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For the love of cities.

May 8, 2024

Enrique Penalosa is an internationally respected urban thinker, who, as Mayor of Bogota in two non-consecutive terms, profoundly transformed his city from one with neither bearings, nor self-esteem into an international model in several areas. As adviser and lecturer, he has influenced policies in many cities throughout the world. 

Among his achievements is the creation of TransMilenio, the world’s best BRT (Bus based mass transit), which today moves 2.4 million passengers daily, inspired by the Curitiba model but much improved in capacity and speed, which has served as a model to hundreds of cities. Currently its lines are being extended by 61%. He contracted the first Metro line in Bogota which is under construction. He also created an extensive bicycle network when only a few northern European cities had one, greenways, hundreds of parks, formidable sports and cultural centers and large libraries, 67 schools, 35 of which managed by a successful private-public scheme and high quality urban development projects for more than 500,000 residents and a radical redevelopment of 33 hectares of the center of Bogota, previously controlled by drug dealers and crime which required demolishing more than 1200 buildings occupying 32 hectares, a few blocks from the heart of Colombia´s institutional heart, including the Presidential house.   

His advisory work concentrates on urban mobility, quality of life, competitiveness, equity and the leadership required to turn visions into realities.

Penalosa has lectured in hundreds of cities and in many of the world´s most important universities. He has advised local and national governments in Asia, Africa, Australia, Latin America and the United States.

He is a member of the Advisory Board of AMALI (African Mayoral Leadership Initiative), Fellow of the Institute for Urban Research of the University of Pennsylvania. For over a decade he was President of the Board of New York´s ITDP (Institute for Transportation and Development Policy) of New York; member of the London School of Economics´ Cities Program Advisory Board. He was a member of the Commission for the Reinvention of Transport of the New York Metropolitan Transit Authority created by the New York Governor Cuomo.

His book Equality and the City was recently published by The University of Pennsylvania; in Spanish it was published Villegas Editores and in Portuguese by the IPP (Instituto Pereira Passos) of Rio de Janeiro. 

Penalosa has been included in Planetizen´s list of The Most Influential Urbanists, Past and Present, the most recent time in July 2023. He was also one of ¨15 Thought Leaders in Sustainable City Development¨ selected by Identity Review July 2023. He has been awarded important international recognitions such as the Stockholm Challenge; the Gothenburg Sustainability Prize; the 2018 Edmund N. Bacon Award, the highest tribute of The Center for Design and Architecture of Philadelphia, given to him because of ¨the world-wide influence his pioneering initiatives have had on public transportation, infrastructure investment, and public space, including in cities such as Philadelphia and New York City¨. For Penalosa´s work Bogota was awarded the Golden Lion of the Venice Biennale.

Penalosa has a BA in Economics and History from Duke University, a Degree in Government from the IIAP (now fused with ENA) in France and a DESS in Public Administration from the University of Paris 2 Pantheon-Assas. He was Dean of Management at Externado University in Bogota and a Visiting Scholar at New York University.

Penalosa´s TED Talk has nearly one million views, his X account in Spanish has more than 2 million followers.

Read the podcast transcript here

Eve Picker: [00:00:13] 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: [00:00:49] This is a long one, but I couldn’t help myself. Enrique Penalosa is an exuberant lover of cities, equitable cities. He served as mayor of Bogota, Colombia, not once but twice, profoundly transforming his city from one with no self-esteem into an international model. As mayor, Enrique launched TransMilenio, a bus mass transit system which today moves 2.4 million passengers daily. He also built an extensive bicycle network at a time when only a few northern European cities had one, along with greenways, hundreds of parks, sports and cultural centers, large libraries, 67 schools, and a radical 33-hectare redevelopment in the heart of Bogota previously controlled by drug dealers. This required demolishing more than 1200 buildings. Recently he published a new book called Equality and the City. Look for it on Amazon. Of course, the accolades are too numerous to mention here. Enrique’s work is considered significant and influential by many, and the list of awards is long. There’s a lot to learn here. More than an hour’s worth of podcasting can hold.

Eve: [00:02:21] Good morning. I’m really delighted to have you on my show, Enrique. I’ve been a huge fan of yours for a very long time.

Enrique Penalosa: [00:02:28] Thank you very much, Eve. Thank you. You’re really generous, and it’s a great pleasure to be with you.

Eve: [00:02:33] I know there have been many, many accolades. You’re one of the most influential urbanists, and you have a brand new book called Equality in the City. But I wanted to start with a question: why and how did cities come to take center stage in your professional life?

