Investing

Turning renters into homeowners.

February 3, 2021

Darryl Scipio is a man of many talents.

He’s been deeply involved in community and political activism since his college days, taking on leadership of the Black Law Students, earning a fellowship to attend the Eagleton Institute of Politics for a year, and working in the Community Law Clinic. After graduating law school, Darryl joined the ACLU of New Jersey, running the Racial Justice Program there. And he spent the next few years working in the labor movement with Local 32BJ Service Employees International Union.

Justice runs deep with Darryl.

And now he’s applying that passion to a real estate project he’s embarking on called Savers Village. He aims to help every tenant save enough for a down payment on a home, to turn renters into homeowners and start building generational wealth. And he listed the investment opportunity on Small Change because he believes that crowdfunding really levels the playing field for investors.

Insights and Inspirations

While Darryl’s interests are diverse, there is a common thread that binds them. He was brought up to help others and he’s passing that on.
Darryl believes that culturally, philanthropy is outdated. Philanthropists tend to give to tried, tested and big organizations. He views crowdfunding as having enormous potential for igniting new ideas.
What’s Darryl’s big hairy audacious goal? He wants to build 60 Savers Villages over the next few years.

Information and Links

Darryl is proudest of his wife starting a company that makes beard oil for men. He uses it and loves it. It’s at www.ancestralelement.com.
And then there is his nonprofit chess mentorship program. It has two sites www.newarkchessclub.com and www.successwithchess.com. They’ve taught over 5,000 children how to play chess, and given tens of thousands of dollars to chess tournament winners in scholarships during the last decade.
He also wants to put a spotlight on Meshele Hardy – she has a podcast called Progress on Purpose and its full of great tips on making it! She also owns a clothing company called Sew Naturally Talented, and she makes each piece by hand. AND she is a high school biology teacher. Just all around amazing! And also his sister :-).

Read the podcast transcript here

Eve Picker: [00:00:19] Hi there. Thanks so much for joining me today for the latest episode of Impact Real Estate Investing. Daryl Scipio is a man of many talents. He’s been deeply involved in community and political activism since his college days, taking on leadership of the Black law students, earning a fellowship to attend the Eagleton Institute of Politics for a year and working in the Community Law Clinic. After graduating law school, Daryl joined the ACLU of New Jersey, running the racial justice program there, and he spent the next few years working in the labor movement with Local 32 BJ Service Employees International Union. Justice runs deep with Daryl. And now he’s applying that passion to a real estate project he’s embarking on called Savers Village. He aims to help every tenant save enough for a down payment on a home. You’ll want to hear more. Be sure to go to Evepicker.com to find out more about Daryl on the show notes page for this episode. And be sure to sign up for my newsletter so you can access information about impact real estate investing and get the latest news about the exciting projects on my crowdfunding platform, Small Change.

Eve: [00:01:51] Hello, Daryl, thanks so much for joining me.

Daryl Scipio: [00:01:54] Hi, Eve, it’s my pleasure. Absolutely.

Eve: [00:01:57] So you’ve led an incredibly rich and varied life, as far as I can see. Dual degrees in political science and Africana studies, .com jobs, entrepreneur, political fellowships, launching a chess mentorship program, racial justice work at the ACLU. And as a lawyer and I’m wondering how and why all of this and what really drives you.

Daryl: [00:02:24] Thanks for the question and thanks for having me today.

Eve: [00:02:27] Yeah, it’s a pleasure.

Daryl: [00:02:28] It’s a real pleasure and an honor to be here. I have always had varied interests, and if something looks interesting to me, I would say to myself, I want to try that. I want to learn more about that. I’d like to see what that’s about. Sometimes it’s worked and I’ve had great success. Sometimes it hasn’t and I’ve been like, get me out of here. But, you know, I’ve really tried to take life by the horns and live it to the fullest and have as many experiences as I possibly can while I’m here. So I think one of the threads, the common threads between everything that I’ve participated in or most of the things that I’ve participated in is a desire to help others and a desire to take the resources that I’ve been blessed with having access to and using the knowledge or the connections that I’ve gained to help people that don’t have access to that resource.

Eve: [00:03:37] Yeah, I think I see a fairly solid strain of racial justice in your work as well. Is that correct?

Daryl: [00:03:45] That is correct. It’s because I’ve always been impacted by race in America. And so I just thought that the right thing to do was to to fight for racial justice in one way or another. Racial justice has always been and race has been a central factor in my life. As a Black man in America and as someone that has grown up with mentors and adults that are important to me, that have given themselves to me and their time and their expertise and their mentorship. And the only thing that they’ve said to me was, now, when it’s your turn, give it back to someone else and you know, there’s been in this country, a lot more racial unrest that I’ve seen since, you know, in the past decade or so. And it is something that has placed itself into my life because of who I’ve been around and who I’ve been influenced by. When you see some sort of injustice, I was taught that you address it. Because we’re all, I believe that we’re all here to make this world a better place and the way you do that and when it comes to racial injustice, it’s to create racial justice.

Eve: [00:05:24] Yeah, I have to say, I feel a little more hopeful after meeting people like you and the project that you’ve embarked on, which which I’d really love to talk about next. It’s a real estate project in Newark, New Jersey, and I know it has a social mission, but let’s talk about the structure first. So after all these other things that you’ve done, you’re now turning your attention to real estate and you’re planning to build a rather large building. You want to just tell us a little bit about the building itself?

Daryl: [00:05:53] Yes, the building will be on a plot of land that’s about twenty six thousand square feet, a little over half an acre. We plan to build 39 units in an apartment building. And we’ll have three bedroom units, two bedroom units and one bedroom units, and I’m not exactly sure about the breakdown. It’ll probably be 15 one and two bedroom units and nine three bedroom units.

Eve: [00:06:27] Right. Do you have a timeline for construction? Where are you in the in the process?

Daryl: [00:06:34] We are currently in the process of acquiring the land and getting city approvals, we’re anticipating that takes about six months, and then we will spend 18 months on construction, so we hope to open our doors at the end of 2022. Worst case scenario, beginning of 2023.

Eve: [00:06:59] And who are your partners in this?

Daryl: [00:07:01] I’ve partnered with a developer named Patrick Turborg. I’ve partnered with real estate professionals Frank Robinson, Stephen Aravilo. And my architect is Mark Best. My engineer is Brian Grant. And these are folks, honestly that have a lot more experience than I do. So it was important that my team knows more than I do about their about their specific areas of expertise.

Eve: [00:07:37] And if I’m correct, it’s largely a Black team as well. A team of Black professionals, is that correct?

Daryl: [00:07:43] That is correct. One of the goals that I seek to make a reality is that not only do we help empower the residents of Newark, that and the members of Savers Village, but also the people that are building and developing and raising capital. And we want to help empower folks that look like me so that, you know, we can start to pass down that institutional knowledge to our children and they can do it with their children. And the only way to do that is through having the experiences.

Eve: [00:08:17] So you mentioned the name of the project, Savers Village, which is a really interesting name. And I know there’s a bigger social mission behind this project. And what challenge are you trying to solve with these thirty nine units?

Daryl: [00:08:32] We are working to turn renters into homeowners with this project. Newark, New Jersey, where the project is located, has a population that has seventy five percent of the people that live there as renters, they rent from other folks and that’s that’s huge. As you can imagine. So there’s a big push to turn those folks into homeowners. And the city of Newark supports this initiative because part of that big push to turn renters into homeowners comes from the city and from the mayor and his administration to start to create and build wealth for Black folks in America. Most of our wealth has come through homeownership and land ownership. So during the mortgage crisis of 2008, 40 percent of the Black wealth in America was wiped away.

Eve: [00:09:29] Interesting.

Daryl: [00:09:29] And when all those subprime mortgages defaulted and all those banks went out of business. So, you know, there’s a social component of trying to help turn renters into homeowners, but then also try to help folks understand what it means to build generational wealth and start to save and start to create systems to support people that are going to be here long after you’re gone.

Eve: [00:09:56] So in addition to the building, you’re building some systems. What are those? How you planning to turn renters into homeowners?

Daryl: [00:10:04] Our plan consists of taking 10 percent of someone’s rent and putting it into an account for them and save that money and invest portions of it so that after a certain amount of time, let’s say anywhere from three to five years, and they can take that money and use it for a down payment on a new home and to cover any closing costs that may come up.

Eve: [00:10:35] Are you going to do this for all renters in the building? Do they have to commit to that?

Daryl: [00:10:41] Our goal is to do it for all renters. And yes, we want them to commit to that. If they change their minds midway, through living there, then there’s nothing that we can do to stop them and that money is their’s, they’ll get that if they say, hey, you know what, I’m moving out and I’m going to Bali and I’m taking my money with me. Then we’ll say, hey, here’s your money, have a great time in Bali, sent us a postcard.

Eve: [00:11:09] And they might buy a shack there, you know.

Daryl: [00:11:11] That’s right. Yeah. I mean, with the amount of money that they’re going to save with us, they can buy a lot more than a shack in Bali.

Eve: [00:11:19] Yeah, probably. Yeah.

Daryl: [00:11:21] They can do really well down there. It’s voluntary. But, you know, we’re looking for renters that are committed to home ownership and starting to build generational wealth through home and land ownership, saving and investing. Part of what we’re going to offer to the tenants is financial literacy, credit repair and first time home buying education.

Eve: [00:11:43] And how are you going to do that?

Daryl: [00:11:45] We’re going to partner with local non-profits that offer those services and make sure that they offer it to our tenants and, you know, it can be in person or over Zoom, but our tenants will have to commit to taking those steps towards achieving that goal through the education.

