Community

Eve Picker: Hey, everyone, this is Eve Picker, and if you listen to this podcast series, you’re going to learn how to make some change.

Eve Picker: Hi there. Thanks so much for joining me today for the latest episode of Impact Real Estate Investing. My guest today is Molly McCabe. I met Molly in her role as chair of the Urban Land Institute’s Responsible Property Investment Council.

Eve Picker: After many years spent in commercial real estate, Molly founded in HaydenTanner. There she works on cultivating practical solutions and strategies to accelerate the emergence of resilient buildings and vibrant sustainable cities. Molly has shown her true colors with her latest astounding project, The Lotus Campaign.

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

Eve Picker: Molly, it’s really nice to have you here today. Would you just tell us a little bit about yourself, and what you do?

Molly McCabe: Oh, sure. Thanks, Eve. Appreciate it. I run a firm called HaydenTanner, which is a strategic real-estate-advisory firm focused on increasing or bringing social equity and sustainability into the built environment. I work with developers and investors on their projects to create healthy, vibrant communities. I also have recently co-founded a non-profit with some colleagues called The Lotus Campaign, which is focused on increasing the availability of housing for people experiencing homelessness.

Eve Picker: That last one is a really big lift. Can you tell us a little bit more about that, The Lotus Campaign? I know a little bit about it, but I’d love to know more.

Molly McCabe: I’m delighted to do that. We started The Lotus Campaign- we’re coming up on our one-year birthday mid-July. What we realized maybe about 18 months ago in looking at a number of things is that the private sector really has not been engaged directly in to how do you solve some of these challenges around homelessness. Really got to thinking about how can we bring the private sector, the private real-estate development, and landlords, and investors into the mix and really start to solve the problem?

Molly McCabe: The Lotus Campaign looks at it from a continuum. We have a program called the Landlord Participation Program, which is really focused on increasing housing availability today for people experiencing homelessness by taking away all the impediments that a current landlord might have in bringing someone into housing, such as credit history, rental history, things like that; making sure that they have some immediate support. Then we also incentivize those landlords to open up the units.

Molly McCabe: Then, on the continuum, we also recognize that just increasing housing today with existing units is not enough, because we just don’t have enough housing units available period. The second piece is we are buying and rehabbing existing naturally occurring affordable housing. Doing major rehabs and putting aside about 20 percent of those units for people experiencing homelessness. The balance, about 80 percent, is primarily workforce housing.

Molly McCabe: The third piece on the continuum is actually increasing the total number of housing. We are piloting- or we’ll be piloting this year, hopefully, some new construction technologies which will reduce the total cost per unit of housing. Through that, we’ll be partnering with cities and other communities to increase the actual total housing stock. It’s a continuum, and it’s, again, been pretty successful. So far, we’ve helped facilitate in the first year about 155 people into housing at an average cost of about $1,000 per person.

Eve Picker: Wow, that’s a lot that you have on your plate. That’s a really lot to manage. I want to go back to something you said about removing impediments for formerly homeless people to be able to rent a space. What exactly do you mean by that? How do you help remove those impediments?

Molly McCabe: Well The Lotus Campaign, if you take a quick step back, and we look at the clients that we- our people that we’re currently looking at serving, we’re looking at serving sort of highly functioning, chronically homeless all the way up to people who are on the verge of experiencing homelessness.

Molly McCabe: Because what you find today is that, in comparison to what we thought were the people who are experiencing homelessness – typically people who were drug users and things like that –  really, it’s so many people who are falling into poverty . Right now, housing prices across the country are just dramatically rising, and there’s …  People who are wealthy can certainly go into housing, but then there’s that point where you lose a job, you have a health problem, something happens, and you can’t make the rent the next month. We sort of serve that whole sector, that whole segment of the population.

Molly McCabe: What we’re finding is that landlords have consistently been concerned about things like, as I said, rental history, credit history. Then there’s a whole stigma attached to being homeless. The reality is, as I said, many of it’s economic in nature. When we talk to the landlords, what we’re doing is we’re providing … We, Lotus, come in and we provide a rent guarantee.