Enrique: [00:02:50] Oh, that’s an interesting question. I somehow talk about this in my book. I am from Colombia, and this, of course, conditions everything. My father was into public service, and he was the head of the Rural Land Reform Institute and the, and so I was as most middle, upper middle-class children in a developing country, in a private school. And I used to get beat up because they were this, institute was doing land reform, taking, forcefully buying land to distribute to small farmers. And so, since very early, I was obsessed with equality with, I was convinced that socialism was the solution, as many in my generation. It was that time around late 60s, 70s and I went to Duke University and there I really was very interested in studying all about this. And I realized socialism was a failure. It was both a failure for economic development, which for me was extremely important and sadly, also for constructing equality, because it was extremely hierarchical system with all kinds of privileges for the bureaucracy and all that. But at that time, when I was in college, my father became secretary general of the United Nations Conference on Human Settlements – Habitat in Vancouver. And he had always already been involved in in Bogota, he had been in city council, and at that time I began to be more and more interested in cities and less and less interested in the socialism, which I as I said, I realized it was a failure. And at that time my city was growing like 4% per year. Bogota. And I realized that maybe it was much more important to define the way cities would be built and even economic development, because economic development would come sooner or later, maybe 50 years later, 50 years earlier. But if cities were not done right, it was very difficult to correct them. If we were able to save land for a park as the city was growing or exploding, almost, this hectare or ten hectares or 100 hectares would make people happier for hundreds of years. Thousands.

Eve: [00:05:21] New York City is a really great example of that, with the fabulous park in the middle. That was very visionary. Yeah.

Enrique: [00:05:27] New York City, I mentioned this, and I work a lot with Africa recently, New York City created Central Park in 1860, when New York City had less than 1 million inhabitants and had an income per capita, very similar to some developing countries today. So, if we are able to save land for a park, it will make life happier for millions for hundreds of years. If we are not able to save land for that park and cities built over, it’s almost impossible to demolish, for example, the 300 hectares that Central Park has later. Demolish 300 hectares of city to create a park of that size. So I became more and more interested in cities. Obsessed. Later I did graduate school in Paris and, of course I was always very poor. When I was at Duke, I was on a soccer scholarship. And in Paris I worked a lot. I was a very low. I mean, I realized I was poor many years later because I was extremely happy. The city gave me everything I needed. And I realized how a great city can make life happy, even if you don’t have wealth or anything. I mean, it’s a, so I became obsessed with cities since then. When I majored in university, I studied economics and history and public administration and all that, but I never actually studied anything urban per se. But all my life that’s what I have worked on.

Eve: [00:07:02] Interesting. So, I have to ask you, what city do you think does that best today, makes people happy?

Enrique: [00:07:10] Oh.

Eve: [00:07:11] I wasn’t going to ask that question, but I have some of my own answers.

Enrique: [00:07:15] That’s an interesting city because I love all cities, you know, all of them have some charm and some great things. Clearly, today for everybody what is a great city is one that is good to be on foot for pedestrians. That’s the way. So, with that criteria, which city? What makes it a great city for pedestrians and for, also, I would add, a great city for the most vulnerable citizens, for the elderly, for the poor, for the children. And so the first thing has to have is great pedestrian qualities. And pedestrian quality means great sidewalks, of course, but also destinations, places to go to and people that you see in the sidewalks. We need to see people, to see people. I mean, we are pedestrians. We are walking animals. We need to walk to be happy. Just as birds need to fly or deer need to run, or fish need to swim. We need to walk not just to survive, but to be happy. We could survive inside an apartment all our life, but cities that are great for walking sometimes because they are very great sidewalks places such as I love New York, despite the fact that I think it’s a little too dirty recently.

Enrique: [00:08:35] And I think the occupations of public pedestrian space by by informal vendors really is getting out of hand. And this crazy, how is it that they put in the buildings the, andamios. Scaffolding all over the place that lasts for years. I mean, but despite that, I love New York because he’s so full of life and he’s so it’s so free and it has beautiful places like the riverfront and anyway I love, I mean I love all cities. And it seems very spontaneous, you know, spontaneous. So, it’s not like, and they are, everybody’s like doing their own thing and doing things. There are cities where you, I think you can be there and just simply lead a contemplative life. But others, if somehow brought you to do things, to do things, to be active, to create, to do, to do. Other cities, you can just, you know, go to the cafe, relax and that’s fine. But I like this energy New York has.

Eve: [00:09:45] You like active cities. Active cities, yeah.

Enrique: [00:09:47] Somehow brought you to be active and to create and to do things. But I mean, all cities are wonderful. I mean, all for different reasons. Mexico City, my city I like, of course. I mean, I love all cities.

Eve: [00:10:03] Yes. So, let’s move on. You had two terms as mayor of your city, Bogota, Colombia, and they’re often cited as transformative for the city. So, what led you to become mayor? I mean, I hear the love of cities, but becoming mayor is really another big step, right?

Enrique: [00:10:20] Yes. I was obsessed with the public service somehow. Always. This is why, even though it’s an interesting thing, I was born in the United States, because, but I was there for only one month, as my accent shows. When I was a kid, my family went back to when I was 15, to my father was working at the Inter-American development Bank and even though then, I was at Duke University, a very good university in the US, and I had a US nationality because I’ve been born there in one of these rare trips to Colombia, I renounced my US citizenship because, since then I was interested in politics. In politics and my father had been a public servant, but not elected. And he was attacked and all this and had many, and I remember always an uncle of mine who said, look, uh, your father was attacked so dirtily because he had neither money nor votes. So, I said I would not have money, but I will get votes. What gives you power when you are, and what makes you be able to do change when in government is to have votes. The difference between the one who is elected and the one who is appointed is like the difference between the owner of the company and the manager.