Eve: [00:12:03] And so how are you going to vet and prioritize tenants who come to you? Like people looking for somewhere to live.

Daryl: [00:12:10] Mainly through our application process. We’re going to do a deep dive into who the tenant is and really kind of understand what their goals are and see if there’s a fit between the tenant and our project and find people that meet that criteria and let them know that, you know, this is a long term project, but will have long term consequences as well.

Eve: [00:12:36] Do you think there’s an ideal person? Is there an avatar of a tenant that you’d like to see move into this project?

Daryl: [00:12:43] To be honest, I would say, you know, when I think about who would be the ideal person, it was it would really just be someone that wants to be a homeowner, someone that has tried to save for home ownership, but has been unsuccessful and is really committed to moving from renting to home ownership. There’s two things that you generally need for home ownership. And the first thing is a good credit score. So someone that’s committed to keeping a credit score above 700, ideally. And then the second thing is, you know, someone that has constant income, if you have constant income and if you have a good credit score, then you can give a mortgage to a bank and get a loan for a home. So folks that are committed to those things are ideal tenants.

Eve: [00:13:34] Are there any local banks that are interested in partnering with you? I wonder about redlining as well. And, you know, if it’s going to be more difficult for some tenants than others.

Daryl: [00:13:45] There are some local banks that are interested. Investor’s Bank has shown some interest in working with us. There’s a community development, financial institution in Newark called Invest Newark that’s interested in working with us. And New Jersey Community Capital, a nonprofit lender and developer, is interested in partnering with us on this project.

Eve: [00:14:11] That sounds really great. So you’ve also listed the project on Small Change, and I’m wondering why crowdfunding and what you hope to get out of raising funds for the project through our real estate platform.

Daryl: [00:14:26] Sure, it’s been a real blessing to have the opportunity to list the project on a platform like Small Change. I’m a huge fan of crowdfunding. As someone that comes from the non-profit world I run a 501(c)(3) chess mentorship program and I think that crowdfunding is an awesome way to get donations and to raise money. I don’t know if you’re familiar with the philanthropic world, but there’s a way to do things that are outdated.

Eve: [00:14:55] Oh, yeah, I’m very I’m very familiar.

Daryl: [00:14:57] Yeah, there’s a culture of philanthropy that says, all right, we’re going to choose you and we’re going to give you everything. And and even though this other group might have a great program, we’re not going to give them anything because they don’t come to us. We don’t know them. And so I think crowdfunding really levels the playing field when it comes to investing in real estate. And it gives folks that otherwise would not have the opportunity to invest in a project that’s worth millions of dollars, it gives them a chance to invest in a project for as little as a thousand dollars or as little as five hundred in some instances. I really like crowdfunding for that. It allows you to market your project while you’re fundraising for it as well.

Eve: [00:15:45] Yes. And that brings me to another point. You talked about building generational wealth, and I’m wondering how you think this might take hold in in Newark. If it’s possible to get the word out there so that people might invest in a project at their own doorstep.

Daryl: [00:16:05] I think people will invest. I’ve been sharing it on my social media and I’ve been getting a great response and I think when we launched in late December, it was a very busy time in most people’s lives. And now that we’re out of the holiday season, then, you know, I do believe that it will start to come to the forefront in most people’s minds. And I’ll make sure to get it to the forefront of most people’s investment through sharing it with my friends and family that are here locally and through my social media channels.

Eve: [00:16:43] Yeah, I mean, investing is yet another step in figuring out how to build wealth, and it’s not an easy one so it requires some education.

Daryl: [00:16:52] Education and patience and largely trust.

Eve: [00:16:55] Yes.

Daryl: [00:16:56] There’s a relationship that my community has had with the government, with banking, with insurance, where we place our trust in these institutions. And we would be treated differently than other folks that don’t look like us. You know, Black Americans are being treated differently than white Americans historically. And it’s not just in the private sector. It’s been in the public sector as well.

Eve: [00:17:20] Yes.

Daryl: [00:17:20] And so there’s a distrust there when it comes to investing and not just in real estate. Investing in the stock market, as well is another area where there’s some distrust amongst the Black community. We have to do our part to overcome that, to change that.

Eve: [00:17:36] I think that’s why I love real estate, because it’s so tangible, it’s so visible. It’s right in the middle of your community. And I don’t know, maybe it’s easier to trust that.

Daryl: [00:17:48] I think it is. I think it is.

Eve: [00:17:50] So this is one building. What’s your big, hairy, audacious goal?

[00:17:55] My big, hairy, audacious goal is to do 60 of these within the next few years with Newark being the first one and starting to build Savers Villages in Detroit and Houston and Camden and in Philadelphia and Pittsburgh and places all over the country where folks are facing the same challenges that Newark residents face with regard to moving from renting to home owning.

Eve: [00:18:27] 60 of them. Have you scoped out any of the next ones?

Daryl: [00:18:32] We we we started to look at a site in Philadelphia that may be ideal for this. But outside of that, no, we’re pretty laser focused on Newark at the moment and just getting this one done. Yeah.

Eve: [00:18:49] Well, Darryl, I can’t wait to see how this goes. I can’t wait to see when it’s built and I can’t wait to see the first tenants become homeowners. I think that’s an amazing goal. And I really appreciate you sharing this with us.

Daryl: [00:19:03] Thank you very much. I appreciate you joining us on this journey and supporting this initiative, with Small Change, so thank you.

Eve: [00:19:28] That was Daryl Scipio. He’s led an incredibly rich and varied life. Degrees in political science, Africana studies and law, .com jobs, entrepreneur, political fellowships, launching a chess mentorship program, racial justice work at the ACLU and more. The common thread has always been social and racial justice. Now Daryl is turning his attention to his next endeavor, Savers Village, where he plans to help renters become homeowners and to build generational wealth. And he’s listed the investment opportunity on Small Change because he believes that crowdfunding really levels the playing field for investors. 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, Daryl, 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 Daryl Scipio

Rethink Real Estate.

January 27, 2021

What happens when three friends and kindred spirits start dedicating their Saturday mornings to the pursuit of more equitable development and democratized finance?

For years, Dutch MacDonald, architect and technologist, Josh McManus, entrepreneur and place-maker, and Eve Picker, urban designer and developer, have been rooting each other on in their respective pursuits. And then the pandemic happened. We traded in time spent on trains and planes for weekly meetings. Over the last year our discussions have led to an emerging consensus regarding the acute need to rethink real estate for the future.

In our respective worlds we have encountered developers, companies, foundations and family offices all looking for counsel. Not an esoteric brand of futurism, but on-the-ground real experience, and solutions to the diverse problems facing anyone who wants to create buildings and places that work for everyone.

And so, Small Change Advisors was born. We’ve an eye on reimagining the way that spaces and places work. And we have a wealth of collective experience amongst us. Just listen in to Josh and Eve in this first of a series of ongoing conversations, and you’ll get the picture.

Insights and Inspirations

There is a radical transformation of real estate going on right before our eyes, and in a system that hasn’t changed much since this country’s inception.
We’ve watched the broker model in insurance and the mortgage industry being displaced. Real estate may be next in line.
The ‘dollars and square foot, for many years at a time’ model for commercial real estate needs to be reimagined.
We have to stop looking at buildings as ‘warehouses for humans’ and see them as ‘machines for the maximization of human potential.’
Real estate is a tool for transformation, able to stitch places and communities and cities together.
We need a broader toolkit of options to expand the lessee/landlord relationship, including a democratization of real estate that can let owners, renters and communities (literally) invest in where they live and work.

Information and Links

Get some (community, development, impact, crowdfunding, visionary) advice from Small Change Advisors.

Read the podcast transcript here

Eve Picker: [00:00:19] Hi there. Thanks so much for joining me today for the latest episode of Impact Real Estate Investing. What happens when three friends and kindred spirits start dedicating their Saturday mornings to the pursuit of more equitable development and democratized finance? Well, a lot.

Eve: [00:00:44] For years, Dutch MacDonald, architect and technologist, Josh McManus, entrepreneur and placemaker, have been rooting each other, and me, on in their respective pursuits. And then the pandemic happened. We substituted planes and trains with weekly meetings, and over time a picture emerged that there’s an acute need regarding how to tackle real estate in the future. Developers, companies, foundations and family offices are all looking for counsel. Not the esoteric, academic brand of futurism, but real talk, real experience and real solutions to the problems facing people working to build places that work for everyone. And so, Small Change Advisors was born. We’ve an eye on reimagining the way that spaces and places work. And we have a wealth of collective experience amongst us. Just listen in to Josh and I and you’ll get the picture. Be sure to go to EvePicker.com to find out more about our Saturday morning adventure, and be sure to sign up for my newsletter so you can access information about impact real estate investing and get the latest news about the exciting projects on my crowdfunding platform, Small Change.

Eve: [00:02:16] Hey, Josh, thanks so much for joining me today.

Josh McManus: [00:02:19] Hi Eve. Happy to be here.

Eve: [00:02:21] So, you and I talk a lot on Saturday mornings with our friend, Dutch MacDonald.

Josh: [00:02:26] That we do.

Eve: [00:02:27] We started doing that like maybe mid-last year? And what brought us there, why did we decide to do that?

Josh: [00:02:35] I think it was a unique combination of our ongoing realization that we all come to, a very similar set of shared beliefs, but from very different experiences and angles. And, you know, to give away your time on Saturday morning when you have a lot of other things that you could be working on, I think there has to be a lot of serendipity and symbiosis. And we seem to have found that amongst the group, that time always flies by.

