Development

The poverty trap.

November 18, 2019

Let’s talk about the concept of mixed-income development. Sometimes mixed-income projects are viewed as the first step toward displacement or gentrification. And to be honest, these fears are not entirely unfounded. The introduction of mixed-income developments was the first step in many rapidly gentrifying areas, followed by luxury housing and upmarket conversions that lifted property values to displacement levels, and the subsequent exodus of long-time residents.

Surely we can learn from the mistakes of the past. Is the concept of mixed-income developments entirely misplaced? The Urban Institute found, in a landmark 2010 study, that thoughtfully planned mixed-income communities can provide unexpected community benefits. The report concluded that mixed-use developments offer tremendous benefits to communities, as long as they are designed in a sustainable, community-oriented manner. Conversely, communities without mixed-use development can suffer adverse effects, including economic stagnation, higher crime, lower educational attainment levels, and a whole host of other negative consequences related to concentrated poverty.

The corrosive effect of concentrated poverty

We’d like to believe we live in a genuinely meritocratic society, But that just isn’t true. Where you are born has a tremendous bearing on how likely you are to succeed. Robert Sampson, a noted Harvard researcher, has spent decades studying poverty along with other academic luminaries. He concludes that concentrated poverty leads to profound suffering in affected communities, as well as limited social mobility. This is magnified in children and adolescents who have a much lower chance of success, even after leaving the low-status community they live in.

Economic diversity as an antidote

There are many possible ways that society can work to end concentrated poverty including legislating racial justice, ensuring gender and sexual orientation-based equity, green/environmental solutions, and a whole host of additional strategies. Mixed-income developments can offer one potential solution.

We all know that there is a great need for more affordable housing. In order to create economies of scale in investing and building affordable house, cookie-cutter affordable housing products have been developed everywhere. These housing products trumpet the boundary of low-status neighborhoods from Baltimore to Boise. While they solve immediate and urgent housing needs, they often fail on many other counts. Are they adding to the vitality of the neighborhood? Are they making the streetscape better? Do they contribute holistically to the place they are built in? Are they sustainably helping to build a better community or will they simply perpetuate the current economic status of that place. Perpetuation means that those social ills caused by redlining, white flight, and urban renewal, will never be solved.

Affordable housing developers should remember that residents in low-status neighborhoods want the same things that everyone else wants. They want access to the same high-quality infrastructure and commercial options that usually grace only middle and upper-income neighborhoods. Cafes, restaurants, grocery stores and shops have a better chance of survival in mixed-income neighborhoods and can act as an anchor for low-income residents. They also provide valuable employment and networking opportunities cementing the community together, instead of breaking it apart.

Fostering thriving mixed-income communities creates opportunity far beyond just affordable housing. Mixed-income communities have the potential to bring us all together.

Image of Malmo, Sweden by Eve Picker.

Revitalization strategist to barista.

November 13, 2019

“Nobody should have to move out of their neighborhood to live in a better one.”

Majora Carter is an American urban revitalization strategist and broadcast producer/host from the South Bronx in New York. Her career has spanned environment, economy, social mobility, and real estate development. Her work has won major awards in each sector including a MacArthur ‘genius’ Grant, a Peabody Award, the Rudy Bruner Award Silver Medal, nine honorary doctorates, and accolades from various professional groups too many to mention here.

The quote, on the walls of the Smithsonian Museum of African American History and Culture, is attributed to Majora. In fact, that’s just the opposite of what Majora was taught to do as a young woman growing up in the South Bronx. She believed, as she was taught to believe along with many others, that her only hope was to get out and abandon her neighborhood.

But she defied the norm and moved back to the very street she grew up on, bringing back with her what she had learned through her corporate consulting work. Her take on real estate and economic development is based on this understanding – that talent retention is key to building better neighborhoods.

Majora believes in talent retention. By placing higher quality third space enterprises for social gathering (cafes, bars and restaurants) ahead of the typical market curve, she believes that talented successful people who would ordinarily migrate out will stay, and keep their spending, reinvestment acumen and day to day example where they grew up. In a stagnant neighborhood , their only option is to flee, leaving communities in a constant talent deficit situation, that (again) makes the place a bargain for those who see value.

Majora is uncompromising about her mission. She lives and works in Hunts Point in the South Bronx, one of America’s lowest status communities just two blocks from the house she grew up in. And she is undaunted by taking new and necessary steps. When it became clear that no coffee shop operator wanted to operate out of her space in the neighborhood, she created her own business to achieve her goal. She’s committed to further developing the neighborhood where she lives and has her sights set on the conversion of a vacant building into a food hall. She lives in a brownstone, two blocks from the one she grew up in.

So listen. You must.

Insights and Inspirations

Majora uses the term “low-status” to describe communities where the schools are worse, where there are more environmental burdens, where the air is more polluted, where there are fewer and less well-maintained parks and trees and where the local population’s health statistics are worse. While philanthropy and elected officials acknowledge these endless disparities, they do little to change them except to use them as campaign tools to get elected, raise money and congratulate themselves.
South Bronx is one of the lowest-status neighborhoods in the country.
Talent retention is key to stopping the typical, stagnant economic cycle of low-status communities.
Billions go into low-status communities every year, but with little impact. You need to mix it up to lift a neighborhood up.
Mixed income and mixed use are key to building stronger communities.

Information and Links

See Majora’s unabridged bio here.
This is Majora’s coffee shop, the Boogie Down Grind Cafe, which was featured in Edible Bronx.
Read about the Self-Gentrification Salon.

Read the podcast transcript here

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 Majora Carter, and, wow, you won’t want to miss this. It’s hard to know where to begin describing Majora, who is, quite simply put, a powerhouse. Described as an urban revitalization strategist, her career has spanned environment, economy, social mobility, and real estate development, and her work has won major awards in each sector, including a MacArthur Genius Grant, a Peabody Award, the Rudy Bruner Award – Silver Medal, and nine honorary doctorates amongst many, many more.

Eve Picker: Majora is quoted on the walls of the Smithsonian Museum of African-American History and Culture as saying, “Nobody should have to move out of their neighborhood to live in a better one.” There is no way around it; if you are really interested in impact investing, this podcast is a must-listen. Be sure to go to EvePicker.com to find out more about Majora 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: Good morning, Majora. I’m so delighted that you’re on the show with me.

Majora Carter: Good morning. Thanks for having me.

Eve Picker: I was reading a little background on you, and the thing that stood out to me is this quote, “Nobody should have to move out of their neighborhood to live in a better one.” These are your words, and they can be found on the walls of the Smithsonian Museum of African-American History and Culture. I just wonder how these words play into your work?

Majora Carter: Oh, those words are- were actually not my words, but they’ve certainly been attributed to me. They were the words of a woman who worked with me – Marta Rodriguez – as a organizer, when I ran Sustainable South Bronx, and it really embodied exactly what we were trying to do at the time, when I was running a small environmental and economic development organization – which is this is our community. How are we not creating the kind of community of our dreams here? It really continues on, as we’re thinking about real estate development, and how do you use real estate development to truly transform your community into something that you can age into, and stay there, because you feel as though everything that you need and want is actually part of it?

Eve Picker: Yeah. So, you’re working- are you still working mostly in the South Bronx?

Majora Carter: No, I work nationally. I certainly do have some projects that I’d love to get off the ground, here in the South Bronx, and some that we’re working on, but we actually work nationally, as well. We’ve got a really amazing real estate development project, a mixed-income housing, mixed-use development, going on out in Mapleton-Fall Creek, Indianapolis, which I’m absolutely delighted about. There’ll be about 50 units of home ownership; another 150 units of mixed-income housing, and about 50,000 square feet specifically for light manufacturing, commercial, and cultural space. We’re delighted to be the developer on it.

Eve Picker: Wow. You weren’t a developer when you started out, right?

Majora Carter: Oh, no! Although, interestingly enough, I’ve been developing a lot longer than I actually gave myself credit for. I was a card-carrying member of the non-profit industrial complex, and moved out of my neighborhood, or left my neighborhood for college, and didn’t really want to come back, because it’s really like America’s low-status community – one of America’s low-status communities.

Majora Carter: I want to just articulate what I mean by ‘low-status.’ We don’t generally use ‘disadvantaged,’ or ‘low-income’ to describe the communities that we want to work in most; but low-status are the kind of communities where there are more liquor stores, and corner stores than there are opportunities for good, affordable, different, diverse options for food. You’ll find, instead of banks, or credit unions, you’ll find payday-loan places, and check-cashing stores. You’ll find the kind of places where there’s an enormous amount of very highly subsidized affordable housing, and very little economic range between.

Majora Carter: Essentially, in those areas, inequality is assumed, both inside, and outside the community. These are the places where, if you’re a bright, talented kid, you are taught to measure your success by how far you get away from those communities. We don’t have a way to think about retaining talent in those neighborhoods.

Majora Carter: When I was growing up in the South Bronx, I was one of those bright kids who was definitely told, “You’re going to grow up and be somebody,” which meant you get out of the neighborhood. I embraced it hook, line, and sinker. Only when I came back to the neighborhood and realized that the way our communities were being used via real estate – in particular, for us, it was environmental burdens that just kept getting heaped upon us – I also started realizing that we could use real estate as a way to transform our communities to benefit us.

Majora Carter: I first started in park development, and riverfront restoration, green jobs, training, and placement, and literally just moved into real estate development, when I realized that … It seemed to me like a very natural trajectory to go at scale, in terms of creating the kind of community that you really felt you didn’t have to move out of, in order to live in a better one.

