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Visionary

It’s all about walking.

May 3, 2023

Jeff Speck is a city planner and urban designer who advocates internationally for more walkable cities.

As Director of Design at the National Endowment for the Arts from 2003 through 2007, he presided over the Mayors’ Institute on City Design and created the Governors’ Institute on Community Design. Prior to his federal appointment, Mr. Speck spent ten years as Director of Town Planning at DPZ & Co., the principal firm behind the New Urbanism movement. Since 2007, he has led Speck & Associates, a private design consultancy serving mainly American cities.

With Andres Duany and Elizabeth Plater-Zyberk, Mr. Speck is the co-author of Suburban Nation, which the Wall Street Journal calls “the urbanist’s bible.” His 2012 book Walkable City was the best selling city-planning title of the past decade and has been translated into seven languages. He is also the writer of The Smart Growth Manual and Walkable City Rules.

Jeff Speck has been named a fellow of both the American Institute of Certified Planners and the Congress for New Urbanism. He is the 2022 recipient of the Seaside Prize, whose former awardees include Jane Jacobs and Christopher Alexander. His TED talks and YouTube videos have been viewed more than five million times.

Read the podcast transcript here

Eve Picker: [00:00:08] Hi there. Thanks for joining me on Rethink Real Estate. For Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo, in order to build better for everyone.

Eve: [00:00:43] Ten years ago, Jeff Speck wrote a book called Walkable City: How Downtown Can Save America One Step at a Time. Since it was published, the book has become one of the most popular titles in urban planning. His blunt assessment of the state of the planning profession, along with ten steps for improving street design, have forever influenced livability across US cities. Basically, it’s all about walking for Jeff. Listen in and learn. After all, Jeff’s TED Talks and YouTube videos have been viewed more than 5 million times.

Eve: [00:01:34] If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast and go to RethinkRealEstateforGood.co, where you can subscribe to be the first to hear about my podcasts, blog posts, and other goodies.

Eve: [00:02:01] Welcome to the show, Jeff. I’m really honored to have you here, especially because I’m a bit of a Walkable groupie myself.

Jeff Speck: [00:02:09] Well Eve, Thank you. I didn’t know that I was getting into real estate when I was studying design, but that is kind of where I’ve ended up.

Eve: [00:02:17] Yes. Yes. So, you’ve written a very famous book called Walkable City, which is now ten years old. And in it, you tell us how downtown can save America one step at a time. Isn’t that a really radical claim?

Jeff: [00:02:34] I didn’t realize that when I wrote it. You could say it is. I’ll try to explain why it makes sense to me. First, I’ll mention that the book is ten years old, but what’s relevant to you and your listeners is that in honor of the ten year anniversary, we’ve issued a new edition that has 100 pages of new text. So actually, I spent a month or more, well, of course, gathering the information took years, but I spent some time about a year ago doing what I usually do when I write, which is saying, what’s all the stuff that I’ve heard about that I’ve witnessed that, you know, is noteworthy and that I’ve got really ardent feelings about that I need to share. And so, there’s obviously, so much has happened in the last decade. And those 100 pages that I’ve added to the book talk about such things as the promise of autonomous vehicles and Uber and Lyft, which weren’t around to comment on when I was writing the first edition. And of course, COVID and the housing crisis and so many other things. So, it’s in some ways a new book. And I’m very pleased to hear you say it’s very famous. I know it sells well. I know it pays for my breakfast, which is pretty good for a book, but it’s a book that has, I’d like to think that it’s played a role in changing the conversation around cities and focusing on walkability as a key goal, but also a measure of success and just something that if you put walkability at the top of your list and you start to reorganize your city around being more walkable, you end up making all the right choices for your city. So, getting to your question, the book begins with a large segment that’s called “Why Walkability.”