Molly McCabe: We provide tenant insurance. We work with social-services organizations who have an ongoing responsibility to 1) identify a resident who is able to go into scattered-site housing and then provide ongoing services to them during the entire period of time that they are in that housing; including, for example … They come in once a month, and they walk the unit; check in with the tenant, but they make sure it’s- from the landlord’s perspective, it gets somebody in the unit to make sure that things are still going okay, and if there’s any problems, it gets you ahead of that.

Molly McCabe: We will provide …. We’ve asked the landlord to postpone eviction processing for a month – 30 days – and we ask them to partner with us to see if we can work out whatever the problem is. If, at the end of that month, we are unable to do that, we will go with the landlord to court. We will pay their court costs, their attorney’s fees to help process that eviction, if necessary. Hopefully- that hasn’t happened so far with any of the tenants that we’ve had, but we have offered that.

Molly McCabe: The last piece is we provide the landlord with an incentive payment to open up units. What we’re finding is that it’s about, again, $1,000 per person.

Eve Picker: That’s not a lot of money.

Molly McCabe: No, it’s a great way to … If you think about leveraging your capital, it’s not a lot of money. We’ve been really, really successful with that. So far, as I said, we have 155 people in housing.

Molly McCabe: We’ve had one person leave; lose their housing. That wasn’t because they were doing anything wrong at the building, at the apartments. It was because they weren’t actually following through on what the social-services organization had expected them to do. They weren’t making meetings. The social- services organization actually came in, and said, “You need to leave.”

Molly McCabe: That person’s gotten back on the waiting list because they’ve shown back up, but it’s really a matter of bridging that gap between what the landlords are- their expectations [inaudible] making them feel comfortable that they have support, and that they have a reason to open up those units and feel confident.

Eve Picker: Be sure to go to EvePicker.com and sign up for my free educational newsletter about impact real-estate investing. You’ll be among the first to hear about new projects you can invest in. That’s EvePicker.com. Thanks so much.

Eve Picker: What locations are you in, so far?

Molly McCabe: We’re currently piloting in Charlotte, North Carolina. In Charlotte, again, we have four landlords; four different landlord organizations that we’re working with, and we have four different social-services organizations that we’re working with who have identified people.

Molly McCabe: We hadn’t expected to do this, but the opportunity came along in November to actually purchase- acquire a building. We acquired the building in November. It’s 144 units; 30 of which have been set aside for Lotus clients, and the balance are workforce housing – tenants, residents.

Molly McCabe: In that case, we brought in an impact investor as a partner. Our returns are very strong as compared to anything else in the market.

Eve Picker: What are the returns? Can you share?

Molly McCabe: Sure, I’d be happy to share on that. On that particular project- again, we’re targeting market-rate returns, so we’re looking at a current of about six percent on that deal, and we’re looking at, over a seven-year period, a 12-percent IRR.

Eve Picker: That’s pretty good.

Molly McCabe: Yep, and [cross talk] It’s a very traditional … Of course, any real-estate deal is different-  all real-estate deals are different. You go into any one; you figure out what works. But it’s a very traditional model. There’s no tax credits. It’s a 65-percent loan to value. We’re doing some rehab on it.

Eve Picker: You have guaranteed clients-

Molly McCabe: Exactly, guaranteed clients.

Eve Picker: It’s a pretty low-risk project by the sounds of it.

Molly McCabe: Yes, exactly.  What we think- our goal over the course of the next three years is to be in 10 different cities and-

Eve Picker: That was going to be my next question. What’s your goal?

Molly McCabe: Perfect segue-

Eve Picker: 10 cities. That’s a pretty- that’s pretty fast.

Molly McCabe: Yeah, so 10 cities in 36 months, that’s our objective. Again, it really- people ask us, “Where are you going to be? Have you identified the cities?” We do certainly have criteria. Number one, I think we’re going to  …

Molly McCabe: The two most important criteria are who do we know in that city from a landlord-development perspective? Who controls the real-estate side? Then, are there solid social-services organizations who can 1) identify clients who can go into scattered-site housing, and 2) have the capacity to provide that ongoing support to those tenants?

Eve Picker: Interesting.

Molly McCabe: I suspect it’ll probably be secondary cities. We’re probably not going to go into major-major cities, just because the cost of housing is so expensive in places like New York, or Los Angeles, San Francisco.

Eve Picker: Well, let me know if you need any help in Pittsburgh, because, as you know, I’m connected here.