Majora Carter: My first development project was literally squatting a building across the street from the house that my parents lived in, and I was born and raised in. It was a crazy story because it kind of technically had been in my family for decades at that point. The woman who owned it died 20 years before I decided to move in, and no one in her family wanted the house.

Eve Picker: Wow.

Majora Carter: Yeah, so it was like I’d move back in, and I’m like, “I want to set some roots down.” What did I do? I moved in there, took over all the bills, the taxes, and everything. That’s when predatory speculators obtained a fraudulent deed for my house, just as I was in the process of trying to purchase it and finding – getting title. It was a crazy, crazy story.

Majora Carter: There I was, acting as an owner/landlord for years, at that point, and it was a wonderful, just crazy opportunity to realize that, no, I am actually developing this space. and preserving affordable housing in my own community, and generating wealth for myself, because it’s like, look, we’re losing that. I wasn’t thinking about the wealth gap or anything like that, I just needed a place to live. I wanted the people who were living in my building to continue to have a place to live. But I was a developer back then, and I’m a developer now.

Eve Picker: Right. That’s really interesting to me, because I’ve been lots of places lately where ‘developer’ is just a bad word.

Majora Carter: It still is. Oh, my gosh, yeah-

Eve Picker: Yeah, I know. It’s getting worse, I think. Not just still … The question is, I mean, we know that just like there’s good doctors and there’s bad doctors-

Majora Carter: Exactly.

Eve Picker: -there’s good developers and there’s bad developers. But the narrative is really all developers are bad.

Majora Carter: Right [cross talk] and there’s no space in it for those of us who are trying to use development for what it actually could be, which is a truly transformative way to support communities that we love. We really think about how do you use it as a tool, specifically, to support the visions and the values that we have, which is that [inaudible] and no one should have to move out of their neighborhood to live in a better one. You should have opportunities to live, work, and play, in wonderful ways, in ways that match your income, but there’s all sorts of opportunities for you to engage in a beautiful community that actually does not require money, but builds community, and through [cross talk]

Majora Carter: Why is it that, in low-status areas – whether it’s an inner-city community, like the South Bronx, or a Native American reservation, or a former coal-mining town that has no real jobs anymore, where it was all white – why do we think of those, of developing in those places, where it’s only two kinds of development, where it’s either the poor folks that are there are either bought it; generally bought out, or displaced by people with higher incomes – that typical gentrification kind of phenomena – or its poverty-level economic maintenance, which is still real estate development, wherein there’s [cross talk]

Majora Carter: The whole idea is that why are there only two kinds of development that happen in low-status communities? Why can’t we use it as a way to increase economic diversity, and to build wealth creation, and just make it so that people love their neighborhoods, as opposed to feeling like they’ve got to move out of them in order to live a little bit better? I accept that challenge, and I really believe that that’s what I’m doing. So, yeah, as a developer, and as a black woman developer, whose working in this really interesting way, where I absolutely … There is no way I would ever build an exclusively affordable-housing complex for the lowest-

Eve Picker: I’m glad you said that.

Majora Carter: Never, never! I’ve been, in some circles within the non-profit industrial complex, demonized for that, because I should be doing the kind of things, where it’s like [cross talk] for the people. I’m like, poor communities concentrate- low-status communities concentrate poverty and all of the issues that are associated with it – low health outcomes, poor educational attainment, higher rates of being involved in the justice system, or being touched by it in some way, and your family … Obviously, higher rates of unemployment, and poverty, and just creating a sense of lack of hope within those communities.

Majora Carter: Why would I want to build more of that?

Eve Picker: Yeah.

Majora Carter: Unless, of course, you’re getting big developer fees, and you really don’t care about the communities that you’re working in, which is why I understand why most people hate developers so much.

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: Yeah, no, I get it, too. But I’m really fascinated by what you’re saying, and I totally agree with it. I’ve watched, for years, in Pittsburgh, the affordable housing product sort of live in neighborhoods that all start looking the same – this cookie-cutter affordable-housing product. It doesn’t … While, definitely, people need decent places to live, and it accomplishes that, it doesn’t change the nature of what’s happening in those neighborhoods. The moment you kind of push that edge of that, that’s when … I don’t know, how do you stop speculators? It’s something I think about a lot.

Majora Carter: We [cross talk] try to and are still trying a number of things. One of them is to continue talking about the approach that we’ve taken with our own real estate development and actually putting our own money where our mouth is. So, as developers, we did spend a lot of time within our own community just really understanding what are some of the hopes, and dreams, and aspirations, and, of course, needs within the community.

Majora Carter: We did hundreds and hundreds of surveys; realized that what people in a neighborhood, like the South Bronx, which is one of the poorest parts of the country within congressional districts, are the kind of the same things that anybody in a middle-class community wants. They want great places to work, with housing that- quality housing that matches their income. They want places where they could afford to buy new things that they need. They want lifestyle infrastructure, like cafes, and coffee shops, and bars, and things of that nature. They want those kind of things so they can feel a sense of value that is inherent within their own community. That goes back to that …

Majora Carter: What happens within low-status communities a lot … Because, of course, real estate developers, they take the kind of 20-, 30-year long-term view of what’s happening, in terms of how communities are going, to plan; whereas, in our communities, we’re taught that there’s no real value in them. So, it’s easy, I think, for them, if your family owned a home during a time of severe financial disinvestment in America, like the way that my family … My dad bought the house I was born and raised in the 1940s. By the time the ’60s, and the ’70s rolled around, there was so much white flight and disinvestment within the community, and arson, because landlords were torching the buildings there, because there was no financial investment coming in, so the most they could do is get insurance money.

Majora Carter: It was a really bad kind of space. That kind of lingering understanding – this is what our community is … Of course, you own property. It’s going to have an impact on you, and you’re going to feel like … The second you can move, you’re going to get out. Predatory speculators understand that. They’re counting on us not knowing the value of our own home. I can’t tell you how many little notes I get under my door, or they found my cell phone … They’re telling me they can buy my house for cash, and close within a week. This is a common occurrence.

Eve Picker: Wow.

Majora Carter: For folks that don’t understand what they have, guess what? They’re going to be like, “You want to pay me what for this crap that I’m living in right now?” So, they end up selling, actually, generally for less than what the house is worth, because they just don’t know. Then the predatory speculator makes out really well.

Majora Carter: Since there isn’t a whole lot, from what I’ve seen, within the non-profit industrial complex and communities like this, that’s actually going to support homeowners within a community; which I think home homeownership is actually often – especially in areas where there’s a rental unit in them – there’s very little support to support those folks, like there’s [cross talk] non-profits or government. They’re like, “Oh, we’re going to focus on the poorest people in those communities,” and anybody else, it’s like sucks to be them, because it’s almost like they’re invisible.

Majora Carter: What we’ve actually been doing on our own is trying to identify what are … First of all, some of the homeowners, and just letting them know, “You’re sitting on your family’s legacy. You should be using this to help create wealth and retain it within your own family. Or, if you want to sell, at least understand what you got so that you’re not being reamed for it.”

Majora Carter: The other thing is we’ve actually hosted things like small zero-percent-interest loan workshops, and low-interest-loan workshops and you specifically – on our own dime – just so that folks have an understanding of what that is. On another level, and I think funny, because this is, again, on my own time, because we don’t have funding to do this; it’s just that we saw that it was a need … We’re really hoping that we are going to be able to convince somebody or other to develop some kind of a fund that supports low-income homeowners in low-status communities.

Majora Carter: You know there’s that cooling-off period, if you change and get insurance, or you buy a house, or whatever, and you’ve got a little bit of time where you’ve got to prove that this is what you want? Wouldn’t that be kind of great that before any kind of real estate transaction goes down in a neighborhood like this, that there’s actually folks just making sure that folks understand what their options are?

Eve Picker: That would be great. What would the fund ideally do?

Majora Carter: It would, number one, support folks to actually be in that role, to play that kind of adviser role to the folks to let them know what their options are. But also, people may need … We find that some folks are selling their homes [cross talk]

Eve Picker: -could not repair the roof.

Majora Carter: Yeah!

Eve Picker: I know, I know.

Majora Carter: One little thing, and it’s just like [cross talk]

Eve Picker: So, a neighborhood fund- a neighborhood fund for people who really need help to keep them in their homes. I thought Philadelphia was doing a program like that.

Majora Carter: It is … New York is definitely not; New York City, at least [cross talk]

Eve Picker: Yeah.

Majora Carter: -sad how little they think about it-

Eve Picker: I think there are ways to do a fund like that. Do you think there are people in the neighborhood that would contribute to a fund like that, themselves, in their own neighborhood?

Majora Carter: I’m not sure about that. I think it’s something that, frankly, should be a part of city government. I really do, because I feel like they’ve just- they watch the tax rolls in communities like ours, and it does fall along racial lines, as well. Nobody pays attention in poorer communities of color to supporting the homeownership right here. It’s not in our government. There are non-profits; there are a few nonprofits that work on- none in the area that I’m in, actually, which is why we’ve been posting those type of meetings and bringing those resources in. It’s really challenging.

Majora Carter: Another thing that we’re working on and is literally building our own projects to prove this talent-retention strategy that we have. It’s like if you build the kind of community that makes people feel like they don’t have to move out of it, in order to live in a better one … But you’ve got to build it. One of the things that we saw in all of our research, in the market research that we did here, was that people were leaving the community across income levels; not because they thought the neighborhood was dangerous or anything like that.