Eve: [00:03:05] Yeah, I mean, I remember thinking I’ve known you for quite a long time now, right? Through CEOs for Cities and after that. So, you and I have had a lot of commonalities in the way we think about cities and do things. And Dutch, Dutch was the architect for my real estate portfolio, and then moved on to a slightly different world, business strategy and digital placemaking, I suppose. I don’t know, I have always thought that together the three of us can be better than alone.

Josh: [00:03:37] Yeah, yeah, I totally agree. I think the more, and it’s probably been, I don’t know, 15, 20 years since you and I first crossed paths?

Eve: [00:03:47] Yeh, probably.

Josh: [00:03:48] But the further I go into this work, there’s a very small set of people that I call, you know, at the Ph.D. Level that have been on the, sort of, the front lines of placemaking, community change, this sort of transformational development. And so, it gets harder and harder to find friends that you can have the right conversations with. And so, there’s a certain solace in finding folks that you can talk about any of these problems and issues and opportunities with. But then each of us come at it, you know, you guys have a, very technical training. I have business training. Dutch has been doing a lot of work and consulting in the digital world. And so, I think there’s a lot of magic that’s happened, is collapsing our insights together and turning them into shared action.

Eve: [00:04:35] So, we each have a special superpowers, and I think that’s what’s always fascinated me. And also the thought of working with people who, as you said, think the same way, love the same things, are passionate about cities, want to make a difference. All of those things. It’s hard to find people who really want to do that.

Josh: [00:04:54] Yeah.

Eve: [00:04:55] Anyway, so I’m going to ask you, what’s the one thing you believe about real estate right now that others don’t seem to believe in, yet?

Josh: [00:05:04] I think that we are seeing the radical transformation of real estate right before our eyes and that we should be surprised and amazed by that because it’s a system that hasn’t changed pretty much in the United States since our inception. And the thing that I believe about real estate that I don’t know that others have completely come to terms with yet, is that I don’t think the business model is going to hold. I don’t think that the dollars and square foot, for many years at a time for commercial real estate, is going to be the way that business is done even a dozen years from now. I think there’s going to be a radical imagination of the monetization for commercial spaces. And I think that we’re getting a first look at it through the work of Small Change, and also through some of the work that I’m doing in these post-industrial cities.

Eve: [00:06:02] When you talk about that … are you talking about ‘demand pricing’? Explain a little more.

Josh: [00:06:07] Yeah, I think either brokers with a much broader toolset, or a displacement of the broker, which has happened in the insurance and the mortgage industry, and the toolset then becomes much bigger. So, I mean, demand pricing and pricing, that’s also got the arbitrage for the amount of time that you want the space for. So, right now, it’s really hard for potential tenants to find short-term lease offerings. But, you know, We Work, despite its failure, or despite its setbacks, started to chart that territory. And then you’re seeing a number of other providers following those footsteps. But not just demand pricing. You’re seeing unique revenue share models, a lot of retail, and food and beverage, is shifting much more to revenue share. Food halls are driving a lot of innovation around revenue models where risk and costs are shared by different entities. And so, I just see, you know, the ways that you can and use commercial space turning from a singular, ‘it’s about dollars, square feet and years,’ into a much more broad and varied menu of offerings that are priced accordingly, that are staffed accordingly, and that are, frankly, much more mutually beneficial to both the landlord on the lessee.

Eve: [00:07:29] That’s a really exciting concept. I have to tell you, I was thinking about that 15 years ago when I developed two buildings which had unusually small commercial spaces. Like little studios and spaces that range from about 400 square feet to under 2000 square feet. And I couldn’t find a broker who wanted to take on leasing them. And the reason was, because the broker model is based on commission. And that broker model, really, I don’t want to say it forces greed because that’s a bad way to put it. I mean, people need to put food on their table. So so brokers, right? But it forces them to really pursue the bigger deals because that’s how they get paid. And so, all the little ones get left behind. And yet they’re the ones that are really important for building, you know, the next business, a creative and diverse economy. And I ended up marketing all of those spaces myself for that reason. But it is a very broken system. Very broken.

Josh: [00:08:32] Yeah, well …we’re seeing the radical disruption and displacement … so AirBnB, you know displaced a whole set of brokers. You used to go to the beach and you dealt with a real estate firm that was set up to do short-term rentals. And now AirBnB is …

Eve: [00:08:50] That’s right.

Josh: [00:08:50] Vacasa and others. Yeah. And same thing if you look at under Warren Buffett’s holdings at Berkshire Hathaway, a Geico, like, you know, just used to have your neighborhood insurance man, and you don’t right now. You go direct when you’re going with Geico. I was at Quicken Loans as part of my work with Rock Ventures. That’s a 50 state sales-side operation. So, they’re competing against banks who have brick and mortar locations in neighborhoods, and they have this sustained competitive advantage, in that they don’t have that brick and mortar and they don’t have that whole traditional brokerage model. So, I don’t see any reason why it won’t happen in commercial real estate. You know, it’s in the process of arriving right now.

Eve: [00:09:31] Yeah, at the moment, really, Craigslist is the only option.

Josh: [00:09:35] Yeah, yeah …

Eve: [00:09:36] For those little spaces …

Josh: [00:09:37] … and that’s a sketchy option.

Eve: [00:09:39] It’s a sketchy option. It’s difficult.

Josh: [00:09:41] But I, I think it’ll change quickly.

Eve: [00:09:43] Yeah, that’s exciting. What’s your biggest pet peeve in real estate? Aside from this one?

Josh: [00:09:51] Well, this one is a major pet peeve of mine. There’s a philosophical one that I don’t know if you and I have talked about before, which is, I think that all too often we look at buildings as warehouses for humans instead of as machines for the maximisation of human potential. And what I mean by that is, a lot of folks, when you were doing commoditized-type work, if it was piecework or sales work or light manufacturing, which is, where can we find some space that has basic amenities so that people can do their work inside of them. Now that we’ve moved to a much more knowledge work-based economy, you have to ask yourself, how do I help the people that are inside of those, which are our most valuable asset, be their most productive selves? And so, I still walk into too many spaces and I feel like they’re trying to compete on the warehousing front. So, how many people can we warehouse in here for how many dollars and how many square feet?

Eve: [00:10:49] Right.

Josh: [00:10:49] And they’re not thinking about this is a machine for maximisation of human potential. So, what happens in the public realm? The quality of the food and bev, the quality of the shared spaces, the shared amenities? I always say in the real estate project I work on, you can’t austerity your way to prosperity. And so, I’m constantly peeved when I find people that are trying to do that.

Eve: [00:11:12] Interesting.

Josh: [00:11:14] What about for you, Eve?

Eve: [00:11:15] I’ve got a couple of pet peeves. One is banking. You know, I really and I’m not sure it’s the fault of banks, but I really believe that banks are squashing creative real estate innovation in the way that they lend. Because in order to get a bank loan, you need to get an appraisal. And in order to get an appraisal, there need to be a couple of, like, kind projects. So, this means that some new idea or a first of its kind project in a neighborhood is not going to get traditional bank financing. And I think that’s really holding back remaking places in a meaningful way. I think it’s a really big problem. The second pet peeve I have, I think, is zoning. Same issue. I have a little cottage in this wonderful little place that was, really, a fisherman’s village. It’s a miniature little thing. And sometime in the 19 .. probably in the 1960s or 70s, some wanting the zoning department thought it was a really good idea to overlay a completely suburban zoning rule over that funky little neighborhood. Everything that was there is grandfathered in, but everything that’s being built now looks completely different. It looks suburban with side yards and backyard setbacks that really are a completely suburban model. And I think that’s a horrible shame. But, you know, I think contextual zoning is critical to keep places intact and characterful and interesting and to really maintain the culture of them. But on the other hand, rewriting zoning codes, not zoning law, is immensely expensive. And I really don’t know the answer to that. I mean, small municipalities simply aren’t going to be able to afford to address that. They’re just not.

Josh: [00:13:15] Yeah, yeah. I see a regular friction with this, especially in post-industrial cities that have draconian old zoning laws, and they also don’t have the municipal finance to even start thinking about how they decrease these barriers. There’s an exciting piece of these pink zones or innovation zones, or they’re sort of peeling back zoning temporarily to see what happens. And I hope that that leads to some mass scale changes. But it seems to me in general, you know, when a lot of this was laid out, you know, heavy industry was big and dirty and that’s not even the case anymore. And so, all of the things that were being accounted for and attempted to be prevented, not to mention the things that were attempted to be prevented that were terribly racist classist or something else -ist, but I don’t think it’s the looming threat that it was when a lot of this came about. So, I’m hopeful that some of these innovation programs will chip away at it.

Eve: [00:14:14] Yeah, things like that have happened recently, like zoning overlay districts in the entire state of Oregon and California to permit accessory dwelling units. They’re really good. Planners need to just go for it a little bit more.

Josh: [00:14:29] So you have this incredibly rich experience where you’ve worked on a lot of projects. And I’m curious to know of all these projects that you’ve worked on, and you’ve taken on some of the hardest to figure out buildings in some of the most needed urban places of all of them that you’ve ever done. Like what’s your favorite project and why?