Jeff: [00:04:24] And I would say it’s expanded in the last decade, but essentially what I did or what I tried to do was to bring to everyone’s attention three different issues impacting cities and impacting America that had been brought to my attention. And it was interesting as a city planner to be arguing for better urbanism, better urban design, which we called traditional town planning for a while, and then we called it the New Urbanism, which kind of we still do, but realizing that we were getting kind of a limited response and that arguing for good city planning in the terms of city planning wasn’t really getting the audience that it needed. And that’s when I kind of discovered these three other groups, the epidemiologists, the economists and the environmentalists. All of whom were arguing for the exact same stuff that we wanted, but from their own terms and much more effectively, and really made me think that, yes, if we make our cities more walkable, they will make America a much better place.

Eve: [00:05:25] It’s really not a radical claim then. I mean, it’s radical along with everyone else who’s making the same claim, right?

Jeff: [00:05:31] Well, it’s not radical, but the prescriptions that it then leads you to are not considered exactly standard practice in many of the cities in America and in much of the world, certainly the developing world or other places that imitate America. So, in a nutshell, the Economist’s argument was pretty straightforward. And I know you’ve had Chris Leinberger on your show, but much of the economic argument I learned from him. And it was essentially how, of course, value is generated much more strongly in mixed use, walkable places, and that, in fact, there’s kind of two sides of the coin. One is that we’re bankrupting ourselves with the individual car ownership mandate and that in the US, poor people are paying more for transportation currently than they are for housing. Many of them are paying 40% of their income just to get around, and that’s a tremendous burden on society. And of course, the typical car is costing us $10,000 a year. People talk about affordable housing. They don’t really talk about affordable living. And actually, if you don’t need a car for every adult, that makes it living much more affordable.

Jeff: [00:06:34] But then on the more optimistic, ambitious side, which is what Chris Leinberger talks about, just the fact that the same number, you know, the same square footage of living space in Greenwich Village rents for three times or sells for three times what it does in Greenwich, Connecticut. And if you know Greenwich, Connecticut, it’s an extremely lovely place. But essentially that if you create walkable, dense places, your values and your investment will be so much stronger. But then also just simple discoveries about how, you know, the denser your city is, the more patents per capita you create. And just acknowledging that we come together in dense mixed-use communities because that benefits us economically in so many different ways. The book outlines the money that Portlanders save by actually commuting less, Portland, Oregon. By commuting less, spending less time in traffic because they invested in bike lanes, because they invested in density and transit and the billions of dollars that they save annually by virtue of having made those choices a couple of decades ago. There are many more economic arguments. The epidemiological argument is essentially something I learned from a book called Urban Sprawl and Public Health, and then getting to know the authors of that book, three epidemiologists who were basically saying they studied disease and they studied the health of the culture as a whole. And they said, you know, we have the first generation of Americans who are expected to live shorter lives than their parents. And the average child born after 2000, you know, half of them are expected to get diabetes. It’s just a horrible situation that they say is due to the fact that we have engineered out of our daily life the useful walk. So, you know, there’s a bunch of doctors and others who point to our unhealthy American diet and other aspects of life in America, like car crashes that shorten our life expectancy. But the biggest factor is that walking used to be just something we did every day that made us healthy that we’re not doing because we’ve designed our neighborhoods to cause us to not do it.

Jeff: [00:08:31] And of course, The fix is an urban design fix. And then I do talk a lot about car crashes and their impact. And then finally, the environmental argument is in part not entirely taken from a wonderful book by David Owen, who’s a New Yorker writer called Green Metropolis that you may have seen about 15 years ago. That was going to be called Green Manhattan when he wrote it. Acknowledging that the place in America where people have the lightest carbon footprint is New York City and then asking why? Acknowledging that New Yorkers use a quarter of the electricity to people in Houston, they use one tenth of the gasoline of people in Houston. If you really care about the planet and love nature, if you love nature, the best thing to do is to stay away from it and live in an urban place. The denser, the better. And just wonderful arguments about, in fact, how the maps that show carbon output per square mile are so incredibly misleading. They look like the night sky photographs of the US. You know, they’re hottest in the cities and cooler in the suburbs and coolest in the countryside. But if you if you look at carbon output per capita, those maps entirely flip. And it’s urban dwellers who have the lightest footprint. Now, I should say that in the update, I’ve added two other things that I neglected to focus on enough in the first edition. One, of course, is the social impacts of living in a more walkable place. And there’s been tons of great evidence.