Majora Carter: It was because it was- there was no real lifestyle infrastructure here. There was no place to get a drink, if you’re an adult, that wasn’t a topless bar; there wasn’t a coffee shop, or a bookstore, anything like that. Even the kind of cute stores that people want to go to, or a place to get dinner. There’s plenty of greasy spoon places, and, of course, fast-food chains, et cetera, but nothing that actually spelled quality in any real way, and no attractive third spaces that made people want to stick around, like a coffee shop with Wi-Fi.

Majora Carter: We actually were able to acquire the lease on two very inexpensive leases on the main street in our community. It was just a wonderful deal that we got, long term. So, we were just like, “This is great.” We looked, actually, for a coffee-shop operator for years-

Eve Picker: For years?

Majora Carter: Oh, yeah, literally. We had that lease for a while [cross talk] and basically, it was clear, because it looked like the market here wouldn’t appreciate anything like this, even though we knew that our data proved otherwise, because we knew people were leaving the community to experience things like that-

Eve Picker: I know what happened. You started it yourself, right?

Majora Carter: Exactly. I was never planning to be a barista [cross talk]

Eve Picker: Well, there’s not many developers who’ve done that in areas where no one sees the market potential, because our financial institutions – I sound a little bit like a broken record, because there’s lots of reasons to say this – financial institutions, really, they’re crushing the innovation of the cities-

Majora Carter: Exactly.

Eve Picker: They’re really just financing cookie-cutter projects, so the moment you do something different … I mean, I get it. They have regulators, but shouldn’t someone step up?

Majora Carter: Yes! Yes! You know what? What was wonderful is that, in our example … We decided to open- we first started- it was a joint venture with a really amazing coffee shop and roaster downtown. They’d never had a Bronx presence, and was kind of interested in the idea, called Birch Coffee. So, we partnered with them for almost a year. First, it took six months just to understand the business. Then, we actually opened in the latter half of the year. We learned everything from them about how to actually operate a coffee shop, and bringing people in, all that stuff. It was amazing. It really was their guidance [inaudible] I am so grateful.

Majora Carter: But it was sort of clear that the market up here was a little different than this very high-end big coffee shop downtown, where there’d be no flavors, or whipped cream, and syrups, and people … That’s what, frankly, people wanted up here. We also wanted to provide healthy options, as well, but we had- in order to stay in business, we actually had to respond to the market. So, we actually [cross talk]

Eve Picker: They wanted over-the-top luxury, right?

Majora Carter: Yes, and it’s just like no. I know expertly steamed milk is beautiful, on its own, but, look, if somebody wants whipped cream on top of it, I’m going to give it to them.

Eve Picker: Yes!

Majora Carter: Oh, it was just [cross talk]

Eve Picker: That’s a Viennese, right? [cross talk]

Majora Carter: -we should start calling it that now. You’re totally right.

Eve Picker: Yeah, and they’re all over the … Call it a Viennese.

Majora Carter: What was so interesting is that it … It also gave us an opportunity to stick our own swagger on it, quite frankly-

Eve Picker: Right.

Majora Carter: -because, after all, this is the South Bronx. It is the birthplace of hip hop. We are all about innovation. We were like, we need this cafe to pay homage to that. We literally ended up moving it to a larger space, and then we actually hired a two hip hop historians to actually help us curate the actual wallpaper, which is literally the early days of hip hop, mostly [broad] space. We just built this … It’s like an homage to graffiti, and it’s just beautiful.

Majora Carter: We use it as this tremendous third space for open mikes, and art shows. It’s just really this beautiful community gathering spot. It did take us a while to get to that point at a place where we won’t be losing money soon, which is awesome. But what was fascinating about it was the fact that, early on, we literally ran out of money to do it, because we were not anticipating … First-time coffee shop owners not knowing anything [cross talk] One of the members of the advisory board that we had that was literally giving us intel about how to do our projects better, actually, they volunteered to invest- her family volunteered to invest in our project-

Eve Picker: Isn’t that great?

Majora Carter: It was just like … What was amazing was that we didn’t talk about it. We socialize a lot of things, and it’s a small community, but what was interesting is that the way people found out that another family in the community had invested in this business was just like, “Wait, we can do that?” I’ll never forget some of the conversations we’ve had about it. It was just so beautiful that it was … Because people just did not realize that this was like within their grasp.

Eve Picker: Yeah.

Majora Carter: For our next project, we acquired [cross talk]

Eve Picker: I think you should- I think you should be the spokesperson for Small Change [cross talk] that’s really what my hope is for it, that people can invest in the way big investors can invest and they can get the same return. Because, you know, hey, it’s money, right? Why should they get less than someone else? Anyway, I’m sorry to interrupt you-

Majora Carter: -powerful place.

Eve Picker: Very powerful.

Majora Carter: -just to even know that you can add value. Literally, you are adding the value to make this project grow. It is really amazing. Our next project, we acquired a rail station, a former rail station, that was designed by the same architect that did the Woolworth Building, and the U.S. Supreme Court building – his name’s Cass Gilbert. Of course, I’m sure you know who that is. I owned a little piece of Cass Gilbert, like Woo-Hoo!, Which just makes me very happy. It really does! It’s only about 4,000 square feet. Our goal is to transform that into a restaurant incubator, or a food hub for local chefs, because we’ve … Interestingly enough, the Bronx has some tremendous culinary talent that comes out [cross talk]

Eve Picker: I’m sure it does, yeah.

Majora Carter: There’s this one group called Ghetto Gastros. It is four young men from the Bronx; [cross talk] one of them I mentored 20 years ago, which I’m so proud of. Now, they’re like these ridiculous caterers that are flown all over the world to do their version … Haute couture is- I think that’s a fashion term. That’s not a food term. It’s like nouvelle cuisine, except they put their spin on it, because they’re these wonderful boys from the hood, but they’re all trained chefs. It’s unbelievable what they do, and it’s just extraordinary. Ghetto Gastro – you look it up [cross talk] There are folks like that literally come from our communities, but then kind of parachute out, because there aren’t many opportunities for them to open up businesses here. I’m like, how cool would it be if we had this restaurant [cross talk]

Eve Picker: Yeah, that’d be awesome. You know, we have an incubator like that in Pittsburgh that’s done very well. I think they’ve got three stations, and they have like rotating startups in there.

Majora Carter: Because the restaurant incubatees, all they do, they cook … In our version, we would manage the bar and the dining area, and each one of the restaurateurs, either three or four, depending on what we can fit, is literally what … They would, instead of rent, we would get a gross percentage of sales [cross talk]

Eve Picker: Right, right, right, right.

Majora Carter: -they get a chance to really hone their craft-

Eve Picker: Right.

Majora Carter: -and at least focus on building their market, but the-

Eve Picker: What’s the holdup? Why can’t you get that off the ground?

Majora Carter: We’re in a neighborhood that’s not … You can read lots of real estate development articles about the South Bronx, and how it’s like the next … It’s like the next extension of Manhattan, and it’s booming, and there’s a lot of market rate development going on, and a lot of commercial things happening in it. But that’s the part of the South Bronx where that’s happening. There are other parts of the South Bronx, which is where I’m in, and born, and raised, and still live, that’s the part that’s sort of being reserved for poverty level economic maintenance [cross talk] Yep.

Majora Carter: There is one big project that’s coming up here that’s about … Basically, it’s another low-income-housing project. It’s so crystal clear that all that’s happening is they’re trying to concentrate more and more poverty here. I think that’s one of the reasons why it’s kind of like, “Well, that’s what happens here, so we can’t really think about investing in it.” Also, it seems like it might be considered a smaller- like almost too small a project for some folks, as well, because-

Eve Picker: How many square feet is that?

Majora Carter: It’s only 4,000 square feet.

Eve Picker: Oh, that’s big enough.

Majora Carter: That’s about- with all the added … We actually, interestingly enough, discovered a basement [cross talk] found the other room up top. It was- we discovered another basement [cross talk]

Eve Picker: That could be the speakeasy [cross talk]

Majora Carter: You know that to redevelop a 5,000-square-foot space, it’s almost as … The brain damage is about the same as a 50,000-square-foot space, but the returns are much higher for the 50,000-square-foot space. So, I think that’s also part of it, as well.

Eve Picker: Yes, but the return on this would be phenomenal for that neighborhood [cross talk]

Majora Carter: Oh, absolutely.

Eve Picker: -the triple-bottom-line return that really we’re talking about here. I don’t know. I think there would be people who would invest. I really do. It’s really an amazing story. I want to come see the building, and I want to eat with Ghetto Gastro, and-

Majora Carter: I know! Oh, my gosh, who knows where they are right now? [cross talk]

Eve Picker: -because the neighborhood sounds amazing, and I want to cry when I hear about more and more affordable housing being built.

Majora Carter: I know, I know, and it’s just like … I know whenever I say that, I have to preface it with, “Please don’t think that Majora Carter hates poor people,” because I think that’s the way that folks immediately go, like, “Oh, she doesn’t want any more affordable housing.” I want- Actually, I do want more affordable housing. I want affordable housing for a range of incomes, because we know that economic diversity needs economic stability and community stability. Whereas, the concentration of poverty is exactly opposite that.

Majora Carter: But again, if we’ve been led to believe that this is all that happens in low-status communities, we start to believe it, and then feel the only option is to leave, if we have an opportunity to do so. Who does that benefit? It benefits the predatory speculators and the government programs, who take advantage of the fact that there are really poor people in our communities that probably have lifestyle-related illnesses, low educational attainment, or who’ll probably be within the justice system. They make money for somebody; not for the people that are here. It just seems like such a tragically obvious thing that we see happening over, and over, and over again, and since we’re led to believe that there’s no real value in our communities, we internalize it.