Enrique: [00:11:46] If you do, if you are appointed and you do anything that creates a conflict, you are fired. So, I always thought I wanted to be elected, and that’s why I said maybe to have a US nationality may become a handicap in the future. And I was obsessed with doing things for cities. More and more, the more I studied since I was in the middle of college, I was obsessed with studying and reading, and I lived in Paris, and I always dreamt of doing things that were very obvious. And I dreamt, for example, of bikeways much before, I mean, they were always bikeways in the Netherlands and Denmark, but there were no bikeways in Paris when I lived there, not one single bikeway. And in Bogota there were no sidewalks, very few almost. There was not one decent sidewalk in the city, in Colombia. And I always also dreamt that the rail systems were too expensive for our possibilities, that we needed to organize some kind of efficient bus-based mass transit. And, I mean, I was obsessed since then, and so I wanted to become mayor. I think I was a good mayor, relatively good. But I was not a good politician.

Eve: [00:12:58] We had a mayor like that in Pittsburgh. He was a fabulous mayor, but he was not a good politician.

Enrique: [00:13:03] Yes, yes, yes. I mean, I have lost like 7 elections in my life. And that sounds very quickly. When I said you, I lost seven elections. But in life, actually, it is almost one year of work every time, so like,

Eve: [00:13:14] Oh yeah.

Enrique: [00:13:14] You could say it’s lost seven, seven years of life for elections that were not successful. But to make the story short, in my life, I was, after a big effort, I was elected, but I wanted to be mayor because I wanted to do things. I had a whole vision in my mind of what I wanted to do. I did not want to be mayor, but to do as mayor.

Eve: [00:13:43] Yes, I get it. I mean, I’ve read that even the way you became elected, you didn’t really rely on a party machine. You relied on meeting with people one at a time, right? It was all about connecting with the people.

Enrique: [00:13:55] That’s right. Eve. When I started, Colombian politics was only machinery, very powerful machineries, organizations and a lot of money distributed to local leaders. And I did something that was completely new at that time. It’s very obvious. And I had nothing creative now in the world. It’s very easy to start to distribute little leaflets in the street, which nobody had done at that time. Even I did some interesting things that were different. For example, the first politician had a smiling picture. At that time, all of the pictures were more like, great…

Eve: [00:14:34] Powerful. Yes.

Enrique: [00:14:35] And I also put a resume and anyway, so I was able and going to homes one by one. Anyway, I was elected. I was able to be elected first to Congress, like this. And a few years later to mayor with no party, as an independent really.

Eve: [00:14:57] Independent. Interesting. So, describe Bogota as a city when you took office and some of the challenges you faced.

Enrique: [00:15:06] That’s interesting because Bogota, as most developing cities, well, Bogota, our cities have lacked a lot of planning. And even when they did plans, they weren’t very nice plans. Architects draw and they don’t, are not implemented. So a few things were a few roads, a few main big roads. But for example, more than 40% of Bogota when I was first elected in ’97, had informal origin, had been of informal origin. And since I had worked in the past in things with the city, for example, I was Vice President of this Bogota water company. I had really worked closely, and I knew very well, and I was very obsessed with this informal organization, how lower income people were not able to get legal land, well-located legal land. So were they forced to the steep hills around the city, steep mountains, or flooding zones near the river and so with the water company we used to we’re able to work a lot in the legalization of this to bring water and sewage. And so, this is one thing Bogota had. Another thing Bogota did not have sidewalks, practically not one. I would say they were not one. They had been a few decades before a few sidewalks built or some sidewalks, but the cars simply were parking on top of them whenever they had been built. And and many places they had not even been built at all. So, it was horrible for pedestrians and of course Colombia has always been a very much of a bicycling country. It’s the only developing country, the country in the developing world that has successful cyclists at the world level. Some Colombians have won.

Eve: [00:17:00] That’s interesting. Yeah.

Enrique: [00:17:02] There is no other developing country in the world. I mean, you would think this is not an expensive sport. It’s not like yachting, but nevertheless, for some reason, Colombia is the only developing country that is successful. For example, Colombian won the tour de France and Colombians have won the tour of Spain and of Italy.

Eve: [00:17:22] Oh wow! I didn’t know that. Yeah.

Enrique: [00:17:25] But there were no bicycling for work. For zero for transportation. It was like a sports thing. And of course, only 10% of the people have cars, but they were the richest and most powerful people in the city, and they think they could park in the sidewalks or two. And they thought the bicyclists were a nuisance if there were any. They were nobody used to go to work by bicycle. There were almost no parks, and the few parks were completely abandoned and not in a good shape. So, this is the environment I found, more or less. And of course, the traffic jams were worse and worse, and there was not a decent public transportation system. Of course, there was not a metro and there was not a, the bus system was completely chaotic. There were thousands and thousands of buses that were almost individually owned, racing against each other, people hanging from the doors. And sometimes since they were fighting for passengers, they would block the another ones and the other bus the driver would get out with a cudgel and break the windows of the other bus. Even if the other bus was full of passengers, it was like the Wild West. And that’s the city.