Jeff: [00:10:02] In fact, one sociologist, you know, it was almost like she was doing it for me, did a study that demonstrated that there was no factor that had a greater impact on how sociable people are as how walkable their community is. It’s like the number one indicator of sociability and participation in community activities is living in a walkable neighborhood. Wow. Well, that’s nice to hear. And then something I’d neglected to talk about adequately at all was the equity impacts of living in walkable and unwalkable places and how the ownership of the automobile is a great divider, creating haves and have nots. But more to the point, how with the suburbanization of poverty and a lot of poor people now living in places that were designed only around driving and people who don’t have cars. We have a tremendous epidemic underway. And now, believe it or not, compared to 14 years ago, 82% more pedestrians are dying in car crashes and it’s a function of a number of factors we can discuss. But those trends skew very much towards people of color and poor people. If you’re Native American or African American, you’re twice as likely to be killed as a pedestrian than if you’re not. And then of course, transit, which we advocate for and walking, which we advocate for, and biking, which we advocate for disproportionately benefit those who have less. Particularly people look at biking, people look at biking as some sort of elite activity when in fact, fully 38% of the people who commute for work or school are from the lowest 25% of income earners.

Eve: [00:11:41] That’s really interesting. But I want to know how the walkable theme came to take such center stage in your professional life.

Jeff: [00:11:49] It’s a funny question that I’ve asked myself. I don’t remember any moment or a decision that happened around me becoming the walkability guy. As I suggested, my colleagues and I were always just looking at best practices or better practices in urban design, and we were trained as architects. My mentors, Andrés Duany and Elizabeth Plater-Zyberk, who designed the famous town of Seaside back in 1980, which kicked off the whole New Urbanist movement. And then they started the Congress for New Urbanism with some other like-minded individuals. In 1993, I was there. We talked about New Urbanism, we talked about what we call neo traditional town planning because it was a return to the traditional ways of making cities independent of architectural style, right.

Jeff: [00:12:36] We’re talking about streets and blocks and squares as opposed to the tower in the park or any of these other kind of modernist reinventions of the city, which suburban sprawl is one model of. And it’s really just best practices in urban design. But we’re like comedians who go up on stage and you try your material out, right? And you see what floats and what doesn’t float. And one way or the other, I realized, first of all, that everything that I was advocating for was making places more walkable, but perhaps more significantly, that when you framed it in terms of walkability, which is not a word I invented, but I may have helped to popularize, that people really got it. People understood it and it became a main street conversation. And I would say by making the choice, not the invention by any means, but the choice of calling what we do walkability planning or walkable centered planning, we’ve been able to popularize it much more effectively. Now it’s interesting, though, because it’s not just, you know, as someone who’s into communication, you’ll be curious to know, these things reinforce themselves.

Jeff: [00:13:41] So, it’s not just a communications tool. Because actually, when I started to use the term walkable, I began to see everything through that lens, and it actually modified my practice, and I started doing something for cities. I’ve done 15 of them, called walkability studies. So, if that’s the name of your study, what are you trying to accomplish? So, I would, you know, we’ll come to town, we’ll spend a week, we’ll have about a dozen meetings with all the different constituents in that week. And I’ll begin each meeting the same way. I’ll say my purpose of this study, what you are paying me for, is for us to figure out together in the, you know, how in the least amount of time and spending the least amount of money we can visibly witness the largest number of people, more people walking and biking in your neighborhood. And it’s almost always the downtown of a city when that’s the problem you’re trying to solve, you make a whole bunch of decisions that are a little more straightforward and clearer and more complete perhaps than you would make if you’re just trying to make a good urban plan. So, you know, my general theory of walkability, which is a fun term, talks about how, for people to make the choice to walk the walk has to be simultaneously useful, safe, comfortable and interesting. And each one of those categories then puts forward a series of changes that you can make around improving mixed use, around bringing more housing downtown, subsidizing it if necessary, to have a lot of bodies in your downtown around where we spend most of our time, which is the reconfiguration of streets. And I studied architecture for, you know, years and years and years, I have ten years post-high school of studying architecture.