Eve: [00:14:50] This is like picking your favorite child. It’s very difficult to do. Oh, favourites, that’s really hard. So, They all have the pros and cons. But I would say … I think the most challenging for me were the most fun. I don’t know if I would call them my favorite, but that tiny house that I built in Garfield, 250 square feet of it, was the most challenging project I ever took on, by far. And it was challenging because it challenged zoning codes, building codes, financing. I mean, there were things I discovered along the way that we just never anticipated. I couldn’t get an appraisal for it because it was the first tiny house on a foundation in the tristate region. Therefore, I crowdfunded the debt, because I was not going to get a bank loan. It was extremely challenging, and I enjoy that. It’s solving an enormous puzzle and along the way you discover the pieces of it that you really need to address. I think I’m a design snob. I love great design and I love wonderful and beautiful buildings and places. But for me, I think the projects I’m proudest of are the ones that just didn’t look like they would ever work. And I, I got them to work through sheer tenacity. Many of my projects have design features that people point out, which really are not design features. I live in a loft with a polished concrete floor because we couldn’t afford to cover it with anything, you know. Three of the walls are concrete block for the same reason. Dutch helped me with these projects. So, he was an integral part of this. We used the raw materials that we knew we couldn’t get away from, to turn them into design features because that’s what the budget dictated. So, I don’t know if I have a favorite, but I think that’s my favorite part of building is really making something wonderful happen with the resources you have. Does that make sense?

Josh: [00:16:58] Yeah, absolutely. And that willingness to let the problem dictate the solution, in some ways flies in the face of probably some of the real estate advice you’ve been given along the way.

Eve: [00:17:11] Oh, yeah, that encapsulates it really well. That’s what I really enjoy.

Josh: [00:17:16] So, what other real estate advice have you been given, or have heard other people giving, that you don’t agree with? Because I love this contrarian line of thought.

Eve: [00:17:25] Real estate advice that I’ve discarded. I think probably the biggest one, and this may be a problem for me is that I fall in love with the buildings I buy. I really, I really love architecture and I love buildings. And so I become passionately entwined in my projects, which, you know, every big developer tells you never to do, you know? Be ready to walk away from a project if it doesn’t work. That is really hard for me. I can’t walk away. I spend a lot of time kind of pressing the challenge, trying to make it work. So, I think that’s probably the biggest advice I’ve ignored. Don’t become passionately involved in the buildings you choose to develop. For me, it matters. If I’m going to spend time on redeveloping a property, or building a new one, or maintaining it afterwards, managing it. I’ve got to love it. I really don’t want to be doing that, you know, with a Microtel in a suburb. That would be painful for me.

Josh: [00:18:28] Sure. Yeah. That relates to the piece of advice that I’ve been given that I just, sort of, fundamentally reject, which is that, you know, often times I’m working with large organizations, you know, companies, sometimes entire communities, sometimes foundations, sometimes family offices, and there’s still people who come to me and say, well, you have to understand that within that, real estate is a unique discipline. The buildings work differently and only developers understand how buildings work. And for me, again, a building is a machine for the maximization of human potential.

Eve: [00:19:04] I think that’s right.

Josh: [00:19:06] And so, if I’m advising a company to say, well, let’s not worry about what the lease is on this space, if you have 20 million dollars of payroll sitting in this building and the building could make those people 10 percent more productive, that will eclipse whatever the dollars in square foot price was at the bottom of the development deal.

Eve: [00:19:29] Right. It’s about change making, right?

Josh: [00:19:32] Real estate is a tool for transformation. Yep. It is not a warehouse for human beings. It is a tool for transformation. And if you look at what companies and communities and foundations and family offices are willing to spend on other tools for transformation, to then walk up to real estate and say, well, we should use the 300 year old model about competitive, you know, commodity prices per square feet. I think that’s just patently ridiculous.

Eve: [00:20:00] Well, you know, I think I bring that same thinking to small change the crowdfunding platform. I venture to say I’d be a lot further along with that business if I were willing to raise funds for any old project that came along. But I’m not. I’ve made it harder for myself, but also much more gratifying by insisting that Small Change is going to help transform places. And so, the projects we raise funds for really need to be making some change in some way, in the place they’re in. I really hope that takes hold. I believe there are lots of people who think about it, but it’s certainly not as many, and there’s not as many big dollars invested as your everyday, you know, development that you see pop up everywhere that all look the same over and over again. There’s far more money in those than these challenging little enterprises, right?

Josh: [00:20:59] Yeah. Yeah. Well, this might be leading the witness a little bit, but I’m curious, based upon that, if you had a magic wand and you could change anything about the development industry, overall, what is it that you would change? I’m sure it relates somehow to the projects that are getting done.

Eve: [00:21:18] Yeah, I mean, I think it goes back to the real estate industry. I think the zoning and financing are the key pieces for me. I wish there were a pool of funds, a bank, a group of banks that would support creative, ground-up projects that really offer the opportunity to stitch places and communities and cities together, and I wish they weren’t so much money being spent on the wrong type of projects in suburban places where you have to drive to them, which causes further pollution, where they really don’t face the street, that don’t add anything to the community there … as you said, warehouses for people. So, that’s what I would like to see change. How about you? What’s your magic wand? What would you like to see?

Josh: [00:22:11] For me on the magic wand, I feel like there is just a missing toolbox that fits between the landlord and the lessee. And so right now there’s a very traditional leasing model that sits between most landlords and lessees. And there’s about dollars and square feet and years. And I would create a much broader toolkit of options that says no matter what you need right now, here is a tool that might be able to help you as the entrepreneur and also benefit the landlord. And so, part of my background is working in creating entrepreneurial ecosystems. And so, I’ve worked with so many small businesses of so many sizes and stages of development, I know that most of them do one of two things. They either sign up for the wrong space and that becomes a particular detriment to them, or they avoid getting space for far too long. And that stunts their growth. And it’s because they’re terrified of, you know, they just got started five weeks ago and they’re asked to sign a five year lease and they don’t know what business is going to be like in, you know, five months, much less five years.

Eve: [00:23:26] Yes, I know.

Josh: [00:23:27] So, creating a much broader toolkit that allows you to nurture an ecosystem of tenants through the maximization of their potential. And I believe that tenants will pay for the arbitrage, like they’ll pay for you to direct them. And we’ve seen this with the We Works and Industrious’ of the world. They’re realizing, like, people will pay for optionality and therefore the landlord can be made whole, and sometimes above whole. But I’m super excited for that toolkit. If I had the magic wand then I would accelerate that toolkit to where there was a whole suite of services available to every potential lessee from every landlord. And then it wouldn’t be necessarily cumbersome or it wouldn’t be, like, finding a unicorn when you’re in a city trying to get a business off the ground.

Eve: [00:24:19] But then, you know, you’d have to work with me on my magic wand, because as the landlord, when I go to the bank with the building and I want to refinance it, the first thing they look at is the length of the lease. The leases that we have on the building. And so, if I have a building providing optionality and I’ve been in this position, even if I have a history with that bank and have never missed a payment, they probably won’t come to the table with a loan. This is why I think, you know, some of these boring things like banking are really critical. So, if we were to develop that toolkit, I’d be right there looking for banks that would support it.

Josh: [00:24:57] I think the toolkit requires a new capital class, and that’s the conundrum of it.

Eve: [00:25:02] That’s right.

Josh: [00:25:03] But if we can make that clear, I actually do believe that there are capital providers that would be interested in that capital class. If you look at the impact funders that want to see the stagnation of small business development in the United States offset, this would be one of the ways to do that. Because you could better incubate small businesses if they had the appropriate arrangements and services in order to grow.

Eve: [00:25:29] Yeah, I think it’s right. I think you just they’re all so intertwined. It’s not a small problem.

Josh: [00:25:36] No.

Eve: [00:25:37] But I have to ask you, like, we’re forming this company, Small Change Advisors, the three of us together. What roles would you love to be involved in as a Small Change Advisor? How do you think we can help people?

Josh: [00:25:50] Yeah, well, I guess we kind of buried the lede from the audio side of things, which is we’ve been working together on Saturday mornings and we finally got to a point where we were like, hey, enough people are asking for these services that we’ve got to do something about it.

Eve: [00:26:04] That’s right.

Josh: [00:26:05] So, we said, OK, well, the easiest thing to do is extend off from the Small Change platform and all the success that you’ve already created there, and the deals that you’ve helped people get done, and form Small Change Advisors. Because we are seeing these companies, these communities, these foundations and these family offices that are trying to figure this out. So, my life mission is to strengthen the humanity immune system. And what I mean by that is I believe the more people that are equipped and empowered to be agents of change, the better off the world will be. And I don’t just mean individual people organizing in their neighborhoods. That’s important. But I think that companies, communities, like entire communities, again these these family offices, these foundations can be equipped to be agents of change. And so what I hope we can do with Small Change Advisors is accelerate the amount of people that are thinking about real estate in these ways that you and I have been looking at it for the last 10, 15, 20 years, the same way that Dutch looks at it, which is, as a tool for transformation for communities, you know, as a great benefit both to the organizations that are doing them, but also to the communities that surround them. And as a overarchingly source of abundance for, you know, a lot of post-industrial places that we work in that have forgotten what abundance looks like.

Eve: [00:27:33] So what is a dream project? Look like them? Like an example of one?

Josh: [00:27:38] Yeah. So, I’m super lucky in that I get to work on a couple of dream projects right now. And the one that’s public facing that I get to help out with is Ford Motor Company’s work on Michigan Central and Detroit. And Michigan Central is a development that’s anchored by Michigan Central Station, which is the Beaux Arts station that’s been abandoned for about 30 years that is designed by the same folks who designed Grand Central Station in New York. And Ford is turning that into a mobility innovation district and a place of discovery for the future of mobility. And so, working to support a company and a community like Detroit, a neighborhood like Corktown, and to think about how you create new products and services, how you create jobs for a community, how you create a place that’s more dynamic and attractive, like that’s the sort of dream project. And so, I got to work in Downtown Detroit on similar stuff. I was at Rock Ventures and we worked on the acquisition and the transformation of over 10 million square feet. But that sort of size and scale is what I’m super fascinated with, because I’m seeing non-traditional actors in the real estate world intervene and say we’re going to make our places better. We have to, it’s table stakes for retaining and attracting the best employees. And it’s also the right thing to do for the communities that we call home. And so, those are sort of dream projects that I get to work on now. I’m interested in that same question for you as well. And then I’ve got another question behind that.