Eve: [00:18:45] It was. It was like the wild… Just just backing up a little bit, how many people live in Bogota?

Enrique: [00:18:51] Now we have like 8 million inhabitants in Bogota.

Eve: [00:18:55] It’s a big city. OK.

Enrique: [00:18:56] And also in the surrounding municipalities, like a little bit about a million, 200 more or something like that.

Eve: [00:19:02] Okay, okay. And then it was also a lot of poverty and drug activity and altogether not a very healthy city by the sounds of it.

Enrique: [00:19:12] There was a lot of poverty because we were a developing city that was very poor. And we are still I mean, so far, for example, Colombians income per capita today is around $6,000. And the United States income per capita is like $80,000 or something like that. So it would take us if we do very well with very high economic growth rates, it would take us maybe, even if we have very high economic growth rates, like, for example, if we if we grow at 3 or 4% per capita annually, it would take us more than 150 years to reach today’s income per capita of the United States, not to catch up to the United States, but to reach where the United States is today.

Eve: [00:19:53] Wow!

Enrique: [00:19:54] We have advanced a lot. Colombia has progressed a lot and we have reduced poverty very much. We have made huge advances in education and all that, but we are still at poverty. But of course, we had much more poverty 25 years ago when I first became mayor.

Eve: [00:20:10] So what did you tackle first?

Enrique: [00:20:13] One thing before I go into that, I’d like to say that this experience in urbanization, urbanization is fascinating because it’s gigantic. I mean, when I became mayor, Bogota’s population would double every 16 years or so, and the size of the city grows much more than proportional to population, because as a society gets richer, there are more buildings that are different from housing. For example, when a society is very poor, barely there are housing buildings. As societies get richer, there are shops, there are factories, there are offices, there are universities. And one thing that is very interesting, this is not just history. What we are talking about is not history because this is the challenge in Africa. I think the most important challenge in the world today is African urbanization. Today in Africa, there are more than, in sub-Saharan Africa, there are more than 250 million people who live in slums. Horrible poverty, slums with no electricity, no water, no sewage. Different degrees of poverty, but all of them horrible. And if these things continue the way as they are, they would have more than 500 million more people living in slums in 20 years. African urban population, it grows by the amount of the US population, about 320 million or something, every 15 years or so. So every 15 years, Africa has to build the amount of housing that the whole US has today every 15 or 16 years, you know. And they are extremely poor, not only housing the sewage, the water…

Speaker4: [00:22:03] The infrastructure.

Enrique: [00:22:04] The schools, the roads, they’re going to have giant cities, cities that maybe like Lagos, cities that maybe 60 million inhabitants or more. So, it is extremely important not only for Africa but for the world to do good cities in Africa. Even if at first they do not have all the water or sewage, but to leave enough space for roads, for parks, for public transport, because otherwise this is going to be horrible for the environment and horrible suffering for people. And this is even a problem for the security of the world, because this is going to be a completely inhuman situation that can have unexpected consequences. So, what I’m saying is that my experience in Latin America is some, a few decades ahead of Africa in economic development and urbanization but this is still a big challenge for the world. This is not just history.

Eve: [00:23:10] I suppose I’m wondering how you convince people. Because Bogota Ciclovia is a really amazing, iconic symbol of the city. I understand that now every Sunday, 75 miles of roads are shut down and given over to people to enjoy, almost like a Millennial Park, right?

Enrique: [00:23:30] Exactly. This is a beautiful thing that we have in Colombia.

Eve: [00:23:35] So I actually was so inspired by this, I co-founded an open street in Pittsburgh, Pennsylvania, and I can’t tell you how hard it was to get one mile of it because everyone complained about, you know, the street in front of their shop that someone couldn’t park there and shop there that day. It was exhausting because people don’t understand the potential that that has. And I don’t know how you get to 75 miles, like, this is huge! You know, how do you convince people that they have to be fabulous cities in Africa or we’re all going to suffer? It’s, most people don’t want to think about it.

Enrique: [00:24:20] Yes. There are several aspects of this. This is a fascinating thing. It all has to do with equality, which is the theme of my book in a certain way, how cities can construct equity so that a good city is one place where nobody should feel inferior or excluded. A good city is also one where, if all citizens are equal, then public good prevails over private interest, you know? So, in developing countries, in Africa or even in Colombia and most, almost there is not one single developing country where more than 50% of the people have cars. Always developing country, almost by definition, I would say, is that it’s a developing city is one where less than 50% of the people have cars. And the one thing we should remember is that if we are all equal, as all democracies say, all constitutions state that all citizens are equal, then a citizen on a $100 bicycle is equally important to one on $100,000 car. And they have, or a citizen that is walking or is on a bicycle has a right to the same amount of road space that a citizen that has goes in a luxury car. The same amount. There is, the person in the car usually think they have a right to more space than the people in the bicycle or so, and they honk at the people in the bicycle.