Eve Picker: Yes. A lot of this is about educating community, right?

Majora Carter: Yeah.

Eve Picker: What community-engagement tools do you think work best?

Majora Carter: Honestly, opening our coffee shop [cross talk] having a presence, and being there has been so transformative. My husband and I both work there [inaudible] and work out of it a lot. We’ve met … I thought I knew a lot of people in my own neighborhood, but I have met so many more, as a result of having that space, opening it up in a way that is just- it’s not a community center that people feel like they’ve got to tip-toe in, or have a problem to be in. No, this is a place of joy, and access.

Majora Carter: I’ll give you an example of how I knew that we were really something that our community appreciated, because, again, the idea … I mentioned before that some folks within the social justice industrial complex totally demonized me and think that I’m bringing in developers to kick out poor people. Some of the stuff is just insane, and they won’t acknowledge that I’m actually a developer. It’s like, no, no, no, I’m the developer. I want to be called a developer … I have my own ideas. I don’t want to talk to these guys.

Majora Carter: We were hosting a workshop for small business owners in the community, as well as homeowners to get access to capital for zero-percent-interest loans and low-interest loans and also figure out other ways … There was going to be a presentation on how to make your building- add additional units on top of your building, to see if this is something even you could do. We were protested. We had 40 people inside the space waiting to hear more about these zero-percent-interest loans and how do you make your actual building work for you, and there were like 10-15 people outside yelling about how I was destroying the neighborhoods with bringing a coffee shop there.

Eve Picker: Really?

Majora Carter: Yeah, and I have to tell you, I was … The signs were huge. They were saying, “Majora Carter destroys the South Bronx one coffee at a time.” That I’m a community destroyer. It was just like, “Some of you people know me … You could’ve just literally knocked on my door and said, ‘Can we talk?'” But they wouldn’t do that. But I have to say, after that, I’m like, “Oh, my God, my whole neighborhood is seeing people yelling, with my name on a sign, talking about how evil I am.

Eve Picker: Yeah.

Majora Carter: I was just like, “We might have to close this stupid coffee shop. I mean, who’s going to want to come?” The next day, we had the best day ever-

Eve Picker: Oh, that’s really great.

Majora Carter: The best day ever. We had people coming in, one after another. It was like, “You know what? I’ve actually never even been here before, but I saw that, and I thought that was stupid. I’m going to buy a cup of coffee just to support you.” I was just like [cross talk]

Eve Picker: That’s really lovely. That’s really lovely. Yes, yes, it is. Many people just fear change, right?

Majora Carter: Yes, and I get it, and I understand … That’s like to your point, it is we fear what we don’t know, but if we don’t actually look at … Because real estate developers … You know that Bishop Desmond Tutu quote? A knife’s a knife. You could either use it to cut a hole in somebody or to cut a slice of bread and feed it to your child … It’s a tool. We can use it for horrible things, or we could use it for great stuff, but it is what it is. But how we use it, and unless we are empowering ourselves and other folks who are actually looking at places that actually have that triple bottom line and going, “That’s valuable. Maybe I won’t make the kind of returns …” because I’m sure … My rail station, one of the reasons why it’s also empty is because I’ve been very choosy. I am not going to open it up to another health clinic, or a tax-prep place that’s [cross talk]

Eve Picker: Yeah, yeah, yeah …

Majora Carter: We’ve said no to folks like that.

Eve Picker: Yeah.

Majora Carter: No. So, yeah-

Eve Picker: So have I, so you’re making me feel stronger.

Majora Carter: Good, good. No, I don’t mind at all; at all.

Eve Picker: I said no to a tax-prep space. I couldn’t bring myself to sign the lease. I just couldn’t do it.

Majora Carter: They have so much money, and they don’t even have to be open. It’s really crazy.

Eve Picker: No, they don’t have to be open. That’s the really bad thing. What a horrible thing to do in a neighborhood, just have a place that’s open for three months and then a shuttered storefront [cross talk] Anyway, now we’ve said what we think … Just like there’s been a wave of green-washing in this country, but I feel like there’s a wave of good-washing. People are talking about impact investing.

Majora Carter: I hope so.

Eve Picker: But when I hear you, I really wonder if they’re really impact investing.

Majora Carter: Nope.

Eve Picker: What do you think the future holds for impact investing? What do we have to do to change that?

Majora Carter: I am actually hopeful about some of the smaller-scale investment platforms that are out there, and just crowdfunding, in general, for real estate. I’m still learning about it. I do feel like our communities and our country, as a whole, is really only going to be changed when we start seeing each other in ways that we want to support. Look, I’m a woman of faith, so I think I actually really do believe that we can create a kind of heaven on earth, if we were really good at it, but I also think that- I am hopeful that … People are really tired of the expecting the status quo, because, by all accounts … I’ve got great vision. I have no balance sheet, so I don’t look good to anybody, and I get that, but I have a track record of getting things done, and-

Eve Picker: No, you don’t look good to very traditional financial [cross talk]

Majora Carter: No, I look miserable.

Eve Picker: You look great to other people, so that’s-

Majora Carter: Yes, and those are the people that I’m hoping will go, “Oh, wait …” But in order to continue to do that great work, she needs something that’s a little bit different than what she was getting before.” That’s what I’m hoping. Because I do- I also love the idea of people really taking ownership. I think that’s been one of the reasons why our low-status communities in America feel so disjointed and so destabilized is because we don’t have a way to really keep and retain roots in those areas where there’s access to capital, or predatory speculation. It’s all up in there, just [cross talk]

Eve Picker: But it’s really hard to get a neighborhood to focus, when has more than its fair share of single parents and people with two or three jobs.

Majora Carter: Those are the people that want more, and you know what? Believe me, and not to pooh-pooh it at all, yes, there are those who are not going to get out of their heads at all, but then there’s those are just like, “You know what? Why can’t I have it?” There’s always a critical mass of folks who are just literally waiting for something to do, like, frankly, the folks who saw me being bullied with this protest and who were just like, “No, wait … I see that. I know what I can do.” You may think that just buying a cup of coffee, a specialty cup of coffee, might not be an act of rebellion or resistance, but I absolutely looked at it like it was.

Eve Picker: Yeah, I think you’re right.

Majora Carter: I think there’s more of that that’s just waiting for a reason to be there, to actually stand up and be counted, and maybe even count a little bit of their own dollars to say, “You know what? Yeah, I believe in it. I believe in it so much that I’m going to invest in it.”

Eve Picker: So that’s what we’ve got to make happen at the train station, right?

Majora Carter: Yes [cross talk]

Eve Picker: I’m going to ask three sign-off questions that I ask of everyone, because I think I’ve taken up enough of your time. I could keep talking to you all day long.

Majora Carter: I know. I love it [cross talk]

Eve Picker: I think I know the answer to this, but we may as well reiterate – what’s the key factor that makes a real estate project impactful to you?

Majora Carter: Mixed-income housing, mixed-use … Well, the actual specifics – mixed income housing and mixed-use economic developments. But I think the real vision is talent retention in low-status communities.

Eve Picker: Then, do you think that crowdfunding might … I mean, you touched on crowdfunding. Do you think it might benefit impact real estate developers in more ways than just raising money?

Majora Carter: Would it impact real estate developers?

Eve Picker: Well, or neighborhoods or any [cross talk]

Majora Carter: -no, I think that you couple the idea of putting your cash into something that you believe in that is actually going to support your community creates a level of ownership that, you can’t buy that; you just can’t. It sets up a foundation and roots in ways that I think a lot of folks wouldn’t know what else to deal with.

Eve Picker: I think that’s right. Then, this is a really hard one – if you were going to change one thing to make real estate development better in the U.S., what would it be?

Majora Carter: Just one?

Eve Picker: Blow up all the Walmarts … I’m just joking …

Majora Carter: You know what? Honestly, I really would go back to … It’s very practical. Creating a fund and education platform specifically for people in low-status communities to either retain their properties or purchase them.

Eve Picker: Like a land bank.

Majora Carter: Mm-hmm. It’s not necessarily a community land trust, although that could certainly be a byproduct or a result of it, absolutely. But I think, ultimately, right now, we just have to stop the bleeding. I just think about my own neighborhood, whereas, I think within the past 10 years, our local homeownership rate has gone down from like 20 percent down to less than seven.

Eve Picker: Oh, why? Why did that happen?

Majora Carter: Because predatory speculators [cross talk]

Eve Picker: -foreclosures …

Majora Carter: Yeah.

Eve Picker: That’s really bad.

Majora Carter: Yep, exactly.

Eve Picker: Well, on that sad note, I’m going to say [cross talk] I’m going to say thank you very much for talking to me. I thoroughly enjoyed it-

Majora Carter: Thank you. Right back at you.

Eve Picker: -and I really hope we’ll continue talking.

Majora Carter: Cool. I hope so. Yes.

Eve Picker: That was Majora Carter. I’m in awe. Majora is uncompromising about her mission. She lives and works in Hunts Point in the South Bronx, one of America’s lowest-status communities, just two blocks from the house she grew up in. Majora is undaunted by taking new and necessary steps. When it became clear that no coffee shop operator wanted to operate out of her space in the neighborhood, she created a own business to achieve her goal. She’s committed to further developing the neighborhood where she lives and has now set her sights on the conversion of a former railway station into a food hub. She lives in a brownstone, two blocks from the one she grew up in. Now that is putting your money where your mouth is.

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

Image courtesy of Majora Carter Group

Crushing urban innovation.