Molly McCabe: You are, very connected. I would love to get into Pittsburgh. There’s some really interesting cities. I think we can have some good impact.

Eve Picker: We need to talk more about that. It sounds like this project takes up a fair amount of your time, but you were also talking about another more local one. Do you want to tell us a little bit more about your involvement in that?

Molly McCabe: One of the things that, as I said, I’ve been really involved with in the last 18 months is this roll-out of Opportunity Zones. Originally, I got involved in it from more of a national perspective in looking at how the real-estate sector might … It’s funny looking at it now, of course, because real estate is the easiest piece to apply Opportunity Zones, but, when it first started, we really didn’t know how it would play out.

Molly McCabe: I got involved more on a national basis and looking at how real estate might utilize it for distressed communities. It turns out I have … There’s an Opportunity Zone in my local small community, where I’ve not done any development or investment at all.

Molly McCabe: The project that I’m particularly looking at now is one where the library is looking at moving into a particular location on a new trail that’s being built. Rail lines are coming out, and the trail is going through the center of town. It’s a great place to create a community hub. There’s such a need for creating that vibrant place where people come together – that third place.

Molly McCabe: We’re looking at the library; some mixed-income housing. It’s akin to what we were talking about earlier for The Lotus Campaign. We’ll have some sort of workforce housing, some higher-end housing, as well as some lower-income housing. Maker space, retail, coffee shops, all added in this one location.

Eve Picker: It sounds like fun. That sounds like a really fun project. You’re working on some really great things. I’ve been personally a little bit disappointed at what has emerged around real-estate opportunities in Opportunity Zones. I’m just wondering, because I know you’ve been a bit- on the speaker circuit, you’ve been pretty heavily immersed in this. I’m just wondering what you think about what’s going on. I’d love to hear your thoughts.

Molly McCabe: I think it’s a great point, Eve. The reality is the projects that are coming first out of the gate are the ones that were already shovel-ready, and, in many cases, already penciled. I had a question on a webinar I did not that long ago from somebody who said, “Well, how is that hotel project really supporting that community, and did they go about involving the community in discussions about what the community actually wanted?”

Molly McCabe: It’s not my project, so I can’t say whether or not they did in order to get it approved, but I think we have to recognize that the early projects that are coming out of the gate are ones that were already vetted; already ready to go.  Water under the bridge. That’s already done.

Molly McCabe: Let’s figure out how do we move forward today, and identify how do we bring the communities in? What kind of impact do we want to have? How do we make sure that gentrification does not displace people? How do we make sure that what we’re doing in these communities actually benefits the people who are currently living there, and what kind of impacts do we want to have?

Molly McCabe: I think many, many cities are finally getting their hands around, and their head around what that actually means. What do we want to have here? What does that look like? I think community members are starting to recognize that.

Molly McCabe: One of the things I think you’re doing, which is so awesome, is this concept of using crowdfunding as part of an Opportunity Zone. How do you take the people who live there, who maybe have small investments and only can do small investments into it, but if they invest in their own community, they have … They are able to help design and create what they really want.

Eve Picker: Yeah.

Molly McCabe: There’s potential, I recognize, because I know you’re doing this, and I haven’t even attempted crowdfunding. Huge complexity to it, so, I don’t say that it’s easy.

Eve Picker: Well, I actually think that’s not the most difficult part. I think, for me, the most difficult part is – when you layer impact on to Opportunity Zones – finding a project that can stand on its own two feet [cross talk] that is investor-ready, that has some experienced developer behind it.

Eve Picker: It’s very rare, because now you have a project that the developer is going to have to track carefully for 10 years to ensure that the investors get their tax benefit, so they can’t just be trying this for the first time. It’s a really difficult formula. I think it’s a really difficult formula to find a project that sort of checks all the boxes. Very difficult.

Molly McCabe: Yep. I think the good news is that … The recent regs that came out in April, one of the things that it did allow is it allows you to sell an asset in the middle of that 10 years and reinvest it, as long as you keep the money in the Opportunity Fund.

Molly McCabe: Theoretically, we will see new capital coming in over time, so I think you’ll see some recycling of capital and see the ability, too, so maybe it doesn’t have to be a 10-year project. I also like the potential to take real estate and layer it with businesses in the Opportunity Fund-

Eve Picker: I agree. I think it has great potential.