Jeff: [00:15:20] Now, what I do mostly is measure and design lanes in streets, because that’s where you can have the most impact on the success of a place. Because most of our downtowns in America, the places that are useful, comfortable and interesting, still aren’t safe to walk around because of the speeds that cars are traveling because of the way that they’re designed, and we fix those in cities. So, that’s become a huge part of my practice. And then comfort and interest. Comfort implies space making, spatial definition, giving proper edges to spaces because we like to be in outdoor living rooms with our flanks covered from attack. It’s something we, you know, we’ve inherited along with all animals. The evolutionary biologists tell us all animals are seeking prospect and refuge. So, we’re seeking refuge, we want to know that our flanks are covered. That means that you want to hold the edge of the streets with buildings that are near the street, tall enough to make a space. That’s something we spend a lot of time on. And then finally, interest is a little more straightforward. You know, no one wants to walk past a surface parking lot, past a structured parking lot, past a blank wall or, and this is important, past 100 yards of the exact same thing. So, we have, for example, we introduced into cities the concept of demise lines, which I’ve done in many of my projects, where you take one big building, and you actually get three architects to do the facade and make it look like three different buildings. Then when you walk down the street, something interesting is happening.

Jeff: [00:16:45] As Jane Jacobs says, No one will walk from repetition to repetition or from sameness to sameness, even if the effort expended is minimal. We line the parking with residential. We put some other use on the ground floor, or we just keep it away from the edge of the street. Right? So, there’s all these techniques and from, you know, the biggest scale of mixed use to the smallest scale of the building edge, we don’t leave anything out. And obviously some things are achievable more quickly than others. Fixing streets is often the first thing you can do, which is why I spend so much time on it. And I do a lot of work for mayors who want results within a couple of years because they’re up for re-election. So…

Eve: [00:17:24] Of course.

Jeff: [00:17:25] City planning is notoriously a 20-year phenomenon, right? But the work that that we do for cities, they don’t want to wait that long, and we focus on streets for that reason.

Eve: [00:17:38] Well, that’s a good thing, actually. So, if ten years is enough time to see if your predictions actually came true and I want to know if there were any surprises, if there have been any bad things that have happened over the last ten years.

Jeff: [00:17:53] One kind of smart thing about the book probably is I didn’t make many predictions. I certainly made a whole bunch of recommendations and gave a whole bunch of direction. And I would say, looking back, there’s nothing in that direction. I mean, the book is literally, you know, there’s four categories of the useful, safe, comfortable and interesting walk. But then there’s the ten steps of walkability. And the big part of the book is these ten steps, which include let transit work, get the parking right, mix the uses, make friendly and unique faces, welcome bikes, um, etcetera. And so, each chapter is dedicated to one issue like trees or bikes. But the chapter that I, and I say this in the update, the only chapter I wanted to retract a little bit was pieces of the biking chapter, because first of all, biking is what is evolving the fastest in most, or micro mobility in general is what’s evolving the fastest in most American cities. We are just now catching up with Berlin in the 1990s. I mean literally I was in Berlin in the 1990s and we had the bike lane up on the curb, out of the street, on the edge of the sidewalk. And now when we do new plans in American cities, that’s what we’re doing. You know, I will no longer put a bike lane in the door zone period. Ten years ago, I would because we were lucky to get it.

Eve: [00:19:24] We’re still doing that in Pittsburgh. I just noticed new ones. It’s scary.

Jeff: [00:19:30] I’ll put a bike lane adjacent to two lanes of traffic. If there’s no parking on the other side of it. More often, I’ll pull parking into the street to protect the biking and put the biking either against the curb in an existing street that we don’t rebuild, or if we’re building a new street or rebuilding the curbs, we’ll put the bike up on the curb, separated often from the sidewalk by trees. When I wrote the book, sharrows were respected. In the intervening ten years, a couple studies were done that showed that sharrows, those share the road markings in the roadway, have no positive impact and in certain instances have made streets more dangerous than not having anything at all. So, that’s out.

Eve: [00:20:11] Interesting.