Eve: [00:29:19] I’ve got a variety of dream projects. One of my big dream projects is that someone approaches Small Change who gets that it is a tool for them, to really remake an entire place. That they can raise a bunch of small raises with people from the neighborhood investing in a variety of buildings, maybe even, you know, your project in Michigan. You know, you open the door for neighborhood investors in each project that is built. But you can also do much larger raises and let much larger investors in as well. So, that over time the people who live there can enjoy the increased value of that asset. I would love someone to come along with something that scale and sort of realize the potential of how we can help to generate wealth over a long period of time. I’d also love to create a Small Change fund. So far we’ve been working on individual project basis, but there are some securities tools out there, Regulation A in particular, that I think could really be used to create a large fund which lets everyone over the age of 18 invest, and really puts our theories to work on where investments should be made, where they’re not being made right now, to sort of build community. I think those are probably my two top picks. I have like little dream projects for real estate as well. But we won’t talk about those.

Josh: [00:30:51] Yeah, yeah. Those are super exciting and I think we’re lucky to be working on the projects we already are. And I can see these new things on the horizon. Beyond those projects they inform a larger, more audacious goal. And so much of what has attracted me to spend the time with you and Dutch every Saturday morning, and to want to be a part of Small Change, and that’s a broader democratization. So, you referenced it that there and community participation. But could you talk a little bit more about that big audacious goal, what you’d like to see for real estate and investment overall? If we could fly back down in 100 years and look at the world, how would it be different because Small Change has been around?

Eve: [00:31:38] Well, I mean, Small Change is sort of tackling, we’re right at the beginning of tackling the democratization of investment. And until these new securities laws were written in 2016, regulation crowdfunding, unaccredited investors could, or non-accredited investors could not invest. Investment in real estate was only for the elite, for the three percent that have a minimum net worth of one million dollars without their primary residence, or 200,000 dollars a year in income. And even then, that elite would have to know someone in the real estate business to be able to invest. So, the places where money was coming from was altogether very limited. And what I learned in my work in Pittsburgh is that people have a palpable need, a desire, to be part of improving their city and they look for ways to do that. I mean, this is one of the key things I learnt in Pittsburgh. It’s extremely powerful. And I really believe that giving them an opportunity to invest at some small level is the right thing to do. In the long run, it will benefit the city and make it a stronger, more tightly-knit place. Does that make sense?

Josh: [00:33:00] Yes, absolutely.

Eve: [00:33:03] That’s one, what the hopes are, that somehow Small Change can become a community banking system of sorts and fill in where financial institutions just don’t want to go right now. Or can’t go right now, for whatever reason. It’s a big, hairy, audacious goal.

Josh: [00:33:21] Yeh, and it’s also such a beautiful dream. And so I’m grateful to you for inviting Dutch and I into the fold. I’m super excited about us forming Small Change Advisors. And I do know from my days in fundraising that you don’t get anything that you don’t ask for. So, I guess as we sort of wrap up this first session, and I made a bunch of notes. It feels like we’ve got a lot more things to talk about. We should say to the folks that are listening, if you are a company, a community, a foundation or a family office, and you’re trying to figure out a project that aligns with this dream of democratizing real estate finance and building better places through these progressive real estate projects, we’d love to talk to you. And also, if you are somebody that has built a tool, created a solution that you think may help along this goal, too, or you’re interested in what we’re going to do as a team, as Small Change Advisors reach out to us as well. Because this is a mission that about a lot more than a traditional company would have. And so we’re going to need all the help we can get along the way.

Eve: [00:34:29] And I would say a final thing is if you have something that you’d like us to talk about, let us know. We plan a couple of conversations like this, and one of you out there may have an idea that hadn’t occurred to us. So, please be in touch.

Josh: [00:34:44] Yeah. Yeah. So, on the horizon, space as a product versus space as a service, continuously variable financing, monetizing public amenities, and the specifics of involving the crowd in the finance stack are all things that are on my notes for additional discussion. So, again, thank you for the invitation to talk.

Eve: [00:35:07] Oh, thank you very much. I’m looking forward to the next one.

Josh: [00:35:10] Thank you.

Eve: [00:35:25] 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 Josh and I today. There’ll be more to come soon. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Images courtesy of For Purpose and Small Change Advisors.

Why ADUs are a good idea.

November 30, 2020

What’s an ADU? It’s a granny flat or a mother-in-law unit, now more widely known as an Accessory Dwelling Unit and usually built as an additional living unit in the backyard of a single-family home. ADUs are typically small, so that they can fit neatly into a backyard, with a compact and efficient floor plan big enough for one or two people to live in.

Adding value all around

One of the greatest benefits of an ADU is the value it adds to a property. Already a popular selling point in many areas, they not only add square footage of independent living space but can also provide supplementary rental income to the homeowner. In the past, zoning laws have prevented this but with the current shortage of housing availability cities and states are enacting policies which encourage the building of ADUs but permitting them to be built “by right”, with no special permitting needed.

Building ADUs increases the amount of housing units while reducing the pressure of cities to expand outwards. Instead of building large-scale low-income housing, building a multitude of small-scale ADUs will increase property values across the board as the integrity and character of a neighborhood is preserved. And higher density populations can not only bring more commercial activity, more transport options and walkability, but the value of infrastructure investments such as transportation, is expanded when more people use it.

Multigenerational housing

With the housing shortage at crisis levels, multigenerational housing is becoming more widely accepted in the US, and ADUs are likely to become more frequently used for expanded families. An ADU can provide housing for ageing parents, home care helpers or young adult members of a family. It can provide additional work-from-home space or it can allow senior homeowners to age in place.

Cost and efficiency

Building an ADU in your backyard means you don’t have to acquire land and their compact size requires less building materials. In some cases, costs are minimized by manufacturing off-site. Their size makes them inherently energy efficient as well.

Zoning

In some cities zoning laws can make it tough for homeowners to create an entirely new dwelling on their property. They may also face backlash from NIMBY (Not in My Backyard) neighbors. But homeowners who build ADUs are filling an important affordability gap and are helping to address the ever-growing housing crisis.

In Portland, Oregon, the city has introduced a combination of zoning reforms, fee waivers, and outreach to jumpstart the building of ADUs and help address the critical housing shortage. That’s where Patrick Quinton launched his company, Dweller. Dweller specializes in building and providing ADUs to homeowners who want one. Not only do they build the modular ADUs offsite, saving substantial time and money, they handle all aspects of the process, from site planning and permitting, to utilities, installation and landscaping. And they pay for the ADUs as well – financing that most homeowners don’t have. Dweller enters into a ground lease with each homeowner, giving them the option to buy the ADU at some later date, making the process of adding a housing unit and adding a little income for each homeowner, as easy as can be.

Listen in to my conversation with Patrick.

Image courtesy of Dweller, Inc

Learn some more …

The world beyond banks.

November 18, 2020

Annie Donovan knows impact investing. She joined the Local Initiatives Support Corporation (LISC) last year, as COO, having built a truly remarkable career in community investment by embracing a pursuit of fairness in economics and finance. She found her way to this mission in part through her roots growing up in a working class family, where she was exposed to ideas of social justice early in life.

After a career working at the national level, she says what attracted her to LISC was its “deep, long-term connection to communities.” Previously, at the CDFI Fund, which provides capital to distressed communities, Annie worked on strategies to address local needs using programs like New Markets Tax Credits, CDFI Bond Guarantee Program, Capital Magnet Fund and the Healthy Food Financing Initiative.

A Pittsburgh native, Annie has described how community investment work ‘found her’ while she was serving in the Peace Corps after college. She says, “I learned powerful lessons about entrepreneurship and community finance – and about the capacity for community members to drive their own success if they have the right resources. I wanted to do more of that kind of work after I returned home.”

Annie has served as CEO of CoMetrics, a social enterprise that works with nonprofits to improve their financial management, and as a senior policy advisor in the Obama Administration. She has been a senior fellow at the Beeck Center for Social Impact and Innovation at Georgetown University, as well as at the Center for Community Investment at the Lincoln Institute of Land Policy. She also served as president of the New Markets Tax Credit Coalition.

Insights and Inspirations

Annie likes toiling close to the ground. She is committed to ‘local.’
She has a heart for social justice.
Community engagement is of utmost importance to building equity.
“You need to know the community where you build”, says Annie.
We can’t solve the issues of inequity without thinking comprehensively – housing, schools, education, the lot.
Disruptive capital is critical for solving these problems.
What if lots of corporations, like Netflix, contributed their PR funds to helping small businesses instead?

Information and Links

Annie has been deep diving into all the American history we never learned in school. She says Scene on Radio is a fantastic podcast, especially Season 2: Seeing White, and Season 4: The Land that Never has been Yet.
And she recommends two books she is immersed in: The Color of Money, by Mehrsa Baradaran, and for spiritual food during this crazy year, When Things Fall Apart, by Pema Chodron.

