremost on people and a human scale to encourage interaction. Downsized lots and homes, a working farm, the integration of small businesses, careful attention paid to embracing everyone all make this project one worth watching. You’ll want to listen in to learn more.

Eve: [00:01:54] Hi, Scott. It’s really nice to have you join me today.

Scott Snodgrass: [00:01:57] Thank you so much for having me. I’ve been a big fan of yours and the podcast, at least for the past couple of years, and so, excited to be able to join today.

Eve: [00:02:06] Oh thank you. You’ve been heard to say that in community development, envisioning how future societies will live can often feel like masterminding a high-tech work of science fiction. Why is that?

Scott: [00:02:21] Well, uh, we don’t really know what the future holds for how people are going to live, but I think that we have maybe 40,000 years or something of history with how people live. And certainly, in modern history, we have some great analogues to look back at and so, I think it’s really about learning with what we’ve done in the past, but then also applying the technological changes we’ve had to the future. We’re a little slow to adopt some technologies. I think it’s real easy to see technologies and think it’s the future. And these sexy technologies that are always being sold by some company for some high price and you have to sign up for their subscription, and they own all of your data and all that. And we’re a little wary of that. But I do think that as we look into the future, sometimes we are doing the same thing that a science fiction writer would do in imagining what the world’s going to be like in the future.

Eve: [00:03:16] That’s true. So, and you are a former farmer amongst other things. How does a former farmer become a real estate developer?

Scott: [00:03:24] It’s a great question. It’s the one that most people ask, right away off the start. But my business partner and I, we have a company called Agmenity, and it manages farms for master plan community developers, hospitals, school districts, cities and counties. And so, we had experience in agriculture and started that company as a service company to help incorporate agriculture into more real estate developments and have been doing that work since 2015. And we had, our first project is called Harvest Green. It’s here in Houston. The real estate developer was just a wonderful company and their general manager on the project, Shay Shafi, was just an incredibly generous guy. And he brought us into every single development meeting, you know, so every week or every two weeks for years. And sometimes…

Eve: [00:04:18] You caught the bug!

Scott: [00:04:19] Right. We were like, why are we here talking about engineering? And he said, well, hey, this whole like, agriculture in a community thing is relatively new in the modern framework. And so we want to make sure that we’re catching any of those conflict points. And so we got to see the behind the scenes. And we got to ask questions about, well, why are you making this decision and why are you making that decision? And Clayton and I, my business partner, we had always felt like what could be more impactful on someone’s life than the food they eat. Nothing, right? And then we saw this whole real estate development world and said, oh, wow. Like, real estate development actually has a lot to do with what food people eat and a whole host of other things. And so, this is also incredibly impactful work. So, we hired a COO at Agmenity who does a tremendous job, runs the company better than we ever did or could and is really leading that company in a growth throughout the country right now. And so, Clayton and I have been able to focus at Meristem Communities and put our energy there and really work on our first project, Indigo.

Eve: [00:05:23] And so Meristem Communities you launched with your partner. And how long ago was that?

Scott: [00:05:28] Now we just launched meristem in 2021. We owned a piece of property, um, that we had had a large-scale farm on, and we were starting to be surrounded by suburban development outside of Houston. And so, that farm was never going to grow to the full size of the property we had purchased, we realized. And so, we said, okay, well, what do we do with the rest of this property? And so, we had been walking alongside real estate developers and we said, well, let’s look at this. And we started talking to some folks about some mixed-use and sports parks and light industrial even. And none of it felt quite right. And then Covid hit, and everything stopped for a while. And then single-family real estate caught on fire, for good and for bad. And we said, okay, well, this is kind of our only option right now. And frankly, because of the demand that home builders had for lots at that time, it put us in a position where two farmers could become real estate developers because the home builders were so desperate for lots. And that was really the key that opened up financing and all the other agreements that we needed to get moving.

Eve: [00:06:38] Interesting. So, then I have to ask you, does this community differ from conventional urban plan communities? And if it does, how?

Scott: [00:06:48] Certainly for Houston, it is shockingly different, we discovered right away. Our conversations with our home builders weren’t easy, even though their demand for lots was so high. But, you know, we’ve done a number of things at Indigo that are different than the norm. You know, first off, we do have agriculture incorporated into the community. How could two farmers, you know, develop a community that didn’t have agriculture? So, we knew we had to do that, but we actually don’t find ourselves talking about it that much, related to Indigo. We see the big differences that we have are really our focus on walkability, and that means using homes that have their garages on alleys and the front doors either on the street or on a green space. And that was a very difficult framework for the Houston development world to understand. For whatever reason, Houston has just rarely had any alleys since the 50s or 60s. The city’s abandoned a lot of them in the urban core and master plan community developers just haven’t used them. And so, you know, we can easily travel around the country and see alley-loaded neighborhoods. You know, the traditional neighborhood design framework all around the country. Dallas even has a lot of it. And so, it was easy to go see it but we had a hard time getting our, our builders on board with doing that. So that was kind of the first hurdle and something we were doing that was very different. And then the second part of that was smaller…

Eve: [00:08:14] So actually let’s back up. So, the importance of alleys means that, you know, no driveways on the front, the front of the houses are really for people, not for cars and, and trash and cars are relegated to the alley. Right?

Scott: [00:08:29] Yeah. So, our tagline at Meristem Communities is places for people. And you know, we imagine a world where cars, corporations and capital are not the primary stakeholders. And those other three things are tools that humans can use to achieve their goals, but they’re not the primary stakeholders. And unfortunately, our real estate system, as you know and talk about all the time, is currently built for cars, corporations and capital. And so, we believe that it’s an important shift in the design framework as you’re designing a community to look at people first. So yes, garages on the back. That reduces our curb cuts and our conflict points for vehicles and for for driveways and sidewalks. Yeah.

Eve: [00:09:12] And people. Safer for kids.

Scott: [00:09:13] Yep. Safer for kids and all that. It allows us to have on-street parking and a lot more of it because we don’t have all of those curb cuts now, for the driveways. And it also means that when cars pull off of the road onto the alley, there’s a very limited number of cars on those alleys as well, because they serve small pockets of homes. And so even those spaces are relatively safe as well.

Eve: [00:09:35] That’s a really major urban planning feature, but I feel like I need to go back a step and ask you what your vision was. Like, what’s the overall vision for this community, and where did you draw inspiration from? Aside from the farm?

Scott: [00:09:51] And we have this conversation a lot too, like. Our PR team will ask, you know, what’s the theme of the community? And we keep coming back to it’s places for people. That really is the theme. You have to do everything. You can’t just pick one thing to do. And so, we’re incorporating agriculture into our development. We’re using alleys. We’re creating safer streets. Wherever our sidewalks cross the street we have a raised pedestrian crossing or a raised intersection table. We have narrower streets, we have on street parking, we have bulb-outs. We have all these things to create a safer environment for people and focus on that. And then we’ve also done the mixing of uses by having residential and retail and other commercial in the same space and, you know, bringing that into the neighborhood instead of pushing it out onto the major thoroughfare adjacent to our neighborhood and turning its back to the community, we’ve really brought that retail into the community and had it face the community and be really central there. And so, I think you have to do all those things. So, places for people really is the theme but then walkability and safe streets has to be an important part of that.