Eve: [00:25:53] Oh yeah.

Enrique: [00:25:56] So, so this is very beautiful, what we have achieved in in Bogota because,I mean, it was created before, but it has been expanding, actually, when my brother was the head of the Sports and Parks and Recreation with another mayor, he expanded a lot and I expanded it a lot. So, we get, on a sunny day, we may get, a million and a half people out in the street. And one thing that is important is that Bogota is a very compact city, very dense. We have more than 220 inhabitants per hectare. So, it’s a beautiful ritual of human beings reconquering this city for themselves. One thing that I did that is interesting too, is that I held a referendum for people to vote, and one day a year a work weekday, we have a car free day. So, this whole 8 million inhabitant city has no cars, no cars at all, during the whole day. Everybody has to use public transport or bicycles. We have taxis but no private cars. And so, it’s an interesting exercise, not only in terms of the environment or even mobility, but of social integration. One of the most crucial things that we need, especially in unequal, in more unequal societies like ours, is that all citizens should meet as equals. For example, someone who owns an apartment in Fifth Avenue in front of Central Park in New York.

Enrique: [00:27:38] He may meet the doorman of the building, but they meet separated by hierarchies. One is the owner of the apartment, and the other one is the employee, low paid employee. But if they meet in the sidewalk or if they meet in the park, they meet in a completely different way. They meet as equals or if they meet in public transport. So, in a great city, people meet as equals. This is not enough for, but this is one of the kinds of equality that a good city can construct. And so in these kind of exercises, if we get people to meet together, for example, if two people meet in bicycles in a traffic light, maybe one bicycle is a $10,000 and the other one is $100, but it doesn’t matter. They both meet as fragile humans, vulnerable. They see each other. They have the same right to the street. They have the same right to the space. It’s very different than if somebody is in a crowded public transport, and the other one is in a luxury car or something. In this there is a proximity, there is a vulnerability. And so, these exercises that we do in Bogota, I think they are interesting. And they are good for the environment, they are good for mobility, and they are good for social integration or construction of some kind of unconscious equity.

Eve: [00:29:11] So you as mayor, you focused on mobility, not just bicycles, right? I read about the TransMilenio, the first metro line, a huge bicycle network, greenways. Do you want to tell us a little about all of that?

Enrique: [00:29:26] Thank you very much, Eve. Yes. For example, the TransMilenio, the BRT. I have even written about how we should organize a bus system that was different than the one I described earlier, with exclusive lanes for buses and a system that, where people would have prepaid cards so they would not take time to board the bus. And then I found the Curitiba system. Mayor Jaime Lerner in Curitiba had done a wonderful, in Brazil, Curitiba had done a wonderful system. But Curitiba was a small city. The system had been created like in 1973 or 4. And they only had 500,000 inhabitants, at that time. It did not have much impact. But then to me, I marvelled because I said, this is the solution. This is perfect because rail systems are too expensive. I mean, subways are wonderful. But they cost a huge amount of money. It’s extremely expensive to build an extremely expensive to operate. And so, we created a BRT system and actually we were innovative even in that we gave a name to it. You know, one of the things that I, I knew from, since you tell me you are in Pittsburgh, one of the first places in the world where they did some exclusive lanes for buses was Pittsburgh.

Eve: [00:30:50] Oh yeah. I use it. I used it a couple of times a week. I live downtown, and I have an office in East Liberty, a building in East Liberty, and it takes me seven minutes on the busway. And if I drive, it’s 30 minutes.

Enrique: [00:31:03] Exactly. You know, so…

Eve: [00:31:05] It’s Fantastic. Fantastic.

Enrique: [00:31:07] Well, I’m very happy that you say that, because I like to tell you and to tell the Pittsburgh people that one of the things that influenced me to create TransMilenio was the Pittsburgh project, because that’s before TransMilenio. I found about it. And these things motivated me and inspired me.

Eve: [00:31:23] It’s very limited. I wish they would expand it. They’re doing a line now from downtown to Oakland, which is the University Center, but they’ve been talking about it for 30 years, you know, takes a very long time to do things.