Molly McCabe: I think it remains to be seen and-

Eve Picker: It’s really not a long enough ramp-up time, is it?

Molly McCabe: No, no.

Eve Picker: The 10 years is ticking away fast, and people are really only getting themselves organized in thinking about it. Yeah, there are a few projects that were ready to go that just happened to be in Opportunity Zones, or, perhaps they were there because they petitioned for them politically. I don’t know, but it’s really only just coming together now, I think. How far into it are we?

Molly McCabe: Yeah, what are we at? Well, we’re more than a year … We’re basically 18 months into it, and I think that has been … I have a client that bought a project in April of last year. Huge project. Opportunity Zone. They are definitely putting in enough money to make it work, but they bought it, and they had no idea that it was in an Opportunity Zone. It was just too new. That backward looking, going, “Oh, well, we should have done it this way …” [cross talk]

Eve Picker: -that’s tough, too.

Molly McCabe: Right. We’ll see. I think it has great potential. There is no doubt it also has potential for abuse. I think we just have to, for those of us who are really focused on impact and really looking at how can we develop communities in ways that make a difference for the people that live there, both on a social perspective, as well as an environmental perspective.

Molly McCabe: I think we just have to keep pushing for those impact measurements and making sure that we are tracking those in a way that are meaningful, whether that’s on an Opportunity Zone project, or really any project. Really, that’s, to me, how do we create thriving, healthy communities that are- we reduce our carbon footprint. We are focusing on going as close to net zero as we can, but also providing jobs and equity and all of those things [cross talk]

Eve Picker: Molly, I love talking to you because you answered my next question before I asked it. My next question was going to be do you think socially responsible real estate is necessary in today’s development landscape? I think I know the answer to that.

Molly McCabe: Oh, yes. Oh, my gosh, absolutely. I’m so fascinated by people … When I look back and I think about developments that I did, oh, my goodness, 25 years ago, I go, “What was I thinking? That was so bad!” We’re in a place where the planet- we have so many people on the planet. You look at … It’s just increasing. Climate change is an issue; water resources are an issue;  energy is an issue; social equity … We have this increasing economic divide of the haves and have-nots.

Molly McCabe: If you don’t think that responsible property investing or responsible investing, in general, is crucial, I don’t know [cross talk]

Eve Picker: Where have you been?

Molly McCabe: Right. The other piece that I think is so important is recognizing … Some people think that capital money is bad. If you recognize that capital is just a tool – it’s just a tool … Money is just a tool; it’s just something that we’ve created to trade energy, and goods, and services. If you recognize that it’s a tool, then you can use it in any way that is beneficial.

Molly McCabe: You have a choice. You can say, “Well, I’m going to make an investment, and it’s going to make money and do something good and positive for the community,” which makes it a more sustainable community, which means it’s thriving, which means it’s healthy, which gives it a long-term value, as opposed to, “I’m just gonna do something and get out in two years,” why wouldn’t you do something that actually benefits the community that you live in; benefits the people that are around you, because you can … I do believe in the goodness of people, so I always have hope for that.

Eve Picker: Yeah, I’m not sure about the goodness of all of them yet.

Molly McCabe: Well, you and my husband would be in the same category. He feels the same way. He always says that I’m disappointed because I expect people to do the right thing, and they’re going to be good, and they’re going to do their best work. When it doesn’t happen, I’m disappointed. He says he doesn’t believe that, so he’s never disappointed.

Eve Picker: I want to believe it, but I’m not sure. I think there’s still a lot of greed, and that may be the primary reason, or the thoughtless reason for not picking one project that does something good, over another that does nothing good – an extra-percent return or whatever it … I’m not yet completely convinced. I wish I were.

Molly McCabe: Right, right. Well, I’m not saying everybody’s there, and we certainly have plenty of examples of people who are not and who are very much out just for their own benefit, but-

Eve Picker: I feel like investing for impact is this tidal wave heading towards us, and we’re early adopters. Eventually … Eventually,  if you think about a graph with Walmart at the top, eventually that crowd will follow, because it’s the thing to do, right? I don’t think we’re there yet. We’re all battling against a crowd that doesn’t know it’s the right thing to do. That’s the way I think about it.

Molly McCabe: It’s always hard to be an early adopter, right?

Eve Picker: It’s also fun.