Eve: [00:11:00] So how big is this community? How many homes are we talking about? How many people?

Scott: [00:11:04] So we have 235 acres within the development. More than 60% of that is open space. So, we have a 25-acre lake. We have, you know, miles of walking trails and sidewalks and everything. And we also have these, we basically created a street grid and then took out every other street and made it a green space. And so, homes still front on those green spaces, and they’re served by the alleys in the back. So, we have a lot of open space there. We have, uh, 661 homes for sale. And then, and that’s a range of attached and detached and cottages and more traditional single-family homes for our market. And then we also have about 150 apartment units, but they’re distributed through a number of buildings. We have these mansion apartments that are six- and seven-unit apartments that just look like a banker’s house, that we’re putting on some of the green spaces. And then we have some, like, smaller 30-unit buildings of micro units that look like brownstones that are in what we call Indigo Commons, which is the real town center, mixed-use area of the neighborhood.

Eve: [00:12:17] And so you’re under construction, right?

Scott: [00:12:21] Correct.

Eve: [00:12:21] How far into this project are you? What percentage complete and how many people live there?

Scott: [00:12:27] So, we don’t have anyone living yet, but our section one, the model homes for the community are going to start construction here in just a few weeks. So, all of section one, which is a little more than a third of the community, all of the storm sewer, the sanitary sewer, water lines, all that’s in the water plant. And, you know, we built our own water plant and wastewater treatment plant because we didn’t have services in our area. And so, all of that is in and the paving starts this week. And so, they’re moving real quick for us. Hopefully the weather holds up for us and they’ll be out there pouring concrete for the next 30 days or so, and then we’ll have those first 265 lots available for sale. And I’ll tell you, we’ve been doing some really intentional, small-scale and intimate cultivation of the potential home buyers. And our home builders are saying the demand is intense and we believe that we’re going to sell out really quickly. So, we’re already getting section two ready. And construction for section two will start in just a few months here.

Eve: [00:13:28] And so, I have to ask how affordable are these homes?

Scott: [00:13:32] So, we are in the probably least affordable quadrant of the city. And again, partially that’s what allowed us as, you know, two simple farmers to deal. But also, what we’ve done is compare ourselves to the communities around us and if we wanted to push towards affordability, what could we do? Because Houston’s always been very affordable compared to the rest of the country but during Covid it changed quite a bit. And so, we’ve seen the same thing now where your firefighters, police officers, teachers, social workers can no longer, or anyone working in retail, can no longer afford to live even in the communities where they work. And it felt really wrong for a community to tell the people serving it they had to go somewhere else. That just felt inhuman. And so, we said, okay, we’ve got to find a way to solve for that problem. And so, one of the ways we did that was by pushing for smaller lot size, because we saw an opportunity where lots in Houston had become huge, you know, mostly in the 70s and 80s and 90s and that mostly that’s wasted space. People aren’t using those portions of their lots. So what we did was really densify our neighborhood, compared to the suburbs, you know, 3.2, 3.4, maybe four units per acre is the standard in the suburbs. I think we’re at almost eight units per acre. And then if you look at like, you know, net density in some smaller pockets in the neighborhood, we even flirt with 20 units per acre in our most dense areas. And so that’s a very different calculation. And that’s just on the first side.

Eve: [00:15:10] What were the zoning restrictions you have to contend with to get there?

Scott: [00:15:15] Most of our property was in the unincorporated county, and the county that we’re in has very little in the way of requirements for subdivisions or development. So, it’s kind of the wild, wild West out here.

Eve: [00:15:26] And that reminds me of, I don’t know if you ever used to play SimCity.

Scott: [00:15:29] Yeah, yeah.

Eve: [00:15:31] I just, you know, no restrictions.

Scott: [00:15:35] Yep.

Eve: [00:15:36] Insanity. Yeah.

Scott: [00:15:38] Yeah. So, then we, but we did have a portion of our property that was in the extraterritorial jurisdiction of the city of Richmond, which is our closest jurisdiction. We reached out to Richmond and said, hey, we’d love ultimately for our neighborhood to be a part of the city. So, we worked with them on a development agreement, and they have the right to annex our property in about ten years when we’re done with the development process. And that development agreement, so their, their minimum lot size was 6000ft², in the city of Richmond. And through our development agreement, we got that down.

Eve: [00:16:11] That’s a really huge.

Scott: [00:16:13] Right. Yeah. It’s big for the minimum. Right.

Eve: [00:16:15] Yes. Yeah,

Scott: [00:16:16] Maybe a maximum. It’d be okay. So, we worked with them and got that down to 2000ft², which is allowing us to do some cottage homes that are in that, like 950 to 1450 square footage range. That really serve, and that’s what we saw, was the suburbs of Houston have almost entirely been built for two parents with children families. There’s just so many homes built for that family formation, which in Texas is now like 20% of our family formation.

Eve: [00:16:49] Oh that’s really interesting.

Scott: [00:16:50] So the other 80% of family formations or household formations we’re just ignoring. People who want to live together, who aren’t married and have trouble with financing. You know, we have single parent families who affording a giant home like that can be really difficult. You know, all these different formations, you know, like couples who don’t want to have kids, which is more and more common today. And so, like, why are we only building these five-bedroom, you know, mini mansions in the suburbs? So, we shifted everything down on lot square footage and home square footage to create more of an ecosystem so that we’re providing homes for that wider range of people. And then especially wanted to do the aging in place concept where you could buy your first home in our neighborhood, you could rent here, then you can buy your first home in our neighborhood, and then you can size up your home as your family grows and size down as it doesn’t, as it shrinks and create all of that in one place for people.

Eve: [00:17:47] This is pretty challenging stuff that you’ve tackled for two farmers. First time real estate development. I have to ask, there’s a lot of infrastructure to put in place. How challenging was it to put the funds together for this project?

Scott: [00:18:01] I think we’re very persistent and we’re very persuasive. And then the market was really hot at that time. Like, we have the privilege of that and the privilege of both being white males, which does make a difference when you’re trying to get financing.

Eve: [00:18:15] Definitely.

Scott: [00:18:16] Absolutely. And then at the same time we were just willing to take no for an answer over and over again and go to the next person. And so we heard no, a bunch of times. We didn’t fit the traditional needs. You know, everybody understandably wanted a huge chunk of cash equity in the deal. And we didn’t have any money, we’re farmers, and we didn’t know anybody who was going to do that for us. And we didn’t want to go out and find an equity partner who would ultimately control the decision making. We wanted that to be us. So, we just kept working and working until we found a private lender that was willing to take on our deal, that was trying to move more into Texas. They had been developers in the past, which we really loved because they understood the development process. They’ve been very flexible. They are not very cheap. And I think that is the place that people need to get over that mental hurdle that, in our minds, we will pay for flexibility over and over and over again because it really brings resilience. When you lock yourself into this tiny little box of requirements and allow that lender or the bank to pull the rug out from under you whenever they decide to, that’s a tenuous place to be that we didn’t want to be. And so, we are happy to pay very high interest rates for very large sums of money for a long time in order to get the flexibility that we need. So, sure, we take a haircut in our profit at the end. And I think that’s what most people struggle with. But it does make our development more resilient.