November 8, 2019

Institutional lenders have their place when it comes to commercial real estate finance. They are the primary source of loans for real estate projects and they offer a wide array of business and development-oriented services as well, all of which are definitely needed. But traditional lenders are not particularly well-suited to solving development challenges in a rapidly changing world. Large financial institutions are not nimble. They will follow, rather than lead with, change. The mess we find ourselves in today is unfortunately in large part due to the dominance of large and traditional financial institutions in the funding of the housing market.

Cookie cutter projects

If you’ve spent any time at all in the urban cores of cities like New York, Los Angeles, Seattle or Chicago, you must have noticed that new construction seems to all look the same. The same residential projects. The same commercial projects. These days larger real estate projects tend to have a floor of businesses and shops with some parking added in, topped with lots of condos or apartments. Often these projects are marketed to high-middle or upper-income tenants, and often they are built with millennials in mind with lots of studio and one-bedroom units. And these developments are a primary reason that displacement is occurring. They are homogenous, catering to one type of tenant or buyer, in a particular income range, with a particular lifestyle. Often, they are funded by the same institutional lenders, like Wells Fargo, Key Bank, and Capital One Financial, amongst others.

Large financial institutions seem to prize predictability and stable returns over all else. The welfare of local residents and the improvement of the community don’t seem to be part of the underwriting equation. There is a desire for simplicity and scalability above all, hence the same projects are appearing in cities from Portland to St. Paul, despite massive differences in the needs of each respective city or community. Housing is not and cannot be a “one size fits all” product. The root cause of many of the ills in the housing market stem from this attitude of “build, and they will come” rather than using community needs and input to craft positive housing solutions.

Scalability is perhaps the biggest reason why lenders won’t support smaller, market-specific projects. Plans to build 20 or 30 units on a small, reclaimed industrial lot in the heart of the city are less attractive than monoculture mixed-use developments that can be replicated quickly and present little risk in terms of construction or the ability to lease to tenants or sell to homeowners. These smaller projects can often be built to maximize their social, environmental, and economic impact. By using non-traditional lots, developers can save on land costs and may also save on lengthy neighborhood review processes, which are common with larger-scale developments. Despite the obvious benefits offered by small-scale development, it can be hard to fund them.

Small investors. Big returns

As institutional investors cannot or will not adapt to unique or non-traditional models, developers and investors must leverage alternative sources of funding for progressive and innovative projects. When traditional lenders choose not to fund a project, look to your own community for development capital!

Raising capital through community-based means allows developers to offer similar returns on investment to smaller, local investors, who may have a personal stake in the success or failure of the project. Rather than the returns flowing out of the community to a large financial institution, that money stays within the area, giving residents and other stakeholders a direct financial interest in their community.

A diverse investment portfolio is a healthy investment portfolio. The same can be said of housing and commercial space. Modern mixed-use, cookie-cutter developments detract from the charm, sustainability, and longevity of a neighborhood. Rather than becoming a fixture of a community, as a unique building or development might, these podium developments re-shape the communities they are built in and drive out long-term residents. We need developers who are willing to take chances on non-traditional projects and want to push urban innovation in our cities to make them better places for everyone. If we crush them, we’ll all be a little poorer, culturally, financially, and socially.

Image from pxhere, C00

Small lots. One solution to the housing problem.

November 1, 2019

At times the housing crisis can seem just insurmountable. Upwards of 11 million Americans spend half of their monthly take-home pay in rent, an increase of more than 30% over the last five years. Almost 25% of housing markets across the country are considered to be unaffordable for the vast majority of citizens. Many different factors influence the rising cost and availability of housing. But there is one that is often overlooked – the design of housing developments. One way to avoid the mistakes of the past and work towards building a better housing future is to think about design from multiple perspectives.

New solutions for old problems

It may seem like housing has only recently become an issue. But while the housing affordability problem has grown in size and scope over the past few decades, it is not unique to our time and place. Over the years, both public and private sectors have tried, but largely failed, to solve the problem. Some infamous examples include housing projects, rent control, Section-8 vouchers, and a whole host of other strategies implemented not just locally but also state and nationwide. In order to change this failing narrative investors and developers should consider identifying and embracing entirely new development models.

Small-lot subdivisions

In the early 2000s, the Los Angeles City Planning Department collaborated with designers, developers, investors, city planners and other stakeholders to tackle the issue of affordable housing. Their collaboration led to several policy ideas that they believed would spur affordable housing production. Among the many ideas proposed at the time, one that stands out is the Small Lot Subdivision Ordinance.

The Planning Department introduced the ordinance in 2005. The Small Lot Ordinance regulates the construction of single-family infill housing in commercial and multi-family neighborhoods. It aims to create a new path for home ownership for first-time buyers by permitting developers to sub-divide small lots and build multiple homes.

Buying a home can be a demanding exercise. Aside from the substantial financial costs, there is also reams of paperwork, lots of professional fees, taxes and many other hurdles along the way. Small-lot or zero-lot-line housing aims to scale down homeownership to make it more accessible to potential buyers, without the use of a traditional condo model – instead, small parcels of land are developed and marketed towards entry-level buyers, or those who may be willing to trade size and aesthetic considerations for the ability to get into a home and start building equity immediately.

At the same time, developers can mitigate expensive land costs through subdivision or the ability to build on off-shape parcels of land, in areas that may not be viable for large-scale development. They get the added bonus of saving on costly risk-insurance premiums that come with developing standard condominium projects.

Unintended consequences

Unfortunately, as is often the case, this new small-lot approach was not as effective as hoped for – as evidenced by the continued and growing housing crisis in the Los Angeles Metro area. As land and housing prices in these areas continued to skyrocket, once affordable small-lot developments became increasingly desirable. Instead of providing a pressure-valve for housing, these homes have been scooped up by speculators, investors, and homeowners of means who wish to buy a piece of these now thriving neighborhoods.

This is not entirely the fault of the originators of the small-lot ordinance. Far from being seen as a panacea to get people into housing, small-lot development was and is viewed as one tool out of many to increase the total housing supply in an area, thus theoretically reducing prices. And it was effective in this goal. What planners in the early 2000s could not account for was the dramatic tide of urbanization, the reversal of residents from suburban and rural areas back to the cities, particularly pronounced in high-dollar regions on the coast, like Los Angeles and San Francisco.

Small-lot development has a great deal of potential for making housing more accessible, as long as it is used in conjunction with other potential solutions like mixed-income developments, grants to first-time homeowners, and other well-thought-out, rigorously tested solutions. It is not and was never meant to be an all-encompassing solution to the housing crisis. Rather it was meant to be just one tool in a toolbox, a piece of the puzzle that is the modern housing crisis.

Image of Rosewood, a small lot subdivision, courtesy of the The 4Corners Group

By right, by design.

October 30, 2019

I spent a most enjoyable hour recording this podcast with Liz Falletta, who is deeply immersed in the nuances of the Los Angeles building codes and their impact on housing production.

Liz just published a book, By-Right l By-Design, an interdisciplinary housing reference text. It studies significant Los Angeles housing design precedents and their related development types. A side-by-side comparison of these projects – real estate development models built in large numbers as of right, versus singular examples of innovative architecture built by variance – reveals new insights for future housing production in Los Angeles and elsewhere. Projects are examined through the lenses of real estate development, urban planning and design, expanding the context in which these works can be understood, evaluated, and, ultimately, built upon.

Liz teaches architectural and urban design at USC’s Price School of Public Policy where she’s taught for over 15 years. Her courses focus on design as an interdisciplinary activity and explore how the intersecting values of architecture, planning and development can inform the design process and improve design outcomes.

In addition to teaching full time, Liz is principal of Falletta Development, which developed one of the first small lot subdivisions in Los Angeles, located on Huntington Drive in El Sereno. She has consulted on many small lot subdivisions throughout Los Angeles and worked as an entitlements consultant on various single and multi-family housing projects. Liz is a licensed architect and a licensed real estate broker in the state of California.

In recognition of the breadth of her expertise, Liz was recently appointed to the City of Los Angeles’ Zoning Advisory Committee (ZAC). This 21-member group is the first line of critique for the city’s recode LA project, a $5 million dollar, five year plan to overhaul the zoning code. Liz is leading the Housing Working Group, a subcommittee of the ZAC working to prioritize issues of housing production, affordability and sustainability throughout the recode project. Ms. Falletta is also a member of the California Planning Roundtable.

Insights and Inspirations

Through research for her book “By-right, By-design” Liz learned that more design is not always better.
She found that some of the best housing solutions might not be the most innovative designs.
Over the years her students have evolved from not caring one iota about design, to caring very much today. And that bodes well for the future of cities.
To Liz impactful real estate projects are those that balance design, planning and real estate development well.

Information and Links

You can buy Liz’s book, By-Right l By-Design here.
Liz loves the Penland School of Craft in NC. She’s been several times for a creative recharge and plans to go more often in the future. (I want to go too.)
Something important to Liz is her participation in the Ross Minority Program in Real Estate (Home | Lusk Center for Real Estate) fostering minority participation in real estate development in emerging communities.

Read the podcast transcript here

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 Liz Falletta. Liz teaches architectural and urban design at USC’s Price School of Public Policy, where she’s taught for over 15 years. But that’s not all Liz does by a long stretch. Liz is also a small-scale developer, having developed, painfully, one of LA’s first small-lot subdivision projects. She sits on LA’s Zoning Advisory Committee, which is tasked with critiquing the city’s Recode LA Project, a $5 million five-year plan to overhaul the zoning code. Last, but not least, Liz has just published a book, “By-Right, By-Design,” where she researched housing solutions. Be sure to go to EvePicker.com to find out more about Liz 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: Hi, Liz. Thank you very much for joining me all the way from California. It’s earlier for you than me, right?