Jeff: [00:20:12] The main thing I wanted to retract was that I was kind of treating the cyclist like any other lobby, bearing in mind I’m a cyclist, I’m also a driver. You know, like most people, I do all those things. I told them, you know, we can’t put bike lanes in every street. I mean, let’s be serious here. You know, if we gave everyone in every street everything they wanted, the streets would all be the size of airport runways. And, you know, it actually isn’t the proper design of a bike network to have bike lanes everywhere. If you go to Copenhagen, you know, the major streets have bike lanes, but the minor streets, most of the streets, almost all of them, are just slow speed, comfortable streets where everyone mixes and it’s better. So, I was a little bit critical of the biking lobby just to be even handed. I’ve now thought better of it. In fact, I’m leafing through my book here and, if you don’t mind, I’ll do a tiny reading.

Eve: [00:21:09] Sure, sure.

Jeff: [00:21:10] And this has to do with my retraction, since you asked. If there’s one passage of this book that I would like to retract, it’s step six’s ‘Don’t get greedy’. Sure, bike advocates are specialists, and we need our cities to be designed by generalists. As I noted, there isn’t enough room in the streets for every specialist to get what they want. But here’s what I got wrong. I’ve yet to see a city do anything requested by a bike advocate that is not made that city better for everyone. I’ve finally been to Copenhagen and biked miles of downtown without the slightest fear for my eight- and ten-year-old boys in front of me. If you haven’t had that life changing experience, don’t begin to think you know what you are doing when you deny a cyclist anything. The cycling city is the city we all need. And remembering Copenhagen fills me alternately with joy and rage. Just today, Milan announced $271 million in funding for a 466-mile citywide bike network. Paris recently upped its biking investment to half $1 billion.

Eve: [00:22:10] Wow.

Jeff: [00:22:11] In order to achieve an 100% cycling city, in quotes. Meanwhile, the Boston Cyclists Union clamors enthusiastically for an increase in the city’s bike budget to $2.6 million. And Boston’s one of the good ones. Don’t get greedy, don’t settle for scraps, demand more, 100 times more, and don’t stop until the very last bike hating motorist throws up their hands and decamps permanently for the suburbs.

Eve: [00:22:37] Or gets a bike, right?

Jeff: [00:22:39] Yeah. So, that was the only real retraction. But I have to say, you know, the book was written to be somewhat timeless and there were a few things it didn’t anticipate, like COVID. It also didn’t anticipate the housing crisis properly enough and was also not fully aware. You know, and I co-wrote and was the principal author of the book Suburban Nation, which is, was with my mentors, which was the best-selling planning book of the previous decade, 2000s. And in that book as well, certainly in Walkable City, I did not pay enough attention to or share enough of the information that people need to know about how racial prejudice has shaped our cities and particularly has shaped our housing crisis and how there is still a crisis for folks of color. And a wonderful book that informed that was Richard Rothstein’s The Color of Law. I presume you’re familiar with that book.

Eve: [00:23:34] Yes. I did also interview him.

Jeff: [00:23:37] I would love to get a chance to talk to him. I haven’t yet, but I read that book with great interest, and I excerpt it within my update. I think a lot of that was eye opening to me. Probably the thing that most people don’t know that I didn’t know. I learned it before I read his book, but I didn’t know it until more recently. People always talk about redlining like it was some sort of thing that the banks did, right? Oh, those evil banks redlining, not granting loans for mortgages in mixed race or neighborhoods of color. In fact, that was the federal government. That was Fannie Mae, Freddie Mac. You know, that was that was that was our leaders who said, no, we will not guarantee a loan in any neighborhood of color and also any investment the federal government made in housing development, which was huge, particularly with affordable housing neighborhoods, was mandated to be single race. It’s absolutely incredible.

Jeff: [00:24:35] And then, of course, the strong evidence that Rothstein collects about how the single-family zoning as a concept was basically created as a way to perpetuate race based zoning when the Supreme Court ruled that that was illegal. And then finally, the understanding that the way that the typical American family has built wealth, the typical middle class American family, if it has built wealth, it has built wealth probably through the ownership of a single-family house that got that mortgage deduction.

Eve: [00:25:08] Right.