Eve: [00:19:44] So you will have a working farm in this community?

Scott: [00:19:48] Yeah.

Eve: [00:19:48] How does that go?

Scott: [00:19:50] It’s 42 acres. And really, what most people will experience is the front three and a half acres, which are right at the entrance to the community, and it bumps right up into the town square area. And that’s the vegetable farm. So that’s where vegetables and flowers will be grown. That’s where people can go and buy some vegetables from the farm. They can take classes, they can interact with the farmers, maybe even have their own little plot to grow some vegetables in. And then the, on the back side of the property, the remainder of the farm is pasture and orchards. And so we will probably have laying hens, you know, hundreds and hundreds of laying hens and do egg production on the farm as well. And we’ll have some programming back there, but in a more limited basis that’ll mostly be a farmer’s work area on the back side of the farm.

Eve: [00:20:38] It sounds idyllic. And then also, where did you get your inspiration from for the architecture for the community, like, and what is the architecture like?

Scott: [00:20:48] We have a funny phrase we find ourselves using more and more, and that phrase is manufactured authenticity.

Eve: [00:20:54] Kind of like Disneyland, right?

Scott: [00:20:57] Yeah, in some ways. And there’s some parts of Disneyland that Disney did really well. Right? And really speak to people. There’s other parts of it that are cloying, I would say and, you know, are saccharine. But what we wanted to do, because we were developing what was just entirely farmland, not a single tree on our property, no structures at all. We felt like for people to feel like it was a place we needed to create some age, some patina on the community. So, we’ve done a few different things. You know, one, we went out and bought two 50-foot-tall live oak trees and had them planted at the property, and that was not cheap. But doing that, you know, at least makes it feel like something was here before. And then as we planned the architecture of our buildings, like the first commercial building we’re building is called the filling station. And so, it’s a little bit tongue in cheek that it was a 1930s Art Deco gas station. And then all of the decorations on it had been stripped off. It had been stripped back to its basic form, and it was no longer a gas station. It wasn’t serving cars now, now it’s serving people. So, it’s a general store, coffee, beer, wine, light breakfast and lunch options and then sells vegetables from the farm, eggs, pickles, jams and jellies, all that. And acts as the third place for the community to really activate at the beginning, where there’s cafe seating and it’s like, come hang out here, use the Wi-Fi, do whatever. So, the architecture of that building was really intentional, that it refers not only to an architectural style of the past, but also acts like it had been adaptive, reused, at some point in the future. And that goes all the way to like, choosing a polished concrete floor finish. You know, where do you incorporate some concrete block, like would have been in those buildings before so that you can see it, even if that’s not our modern construction method? So, there’s some touches to it that are Disney but what we’re hoping to do is really just give people that subconscious feeling of like, this isn’t a brand new whitewashed, you know, place. There’s some age here to, to help the community form in the beginning.

Eve: [00:23:11] And so how do you balance, like, modern amenities with this notion of small-town living?

Scott: [00:23:17] Part of that is actually doing your research on amenities and finding out what people want, and then looking at life cycle cost and value to the community. You know, in Houston, we’ve had an amenity arms race over the years, and people in other places in the country are shocked when they hear how low our association fees are compared to the amenities people get. Usually when I say we’re $1,700, they say, oh, $1,700 a month. That’s a that’s a little bit high. But we’ve seen numbers like that, and we say, no, $1,700 a year, is our cost. It’s shocking to people. And so, we wanted to, like we do with so many other things, go counterculture on that a little bit and say, what do people actually want? So, in Houston, every community has a pool, but those pools are only open three months a year. They cost millions of dollars to install, and they cost like a quarter million a year to staff and maintain. And so, we looked at that and said, okay, well, is there really the value? Like I have three elementary aged kids and we have eight pools we can go to in our neighborhood, which is ridiculous. But we go like 5 or 6 times a year. So, the amount of money that I’m paying in HOA fees towards that pool, it probably doesn’t calculate out to where it actually makes sense. And so we decided not to build a pool at Indigo.

Scott: [00:24:35] We have an amenity lake that is like a nature lake that you can swim in that we’re putting a dock on so if you want to swim, you can go there. But also, if you just desperately want to go to a pool, there are private pool clubs in the area, or you can go to a fitness center with a pool and those sorts of things. So, part of it was like getting rid of the big plays. In Houston these crystal lagoons have become all the rage, where people spend $10 million building a beach. You know, it’s an enormous pool, essentially. And we didn’t want to saddle our residents with that kind of debt. And we feel like with those big giant plays may get you a bunch of media coverage, but they’re really risky long term. So, we’ve downsized our amenities and done more of them and spread them out more throughout the community. So, it’s little things like a couple of bocce ball courts here and a natural children’s playground over here, and a small dog park over here, and a meditation maze over here, and some moving water and wind chimes over here. And really just spread those out and diffuse them throughout the community so that they’re more easily accessible. And that’s a part of the walkability. And they’re, I guess, maybe a little more equitably spread out throughout the community too, so that everyone has access to them, but not saddling the community with any specific, really large-scale debt.

Eve: [00:25:55] Yes, yeah. So, who will live there and where are they going to come from?

Scott: [00:25:59] So we did a lot of research at the beginning. We used a company called Kantar that has a giant database of demographics, looked at who lives in our area, which generation do they fall into? And then they even segment each generation by behavior. So, for example, there’s a millennial segment that’s a little more career-oriented, that’s a little more go, go, go. Then there’s another segment. So, I’m in that segment. My business partner Clayton’s in the other segment, which is a little more family oriented, a little more self-care oriented. And so, you know, it’s interesting to see the different segments and how they’re, how they want to live. So, my segment might be happier in a town home in an urban area. My business partner’s, you know, his segment might be a little bit more happy in a home, a smaller home, but with a little bit more of a lot around it and not attached. So, we did that research. Then we went out and looked at who’s in our area of those segments and then designed our home types for them. And then, we actually had 700 people answer a survey with questions about amenities and other things in our community and got amazing feedback from that that we incorporated into what we were doing. And then we took all of that to our home builders and said, here’s really what we want to see for the homes in this area. And we have architectural guidelines that control what they can build. We control the square footage band. We approve the elevations for the homes, what they look like on their facades and all of that. And then the goal is that once we get that done, we can hand it over to the homeowners’ association, and then the control can relax. And we want people to be able to have their own impact on what their home looks like.

Eve: [00:27:46] So how do baby boomers and seniors fit into your plan?

Scott: [00:27:51] Well, I mean, baby boomers are such a huge part of the population right now. And a lot of them, I’m sure everyone’s seen the articles are holding on to to larger homes and not moving out of them. And that’s creating a little bit of a scarcity for homes, for families that are growing. And I think one of the reasons is that they haven’t been given alternatives, other than the age qualified 55 and up communities and we’ve had conversations with a lot of people who don’t want to live in one of those.

Eve: [00:28:19] Me included.