Liz Falletta: Yes.

Eve Picker: I know you teach architecture and urban design at the University of Southern California’s Price School of Public Policy. I think you also have your own development firm, wrote a book, and you were one of the first developers to develop a small-lot subdivision in LA. You’re a very busy woman.

Liz Falletta: Yes. I do teach design across disciplines at the Price School at USC. I’m an architect and, for a long time, I taught in our architecture school, but now I’m exclusively in our policy-planning environment. Thinking about design from multiple perspectives is something that I do a lot. I guess it’s been a long time now since I did that small-lot subdivision project, and I think I’ve blocked a lot of it out.

Eve Picker: Well, I wanted to hear a little bit about your development work. What prompted you to test out the small-lot subdivision? It might be worth telling our listeners a little bit about that zoning-code overlay, which I kind of find fascinating.

Liz Falletta: Sure. The small-lot subdivision came out of an effort by the LA Planning Department, in 2004/2005, to really address housing and our mounting housing crisis, which is now even more of a crisis. They actually invited an interdisciplinary group of designers, developers, planners, other stakeholders in housing to brainstorm what are some ideas, from a policy-planning perspective, that could engender housing production.

Liz Falletta: The small-lot, or, aka, zero-lot-line housing was one of hundreds, I think, and was really the one that got pursued. I think the idea was if you were able to scale down homeownership and also allow development outside a condominium model … Because, really, what the small-lot allows is feasible homeownership on a smaller scale. Contractors and builders don’t have to get onerous builders risk insurance like they do when they build condominiums.

Eve Picker: Interesting.

Liz Falletta: Yeah, no, it’s … I think planners really thought that the smaller scale would create for more affordable housing.

Eve Picker: I’ve seen some of that, and it’s not affordable, is it?

Liz Falletta: No, no. That is the thing that struck me the most is that, if you build a small-lot in Venice on the west side, it’s going to be $2 million a unit, because it’s the west side. Build one in Silver Lake, it’ll be a $1.5 million. Smaller-scale solutions, I think, are a good option. I think ultimately, after having done one, and having seen how the small-lot has evolved since I did the one that I worked on, I think it’s one tool amongst many [cross talk]

Eve Picker: I think what it does do is it sort of maximizes the use of infrastructure that’s already in place. I know that there are cities all over the world kind of densifying areas through zoning so that they can maximize their transit [cross talk] and utility lines. One little house in the middle of a very large lot in a highly desirable neighborhood doesn’t really … It just makes the sprawl go further, right?

Liz Falletta: Exactly. I think one of the things that was actually brilliant about the way the ordinance was written is that it didn’t have anything to do with the zone change at all. It had nothing to do with zoning. It just allowed you to use lower-density, multifamily-zoned sites in a different way. They might have been built as apartments or condominiums before, but this allowed … We have a restricted-density zone, for example, probably 20 dwelling units an acre, density-wise; it allowed those sites to be developed with for-sale housing, which, at the time, was … The small-lot subdivision came out pre-crash.

Eve Picker: If you were to rewrite that today, what would you change about that small-lot subdivision overlay?

Liz Falletta: That’s such a good question. I do think … Because it’s actually not an overlay, but I think using it as an overlay, and being more targeted and specific about where it could be used and how, I think, would be helpful [cross talk]

Eve Picker: So, it’s LA-wide. It’s just a change for the zoning-

Liz Falletta: It’s LA-wide, yeah [cross talk] It’s an ordinance that allows you to develop with a different model. It was sort of marketed as small houses on small lots, and it really has turned into giant houses on small lots.

Eve Picker: Yeah.

Liz Falletta: So, I think [cross talk]

Eve Picker: It’s an interesting- it’s like an interesting lesson in how much you’d have to think about the details of a code like that.

Liz Falletta: Oh, yeah. Also, you have to … I feel terrible saying this – you have to think about the bad actors.

Eve Picker: Yeah. I think that’s right.

Liz Falletta: Who’s going to abuse this, and how, and-

Eve Picker: So, this is not a democracy. It’s [cross talk]

Liz Falletta: Yeah. How do we head off the bad acting? I think we saw a lot of really bulky design that communities pushed back against. You saw a lot of projects … There were a lot of single-family homes that were built on multifamily-zoned sites, so you saw a lot of turnover of those kinds of sites, and communities … You know, communities, in the main, don’t really understand zoning.

Eve Picker: Yes, that’s right.

Liz Falletta: And were very upset to see houses being demolished to build these giant things. Then a lot of rent-controlled small-scale housing from the ’20s, ’30s, and ’40s has been demolished to build them, also.

Eve Picker: Maybe even just saying that if you have the privilege of adding more units to a lot like that, there’s a maximum size to each of them would have kind of stopped that. It’s interesting. What other development are you doing?

Liz Falletta: I have done development in the past. I did two or three small-lots, also, that, in the end, didn’t get built. Then, the market crash happened, and then I started teaching full-time, and then, I started writing this book, which, it turns out, takes a long time to write a book. So [cross talk]

Eve Picker: Yes. So that’s taken over. Okay- [cross talk]

Liz Falletta: -yeah, but I am actually, I should say, looking to do another development. I feel like I learned a lot by doing all the research for the book. I would like to get back into small-scale development in LA.

Eve Picker: What’s interesting about small-scale development?

Liz Falletta: Personally, it’s just the financial scale [cross talk]

Eve Picker: -in LA, small-scale is still really big, and expensive, right?

Liz Falletta: -yeah, still pretty expensive. But also, I think that’s where we can build successful communities. Not that we can’t have large-scale communities that are successful, but I think neighborhood change in giant steps is not palatable to communities. I think smaller-scale changes can be really impactful [cross talk]

Eve Picker: Right. It’s a way to innovate change slowly and gently, right?

Liz Falletta: Yeah, and in ways that people can embrace and see immediate benefit from, as opposed to this 200-unit housing project that assembled 10 lots, and suddenly, the neighborhood is totally different.

Eve Picker: Yeah, I think that’s right. Your work focuses a lot on LA. What conditions have you found that are unique to LA versus just across the country [cross talk] in the research that you’ve done?

Liz Falletta: One of the reasons why this research was well-suited to LA is we really do have a strong history of design innovation, but also a really interesting history of multifamily housing and different multifamily housing types. They’re different types than we see maybe in Chicago or New York. Then we also see these types have persisted. Our city is younger than many on the East Coast, so these types are still extant in a way that maybe they aren’t in some other communities. I think, also, LA has the reputation – and it’s somewhat true – super pro-growth; really driven by development and developers. There’s long been a close association with the city with the development- development as a profession.

Eve Picker: Your book is called “By-Right, By-Design.” I’d love to know how you came to that name.

Liz Falletta: So, by-right, as I’m sure you know, just means by-right projects can be built with ministerial approval – approvals where nobody can say … If you meet all the criteria, and the criteria are laid out, nobody can deny approval for your project. Developers really like by-right projects, or permissionless projects, because they’re a lot more certain, and they’re less risky, and they usually take less time. Developers would prefer to build by-right if they can. That’s become increasingly impossible in Los Angeles. There’s been a lot of discussion about by-right housing- elevating the threshold of by-right and actually making more projects able to be built by-right.

Liz Falletta: For my purposes, I needed a second category that was a corollary to by-right, and that’s where by-design came from, because the book really looks at a set of six case studies that look at really famous Los Angeles housing precedents by famous architects, aka by-design, with their by-right counterparts. By-design could also mean by-discretion, or by-variance. All of the by-design projects actually required some sort of discretionary approval to be built.

Eve Picker: Interesting. And do you think they’re better?

Liz Falletta: Not always, actually.

Eve Picker: That’s interesting.

Liz Falletta: No, I was … Because one of the questions I had when I started out on this is like I wonder if all these projects that are really famous, you know, that I studied in architecture school, I wonder if they broke the rules; if they could only do these innovative things by not following the rules. It was true. They all required variances of different kinds. I don’t think being by-design means they’re necessarily better, or better designed, or that if they’re in the by-right category, they’re poorly designed.

Liz Falletta: One of the things that really started this research is some annoyance at the fact that architects always … A. they always believe that unless it was designed by them, it’s not really well-designed, and B. that – I should also say that I’m a licensed architect – but that they really thought more design was always better in every situation, and it’s not necessarily true. I was frustrated-

Eve Picker: That’s a pretty damning thing for an architect to say.

Liz Falletta: I know. I’m sorry [cross talk] bad. I guess typically what I say is I think design really, really, really matters. It just doesn’t matter in the way that many architects think it does.

Eve Picker: How so?

Liz Falletta: I think architects are trained to be innovative all the time, to be focused on image, to be focused on creating things that are new, that are this, that are that. I think that allows them to not see, or to discount other aspects of design that are maybe tried and true, or repetitive, or something that actually really matter to quality of life; because I think the design of housing, for example, really matters, but I think what really matters about it is a lot about density, about spatial organization, about circulation, about how common space and open spaces organize. I should say, also, I think there are a lot of amazing architects doing really great projects who don’t maybe share these attitudes, but I think the profession focuses less on these things; doesn’t feel like these things are as important.

Eve Picker: Yeah. As you know, I’m also a trained architect, and I went to the dark side, too, and became a developer.

Liz Falletta: Yay!

Eve Picker: Yeah, but, you know, I have a sort of similar frustrations with the architecture profession, which I adore. I think that architects are trained in a unique and priceless way, but I think they are not necessarily … Especially young architects don’t really understand how much they’ve learned and how they can put that to use in other ways and follow a traditional path in sort of that branded architecture studio that may not always make the world better.