Enrique: [00:31:38] This brings us to the fact that solutions to mobility, more than an issue of money, are an issue of equity and political decision. This is very obvious. Some things, sometimes for us, they are before our noses, and we don’t see them. You know, for example, only about 100 years ago or a little bit more, women could not vote, you know, and it was not fascist who thought women should not vote. I mean, normal people, good people thought that this was good. That was normal, you know? And today we see this is completely mad. Or how about only about 70 years ago or so that, even in the United States that the African Americans had to give their seat to the whites or things like this, that today we think is is mad. But at that time, I’m sure many people who were good people thought this was normal. And so, in the same time, sometimes inequalities before our noses, for example, I believe it’s completely crazy that we have a bus with 50 people and then you have the give the same space that you give to a car with one, you know. This is not democratic. Besides, it’s not technically intelligent because actually a BRT is the most efficient way to use scarce road space. Since we are going to have buses, a BRT is the way that you use the least energy, the way that you use the least amount of buses, the way that you use the least amount of road space. Anyway, we created TransMilenio, which became a model to hundreds of cities around the world. It’s a system that has an amazing capacity. It moves more people per kilometer hour anyway you want to measure it than almost all subways in the world.

Eve: [00:33:28] Wow.

Enrique: [00:33:28] We move more people, passengers, our direction and also within Europe. There is only one line in New York subway that moves more than us and that’s the Green Line. But that’s only because it’s two lines actually: the express line and the local one.

Eve: [00:33:43] Right.

Enrique: [00:33:44] But our system moves more passengers per kilometer than practically even all the New York subway lines. And of course, it costs 15 times less. And this is, I think, you need more of this in many cities in the US, it’s the only way to be able to give this kind of service, even to suburbs, because this can have more flexibility. Anyway, we created this, this system. It has 114km today. And it moves a 2.4 million passengers per day.

Eve: [00:34:14] Wow.

Enrique: [00:34:15] And it’s being expanded by 60%. Now, at this time. So, we should reach easily more than 3.2 million passengers per day or something like this. And now, of course, most buses are bi-articulated buses with gas fuel. But soon all of them will be electric, of course, as well. So, and I’m sure very soon in ten years or so, they will also be driverless. So actually, what makes a mass transit system is not the fact that it has metal wheels or rubber wheels, but the fact that it has exclusive right-of-way. That’s what creates the the mass transit, the capacity, the speed. We don’t have time to go into these boring technical details. But what is interesting also is the democratic symbol it represents, because I have seen everybody in the world wants subways.

Eve: [00:35:14] Yes.

Enrique: [00:35:14] Upper income people all over the world, subways, preferably underground. So, they don’t even have to see the low income people that go in them. You know, in developing countries, I mean, this is not the case in London or in Paris or in New York, but in developing countries, all upper income people want subways, but they have not the slightest intention of using them. It has not crossed their mind. You know, I am sure that if you have Mexican friends, that are most likely upper middle-class citizens, 99% of the cases, not only they don’t use this, I mean, the Mexico City subway is one of the most extensive networks in any developing city in the world. I think only Delhi and maybe another one has longer one. But the upper middle class or upper class even less, it’s not that they don’t use it, it’s that they have never even been to it once in their lifetime. Never.

Eve: [00:36:14] So, you know that’s not only true of them. I have a Pittsburgh born and bred friend who’s in his 50s who has never ridden a bus. Ever. I was completely shocked when he told me that.

Enrique: [00:36:27] There is something very interesting. Transport has a lot to do with status for some interesting reason. You know, this is why some people pay $500,000 for a car, which basically that’s something very similar to a $50,000 car, you know, but then it’s very cool. The fancy car. And for example, in 1940, there were trams in every city in the world with more than 100,000 inhabitants. But at that time, trams were identified with the poor, with the lower income people. They were jammed and so, buses appeared. For some interesting reason buses appear much later than cars, because at first, they were not the technologies for pneumatic tires, and the only until 1920, or even more, most streets in the world were cobblestones. So, a solid rubber tire, big vehicle on cobblestones, of course, would fall apart in a few blocks.

Eve: [00:37:27] Yes.

Enrique: [00:37:28] Jumping.

Eve: [00:37:29] Yeah.

Enrique: [00:37:30] And so buses appeared, and in 1940 buses were sexy. They were the sexy, the modern thing. And trams were identified with something for the poor. Now it’s the opposite. Now, in the US, buses are identified with the poor, with the Latin Americans, with the African Americans. And the cool thing is trams. So, everybody wants to put trams, trams. All cities think trams will revitalize the city centers and all that. And, of course, trams are nice, but basically, they do the same or less than buses and they cost a lot more. But they are sexy, you know, and so we have to make bus-based systems sexy to finish this story. We may have $100,000 car stuck in a traffic jam, and there are many traffic jams in Bogota, and the bus zooms by next to it. And even a little boy can’t make faces to the guy in the car, you know, and say, hey, they can go, you know?

Eve: [00:38:31] Yes.

Enrique: [00:38:32] So it’s a symbol of democracy in action, a BRT when the expensive cars. So, because, even if an underground subway is wonderful, it’s not as powerful symbolically as the bus that zooms next to the car, because it shows that public good prevails over private interest. Democracy is not just the fact that people vote. Democracy it also requires that if all citizens are equal, public good prevails over private interest. And this is the essence of the busway. And also, this is the essence of bikeways. When first we started to do bikeways in Bogota, when I first became mayor, we did like 250km of protected bikeway, the first time I was mayor. When there were no protected bikeways anywhere in the world except the Netherlands and Denmark and a few in Germany. There was not a meter in Paris or in New York, or in London. Maybe there were a few kilometers somewhere in California or something. But we created this network and again, it’s the equity principle is what is behind it. What we are saying is a citizen on a $100 bicycle is equally important to one on a $200,000 car. And the protected bikeway not only protects the cyclist, but it raises the social status of the cyclist. And this is very interesting. Bogota today has the highest amount of cyclists in any city in America. Amsterdam has a much higher percentage, of course, but since we are much bigger, we have more cyclists than Amsterdam.