Molly McCabe: You’re always on the edge … Now, I think about this, and I go, “I said that 10 years ago, and it’s finally coming to fruition.”

Eve Picker: I know, and then … Yeah, if we did it now, we’d be making money. But look, I didn’t know what an early adopter was until a few years ago. Apparently, that’s what I am, but [cross talk]

Molly McCabe: All these years, you’ve been an-

Eve Picker: Yes.

Molly McCabe: I know.

Eve Picker: This is the way we’re wired. We can’t think differently, right, Molly?

Molly McCabe: Exactly. Really, if you think about what does it take to be not just an early adopter, but really somebody who is a leader … I mean, people who are leaders are those that kind of are always … You don’t always- you don’t have the answers. You don’t pretend you have the answers, but you’re always curious, and you’re always looking at what’s next, and how can you solve that problem, and, “Wow, that’s interesting!”

Molly McCabe: I think what I appreciate about spending time with you, Eve, is that you’re always asking questions, and you’re always going, “Huh, well, how might that work? What about this? If we try it this way …” and sometimes it doesn’t work, right?

Eve Picker: Yes, usually it doesn’t work.

Molly McCabe: But then, one time in 10, or one time in a hundred, it does work, and you go, “Wow, that is  cool!”

Eve Picker: Yeah, actually, that’s a really interesting point, because in the tech world, failure is a little bit glorified, right?

Molly McCabe: Mm-hmm. Yeah.

Eve Picker: You’ve tried three companies, and they’ve failed, and finally, you have a winner. In the rest of the world, not so much. Failure is pointed at, and derided, and yet, I think failure is kind of an indication that you were willing to try something. Anyway, that’s my little speech for today.

Molly McCabe: Well, I agree, and I think anytime we’re … I think we are in a culture that’s wired around avoiding any sort of looking foolish, or any sort of uncertainty. We always want to have some sort of certainty around things and some guarantee that it’s going to work out.

Molly McCabe: Tech is a really interesting anomaly to that, and I think being able to take that same mindset and apply it elsewhere in our lives and stepping into that fear, and uncertainty and stepping into the risk is an important component to moving things forward. Going back to our conversation just around impact, sometimes you just have to try stuff and go, “Wow, how might this work?” and “Wow, this is better!”

Eve Picker: I agree. We strayed a little bit there, but I’m also wondering if there are any current trends in real estate that you’ve noticed that are of particular interest to you or that might be important for the future of cities?

Molly McCabe: One thing I do want to- well, two things I’ll comment on. 1) Absolutely, I think this concept of responsible property investing, environmental/social-governance factors … What we are absolutely seeing is a rise of that. It shows up, and admittedly, it might be self-determining, based on what I follow, but it shows up every single day in my inbox. There’s always something on ESG, and how investors are looking at that, and how investors are looking at that risk profile.

Molly McCabe: I think there is a clear recognition on the horizon … Understanding the risk and the opportunities that go along with climate change, social equity, transparency, and things like that. Whether or not you have stranded assets because you didn’t notice that this tidal wave was coming, or that whatever … I think that’s a huge issue.

Molly McCabe: I think we’re seeing … On the sustainability side, we’re seeing some really interesting regulation coming down. You look at what just happened in New York City, what’s happening in California, Washington D.C.; what’s happening in the UK and elsewhere in Europe around net-zero and carbon emissions. I think that’s going to [add to] the built environment, something we need to get ahead of. We need to be looking at what does that mean for our portfolios; what does it mean for our investments, and how do you reduce the risk? Because, if you don’t figure it out until the regulations hit, you’re screwed.

Molly McCabe: The last piece that I think is really interesting, particularly in our cities, is some of the new building techniques. We’ve had some, particularly through our Lotus work, in trying to figure out how do we reduce the total cost of building. Looking at componentized-building projects, which are different than necessarily modular, but just componentized.

Molly McCabe: How do you do a plug-and-play system? What does that look like? How can you make it simple and easy so that it’s kind of off-the-shelf, fully designed, and you can pop it in anywhere? I think that’s interesting. I think zoning issues – what happened in Minneapolis around getting rid of single-family zoning, very interesting; around density and how that’s going to impact cities. There’s a lot out there right now.

Eve Picker: There’s a lot , that’s right. What community engagement tools have you seen that you think have worked?