Scott: [00:28:21] Right? They want to be around younger people and specifically probably even their families. And so, at Indigo, we’ve tried to design the community again, where it’s a complete community with opportunities for everyone. So, we looked at what are some good housing types for people who are downsizing, empty-nesters, aging populations. You know, there’s things like more one-story buildings, or if it’s a two-story, try to make sure your primary suites on the ground floor, and then looking at the the walkability for those homes as well. Mobility is different for every different person. But there’s some commonalities and so for people who are a little bit older, having a place to rest every 150ft or so is really critical. And so, we’ve tried to design our walking network so that there is both shade and places to stop and rest as you make your way from your home to the different places throughout the community.

Eve: [00:29:17] So what about cultural and racial diversity?

Scott: [00:29:21] Our county is the second most diverse county in the country after Queens, I think. And so, it is 25% white, 25% Black, 25% Hispanic, and 25% Asian. And the Asian population is incredibly diverse itself with a lot of Indian and Pakistani, Chinese and Vietnamese populations in our area. And so, we feel like, really fortunate to be in a place like that. Yet at the same time, the suburban neighborhoods can still be fairly white in our area. And so I think some of that is like the messaging that you present to the world when you’re asking people to come join you. So, we’ve been really intentional with our marketing team. And we took our entire design team, including marketing through some DEI workshops and learning about cultural differences and how we can approach things maybe differently with that, with cultural differences in mind. And that’s been, I think, really impactful so far in the narrative that we’re telling, making sure that our marketing materials are representative of the communities around us and the people that we are inviting to come join us. And then we’re even working on a home-buyer resources guide. Basically, if people come to try and buy a home in Indigo and are, either think they won’t qualify to buy the home or try and don’t qualify, we have some secondary resources that are designed to overcome the hurdles that people of color and women and other class distinctions have faced in real estate. I mean, I think real estate is in the top 2 or 3, you know, racist and classist…

[00:31:05] Oh yeah,

[00:31:06] Institutions that we have in the country easily. Right? I mean, the prison system.

Eve: [00:31:10] Maybe the top.

Scott: [00:31:11] Yeah. And so, we want to work against those things in every way that we can. And so, we actually are in the process of building out an equity framework for Indigo and looking at like, what are all the spheres of influence that we have and we’re targeting. So, we have eight strategies that we’re ultimately going to be targeting throughout the community for things that we can do to overcome historic barriers to either renting or real estate ownership.

Eve: [00:31:39] Wow! It sounds to me like farmers do a lot of research. You’re used to that. Yeah. So, what have been some of your biggest challenges and disappointments?

Scott: [00:31:49] Challenges and disappointments?

Eve: [00:31:50] Maybe none?

Scott: [00:31:52] Yeah. No, no, we’ve definitely had challenges. I mean, working with the city, everybody told us that our city was like the worst city to work with in Houston. That’s what the development world said. We found them to be great to work with. It just took a lot of work and time to get them convinced of what we were trying to say, but we brought data to them. You know, narrower streets. It’s the fire chiefs don’t like narrower streets because it restricts access, right? So, then we have conversations about, okay, but a narrower street means slower speeds and means less kids die when they get hit by cars. So let’s balance like, how many home fires do you have in your area? Not very many. Okay, well, maybe more kids are being hit by cars and we should balance that out. So, we just went with those things. It took longer than I think we expected, and I think we’d be a little faster next time. But I also think people need time to wrap their heads around things, and you have to give that to them. So that’s maybe one of the big challenges. And then, you know, there’s a bit of a regret, I’ll say, that in the design of the neighborhood, we didn’t like bleed the retail into the residential part more than we did.

Eve: [00:32:56] I was going to ask about that. What is the retail and where is it? Yeah.

Scott: [00:32:59] So, we have what we call Indigo Commons. It’s right next to the farm. It’s surrounded by the neighborhood. But I wish that, you know, we still have like a street as the dividing line between the mixed use and the residential. And I wish that we had been smarter and had retail on both sides of the street, I think, instead of. And so, take more of that corridor mindset than the block mindset when we were looking at land use. And so, that’s a big regret, is like pulling a few little neighborhood retail places, pulling a restaurant to like a busy corner somewhere in the residential section. I mean, all of our homes are within a seven-minute walk of the commons. So, it’s not like you’re that far away, but it still would be nice to have pulled a few things out. So, I think that’s one thing there. You know, definitely on the commercial side, there’s been some challenges. We have what we call our incremental retail buildings. So, we did the whole household formation conversation on the housing side. And we were getting like halfway through the planning of the mixed-use area. And then we said, wait a minute, we need to do the same thing for businesses that we did over there. What about the barbershop that just wants to have two seats and doesn’t need 2000ft²? Why should they be paying for 2000ft² if they don’t need it? So, we did the same thing and started downsizing and right-sizing. And you know, we’re farmers. We’ve known a lot of chefs in Houston because we sold to a lot of them over the years, and just saw too many extractive relationships between landlords and tenant restaurants, where restaurant gets a little bit of press for the chef having great food, and then all of a sudden, they get slammed and they’re just so busy for a month.

Scott: [00:34:40] And then the landlord says, you know what? Your lease is up in a couple months, we’re going to go ahead and double your rent for next year. And that restaurant may not even be making money. They just appear to be busy and got some press. And so, to fight that a little bit, we wanted to have some tenant-owned retail. And so, we’ve designed these incremental retail buildings. It’s an 800 square foot footprint, 2 or 3 stories. So, 1600 or 2400ft² maximum. The bottom floor has to be active retail. We need the foot traffic for those buildings. But then on the second and third floor, it could be more retail. It could be offices. You could live there. You could lease it out as an apartment, whatever you want to do. And we got that through our jurisdictions and approved. So, it is a little bit like a live/work unit in form. But what I’ll say on the live/work units is most of the places people have done those, they’ve been residences first and they’ve been financed as a residence and then just have the retail. We’ve designed ours to where they work with the Small Business Administration’s 504 and 7A loan programs where you can get a 25-year business mortgage on that property, and you can live there and work there or lease it out or whatever. So, we just wanted to provide a bunch of flexibility. And so, that was a little bit of a challenge to get people to wrap their head around. And even the market has taken a little bit, but now we’re really starting to see intense demand.

Eve: [00:36:03] Well wow! I’m really impressed. You guys clearly have thought about absolutely everything. I hope I get to see the community when it’s finished. Is there anything else you want to tell me? I feel like we’ve jumped around everywhere. I’m sure I’ve missed a lot.

Scott: [00:36:18] No, I mean, I think the encouragement I would give to other people working in the space, and you’ve had so many great guests on your podcast. I was actually just listening to my my good friend Jonathan Dodson, to his version, I think, take hope in the fact that there are a lot of people working in this direction right now, and it feels like the tide is shifting a little bit. And thanks in part to people like you, Eve, doing these great communications and, like, sharing this because otherwise, how would we know about all these other people working in these other cities in the same area that we are? And so, I think it’s really, really valuable. And people who are feeling alone in this work out there, reach out to the people on those, like, we’ve had great success connecting with other developers. And, I mean, we flew to Oklahoma City to meet Jonathan, you know, kind of on a whim and then have become really good friends. And so, I encourage people, even if you’re working in this area and you have questions to reach out to us. You know, find us on LinkedIn and reach out and we’ll be happy to chat.