Read the podcast transcript here

Eve Picker: [00:00:11] Hi there. Thanks so much for joining me today for the latest episode of Impact Real Estate Investing. My guest today is Annie Donovan, COO at LISC, an organization deeply rooted in the community. Annie has built a truly remarkable career in community investment by embracing a pursuit of fairness in economics and finance. She found her way to this mission through her roots in Pittsburgh, growing up in a working-class family where she was exposed to ideas of social justice early in life. In no particular order, she has served as a senior policy adviser in the Obama administration’s Office of Social Innovation, as the CEO of the social enterprise, Core Metrics, heading the Community Development Financial Institutions Fund, and she spent two decades at Capital Impact Partners, all before taking over as COO at LISC. Be sure to go to EvePicker.com to find out more about Annie on the show notes page for this episode, and be sure to sign up for my newsletter so you can access information about impact real estate investing and get the latest news about the exciting projects on my crowdfunding platform, Small Change.

Eve: [00:01:39] Hello, Annie, I’m really honored to have you on my show and pretty excited to talk to a fellow Pittsburgher.

Annie Donovan: [00:01:46] Well, thank you, Eve. I’m very happy to be here and I’m always thrilled and delighted to talk to Pittsburghers.

Eve: [00:01:55] Good. So, the first question I have is actually about Pittsburgh. So, you grew up in Pittsburgh, and I’m wondering how that shaped the way you see the world.

Annie: [00:02:04] Thank you for that question. It very much did shape the way I see the world. Well, first of all, let me just tell you a little bit about my context. I grew up on the North Side of Pittsburgh. From an Irish Catholic family, I am the 10th of 11 children.

Eve: [00:02:19] Wow.

Annie: [00:02:19] My father’s family, so he was first generation American. His parents both came from Ireland. They actually bought a house on the North Side. So, the way that my, my parents were actually able to afford to raise a family that big was because my grandparents passed their home on to my parents. And so they never had to pay a mortgage. So, yeah. So, that’s how we sort of made ends meet economically, and, you know, were able to create some mobility in our family.

Eve: [00:02:58] What neighborhood was that?

Annie: [00:03:00] Brighton Heights.

Eve: [00:03:01] Brighton Heights. Ok.

Annie: [00:03:03] But the things about Pittsburgh, you know, when you’re from there or when you’ve lived a long time there, you know, Pittsburgh can take a hit for, you know, being provincial. And that’s certainly the case. I mean, in my parents’ generation, my parents had an ethnically mixed marriage because, you know, my father was Irish, and my mother was part German. But in their generation, people even went to church based on ethnicity. So, you know, so there’s a lot of that sort of ethnic pride and it can feel a little provincial. But Pittsburghers are also very unpretentious and very warm and open hearted, I think, and just possess a lot of resilience and, you know, grit. Those are qualities that I’m very proud to have had instilled in me growing up that I’ve relied on throughout my career.

Eve: [00:03:58] So, you know, I think also what I noticed in Pittsburgh and I heard stories about the steel mills actually purposefully separating neighborhoods into ethnicities.

Annie: [00:04:09] Yes.

Eve: [00:04:10] And that sort of prolonged that here.

Annie: [00:04:13] Yes.

Eve: [00:04:13] And it’s made the city architecturally interesting …

Annie: [00:04:15] Yes.

Eve: [00:04:15] … because the neighborhoods are really distinctive and unique …

Annie: [00:04:20] Yes, yeah, very much so.

Eve: [00:04:21] … and look very different. It’s fascinating. And then, of course, there’s the managers neighborhoods and the steelworker neighborhoods, so you know …

Annie: [00:04:28] Right. And you know, interestingly, what happened in my family, I grew up in a working-class neighborhood and it was very working class. My father actually went to school at night and earned a college degree from Duquesne, and he was the only person in the neighborhood who had a college degree. And he was an accountant. He worked for the Allegheny County. So, we had this interesting blend of, you know, when our country was experiencing sort of white flight. Right, so lots of white folks moving out to the suburbs.

Eve: [00:05:03] Yes.

Annie: [00:05:03] And those white folks moved out and then they went on toward more upward mobility. And we stayed in the working class neighborhood. But we were still, in my family, able to experience upward mobility because we owned our home. And my father had a college degree.

Eve: [00:05:21] A degree, yeah yesh, yeah. What led you into the world of community finance?

Annie: [00:05:25] I had always had, I think, a heart for social justice work. I thought a lot about poverty, and I thought a lot about the kind of injustices that were in my world growing up. Of course, I was born in 1964, Pittsburgh being, you know, not only ethnically divided, but lots of really hard lines around racial division, as well.

Eve: [00:05:54] Yeah.

Annie: [00:05:54] And I have to say, I have to hand it to my mother, because when we were growing up, this is probably the mid-70s and my brothers … well, so, in my family, there are six girls, and then three boys, me, and a boy. So, it’s almost like having two generations, you know. And I grew up with the boys. They wanted to start a street hockey league. And you know so, of course, I was out there playing street hockey with them. I’m a Title IX gal, and they were looking for a coach. And so they put an ad in the newspaper and a guy responded to it. And his name was Curtis. He was from the Hill District. And of course, the Hill District is the historically Black neighborhood. And so they signed him up and he came over to Brighton Heights, which was a very white place, and coached the street hockey team. For me, you know, they just got me thinking about, like, why why do we have these divisions? And I have these ideas of what people from from Black communities were supposed to be like. And he wasn’t like that. He wasn’t like my image. And my mother, you know, they’d play street hockey and it’d be time for dinner, and of course, whoever was around my mother invited in for dinner. So, often times Curtis would eat dinner with us. When we said Grace before dinner, the way he bowed his head and prayed, you know, it just struck me that everything I’d kind of learned about our Black neighbors I didn’t see in him. And so this is what got me thinking, like, what was all that education about? And so I’ve always been on a quest to understand what these racial lines are, too, and what the class lines are. And so, you know, I studied economics in college. Early on in my journey there was a 101 economics class and we were learning about rational thinking and optimization.

Annie: [00:07:53] And I remember thinking, well, this isn’t really a fair way to allocate resources across a society. And so I said that to my professor afterwards, who was, you know, a classically-trained economist who was like, Chicago School. And he said, well, this isn’t about fairness, it’s about efficiency. And that was like, OK, I’ve found my mission. And so, you know, and then I joined the Peace Corps, went to the Peace Corps after college. You know, lived in a very poor place. And then, you know, then it really sunk in because the people that I lived around were supremely resourceful and smart and really dirt poor. And so, what was that about? So, that’s when I became sort of even more fiercely committed to it. And, you know, that’s so, that’s been the pursuit of my career since then, is how do we use the tools of economics and finance, and how do we rewrite them in a way that produces a more inclusive prosperity, because we are leaving a lot of talent on the table.

Eve: [00:09:10] Ok, so you’ve had some really big roles from the White House to the head of the CDFI Fund. And now you’re at LISC. And I’m wondering, I’m familiar with LISC, I actually benefited from a loan from LISC years ago …

Annie: [00:09:23] Good.

Eve: [00:09:23] … for one of my projects. And I’m wondering what brought you there.

Annie: [00:09:28] Yeah. So, what brought me to LISC was, so after my experience at the CDFI Fund, I knew I wanted to go back into practice, because that’s kind of where my heart and soul lies. And so, one of the characteristics about LISC is that it is very committed to local – ‘local initiatives’ is part of our name. And I wanted to be in a place that was toiling more closely to the ground. You know, we have local offices, we have 35 and growing, local offices that really are programmatically focused and focused on capacity building alongside lending. And so, that’s where I saw the ability to more closely connect those pieces and not just be finance oriented. But to get deeper, closer to the community. And then the second thing was I saw in Maurice Jones, a leader in our industry who is boldly ambitious, is ambitious for the sake of impact, and I was attracted to that as well. So, yes, so that’s what drew me to LISC.

Eve: [00:10:41] Then like about community capital, what does community development capital look like today versus 20 years ago?

Annie: [00:10:49] Yeah, that’s a really good question. So, I think 20 years ago, if you think about, or even 25 years ago, you know, the sort of the history of community development or community capital, community investment … The community investment world, really, it braids together organizations and institutions that come from different origin stories. So, there’s the origin story of the black-owned banks and minority depository institutions that got underway right after emancipation, for Black Americans to build wealth. There is the credit union movement that was tending to people of modest means who wanted to come together and save together and, you know, have access to financial services that were owned and controlled by them. And then you had the nonprofit loan fund world that emerged because community development really took shape in the war on poverty and the commitment of the federal government to funding community development corporations. There was an era there where there’s a lot of federal funding, and we can talk about urban policy and how that, you know, CDCs kind of shifted urban policy. But then in the beginning of the Reagan era is when the feds really pulled back. And that’s when loan funds really started to emerge to say, well, we have to create new ways to finance the activity of community development. And that’s when the loan funds really started taking root. And then when Clinton came into office, he created the CDFI fund. And that has been a really important policy innovation, still as a policy innovation today, that has been investing the kind of equity capital that the industry needs to grow, that you can’t really get anywhere else.

Annie: [00:12:46] So, the industry has really blossomed, partly because we had good seed capital and partly because we just have been a bunch of people who have had a faith in the people and the communities that we’re investing in and have found a way to work with traditional and non-traditional sources of capital, to blend them in a way that allows investments to work in, you know, places where, you know, my old economics professor would have said you wouldn’t invest in because it wasn’t efficient, the rate of return wasn’t commensurate with risk, and all those sort of traditional measures, you know, that’s the reason capital doesn’t flow to some of the communities that we care about. And we are becoming more mainstream. And even though we’re still a tiny percentage of the financial services sector, I think through, even through the pandemic, you start to see CDFIs emerge, getting more attention in mainstream media. And certainly LISC has gotten a lot of, we’ve been able to raise a lot of resources through this pandemic because there’s a recognition, and we’ve not only done the investing and gotten the money there where people said it can’t go, but we’ve done it financially in a fiscally responsible way. So, we’ve proven that the places and the people we’re investing in are creditworthy. That has allowed this industry to grow. And I think it’s going to continue to grow. I’m optimistic about that.