Molly McCabe: That’s a great question. I think communities are different, so that’s one thing that I am really getting to understand more skillfully, I guess, now that I’m working on this local project, and, because I live in a rural area. That’s different than in a city.

Molly McCabe: Then you, of course, have all your social-media platforms. Obviously, social media is one platform, but I think, in many ways, on the ground- your typical canvassing and going out and meeting people where they’re at still continues to be, in many ways, the best way for people to understand what’s going on [cross talk] engagement.

Eve Picker: I think some of the communities I’ve worked in, they really don’t have access to the internet, and they’re working two jobs, and it’s unlikely that they’re going to show up at a meeting. You have to find a way to [cross talk]

Molly McCabe: Yeah, you have to go- you go to the coffee shop, or you go to the soccer game, or you go to the … One thing, going back to the comment I made earlier about a third place, and creating a place where people can meet, I think creating those sort of hands-on experiences, so people can show up, whether it’s just at a social event; an ice cream social or something where people come together. Again, it’s kind of old-fashioned, but in many ways, in many communities, that’s really the best way to get people out and get them engaged in what the vision for the community looks like.

Eve Picker: Yeah, I think that’s right. Then there’s equity crowdfunding, which I think can play a role in building communities, but what do you think of that?

Molly McCabe: Well, I love equity … I do. I love the concept of equity crowdfunding. I love being able to look at the neighborhood and say, “Well, who are the people here who really care?” I look at-  if you look at your own investment dollars, and you make a choice … I can put them with some large investment firm, and they would go put them in a mutual fund somewhere and invest in some thing that I have no connection to; or I can invest in my community; spend my dollars in my community to support those local businesses. That, to me, feels good, and it feels very connected and engaged.

Eve Picker: Yes. Where do you think the future of real-estate impact investing lies globally? Locally? Anywhere?

Molly McCabe: Oh, wow … I think it lies in both, certainly. I think impact- Local is exciting to me, and probably that’s because I’m working on this project locally, because I see the opportunities there, and the opportunity to engage the community in a positive way.

Molly McCabe: But I think larger things on impact will happen at the institutional-global level. If you look at- institutional investors are definitely going to push different building techniques, technologies, energy efficiency, carbon reduction, net-zero water resources. I think that will probably push from the more global side.

Eve Picker: I think you’re probably right. Okay, I have three sign-off questions I’m going to ask, Molly. The first is what’s the key factor that makes a real-estate project impactful to you?

Molly McCabe: To me, if it creates a place where people can engage and connect. If I look at my core values, connection and relationship is one of my core values. Creating that space in a way that is healthy and vibrant … It’s that connection in a way that is not looking down at your screen; it’s a connection of people, bringing people together where they actually … One and one doesn’t make two, one and one makes something n one doesn’t make to one and one makes something multiple.

Eve Picker: It’s a community, yeah [cross talk] then, other than by raising money, in what ways do you think involving investors through crowdfunding could benefit and impact real-estate development?

Molly McCabe: To your point on engagement, I think that once you bring them in on a crowdfunding platform, they get … You’re continually communicating with them. “Here’s what’s going on; here’s where we’re at. Here’s what we see down in the future; here are the challenges that we have.” I think what it does, in that sort of crowdfunding way, it gives them the ability to say, “I’m part of this, and it’s meaningful to me, and I’m going to engage further.”

Molly McCabe: Yes, the crowdfunding is important to bring in money, but I also think it actually engages people in a proactive way. It actually pulls them in, in a way that they want to be engaged, and they want to participate. They want to, whether it’s showing up at the city council meeting, or writing a letter to the editor, or-.

Eve Picker: It becomes their project, as well as the developer, right?

Molly McCabe: Exactly. I also think it helps them think about how they can impact their communities in different ways. If you think of that, if you just look at it like you drop a pebble in the pond, and you see the ripples go out. If that crowdfunding is just the pebble that’s dropped, it’s all the ripples that go out. Not just that project, but in other projects, and in other … Whether it’s working in a nonprofit, or it’s working in so many different ways in a community. I think it makes [cross talk]

Eve Picker: I like that analogy. This last question is completely unfair, but I’m going to ask it.

Molly McCabe: Okay.

Eve Picker: How do you think real-estate development in the US can be improved?