Eve: [00:37:20] Well, this has been delightful. Thank you so much for joining me and spending time. And, um, I do want to know how it ends up.

Speaker3: [00:37:27] We hope to have you down to Houston.

Eve: [00:37:28] I’m a little bit jealous.

Scott: [00:37:31] Well, we’ll look forward to that.

Eve: [00:37:40] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. Please support this podcast and all the great work my guests do by sharing it with others, posting about it on social media, or leaving a rating and a review. To catch all the latest from me, you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing, head on over to smallchange.co where I spend most of my time. A special thanks to David Allardice for his excellent editing of this podcast and original music. And a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Scott Snodgrass

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Reclaiming Control.

Adriana Abizadeh is the executive director of the Kensington Corridor Trust (KCT) in Philadelphia. The mission, duty and purpose of the KCT is to help the Kensington community reclaim control over a once thriving commercial corridor by reactivating real estate, fostering local entrepreneurship and reinvesting capital in the neighborhood.

With deep interests in public policy Adriana has taken every opportunity to utilize her privileged position as a nonprofit leader in order to speak out for what she believes in and to lift the voices of impacted community members. Immersed in policy initiatives, she has facilitated community collaboration to address the intersectionality between immigration status, housing, poverty, and race.

All of Adriana’s professional working experience has been in the nonprofit sector and she is passionate about serving others. Adriana has a BA from Rutgers University in Political Science with a minor in Security Intelligence and Counter Terrorism. She also has an MS in Public Policy from Drexel University. She has committed herself to serving on several boards that reflect some of her deepest passions: immigration, racial and health equity, and youth development. When Adriana isn’t serving her community, she is at home with her two children and two dogs.

Read the podcast transcript here

Eve Picker: [00:00:06] Hi there. Thanks for joining me on Rethink Real Estate. For Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich, or poor, beautiful, or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone.

Eve: [00:00:39] Adriana Abizadeh is the executive director of the Kensington Corridor Trust in Philadelphia. You might wonder what that is and why it exists. Kensington was once known as the workshop of the world, with booming manufacturing and a well employed neighborhood. Then Kensington Avenue was a bustling local business corridor. Now there is a lack of economic investment and everything that comes with it. 58% of Kensington residents live below the federal poverty line, and the average household annual income is just over $20,000. Formed in 2020, the trust is tasked with reclaiming control of the corridor. They do this through the purchase of property, which is placed in trust and governed by the neighborhood. Neighborhood trusts are fairly new, but if Adriana has her way, they will become mainstream. Listen in to learn more.

Eve: [00:01:51] Hi, Adrianna. Thanks for joining me today.

Adriana Abizadeh: [00:01:55] Good morning. Thanks for having me.

Eve: [00:01:57] So, unwavering commitment to reclaiming control of the business corridor. That’s the bold statement on your website. What corridor are we talking about? And? And how do you reclaim or regain control?

Adriana: [00:02:13] Absolutely. Yeah. So, we are talking about the Kensington Avenue corridor in the Kensington neighborhood of Philadelphia. And for us, reclaiming control is really a couple of different elements, but all focused on community control. So, reducing vacancy, bringing new businesses into the space with an emphasis on a focus on businesses that are coming from within the neighborhood and then providing affordable residential spaces also on that very same corridor.

Eve: [00:02:40] So when did the need for control become clear and why?

Adriana: [00:02:47] Yeah. So, KCT was formed in 2019. The Kensington Corridor Trust, we were formed in 2019. I would say the need probably became clearer probably sometime in the five years before that and maybe even longer before that. But it was watching, kind of, the wave of gentrification in some of the neighboring neighborhoods following the elevated train, which we call the L, and acknowledging that at some point Kensington would be next. We’d already begun to see at that time some active redevelopment from private developers. Still not a ton of city investment, some nonprofit investment but even with all of that there was still very large vacancy rates, a lot of properties with absentee landlords or not in active use at all. And so it was this mixed space where there was deep investment alongside disinvestment. And so, in 2019 we were formed.

Eve: [00:03:42] So was the next space, right? The next edge. But what did the Kensington corridor, what was it like previously? How did it shift over the last several decades?

Adriana: [00:03:42] Like decades ago?

Eve: [00:03:53] Yeah.

Adriana: [00:03:54] Yes. So, like many neighborhoods, we were one of the workshops of the world. So, it was a manufacturing and factory space, textiles, among other things. And, you know, as we saw that boom kind of shudder and leave spaces like Philadelphia and other major urban centers, we saw increased vacancy. We also saw white flight, and then we saw affordability emerge. And so, the neighborhood is now and has been for several decades, predominantly black and brown, fairly low average household median income around 25,000 a year, which is half of the city of Philadelphia’s AMI, which is at around $54, $55,000 a year. You know, just alongside the disinvestment in the work and the employees leaving, there was also then disinvestment in the neighborhood in itself. And so that’s where we began to see a rise in the vacancy, which then led to an increase in crime, you know, and it kind of trickled from there.

Eve: [00:04:46] All the things that follow. So, what is the Kensington corridor? Is it primarily retail? Is there housing, office, like, what sort of uses are along there?

Adriana: [00:04:55] Absolutely. So, it’s predominantly commercial mixed use. So, most of the buildings are commercial on the first floor with residential on the second and third story. Some of the blocks are two stories. Some of the blocks are three story. But it’s predominantly commercial mixed use.

Eve: [00:05:07] How long is the area that you’re working on?

Adriana: [00:05:11] So we are a 1.4-mile-long corridor, but we’re actively acquiring on three blocks. So, we are using a strategy of density for acquisition.

Eve: [00:05:20] So you launched actually something called the Kensington Corridor Trust and when did it launch?

Adriana: [00:05:27] It was formed in 2019, and then I was hired as inaugural ED in 2020.

Eve: [00:05:32] Okay, so it’s pretty young?

Adriana: [00:05:34] It is. Yes. Still infants.

Eve: [00:05:36] The primary goal you’re trying to accomplish and the target market…

Adriana: [00:05:41] Is community wealth building. Yeah. So, we are trying to have localized ownership and control of the real estate to preserve affordability and localized control. So, making sure that the folks who have lived there historically have access and control over those spaces.

Eve: [00:05:52] So the target market is the people in the neighborhood, like, how do you stop other people from buying in, like…

Adriana: [00:05:58] You can’t.

Eve: [00:05:59] You can’t, right? So let me step back a bit. What is a neighborhood trust? What is the Kensington Corridor Trust and exactly how does it work legally and financially?