Eve: [00:40:12] Interesting.

Enrique: [00:40:13] We have like a like a million people every day using bicycles.

Eve: [00:40:17] Your optimism about this is infectious, but I can’t wonder what sort of pushback you had because wealth is powerful, right? So even if 10% of the population don’t get it, that must have been an enormous lift.

Enrique: [00:40:32] I had a lot of enemies in politics. Yes. I mentioned I was not a good politician. Amazingly enough, I was re-elected in Bogota. There is no immediate re-election. If I had immediate re-election, I would have loved to have 2 or 3 periods. I really would have transformed Bogota. But I had to wait several years afterwards. And it was very difficult, even, for example, when I was just having the war to get cars off the sidewalks and to put bollards, for example, they made this huge calumny. Half of Colombians thinks that I made a business making bollards, you know? And there was never an investigation. There was never even a press article. Nothing. But there was so much calumny that I would say, if we make a poll, a half of, not Bogota people, Colombian people, think I made some kind of business from making bollards, or that my mother had a bollard factory or my brothers or something. Because we had to put bollards because we built a lot of sidewalks. But we did not have enough money to build the sidewalks everywhere. So we had to put bollards where we did not have money to build sidewalks. It’s always difficult. I try to do many things. I mean, again, we have to do what will improve the life of all and this implies conflicts. For example, now I talk very quickly about how we create the TransMilenio. But these people who used to have individually owned buses before TransMilenio, they were extremely powerful, extremely well-organized, and they would bring the city to a halt on a strike, and they would put the president on his knees. When I was doing TransMilenio, the President would call me once they had a strike, and he would call me all the time at home and everything to tell me to stop and to negotiate, that this was not tolerable.

Enrique: [00:42:30] Happily, in the Colombian constitution, the mayor has a lot of autonomy, and I did not have to obey the President. But I don’t say this is the kind of difficulties that you find when you are seeking the public good. And not only that, for example, many of these traditional bus operators became the contractors of the TransMilenio system, and actually it was very good business for them. But it was not easy. And, for example, there was the most exclusive club. This is the cover of my book, by the way, the cover of my book. The most exclusive country club in Colombia where the elite of the elite, maybe, I don’t know, 1500 members, the all the former President, the richest people in Colombia, I mean the most powerful people. I use eminent domain to turn the riding stables and the polo fields into a public park. And I also said that the whole golf course should become a public park as well. And this was, of course, very difficult. And, of course, all of these are battles. Battles, battles. Sometimes I have to battle the drug traffickers who control the whole area downtown. The police would not enter this area unless they were on a big operative with a hundred police, but five police would not go there because it was completely controlled by crime. And this was two blocks from the Presidential palace, from the main square in the country, in the city, from Congress, from the Supreme Court of Justice. And it was extremely difficult. And there we demolished more than 1200 buildings in my two terms and were able to create parks and housing.

Eve: [00:44:16] Wow!

Enrique: [00:44:17] But everything that you do is difficult. It’s difficult and painful.

Eve: [00:44:21] And yet you went back for a second time.

Enrique: [00:44:23] I went back, this, yeah, this thing that I just.

Eve: [00:44:25] Is there a the third one that we need to know about?

Enrique: [00:44:28] Well, I was feeling that I was already in a certain age. But then, once I see Mr. Biden and Mr. Trump as candidates, so I feel very young again.

Eve: [00:44:41] Very good. It’s only a number, right?

Enrique: [00:44:43] So I will go for another time or something.

Eve: [00:44:48] This is an amazing story. So, I want to ask you what’s the accomplishment you are most proud of?

Enrique: [00:44:54] Well, there are many things that made me extremely happy. For example, I was able to get more land for parks than all the mayors in the city in the whole history. The TransMilenio is very exciting to me because I think, again, as mobility, as symbol of democracy. There are some other things that we did that are very beautiful. For example, one of the most difficult things is to give good education to the poorest people, quality education. And we began to build some beautiful libraries, like four large, beautiful libraries, some in low-income areas. So, they are symbols that construct, like temples, that construct values, that knowledge and education are important. But also, we created beautiful schools. Beautiful, like the best private schools of the upper income people in the lowest income neighborhoods and former slums. And these beautiful, but more important than the building is that we created a system that has cost me blood politically, because I confronted the extremely powerful teacher’s union in which we said, we are going to get the best private schools and the best private university to manage these public schools in the poorest areas.