Molly McCabe: You mean how can real estate in the US be improved? Our industry has, for so long, done the same thing over, and over, and over again, the same way. We really are not an industry that is too focused on innovation, so I think … How can it be improved on the development side?

Eve Picker: Maybe that’s unfair. I’ve traveled a lot, and I see what other countries do. I know it’s wrapped up in zoning laws, and legal issues, and property rights issues. Then I see a McDonald’s on the edge of a historic market district, where they-

Molly McCabe: That makes you want to cry?

Eve Picker: -they’re not being permitted to put the M, the arches up, that are any bigger than 12-inches tall, and they’ve gone with it,  because they really want to be there. That’s just a little thought, but I …

Molly McCabe: It’s an interesting question, because I do think … I was just reading this morning, one of my colleagues … Sydney, Australia had put out an international competition to increase- to get proposals to increase housing, and affordability, and such. They had over 200 submissions, and they’ve narrowed the shortlist down to seven.

Molly McCabe: Some of the ideas are really interesting, whether it’s micro homes, or some of it is micro homes and some of it is community land trusts, and different types of ownership models. It’s not really development, but I’m curious to this- to your point about how do we bring in different concepts from different parts of the world into what’s happening here?

Molly McCabe: I think I would expand that to not merely development, but how do we learn from technology, for example? How do we learn from different industries? One of the things I’ve always done, when I was chairman of the Responsible Property Investment Council for the Urban Land Institute is every meeting, we’d bring in …

Molly McCabe: We’d have a session called Conversations with Great Minds, and my goal was to always bring in somebody from another industry,  whether that’s the banking industry, who is looking at how they – for their human resources – how they really make people who are LGBTQ feel comfortable, and how they go out of their way to make an expansive and culturally supportive environment, to the chief storyteller from Patagonia coming in and talking about how Patagonia has created a whole culture and brand around sustainability, and connection, and the environment. Understanding how can we use what retail is doing, what tech is doing that we aren’t currently doing.

Eve Picker: Yeah, or actually, Sydney Australia is a really good example. That’s where I grew up. I’ve been watching Australia for years become one of the most expensive housing markets in the world, by far, and wondering how anyone can possibly buy a starter home there. It’s so expensive.

Eve Picker: Now, they’re all of a sudden hit with the problem of affordable housing. I don’t think there is government assistance at all. We’ve done that actually much better here. While they’ve done some things well, we’ve done other things better, and I think there’s a lot to learn from everyone.

Molly McCabe: Yeah.

Eve Picker: That was a little bit unfair, so, I’m sorry.

Molly McCabe: Well, I think your plan zoning is really crucial, and what you’re finding is, even in many of these progressive cities, if you look at how … Right now, I’m  focused on housing with Lotus, but you look at housing, and, to your point, Vancouver, for example, is also hugely expensive.

Molly McCabe: We need to look at zoning laws. In these progressive cities, we’re finding, even in those locations, that we don’t want people to move into our backyard. If we are doing that, we are naturally just causing a shift in population, and we’re not providing the kind of housing we need to provide. We have NIMBYism.

Molly McCabe: We have to- people who are progressive have to look themselves in the eye, and go, “Am I really, really marching … Am I actually espousing one thing and doing something else?” Because I think, in many ways, we are. We say one thing, but we’re doing something else.

Eve Picker:  I think that’s right. I think that’s right. Well, I think that was a really wonderful chat, and I thank you very much for joining me. I’m going to be talking to you soon about Pittsburgh and other ideas for sure.

Molly McCabe: I’m excited about that. Thank you so much, Eve, [cross talk] it was really, as always, a delight.

Eve Picker: Okay, thank you. That was Molly McCabe of HaydenTanner, and The Lotus Campaign. Here are some of the takeaways that Molly shared with us today. First that we need to think of capital as just a tool; it can be used beneficially or not. Second that her Lotus Campaign has housed over 150 homeless people in its first year at the extraordinarily low cost of just $1,000 per person. Third that, along with everything else she does, Molly is exploring building techniques in order to lower the cost of housing for those who really need it.

Eve Picker: You can find out more about impact real-estate investing and access the show notes for today’s episode at my website, EvePicker.com. While you’re there, sign up for my newsletter to find out more about how to make money in real estate while building better cities.

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