Adriana: [00:06:10] Absolutely. So, a neighborhood trust legally is the combination of a 501(c)(3) and a Perpetual Purpose Trust. So, it’s that hybrid construct between those two entities that creates the neighborhood trust model. And then in terms of the way that we operate, we have two governing bodies, both of which are fully comprised of residents and small business owners in the neighborhood. So, of the 19134-zip code, specifically. We touch six census tracts along that 1.4-mile-long corridor. So, in those there’s about 32,000 residents. Again, average household median income about 25,000 a year. On the 1.4-mile-long corridor there are over 600 assets. In our current target acquisition space, which are those three blocks, there’s a little over 100 assets. KCT is in the process of closing on its 20th property now. So, we hold about one fifth of what’s in that three target blocks. When we get to about 40 to 60% of ownership on those blocks, we’ll then begin to move outward one block at a time in each direction towards the outer boundaries of the 1.4 miles. Again, density strategy.

Eve: [00:07:12] So it’s a neighborhood trust. The neighborhood trust owns the property. The governing organizations are also people from the neighborhood in perpetuity. So it can be no one else who controls the property. That’s essentially…

Adriana: [00:07:25] Correct.

Eve: [00:07:25] Do I have that right?

Adriana: [00:07:26] Yes. Yeah. So, a perpetual purpose trust, which is the part that most folks are not as familiar with. Most folks understand the 501(c)(3) non-profit model. In a perpetual purpose trust, you can protect assets perpetually for a purpose. And so, the assets that we are protecting are real estate for collective ownership and localized control and affordability. And then for that purpose that I just mentioned. And so, once the assets go in, they cannot come out.

Eve: [00:07:50] And how do you decide who is on the governing board?

Adriana: [00:07:54] We hold open democratic elections annually. So actually, we’re in open cycle right now. So, anyone from the neighborhood is eligible to apply or be nominated, either, again, as a resident or the owner of a small business. And then the existing governing body selects the folks that applied, bring them in, and then we do rotating cycles so that we’re not losing institutional knowledge as terms are ending.

Eve: [00:08:15] Wow, okay! You said the trust owns about 20 properties now. Total square feet?

Adriana: [00:08:22] Each property is about 2200ft² on average. Typically, 16 foot frontages and 65 foot runs back, in terms of depth. Most of our properties are three-story. We hold a couple of two-story properties, and then we also hold some vacant land which we steward in a community garden. So, we have an 11 lot pollinator garden that we steward directly on the corridor.

Eve: [00:08:42] So these are all pretty tiny properties actually. They remind me of what’s called sliver buildings in Pittsburgh, which are slightly larger.

Adriana: [00:08:50] That’s exactly right. Yes.

Eve: [00:08:50] 20 by 100. Yeah.

Adriana: [00:08:53] Yeah, that’s actually larger. These are small. These are typically 16 by 65.

[00:08:57] Slightly. And what condition are most of these properties when you buy them. And do you renovate them yourselves? I mean, do you have your own development arm. How does that work?

Adriana: [00:09:10] Yes. So, most of the properties are requiring gut rehab. Some of the properties we’re acquiring are coming from private developers, so we’re exiting them so that they can move on and be extractive somewhere else. And so…

Eve: [00:09:23] Not all developers are extractive. Come on.

Adriana: [00:09:26] Not all of them. Just the ones that we’re dealing with, just the ones we’re dealing with. But when we do exit something from a private developer, typically it doesn’t require rehab, and we’re able to pull it back into affordability, right? So, for example, we just acquired a property where the commercial tenant was paying $1300 a month, and we’re going to be able to bring their rent down to $950. So, it is a significant difference in terms of the relationship that I think they’re having with a neighborhood stewarded trust. And then the other assets that we’re acquiring that require a gut rehab, we have a construction project manager that oversees the subcontractors, and we directly sub out the different aspects of the work and get the project back online and activate it as quickly as possible. And then the commercial tenants that are coming into those spaces are approved by the neighborhood. So, we do a ton of community engagement to ensure that the neighborhood wants that business on their corridor before moving someone in and signing a lease.

Eve: [00:10:16] Are the people who come in as commercial tenants sometimes from the neighborhood?

Adriana: [00:10:21] Yes.

Eve: [00:10:21] Like, do you help them with their businesses and growing sufficiently to be able to manage a space like that?

Adriana: [00:10:27] Yes. So, a couple of things. Most of the folks that have come to us so far are from the neighborhood. Most of those folks are folks of color and more than half of them identify as immigrant as well and we have several women owned businesses. And so, those folks, most of them, as I said, have come from the neighborhood. Most of it has been fairly organic. So, folks are referring them to us, we’re having a conversation. The other thing to keep in mind, as we talked about the square footage of the space, these are on average very small spaces. So about 850 square foot frontages on the commercial space. So, they’re small operators.

Eve: [00:11:00] That would be really big in Paris.

Adriana: [00:11:03] Ah, okay. See, all relative.

Eve: [00:11:04] It’s all relative.

Adriana: [00:11:06] For Philly it’s a small footprint.

Eve: [00:11:07] Yeah it is small. That can be good for someone who’s starting out. That’s just way less to take on.

Adriana: [00:11:13] That’s exactly right. So, a lot of the operators that we’ve brought in thus far are single owner, you know, member LLCs. They are figuring out something. Maybe they’ve tried it in a different space. Maybe they’ve been a maker inside their home, and they’re now at the space in the capacity where they’re ready to transition into a bricks and mortar. So, it’s been really exciting for our organization and our partner organizations to support them in, you know, gaining access to physical space, but also ensuring that their business is ready and that they, as entrepreneurs, have the wraparound services that they need to be successful and thrive in that space.

Eve: [00:11:46] And so the properties that you’re purchasing, do you hope to eventually have control of most of the properties in those three blocks?

Adriana: [00:11:54] Yeah. So ideally, we want to hold between 40 and 60%. So KCT, right, when we talked about earlier about like how do you stop other people from coming in. We can’t. That’s not what KCT is doing. I think at the Kensington Corridor Trust, our focus has been on protecting as much as we can by preserving the affordability and the local control, acknowledging that there’s always going to be outside development, there’s going to be city development, and also there’s going to be individual owners, which we want to continue to own and steward their spaces on the corridor, right? We are not trying to exit individual owners who are, you know, operating their business out of their space or, you know, making their own individual generational wealth out of the space. We’re interested in taking on the spaces that no one is activating, or that are highly extractive.

Eve: [00:12:35] Okay. So, then on to financing. How do you finance these projects?

Adriana: [00:12:40] Yes. So, we look at it from kind of like two worlds, if you would. We do have a 501(c)(3). So, we are able to take in subsidy in grants. At this time, we’re not using government funding, so it is all private foundation dollars. And then on the debt side, we’re using program-related investments or PRIs, also known as mission, aligned investments from foundations, from their endowment. And that allows us the space to be able to do the rehab on the, you know, do the acquisition, do the rehab on the properties, reactivate them before we’re moving into repayment. So, we have longer runways on the front end of those debt terms that do either interest only or interest only deferred followed by the P&I. And then there’s a balloon. Most of our terms are between 10 and 15 years. All of our debt is at 2% or below. So, we’re between 0 and 2% interest on all of our debt.

Eve: [00:13:31] Pretty good.

Adriana: [00:13:31] It’s been really, really great. Challenging to scale, but very, very good in terms of the projects and making sure that we can sustain affordability.

Eve: [00:13:39] Okay. So, tell us about a successful project that you’re particularly proud of.