Liz Falletta: Yeah.

Eve Picker: I wish they’d learn a little more about real estate development, as well, because the pragmatic side of architecture is sometimes overlooked, right? I remember having conversations with an architect about the fact that five units would be so much nicer than six. I’m thinking, “Well, five units won’t be built and six will be …” It’s that sort of basic thinking, yeah …

Liz Falletta: Yeah, because that sixth unit is your profit; that’s your cash flow [cross talk].

Eve Picker: -or I’ll break even. It may not even be profit, you know?

Liz Falletta: Exactly. One of the reasons I wanted to write this book is because I wanted to help architects, and planners, and real estate developers better understand each other’s goals and values so that that architect could use his understanding of the profit motive in real estate to get his or her own goals addressed, or met, or something. Because, if architects just sit there and say real estate developers are terrible because they don’t understand that the five-unit design is going to be better than the six-unit design, that’s completely unhelpful. It’s not going to get us anywhere.

Liz Falletta: I think what architects don’t understand is they have an interest, a vested interest, in the planning and real estate development strategies of the projects they design, right? A good example from the book is Gregory Ain’s Mar Vista Tract, which had a very enlightened developer who had done some development in the ’20s, or early 20’s; hadn’t done anything in the ’30s, during the Depression, and really wanted to build a community, which is fantastic. Ain was also very interested in that. They got a lot of pushback from lenders, and they got a lot of pushback from the city planning department, in terms of how it was laid out, and the style the houses; did it have flat roofs or not? Ultimately, they could only build half of the tract, and that half was a financial failure. So, if people wonder why we don’t have modernist communities, that is one reason.

Eve Picker: Yeah.

Liz Falletta: They had to sell off the rest of their land. and it got developed in the traditional kind of manner.

Eve Picker: Talking about by-right, I know you’re a fan of the recent offering we had on Small Change, Bungalow Gardens, which is in your neck of the woods. It’s a little homeless housing project. I believe that’s a by-right project [cross talk] and I’m wondering why you like that project.

Liz Falletta: I personally would love to build a bungalow court for myself. My goal – I think a lot of people have this goal – it’s going to be hard to do here in Los Angeles. Everybody wants to build a compound, where you can live with your friends and have communal dinners. Actually, also, I should say that the first place I lived when I moved to Los Angeles was a very small bungalow court, and that-

Eve Picker: Oh, cool!

Liz Falletta: It was interesting. I moved out here from D.C. to go to SCI-Arc, actually, for grad school. Finding housing was really interesting, because I had lived in a rowhouse, I think, in D.C., in a basement apartment. I’d never encountered a bungalow court, but I was driving around, and they’re just … Everybody loves them. They are the best places to live.

Eve Picker: That’s really sweet.

Liz Falletta: You know your neighbors immediately [cross talk].

Eve Picker: How big are they, typically?

Liz Falletta: Oh, gosh. They can be relatively large. The one I lived in was probably six units, eight units-

Eve Picker: For our listeners, the bungalow court typology, I think, start being built in the ’50s, right?

Liz Falletta: Really much earlier than that. Probably the latest ones are in the ’30s.

Eve Picker: In the ’30s. This little one that Jason and John built – a building, Bungalow Gardens – is the first one in almost 100 years.

Liz Falletta: You can’t build them now, mainly because of the parking requirements, but also just underlying density is reflected in land values, so you can’t … Basically, if I wanted to build a bungalow court, I would overpay for land and then under-develop it. Part of what makes the bungalow court work, really, is the scale and the individuality of units.

Liz Falletta: Many of the units actually- these were often built for tourists, because people would come to LA for their health, but would also … It took a long time to get here, then, so you stayed for months. They had all this built-in furniture and fun things that allowed you to live in the unit, easily, for a few months, as opposed to having to bring all your belongings and actually move here for real.

Liz Falletta: They’re very efficient; they’re laid out, really, very functional. They’ve got a lot … They’re high, in terms of individuality, so you have a lot of identity with your unit and your space, but then there’s that communal scale. That actual courtyard usually then connects to the block and the street [cross talk]

Eve Picker: It’s very nice [cross talk]

Liz Falletta: -if we could all live in bungalow courts, we would [cross talk]

Eve Picker: -maybe the issue is not … Maybe the issue is not just by-right, and by-design, but also by-cost, because the cost of land clearly drives development, as well, right?

Liz Falletta: You have done your deal when you bought the land, right?

Eve Picker: Yes.

Liz Falletta: If you overpay for land, you’re done. You have determined sort of what kind of project you’re going to do and whether that project’s going to be a success or not.

Eve Picker: How does all of that fit in with affordable housing?

Liz Falletta: One of the other benefits of building small-scale housing and even this- the whole explosion of ADUs is many of those are going to hopefully provide inherently affordable housing, as opposed to subsidized affordable housing. Getting subsidized affordable housing, we just haven’t been able to build a huge number of units. There’s a lot of competition for those funds. We now have transit-oriented communities. It does incentivize the development of affordable units in mixed-use projects. You get some extra density and some parking reductions, if you’re near transit, and they have a pretty liberal definition of transit. I do think that is generating way more affordable units than maybe some of our other mechanisms have in the past [cross talk]

Eve Picker: Interesting. Zoning becomes a serious mechanism for affordable housing. Actually, that brings me to the other thing I’d like to talk to you about. I think you were appointed to LA’s Zoning Advisory Committee? The Recode Project-

Liz Falletta: Yeah. Mm-hmm.

Eve Picker: You’re one of not many people who are critiquing that and leading a subcommittee on housing, right?

Liz Falletta: Yes. I was just talking about this with my students yesterday and realizing that I needed to check in with people at the City, because we haven’t had a meeting in a while. LA’s zoning code that we are still using today was officially created in 1946, even though we had a code prior to that. We had residential districts as early as 1908.

Liz Falletta: Our code has been frustrating to use for … It makes it really difficult for people to do good projects; the kind of projects that the city wants to see. Mixed-use has always been a problem with our code, because it’s very single-use oriented, so it’s confusing to use. There was also a substantial sort of phantom code, or ghost code that, if you were in the know, you knew [cross talk]

Eve Picker: Oh, really?

Liz Falletta: -you didn’t? Yeah, that wasn’t very transparent. It meant that certain people got certain favors. The planning department wanted to do several things. One, make the code more user-friendly; I think, two, make it more modular. Basically, it’s a form-based light code. It disassociates use and form. The idea is that the modularity will make the code more flexible, but then, also, as people want to do different kinds of projects, the tools are already there, in terms of making a zone combination that will facilitate that kind of project. I think the third thing they wanted to do is elevate by-right processes. So-.

Eve Picker: Interesting.

Liz Falletta: -allow more projects to be built by-right, because virtually no projects are built by-right.

Eve Picker: Yeah, and the entitlement process takes a really long time in LA [cross talk]

Liz Falletta: Oh, yeah. No, the first small-lot project I did was the real education because I was like, “This makes no sense …”

Eve Picker: How long did it take?

Liz Falletta: Oh, my God. At least two years, yeah. It was like banging your head against a wall.

Eve Picker: Now, I know, with the Bungalow Court listing, I talked to them probably for two years before we listed it. All along the way, there was entitlement, entitlement, entitlement, right up until the end.

Liz Falletta: Yeah. What I learned is that part of that is inherent in development. Every week, something happens that’s going to kill your project. It’s just how it is, here. I would get upset and there would be crying. Finally, after a few months of this, I was like, “Oh, this is what development is. This is how it works. Okay. I need not get so upset about this, because it’ll kill me, A, and B. that’s the work site traffic control inspector. Sure, he’s going to deny your work site traffic control plan …” That I even had to have a work site traffic control plan was ridiculous, but-

Eve Picker: How many units are we talking about?

Liz Falletta: Four!

Eve Picker: That’s crazy. That’s crazy.

Liz Falletta: It’s crazy, and they already existed. I was using the ordinance. The ordinance was silent on whether it had to be new construction or if it could be existing construction. Basically, I bought two duplexes on a big lot, and cut the duplexes apart, and cut the big lot into four.

Eve Picker: And it took two years to get it approved.

Liz Falletta: Yeah.

Eve Picker: That’s nuts.

Liz Falletta: It was insane. Then they wanted me to build a public sewer.

Eve Picker: Oh …

Liz Falletta: Yeah! It was … I think my experience was maybe more extreme than some.

Eve Picker: I had the public sewer experience in Pittsburgh once.

Liz Falletta: Did you?

Eve Picker: Yes. The sewer was out on the main street, and they’d been wanting to move it into the alley for a long time, behind the building. Our building was at least 600 feet from the crossroad. They wanted us to lay an entire line to the [cross talk] So, every other building on the both sides of the alley could feed into it. It was really awful.

Liz Falletta: Yeah. No, they wanted me to build an eight-inch line with a manhole on my property for four one-bedroom/one-bath units.

Eve Picker: Now you’re in the middle of the Recode Project. How long has that been going on?

Liz Falletta: You know, it was supposed to be a five-year project, so it’s gone on six and maybe seven years, now.

Eve Picker: For a five-year project?

Liz Falletta: Yeah, five years; $5 million dollars. It’s going to be interesting to see how it plays out.

Eve Picker: Do you think that it’s going to be successful? Are there pitfalls that you’re seeing already?