Speaker4: [00:46:09] And we have now 35 of these schools that we built, and we are able to contract with this, the best university. And the results have been amazing. Amazing. It’s really amazing that these children with the poorest people, because these schools are all in the poor, they are not in middle class areas, they are in the poorest neighborhoods. These children have academic results that are comparable to the upper income children in private schools. And of course, this has been extremely exciting. I mean, I will tell you that 99% of these children who study, they’re already graduates, or they have no idea that I, that I did this. But the teacher’s union has it very clear and it has caused me blood because they have been specialists in calumny me and to say all kinds of lies. And of course, the fact is not that all public schools are going to be managed in this way, but this creates a competition with…

Eve: [00:47:09] Equality, yeah.

Enrique: [00:47:10] Exactly, a model. So, we have to understand why these children in these schools, why these schools work so much better, so much, amazingly much better than the other public school that is managed by the traditional public union style only a few blocks away. And it’s not only in academic results that are amazing in the S.A.T. kind of things, but also, for example, much lower drug consumption, much lower desertion. I mean, when desertion rates that these children leave schools. Much lower gangs, even the whole neighborhoods crime goes down.

Eve: [00:47:50] Interesting.

Enrique: [00:47:51] It’s really fascinating. And of course, like many things that, so this, if you say, what are you most proud of? I think that these schools are teaching some things which have not yet been adopted by the rest of the educational system, but it’s very clear what it is that makes them much better.

Eve: [00:48:08] Interesting. We could talk all day, but I’m going to have to wrap up. So one more question. What’s next for you?

Enrique: [00:48:17] Well, we have in Colombia this time what I consider a terrible national government. We’re doing many crazy things, and I continue participating in politics. I mean, I have, like more than 2 million followers in Twitter, and so I try to give opinions or things. I may run for office somehow, even if it’s just to help somebody in the end, somebody else. I’m not obsessed with power, but I will try to contribute, and I’m also working very much internationally. I am very, I have been given the opportunity by some programs in Africa that are being, built by AMALI, an organization called AMALI and by Bloomberg. So, I am extremely interested in being able to participate more in African organization. I think this is a huge challenge, not just because we could avoid horrible problems, but because we could do cities that are better than anything that has been done before in the world. For example, in Africa, one of the things that we did here that I’m most happy about, we did more than 100km of greenways crisscrossing or bicycle highways crisscrossing an extremely dense city, because this is easy in a suburb, maybe, but this is extremely difficult.

Enrique: [00:49:33] And so, African cities could very easily have thousands of kilometers of greenways crisscrossing them in all directions. Imagine, not just one central park, but some parks all over the place. I mean, African cities can profit from the experience of all cities in the past, and in many cases, it makes it easier. In many cases, land is owned not by private owners, land that runs it by tribes or by national governments. So this is something that I hope that I’m able to participate more, because I think African people are wonderful, and I think there is a fantastic possibility to profit from us. I tell them, look, it’s not that I want to teach you the wonderful things we did. I want to tell you all the wrong things that we did, that you can avoid. Because our process of urbanization is so recent. I say, oh my God, if we had done this, that, that, that, that we would have we could have avoided so many mistakes.

Eve: [00:50:35] Yeah. Well, this has been just an incredibly delightful hour. I could go on forever. And of course, now Bogota is on my bucket list. I have to go there. Especially on a Sunday. I can get to ride those 75 miles. It would be amazing. So, thank you very, very much for joining me. And I hope every city gets your touch.

Enrique: [00:51:02] Thank you very, very much for the invitation. Thank you very much.

Eve: [00:51:19] 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 Enrique Penalosa

Roseland Center.

May 7, 2024

✅ Strategic. Purchase profitable urban community shopping centers in partnership with Black entrepreneurs and community investors.

✅ Building Black wealth. Providing a path for increased ownership opportunities of real estate assets.

✅ Supporting Black talent. Providing opportunities to Black-owned businesses and opportunities for local community employment.

✅ Scalable. Planning to provide investment opportunities in up to 16 service-oriented community shopping centers.

✅ Black-owned. Project led and owned by a Black team.

✅ Return. Up to 49% pro-rata share of cash flow and profit to investors.

Chicago TREND, led by Lyneir Richardson,  has launched a crowdfunding campaign to allow Black entrepreneurs, community residents and other interested socially-minded impact investors – with just a small investment – to co-own the Roseland Medical and Retail Center in Chicago, IL.

“Wealth is created by owning assets that generate revenue and appreciate over time,” says developer Lyneir. He wants you to own this shopping center right alongside him!

He’s  looking for investors, small and big alike, just like you, on Smallchange.co.


This is not a solicitation of an offer to buy or sell any securities. All investing is risky and involves the risk of total loss as well as liquidity risk. Past returns do not guarantee future returns. If you are interested in investing, please visit Small Change to obtain the relevant offering documents.


Image courtesy of Roseland Center

DWELL riffs on Small Change.

April 16, 2024

“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.

April 10, 2024

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.

March 27, 2024

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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