Adriana: [00:13:46] Hmm. Well, one that we have in the pipeline that we’re particularly proud of is not at full fruition yet. We are bringing a small grocery store to the corridor. So, when I first started working at the Kensington Corridor Trust in 2020, you know, I was trying to learn about the neighborhood, meet with residents, meet with small business owners, and the single thing that I kept hearing over and over in every room, different rooms, you know, different people, was, we need a grocery store, we need a grocery store, we need a grocery store. And the second thing that folks were saying is we need more spaces for our youth to engage in positive and healthy spaces after school and on weekends. And so, for the last few years, we’ve been working at trying to figure both of those out. The youth element was a little bit of a lower hanging fruit because there are already partners in the space who, you know, in the neighborhood, rather, who are already doing youth programming. And so, it was a matter of partnering with them, making that activation at our garden, which we now do successfully and have for two seasons, two garden seasons. The grocery store was a harder lift. One, because of the square footage of the buildings, right? We just talked about the average square footage of a building at 2200ft² across, three stories.

Eve: [00:14:49] Right?

Adriana: [00:14:50] Two, parking. Right? So, it’s a very busy and bustling corridor in terms of commuters and for the businesses that are operating. And so, parking is very challenging. And then a loading dock, there really aren’t any buildings that have loading docks on the corridor to bring the grocery pallets in and out. So, last year we stumbled on a gem that came up for sale on the market. There was an artist who had been using it as his studio, his artist design studio, for the last 20 years, and he was moving towards retirement and put his property up for sale. That property is about 3400ft² across two stories. So, it’s a much larger run.

Eve: [00:15:24] Huge!

Adriana: [00:15:24] Yeah, it’s a much larger run than the average building on the corridor for us. And so, we were very excited to bring that in. Just right after we brought it in and we found a local operator. So, this gentleman grew up in the neighborhood, has been operating his business in the neighborhood, doing food imports and exports and is going to move into the grocery space and then is also going to operate a commercial kitchen on the second story, a shared commercial kitchen. And so, we’re really, really excited for that project.

Eve: [00:15:54] That’s a great project!

Adriana: [00:15:55] Yes, it’s going to be super great. The neighborhood is excited. It’s accessible by transit, so it’s literally right outside of the train station. So, for folks who are riding the El it’s been very well accepted and regarded and welcomed by the residents. And we’re really, really excited to bring it online, hopefully by winter of this year.

Eve: [00:16:14] Sounds terrific. So how do you engage community members and stakeholders, so they know what you’re doing and become part of this trust?

Adriana: [00:16:23] There’s a couple of ways. Traditional organizing and engagement, right? Going out, canvassing, being present at events, making sure that we’re visible. All of our staff at this point, right when we’re out on the corridor with our swag, with our KCT-shirts, everyone’s like, oh, hi! Like, you know, we’re very known just from walking so much up and down the corridor. That’s one way. The other way is through our partners. So, engaging in partnership and collaboration as much as we can, right? We’re a very small entity in comparison to some of the larger nonprofits that exist in the space and so really leveraging and pulling shared resources together for events and for activities and programming has been really, really helpful. And then the last way I’ll say, has really been around policy advocacy. Right? So, in addition to thinking about perpetual ownership, we’re also thinking about public policy and systems change. And what does it mean? Or what does it look like to have residents engaged and small business owners engaged in that work? And so, we do have a full-time organizer on staff who’s leading our engagement work, but also doing our policy advocacy. And so, we’ve engaged with a lot of folks in that way, because people want to see change in the neighborhood. And they, you know, we all have a vision for what we want. And so, bringing those folks at City Hall to do testimony and meeting with legislators and council, and having them hear directly from the folks on the ground. So, I think through those kinds of three different avenues, we’ve been pretty successful in engaging with folks.

Eve: [00:17:39] So that was going to be my next question. Is the city of Philadelphia supportive of the trust and its goals and how?

Adriana: [00:17:45] Yeah, I think the city has been supportive. I was invited to be on the Mayor’s Transition Committee for Economic Development this past winter. I think we have a strong presence in the city of Philadelphia as a new and innovative model. What I think we haven’t quite cracked the code on is determining funding and land, so.

Eve: [00:18:03] I was going to ask about that.

Adriana: [00:18:04] City of Philadelphia has a land bank and so we are working with our local councilwoman who was recently elected. So, a new rep to determine how we can move forward with doing that, with unlocking some of these properties that sit within the target boundaries of where we’re currently doing acquisition, and then trying to learn more and be in the right spaces and places with the right people at the right time to determine how we can unlock some funding from the city of Philadelphia. And I think we’re getting closer every day but, you know, when we look at other cities across the country, you know, some cities are making multi-million-dollar investments into innovative trust structures. That has not yet been the case in Philadelphia. But I am very, very hopeful that we can unlock some land and some dollars to make this work possible.

Eve: [00:18:46] So is the Kensington Corridor Trust unique in Philly or anywhere?

Adriana: [00:18:53] It is, yeah. So, it’s the only one in Philly and then the other folks who are using the same legal infrastructure and also building a neighborhood trust structure are based in Kansas City, Missouri. And we both formed around the same time. They’re very focused on the residential aspect, we’re more focused on the commercial aspect but we use the same legal infrastructure and back end and we’re both neighborhood trust models. But, outside of us, to our knowledge, there are no others.

Eve: [00:19:16] Should there be more of you?

Adriana: [00:19:18] I think so. We at KCT have been very cautious. Just to say, let us make sure that this is sustainable first, before we begin to replicate. We don’t think that neighborhoods are stomping grounds for experiments. So, we want to make sure that this is viable and sustainable and that it has impact, and that it can be governed locally and that you can, you know, secure sufficient funding and land to make it work long term. I think we’re still maybe another year or 2 or 3 out from that determination. But we have conversations with communities across the United States and some international conversations as well, regularly. Just like, what would it look like to replicate this? What does it look like to scale it in Philadelphia? I think folks are very interested in the model and particularly in the governance and the financing of the work. And so, we, on our website, we have a document center where we share all of our learnings, and we’re dropping reports on a fairly regular basis. We define common terms, because it’s not just there for folks who are looking at our model externally, it’s also there for residents who want to understand and learn more about the work as well. And so we try to make sure that it’s very transparent and that it’s easy to access and to grasp.

Eve: [00:20:23] Do you think, is there another neighborhood in Philly that you think is ripe for a trust like this? I’m sure you’ve thought about it.

Adriana: [00:20:32] Yeah. And there’s several that have approached us. I think there are some that could be ready. I think one of the things, I think there are two things. One is, it should come from the residents. Right? So, it should really come from the folks who are there who have lived there historically, those legacy residents and those legacy business owners wanting to preserve and protect for themselves. So that’s part one. So, you have to have like a ready neighborhood. Those folks are ready to go. The second part is the financing of the model. Right? Like going out to national foundations and securing these program-related investments is not light work. And it’s not for the light-hearted. And so, you know, having folks who are ready and prepared to do that work and to make those pitches and to have those very financial conversations alongside, you know, the societal impact conversations. So, yeah, there’s a couple that come to mind, but I wouldn’t name one specifically now. I would say that there are some who are already exploring and thinking about it. And, you know, we want to be of support wherever we can. To all of those folks.