Jeff: [00:25:08] And that that wealth building opportunity was only made available to white Americans for many decades. You know, as Martin Luther King said, you can’t expect a man to lift him up by his bootstraps if he has no boots. And so, the constant deprivation of opportunity to a portion of our population, I’m getting off topic of planning, but it’s all.

Eve: [00:25:30] But it’s all part, it’s all part and parcel of it. Definitely. I want to drag you back to the suburbs because, you know, in recent years there have been talk about making suburbs pedestrian friendly. And I’ve noticed the suburbs I drive through, you know, I get a little scared when I’m in the suburbs because I don’t know where there is. Yeah, there’s no there there. But I’ve noticed that little pieces of sidewalk emerge. They don’t necessarily go anywhere. It’s amusing to watch. Have you seen any successful attempts to urbanize the suburbs? And is this the future for suburbs?

Jeff: [00:26:12] Well, I think it’s important to understand that most American suburbs, most American post, all American post-war suburbs and most American suburbs have the wrong bones, right? It’s like chipmunks versus dinosaurs or, you know, mammals versus lizards, whatever you want to say. And when you’ve got the wrong bones.

Eve: [00:26:34] You need a lot of surgery.

Jeff: [00:26:36] Well, when you got the wrong bones, you actually, it’s impossibly expensive to change your nature. So, these giant blocks, these arterial highway, arterial collector, local road networks with a major intersection every half mile that constitute probably 50% of the American landscape right now, the built environment. They can’t be changed in a way that will make them walkable. They can be changed street by street, intersection by intersection, you know, roadside by roadside into places that are safer. They can be changed into places that are more bikeable, but they will never have a condition in which walking is a favored means of getting around. Except as we’ve seen, and I’ve participated in several of these, when you get a chunk which is big enough to become a new mixed use town center. And so, you find in places like it’s called City Center in Houston, it’s nowhere near the downtown of Houston, but it’s in the geographical center. That’s a place where a developer got a big enough piece of property and said, let’s have shopping and housing and offices and hotel and cinema and everything in one place. And eventually what you get is a little bit of a town center, and it might be what you call a park once environment, right? But people end up living there. People who work there end up living there, and certain people really reduce their carbon footprint and have a much better quality of life living in those places.

Jeff: [00:28:01] And many of our cities have this. There’s one in Alpharetta, Georgia, called Avalon. You know, they’re all over the place. And they’re, some are better than others. Some are not much better than exterior malls with a main street down the middle instead of pedestrian. But once you get significant housing, hotel, office above the main street, then it’s almost nothing that distinguishes it from being a real town center.

Eve: [00:28:28] Interesting.

Jeff: [00:28:29] The other hope for suburbs is the pre-war suburbs. I was in Tigard, Oregon, which is a suburb of Portland, and they want to be more walkable. And they were almost entirely a driving suburb, but then I discovered, like struggling, but there this germ of a main street, like it was a pre-war main street. And many of our suburbs have these old centers that were disinvested but are still there, are still zoned for mixed use. And if you can get more people living there or allow more people. Change the rules, often to allow more people to live around that old main street, then you get that little walkable downtown core that becomes the heart of the community. And still, most people are driving to it, but not everyone is. And those who do drive to it have that lovely experience when they get out of their car of walking around.

Jeff: [00:29:11] Now, I want to mention I have something to say about this, too. I have a book I’m showing you called Walkable City Rules. That is a book that I recommend mostly to professionals. So, your audience, the realtors, the real estate developers or others in your audience. Walkable City is the book that people read for entertainment. They read it to get convinced. Mostly they distribute it to get to convince other people. And I’ve worked in a lot of cities where they’ve given it out by the box to the city councilors, to others. It’s a great tool for winning converts, but if you’re already doing the work and you just want all the information, you know, all the stuff you need to know, including such little tidbits as when you remove the center line from a local street, people drive seven miles an hour slower. Like that’s good to know. That’s get rid of some center lines. Or when you replace a signal with an all way stop sign, severe pedestrian injury crashes dropped by 68%. Well, that’s a nice thing to do. So, that’s all in there. But there’s one. So, it’s 101 steps to making better places, Walkable city Rules.