Eve: [00:14:19] Years ago, I helped found a CDC in Pittsburgh. And what was really fascinating to me, because I was pretty new here and I didn’t really understand this lay of the land very well, you know, I sort of dropped in from another country. But, you know, all of the work we did was to get us to the same place as neighborhoods and places that were doing OK. And I’ve been in, I’ve been in this work for a long time and we never seem to get there. And so, I’m wondering, you know, because when you take a step forward with CDFIs, and maybe this is, you know, a really naive way to look at it, but you take a step forward with CDFIs, and you take a step back with banks who no longer really want to bank in or lend in communities, or want more equity or want, you know, more traditional products to lend in, and it’s just this never ending catch up, so, how does it all get better.

Annie: [00:15:30] Yeah. So, of course, I, I’ve been doing a lot of thinking about this and I think a lot of, a lot of folks have been soul searching around this, particularly because of the uprisings, demanding more, you know, racial, that we address racial equity. And so, it does often feel like, you know, some days it really just feels like we are just doing the work of bandaid, you know, putting bandaids on things. And that’s, that’s where I think this the work right now is really important because we can’t be satisfied with what we’ve done because it’s clearly not enough. And, but I think we are in a moment that we have to take, make the best use of, because we can’t do this on our own, as our, with our little bitty organizations. And even if we’re a billion dollars or two billion dollars or 10 billion dollars, we’re still to itty bitty to to create change on the scale that needs to be, that needs to happen. But that doesn’t mean this stuff shouldn’t happen. And it’s, and it does have to happen because even over my career, you know, 25 years ago if somebody had said that you’ll be working for a CDFI or you will help the, you know, build a CDFI, that will get to be a billion dollars. You know, wow, that would have been, because we, these loan funds were starting at, they just wanted to get to 10 million, you know.

Eve: [00:17:04] Right.

Annie: [00:17:05] And and we we wouldn’t be we wouldn’t have the opportunities that are in front of us now if we hadn’t taken all those baby steps to get to here. So, over the long haul, you know, I hope that we can get there. But, you know, there’s the bigger, we have to be able to impact the bigger picture. And, you know, for example, it was discouraging to me when I was at the CDFI Fund, and the second two years I was there under this administration that, you know, that a tax policy got, got enacted that just, you know, felt like it was going to undo everything that we were trying to do. So, there are these macro forces that, you know, that we have to try to turn the tide on.

Eve: [00:18:04] Yeah, that’s depressing. But I know (laughter) but I know it’s a really long patient game because I’ve been, I’ve seen that, you know, on things I’ve worked on that initially were like, what are you doing? You’re nuts to now being, OK, this is mainstream. Like co-working or lofts downtown or revitalizing downtowns …

Annie: [00:18:27] Exactly.

Eve: [00:18:27] … or all of that. And we’re actually …

Annie: [00:18:29] Exactly.

Eve: [00:18:29] … I think you’re right. We’re in a moment. All of the progress we were heading towards has been unbelievably compressed by everything that’s happened this year. So, maybe that’s a good thing, but …

Annie: [00:18:44] Yeah, and I think that it’s also very complex too, right? Because, even we see in some places tremendous progress running exactly alongside of things that feel like tremendous regression …

Eve: [00:18:56] Yes.

Annie: [00:18:56] … you know, so, and both of those things are happening at the same time.

Eve: [00:19:01] Well, what’s … I’m going to ask you, may not know the answer. But I really puzzle about what’s happening in traditional financial institutions. So, you know, I have this crowdfunding platform and what’s been startling to me and, you know, and our purpose is to help raise money for creative change-making projects and help developers get a little equity together, that seems to be a little more and more equity every year as banks change their position on what they lend for. Because we think that creative, those projects are important for making cities better. B

Annie: [00:19:41] Yeh, yes.

Eve: [00:19:41] But it seems to me that they’re retracting even further because we’re just being flooded at the moment, and equity requirements go up. It just seems to be harder and harder to borrow money, to do things, that are different than the things we have today. And we know we need to do things differently to fix some problems.

Annie: [00:20:09] Yeah, yeah. Well, the way I think about this and what I see from my perch is that I think that we have to, we have to start thinking about the world beyond banks, and, you know, think about and work hard on this, you know, the idea of having broader stakeholders. I mean, banks have been brought to the table on community finance because of the Community Reinvestment Act.

Eve: [00:20:45] Right.

Annie: [00:20:45] And so, so what are the ways in which, you know, there might be policy levers that need to be pulled to get more folks to the table. But also, you know, what the next generation of employees and employers, I mean, I think that we’re in for change and I’m really hoping that we’re in for change with the next generation of leaders. Because they have been raised with different expectations and they are already changing, corporate, the way … corporations are reacting. And you see now, you know, we’ve been the beneficiary of, you know, almost a 100 million dollars in corporate contributions that are going out to small businesses, as, you know, in this pandemic, in the form of relief grants.

Eve: [00:21:44] That’s pretty fabulous.

Annie: [00:21:45] And what we did was, the first one that came in, the first corporation that came in and said, can you do this for us? And we said, yes, we can do it for you, but we’re going to do it in our LISC way. And that means we are going to get to community-serving businesses that are majority-owned by people of color and women. And they said, OK, cool. Go ahead and do it. So, you know, and then the next company that came in said we want to buy that, we want to buy, especially as PPP, the paycheck protection program and SBA, major piece of the the CARES Act, you know, was clearly written in a way that was just going to follow the old rules for how you distribute capital. And then people started saying, wait, wait, wait, there has to be other ways to do this. And so the work that we were doing was tipping the scales. We put our thumb on the scale in favor of community-serving small businesses and gave preference, and we’re ending up with, you know, somewhere in the low 90 percent, of the businesses that we’re funding, are owned by people of color.

Eve: [00:23:04] That’s pretty great.

Annie: [00:23:05] And yeah, and in the paycheck protection program, we got to about 80 percent of our companies being minority women- and women-owned companies. And when you put together and in the, on the private sector side, our formula was where we’re going to advantage certain census tracts. We’re going to advantage minority ownership and women ownership, and we’re going to advantage certain size. So, when you line all those up, it’s not that hard to come up with lots of folks to invest in. And that’s where our money’s gone.

Eve: [00:23:43] So, another question I have is looking at the other side of it. If a real estate developer has access to community capital, what should her reciprocal responsibilities be to that community?

Annie: [00:23:59] I think that’s really, really very important because, and we have to all get better at this as well, in terms of how we doing community engagement, and how we’re bringing people into ownership of what happens at the community level. And so I think, you know, there are just these models and this seems to me to be what’s out there on the fringe right now, you know, and it’s always what’s happening on the fringe that’s eventually going to be where where we all go, hopefully. But what I see is, I’ve been been advising on a project that’s being done by a foundation of philanthropy. It’s not a traditional philanthropy. It’s one of the newer philanthropies. And they are, they’re going to do they’re investing in a real estate project in a very, one of the most distressed census tracts in Washington, D.C. And they are bringing together community stakeholders to say, how do we create a vehicle for people who live in that community right now before the development happens? How do we create a vehicle for them to invest in it and to get ownership in it? And those are, I think, the kind of strategies we need to be thinking about. You know, how do we, because otherwise if you just let this play out via market forces, you get gentrification a lot of times.

Eve: [00:25:40] Right, right, right.

Annie: [00:25:42] So, you know, we don’t want to go in that direction. And that that means giving people real ownership stakes.

Eve: [00:25:48] I mean, I agree. That’s what we at Small Change, I’m having similar conversations with some very large developers who are starting to think about that ownership piece, in really humongous projects in D.C. and New York. And it’s really exciting to see that people are thinking about it. It is hopeful.

Annie: [00:26:08] So, yeah. And if you think about like, so, another example, and this is not at the project level, this is at the fund level. But, you know, we’re managing we’re going to be managing money on behalf of Netflix. And Netflix went out, and this was somebody inside Netflix who said, you know, in their treasury department, why are we sitting on all this money and not thinking about where it’s invested? Why don’t we get this to black-owned institutions and, you know, and that, and that’s when, so, you know, like back to your question, when are we ever going to see this get better? I mean, that’s when it’s going to get better, right? When that person inside that corporation goes to the CEO, and the CEO says, yeah, absolutely, why aren’t we doing that?

Eve: [00:26:53] Yeh, yeh.

Annie: [00:26:53] And then you put it out there. And once, when Netflix put that out there and they made the investment in us, we had so many corporations respond to say, well, how do we do that, too? So, that’s what we have to do. We have to create the bandwagon. But the bandwagon that’s moving money in this direction.

Eve: [00:27:12] Yeh. Yeh, yeh. So, I mean, how would you define impact investing then?

Annie: [00:27:20] Ok, so impact investing to me, I always define it as it’s a spectrum, right, because I like I think it’s important for all of us to have a big umbrella and be inclusive. Right? And on one end of the impact investing spectrum are the folks that would say, you know, you can invest, and do good and do well at the same time. Right? And there’s not really a trade off. And then the other end of the spectrum is, you know, where my work has always been, which is on the whether you call it concessionary or catalytic capital, where you’re trying to, because on that that first end of the spectrum, you’re not disrupting any kind of the market forces. You’re sort of saying the market can do this, but there’s something missing in terms of information flow. So, if everybody had perfect information, then you know that that would solve the problem. So, I’ve never bought into that because I don’t think that it accounts for the systemic racism that exists in our society and in our economy. And so, I think you have to be more disruptive than that. And that requires capital that, that is, that can be designed in a, and stacked and engineered in a way that allows more people to get access to it, to do the kind of projects, to create the kind of businesses that are going to let them into, you know, more economic activity. So, yeah. And my dream is always in my work is always trying to think about, how do we get the people who are on one end of the spectrum down toward the catalytic end? Because if you want to disrupt poverty, you can’t do it on the market end, purely market end.