Eve: [00:21:30] You mentioned that you have a small team. How big is your team?

Adriana: [00:21:34] There are four of us as of January 2nd.

Eve: [00:21:37] Small but mighty, right?

Adriana: [00:21:39] Small but mighty. So, it’s myself, the construction project manager, the lead community organizer, and then we just brought on a part-time operations assistant in January, just to give us a little bit of extra capacity boost for everybody to get their projects across the line.

Eve: [00:21:52] And how big were you when you started? Just you?

Adriana: [00:21:57] One. Just me. For the first two years, it was just me.

Eve: [00:22:00] That’s pretty decent growth, right?

Adriana: [00:22:02] Yes, I think so. Slowly but surely.

Eve: [00:22:06] So what excites you most about the work you are doing?

Adriana: [00:22:11] Mhm. Really the community-led aspect, right. So, I’m an organizer by background. I have a public policy background, which is what attracted me to this work and to exploring the development of the neighborhood trust model. But to me, there’s nothing more exciting than folks leading the way forward, the folks who are most closely impacted, the folks who know the best solutions to the work, and to the issues and the challenges. That’s the best part. Like, our governance is amazing and bar none. I love working with the residents and small business owners to design and to determine what it is that they want done, and for our team to just go and implement it and serve as the stewards.

Eve: [00:22:44] I hope people are listening to this because a lot of people are very scared of that.

Adriana: [00:22:48] Oh no, I mean, it’s my favorite part. It really is.

Eve: [00:22:52] But I mean, working with people who don’t necessarily have the skills or understanding around real estate development, that can be really tough.

Adriana: [00:23:01] Yeah, it can be, 100%. And we’re so grateful to have funders that have supported us in doing governance education. So, we’ve brought in outside facilitators to have discussions with our boards around the different issues where they felt they could have some skill strengthening. Right.? So, thinking about how to make a real estate deal, right? When do you know something is the right acquisition? How do you, you know, put together your portfolio. But even other things like marketing and communications and thinking about social media and press hits, you know. Development and fundraising, making a pitch, right, like all of those things, if you haven’t served on a board before or if this isn’t an area where you’ve had space.

Eve: [00:23:36] It’s all new. It’s all new.

Adriana: [00:23:38] All new, right? And so, making sure that folks feel like they are equipped to support our staff team, but also each other and the broader neighborhood in executing the work. But, yeah, I think so, oftentimes, particularly in the nonprofit sector, we feel like, you know, you’ve got to have the attorney, the HR consultant, you’ve got to have a finance expert to be your treasurer. Right? Like all of these things are necessary. And it’s just so untrue. You can bring in those external supports to make sure that the folks who are closest to the works are the decision makers, but that they have expertise at their side when they’re making those decisions.

Eve: [00:24:10] So you don’t have any requirements for skills for the governance board?

Adriana: [00:24:14] We do not. Open applications every year. The only requirement is that you live in or have a small business in the neighborhood. Outside of that, there are no formal requirements for skill sets or education or anything else.

Eve: [00:24:28] So looking ahead ten years, what potential do you think trusts like this hold?

Adriana: [00:24:33] Yeah. One, I think preserving pockets of affordability. Right? The private development is coming, city development is coming. Individualized donor development is coming. And so, I think, you know, making sure that the folks who have lived in a certain space in place historically can afford to continue doing so. And so, reducing some displacement is my hope. I think scaling is definitely viable in ten years. Right? So, thinking not just only in Philly, but also in other places and spaces, and acknowledging too that the model is not a one size fits all, right? You can use this legal infrastructure in back end, and you can think about neighborhood-led governance and work on residential. Right? Strictly residential, as they’re doing, you know, trust neighborhoods out in Kansas City, Missouri. Or, you know, potentially other uses. Maybe you use it just for green spaces, right? Like we’ve been able to integrate. Right? So, we’re working on residential and commercial and green space. But you know, you could have focuses based on the needs of any specific neighborhood or place at any given time. And then my hope is that ten years from now, this really won’t be seen as innovative or othered, right? It’ll be very, this is normal, right? Just when you think about community land trust.

Eve: [00:25:36] Mainstream.

Adriana: [00:25:38] Mainstream, right? When community land trusts first emerged, everyone was like, what is this? This is not a thing. This won’t be viable. And look now, right, there are hundreds of commercial land trusts, but maybe thousands. I don’t know the statistics, but there are many across the United States, several of which are in Philadelphia and have been very successful at preserving green space and doing affordable housing construction. And so, you know, I think getting it less from like this shiny new thing into like a this is a place where we can invest, and we know it’s a sure investment and there’s space to have real impact in neighborhoods through this work.

Eve: [00:26:08] And it will unlock financing, because financing is definitely mainstream, right?

Adriana: [00:26:14] 100%. The way that we define risk is very mainstream.

Eve: [00:26:17] Very mainstream. So one final question for you. What keeps you up at night?

Adriana: [00:26:22] Oh! Moving too slow.

Eve: [00:26:24] Interesting.

Adriana: [00:26:25] Like are we moving too slow? That question of just like, what is the right pace and scale in order to make sure that there is sufficient impact, and you are preserving enough affordability, meanwhile, making sure that there is sufficient external investment to take, you know, care of some of these larger things that folks want to have taken care of, like crime and education and public transportation. Right? Like all of these societal benefits that we have at large, it’s like a little bit of a coin toss, almost, right? Like if you have too much investment in one place, you have really active displacement of low-income folks. And if you have so much preservation of affordability, it makes it difficult to have investment, perhaps, in some of these other areas. So, yeah, sometimes I’m just like worried about the pace and the scale at which we’re doing the work. We’re acquiring about five properties a year right now, which when I say that to some folks, they’re like, that’s amazing. I’m like, yeah, but remember, they’re like 2200ft² apiece. There’s over 600 of them on this 1.4-mile-long corridor. So if I buy five a year, we’re like, really, the impact, you know, this feels fairly small. It’s very impactful for the folks who take on those spaces as commercial tenants or as residential tenants. But in the larger scheme of things, like I’d love to see us acquiring more each year, bringing more properties online each year, attracting more businesses each year, and making sure that there’s more residential affordability annually as well. So yeah, just like pace and time, I always feel like I’m fighting some clock, some like non-affordable clock.

Eve: [00:27:50] Well, it sounds to me like you’re going gangbusters and I expect in a year or two you’re going to be buying 20 properties a year. I don’t expect less from you okay.

Adriana: [00:28:01] OK then, the pressure is on!

Eve: [00:28:03] So thank you very much for joining me. And I can’t wait to see what else you do.

Adriana: [00:28:08] Thank you. Thanks for having me.

Eve: [00:28:28] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. Please support this podcast and all the great work my guests do by sharing it with others, posting about it on social media, or leaving a rating and a review. To catch all the latest from me, you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing, head on over to smallchange.co where I spend most of my time. A special thanks to David Allardice for his excellent editing of this podcast and original music. And a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy Adriana Abizadeh