Liz Falletta: There are several. There are many pitfalls, I think. One is mixed messaging about the project and what it would do. I think they promoted it differently to different constituencies. That’s fine, but they have not been very clear about that. I think, two, they have- this is a critique of urban planning. I think there’s a whole sector of urban planning that feels like if they did 800 community outreach meetings, they’ve done their job, and I don’t think that’s the measure of whether this is successful or not [cross talk] I kept getting emails; “We’ve had 800 meetings …” and I’m like, “Great …”

Eve Picker: Wow, that’s a lot meetings.

Liz Falletta: It was a lot of meetings. It definitely was. Then, thirdly, these zones are basically being applied in a community planning process … I unfortunately know very little about planning on the other cities or the East Coast but, in California, every city has a general plan, which is sort of the constitution for growth and development; has different elements. One of them is about land use and planning for land use. In the city of LA, we have 35 different community plans that basically apply zoning and apply various planning tools to specific parcels and talk about how neighborhoods are going to grow and change.

Eve Picker: Right.

Liz Falletta: We update … We don’t update those very often. Five or six years ago, we’d updated four or five in the past 20 years. We didn’t update them very often. What that meant for the zoning code was that most communities wouldn’t see the benefit of this new code for decades. We’d have a dual kind of code system. The mayor, then, vowed to update all the community plans within six years. I don’t know the status of that, right now [cross talk]

Eve Picker: It sounds like a monster project.

Liz Falletta: Yeah, no, it’s just … I fear that it was oversold, and people aren’t really going to see the benefit of it.

Eve Picker: That’s a shame. What do you think is the best possible outcome for this code overhaul for LA?

Liz Falletta: What all of us really focused on was identifying and reducing the barriers, which are legion. But then there was a lot of … I think there are a lot of people out there … I’m one of these people who want- I want to do interesting small projects, and I can’t, for a variety of reasons. You have to cobble together … It’s so interesting to me that the Bungalow Gardens project really could only exist because it’s in a TOC designation, because they don’t have to have parking.

Eve Picker: Oh, and probably because the developers are non-profit [cross talk] they spent two years on that project, and I don’t know what for-profit developer could do that.

Liz Falletta: Right. No. A for-profit developer would slide right past that project, or at least definitely not do it in the same way-

Eve Picker: Yet they got an award for innovation on that project. So, there’s something really broken, right?

Liz Falletta: Yes, that is- that’s exactly right. Part of the reason, also, that I wrote the book is I think … We’re having to have a citywide conversation about housing and how to produce it. Our ability to have that conversation is just as broken as all the tools that we use to try to generate housing – affordable housing that costs $500,000 to $700,000 a unit to build. I’m even beginning to think that these sort of silos that we exist in are a problem, when we think about gentrification, also. It stops the conversation. We just don’t get anywhere.

Eve Picker: Yeah, I think that’s right. It’s kind of depressing.

Liz Falletta: Yes. I’m sorry. No, I mean-

Eve Picker: You know, John Perfitt said something, actually, in the podcast I did with him and Jason about the work they do as a nonprofit housing developer that I think was really sad. That was engagement of community is very difficult for them and very expensive, if they’re going to … It’s kind of had the reverse impact on involving community because if they’re going to spend a long time on a housing project, they simply can’t afford to have it shut down by someone at the end of a two-year process. They don’t have the money for it. That means that they almost have to avoid some community engagement, which is kind of the reverse that you want, right?

Liz Falletta: I think that’s one of the big reasons, also, that you’ve seen more housing initiatives in California at the state level. People interested in taking local control over housing away, because communities have shut down projects, basically because they’re only looking at them from a singular perspective, which is their own. We can’t move forward, as a city, with that.

Liz Falletta: For a long time, Christopher Hawthorne, who is now the city designer; I forget exactly what his title is, but he was the architecture critic for the LA Times for a long time. Then, Mayor Garcetti hired him recently. Basically, his analysis of the city really was for a long time we had so much- enough space to be 10 different cities. We could be the industrial engine. We could be the idyllic single-family home and the garden. We could be the diverse multifamily community. But now, we’ve run out of space, so all of those images and versions of the city are competing with one another and conflicting. We have to have a higher-level conversation. There needs to be a lot better education of the public about housing and how housing works [cross talk]

Eve Picker: -just on a broader level, impact investing … How do you think it’s aligned with real estate and the importance of it in your mind?

Liz Falletta: Well, like I said, I was super-excited to be able to invest in John and Jason’s project. I actually have been teaching design to real estate development students for about 15 years, 16 years; increasingly horrifying amount of time. It’s interesting, the evolution of the students that I’ve encountered, because when I first started doing it, none of them thought design was important. None of them wanted to be there. I got ones on my evaluations. Everybody hated me. It was demoralizing and terrible.

Liz Falletta: Now, the students are not only aware of issues of gentrification; really aware of the perception communities have of developers and development; aware of social issues, like homelessness. Also, they’re really interested in building communities, and innovative communities. I think the interest in impact investing is going to track that. I think my generation screwed it up or it was part of the problem. I think the students- I think kids in their 20s and 30s are going to really change things.

Eve Picker: They really care about the world, I think, in a way-

Liz Falletta: They do. Climate change … I think they really understand development as a responsibility, as opposed to a way to make money. Don’t get me wrong; they want to make money, totally, but it’s interesting; a lot of them have fathers or mothers who are developers, and their parents’ development practices really bother them. They’re like, “You know, my dad doesn’t spend any money on this part; this thing that I think is really important.”

Eve Picker: Interesting, yeah-

Liz Falletta: Things are changing.

Eve Picker: I think that’s right. I think my parents didn’t think that way either. It’s a definite shift, which is great.

Liz Falletta: Yeah, and I’m wondering how it happened. I’m not sure I know. I don’t know if you have children, because I don’t. I just see the students and see how they how they shift and change.

Eve Picker: Yeah. I think climate change is probably- is there, and people are thinking about it at a much earlier age. That surely has to impact the way they think about the world. Then, there’s so much access to information easily-

Liz Falletta: That’s true.

Eve Picker: -that a generation or two ago, we just didn’t have [cross talk] there’s more knowledge to- or more access to knowledge, whether it’s fake or not. I mean, you have to sift through it all, but there’s just more access. I don’t know. I think all of those things together change things.

Liz Falletta: I think, too, their expectations have changed, in terms of how they’re going to live. They don’t all assume they’re going to buy single-family homes; either because that’s out of reach or because it’s just not something they’re going to value-.

Eve Picker: Or because it’s illegal in some cities, now.

Liz Falletta: Right, exactly.

Eve Picker: So, I’m going to I’m going to sign off now. We’ve been talking for a while, but I wanted to ask you three questions that I ask everyone. That is what’s the key factor that makes a real estate project impactful to you? What really matters to you?

Liz Falletta: I talk about triple-win projects in the book, and these are projects that perform well from the perspective of design, planning, and development. For me, that’s the real hard hallmark of a good quality project. Because the interesting thing to me was the projects that balanced those perspectives from their inception really were the more resilient projects, over time, in terms of being valuable projects from all three perspectives. The Village Green, which is a really famous Garden City garden-apartment projects in LA is a really good example. It was definitely innovative, when it was built, but also very financially successful, when it was built, and really created a community. It’s performed well in all those measures, throughout its history.

Eve Picker: That’s really interesting. Other than by raising money, do you think that crowdfunding could benefit small-scale or impact real estate developers like you?

Liz Falletta: Yeah, I hadn’t really thought about using it as a tool, but I do think, as John and Jason talked about, it is an interesting way to do community outreach and involve neighbors in projects. I think that is pretty brilliant, giving people the opportunity to invest in something next door. I think it’s probably also a really great networking tool. I could imagine that, for John and Jason, the people who invested in this project are probably going to invest in other projects [cross talk]

Eve Picker: -we can only hope, right?

Liz Falletta: Yeah, no, I’m up for it-

Eve Picker: We hope that they build more. Then, if there was one thing that you would change to improve real estate development in the United States, what would that be?

Liz Falletta: Oh, gosh, what would that be? That’s such a good question. I think it really comes down to bad acting. I think a lot of our policy is retroactive and is responding to bad acting instead of promoting high-quality, community-oriented projects created by people with good intention.

Eve Picker: Oh, yeah.

Liz Falletta: So, I guess that’s really about changing the culture of the profession, which I do think is changing. Maybe it could change quicker.

Eve Picker: Well, thank you very much. I really enjoyed talking to you and good luck with everything.

Liz Falletta: Yeah, thank you. You, as well.

Eve Picker: Actually, I have another question for you, Liz, I think I’m going to add in. What’s next for you, now you’ve written the book?

Liz Falletta: Oh, gosh, I have to say that-

Eve Picker: A break?

Liz Falletta: -yes, it is … I’m doing some book promotion, and I am looking for a real estate project right now, in between teaching, and also sort of … I’ve been teaching now for nearly 25 years, and I’m wondering if it might be time for a larger-scale change; maybe doing something more entrepreneurial with real estate.

Eve Picker: Oh, wow.

Liz Falletta: Yeah.

Eve Picker: Keep me posted!

Liz Falletta: I will.

Eve Picker: Okay. Thanks, Liz.

Liz Falletta: Okay, thanks so much. Take care.

Eve Picker: That was Liz Falletta. What an amazing woman. Here are some of the takeaways from what Liz shared with us today. First, through research from her book, “By-Right, By-Design,” Liz learned that more design is not always better. She also learned that some of the best housing solutions might not be the most innovative designs. Over the years, her students have evolved from not caring one iota about design to caring very much today, and that bodes well for the future of cities.

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

Image courtesy of Liz Falletta.

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