Eve: [00:29:28] No. Interesting. I mean, impact investing has been growing, I still think it’s small. Do you expect, I’m, I suppose I’m wondering if you expect this, the events of this year to rapidly increase interest in that, too. Well, certainly if you see it from Netflix.

Annie: [00:29:52] Yeah, I think I think it is. And I think the question is, you know, the question that’s on our mind at LISC is how do we, how do we convert the short-term interest into long-term relationships. Because, and how do we get people to see? Because actually, frankly, in the short run, it’s good for a corporation’s brand to step up and do this kind of work.

Eve: [00:30:17] Oh, yeh.

Annie: [00:30:17] I mean they’re … Yeah, and there’s not really much at stake there. And frankly, you know, they could direct, if they wanted to, they could purely direct this out of their PR budgets.

Eve: [00:30:28] Yes.

Annie: [00:30:29] You know, and so how do we, how do we, you know, convert people to the long-term play? That’s the work that’s in front of us right now.

Eve: [00:30:40] Right. So, Just shifting gears a little bit, how, you know, what do we need to think about to make our cities and neighborhoods just better places for everyone?

Annie: [00:30:55] Yeah. I think that we have to, we have to think comprehensively, first of all. So, I don’t think, that’s the other another reason that I wanted to join LISC is because I like the comprehensive approach. Because I don’t think there’s any one dimension to neighborhood life that is a silver bullet. Right? So we have to invest more in education and housing stability is fundamental to economic mobility. And so, we have to invest in all of these things. And, you know, back to, back to the big picture of tax policy and how we tax and spend. I do think we just, the thing is, we know exactly what we need to do.

Eve: [00:31:54] Yes.

Annie: [00:31:55] We just have to invest in it. Right? We know the payoff of early childhood education. We know the payoff of education in general. We know the payoff of preventive health care. So, you know, what more evidence do you need? We just need to have the will and the commitment as a society. And once that’s there, I think everything else follows.

Eve: [00:32:24] Yeh. And I see physically, too, we know the payoff of neighborhood parks and better streets and better lighting and all of those things that everyone wants in their own neighborhood. And some people don’t have.

Annie: [00:32:39] Right. And we have to develop we have to develop our collective will to say that that’s not OK. That’s not the world we want to live in.

Eve: [00:32:49] So, what community engagement tools have you seen that have worked that, you know, you mentioned that that’s a critical piece of it and that’s hard.

Annie: [00:32:59] It is hard. It’s hard for a lot of reasons, one of which is that when community developers who don’t know community, if they don’t know the community, if you’re coming in to this, you know, as a sort of professional, you may have certain assumptions about what people, and I think one of the things we make a mistake on this all the time, like what does the community want? Well, you know what? Not everybody in the community agrees on what they want, just like, and just like in your community, you know.

Eve: [00:33:35] Yes.

Annie: [00:33:35] So, I think starting with listening, and being open is really, really important. And so, I mentioned a, you know, the project where, you know, in Washington, D.C., where the funder was coming in and actually saying, OK, we want to do, we want the result of, to be that people have an ownership stake. But why don’t we find out from the community what that means to them, how they would do it? What, is that what you, is that what’s really wanted? You know, so I think, you know, good community engagement starts with listening, not making assumptions and and bringing people in and just providing the space for voices to be to be heard and listened to. And, you know, just having a faith in that. That that’s, you know, that that’s going to going to lead you down the right path is a good way to get people involved. And I think that also, you know, when I started my career, after I got back from the Peace Corps, I went to work for the Campaign for Human Development. And in that work, we funded a lot of community organizing. And the ability of communities to organize themselves is also an important piece of this. Like the, there’s very little investment that goes into community organizing. And I think that’s a really important component.

Eve: [00:35:24] You know, that’s what I was just going to say, because I think about, like when you’re a very large developer doing a large scale project, you can absorb that community organizing piece.

Annie: [00:35:35] Yes.

Eve: [00:35:35] But when you’re a small developer doing like interstitial projects that are, you know, fit into a neighborhood, that becomes a pretty heavy lift in terms of resources …

Annie: [00:35:46] Exactly.

Eve: [00:35:46] … and there to help, and how do you get that done properly. It’s really, it’s hard. It’s hard.

Annie: [00:35:53] Right. Right. And it’s also, you know, and we need more philanthropy dollars in that because that’s a really hard role for government to play. And we administer a lot of Section 4 money, and that’s out of the HUD budget, and that’s for capacity building of local organizations, and, tt’s really hard money to work with.

Eve: [00:36:16] Yes. Yeh, yeh.

Annie: [00:36:16] You know, it’s, so there’s a need for investment in, of flexible dollars into neighborhood organizing and leadership development.

Eve: [00:36:27] Yeah, no, I agree. So, what’s what’s next for you and LISC? I mean, what do you think the next five years will look like in this pretty fast-moving time that we’re having here?

Annie: [00:36:40] Yes. So. Well, I think that we are on a pathway, move, you know, moving to the next level of growth and scale. And for us, that’s about how do we, how do we use the assets that we’ve built so far to get to the next, to get to that next level? And I think for us, you know, putting impact first, you know, the racial equity piece of this is really important. And I think, I am very hopeful that we are going to be able to do the deeper work there, that we’re going to, you know, take, choose the pathway of doing the harder, deeper work. Because the long-term outcome is going to be better. And we’re going to, you know, try to bring our partners along for that ride. And I think that we are through this period, we have greatly increased our capacity to reach small businesses, and to think about inclusive economic development. How do we build the infrastructure for more inclusive economic development? And ecosystems that support community, small community-owned or locally owned small businesses? And, you know, and we have to be thinking about how are we disrupting systems? So, because we’re at the edges of them now, you know, in terms of their usefulness and we have to build something that’s built to suit, for the next level of scale. So.

Eve: [00:38:41] Thank you very much. I really enjoyed the conversation. And I can’t I really can’t wait to see what you build and where LISC goes and where you go with all this.

Annie: [00:38:52] Well, thank you and I love the work that you’re doing, every dimension, you know, that, every strategy that brings in more capital and the, you know, more of the kind of equity capital that you’re pulling in and democratizing that, I think is a really powerful strategy. And I also wish you the best.

Eve: [00:39:17] Yeh, all takes … Thank you, Annie.

Annie: [00:39:19] Yes. I can’t wait to. I can’t wait to see that happening.

Eve: [00:39:22] Bye.

Annie: [00:39:22] OK. Bye, bye.

Eve: [00:39:29] That was Annie Donovan. Annie thinks we need to start thinking about the world beyond banks. We need to find a way to let communities invest in order to change how we tackle development. To give them a real stake in their own future. Listening is key, as is providing the space for people to be heard. For Annie, impact investment needs to have a big umbrella and be deeply inclusive. She also understands playing the long game, saying that we know exactly what to do, but that we need to develop as a society, the collective will to invest in that knowledge. 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 any 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 Annie Donovan / LISC

Place.

November 9, 2020

Main streets everywhere, in urban metros and small towns alike, are the lifeblood of community. What makes them so important?

Economy

Small businesses thrive on main streets, and small businesses are the backbone of our economy. In this way a main street can be a local employment center that reflects the prosperity of a community. It can offer the convenience of local shopping and services and it can also be the center of civic life – a place for forums and for public events. A healthy main street can also protect property values in surrounding neighborhoods. Unfortunately, because of the severe economic impact of the coronavirus pandemic, many storefront businesses have closed resulting in vacancies on main streets, a new and unexpected challenge. But unlike big box stores, businesses that tend to be less nimble and less entrepreneurial, small businesses are proving themselves to be extraordinarily imaginative in creating new customer experiences as the pandemic unfolds. They may yet prove that main streets can be quite resilient

History

The main street as an urban form has existed for millennia as a place where people make commercial transactions and a place to meet and connect. Usually it is a community’s historic core, a place of shared memory. Those historic buildings on main streets not only lend character but are a reminder of who we were and how the past has shaped us. Extraordinary historical events, including the exclusion of African Americans during the Jim Crow era, occurred on main streets.

Quality of life

Main streets are a place where people come together to gather, shop, do business, eat, play, define common purpose, bridge differences and participate in civic life. They are dynamic hubs that reflect the unique qualities of their surrounding area. A healthy, vibrant, thriving area provides a sense of pride and helps shape a positive identity for a community whereas a main street where nothing happens or where buildings are vacant can create a sense of distress. The coronavirus pandemic has shown us how much we appreciate having places to go. It has also highlighted the importance of walkability as a way to stay safe and healthy. At the same time, as work habits change, people often choose where to live before finding a job or choose where to live and then tele-commute. This makes it all the more important that main streets thrive as communities continue to change and grown with them.

Patrice Frey sees main streets as entrepreneurial eco-systems, often the single biggest asset that a neighborhood or small town has. Without bold action, she’s afraid that the livability and character of our local neighbourhoods and the vibrancy of our cities are at risk. As the president and CEO of the National Main Street Center, she is fully focussed on offering programs and guidance on placemaking, local entrepreneurship, facade improvements, crowdfunding and green rehabs to the Center’s network of approximately 1,800 members, all in service of revitalizing commercial main streets in both big cities and small.

Listen to my interview with Patrice to learn more.

Elkin, NC Downtown by G Keith Hall, CC BY-3.0

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