Eve: [00:30:16] I’m going to buy that book.

Jeff: [00:30:18] Each rule is two pages. It has a headline, it has a rule at the end, it has a photograph or a chart. Step 100 is Don’t give up on sprawl, it’s where most Americans live. It talks about these two conditions. The opportunity to create a mixed use town center if the economics are there to support it and you have a chunk of land or to find the, you know, the moribund main street that was once there and the rule 100 at the end of the page says, in sprawl, invest in old Main Streets where they exist and otherwise focus on safety for all road users because that’s the main thing that you can accomplish. And I’ll do a tiny reading from this book, which is the sad conclusion. But then there are the newer places like Chandler, Arizona, 250,000 humans doomed to scuttle around perhaps the most utterly placeless landscape in America, 65mi² of entirely car dependent nowhere.

Jeff: [00:31:14] Without the full-scale insertion of a large new town centre, what can be done to make the denizens of the purest sprawl less isolated? While true walkability is out of the question, the most essential improvements would seem to surround safety for pedestrians, cyclists and drivers too. People are dying in these landscapes at an alarming rate, thanks to high-speed road geometrics, inadequate crossings and rare and dangerous bike lanes. Such places can’t really be fixed, but they can and should be made safer using many of the techniques contained in this volume. So, that’s my conclusion for the sprawl.

Eve: [00:31:48] I’m going to I’m going to order that right after this because I want to see those rules. That’s interesting. So, let me ask you, what’s one of your favorite places or cities in the US or elsewhere where you feel really happy walking and why do you love it?

Jeff: [00:32:06] I think the best answer to your question is that any, almost any pre-war city in the US has kernels, pieces that are that are fantastic and a majority that’s probably pretty bad, and that the distinction is not so much among cities as it is among pieces of cities. I would also argue, I think this is important for your audience, that the decision, the contrast also in our work, particularly in Suburban Nation that we wrote about, isn’t about town versus city or town versus village or even suburb versus city, but it’s around walkable versus unwalkable organizational patterns and how there are cities that are unwalkable, there are towns that are unwalkable, there are villages that are unwalkable and the opposite.

Jeff: [00:32:57] You know, I grew up in a suburb. I think many Americans my age did. I’m almost 60. Where I mean, it was a pure suburb. It was Belmont, Massachusetts, next to Cambridge outside of Boston. It was completely walkable. My dad walked to work every day. I walked to the bus that took me into Harvard Square. I walked to school. It’s possible to create cities, towns, villages and suburbs that are fully walkable beyond a certain point, it’s not a question of density. And what’s more important is neighborhood structure. Neighborhood structure means small blocks, small streets, frequent intersections, civic spaces, a sense of center and a sense of edge. You know, the neighborhood and planning terminology is very well defined as being compact, mixed use and walkable.

Jeff: [00:33:43] And so, that’s what really matters. Now, to answer your question and enjoy in my memory some of the wonderful places I love to go, you know, most of those are the places that were not run through with highways that maintain their existing pre-war character. You know, I love to visit the great cities of the South, Charleston, Savannah, New Orleans. Alexandria, if it weren’t part of DC would be another city like Charleston that people would go to just to walk around Alexandria, Virginia. You know, and then there are amazing Western examples, Albuquerque and you know, Carmel by the sea. Carmel by the sea. Excuse me. I’m working in Carmel, Indiana, which is not pronounced the same as Carmel by the sea. But, you know, for big cities, you know, despite the problems with homelessness and other issues, I still think San Francisco is one of the best places in the world to walk around.

Eve: [00:34:40] Yeah.

Jeff: [00:34:41] And in a global perspective, off-season, because the tourists make it hell. But off season would have to say my favorite city is Venice because it has so many wonderful qualities, most of which derive from, independent of its historic character, most of its wonderful qualities derive from the fact there are no cars in it.

Eve: [00:35:00] Yes,

Jeff: [00:35:01] This makes it so amazing.

Eve: [00:35:02] Yeah, but the tourism just almost unpalatable.

Jeff: [00:35:06] But you can truly enjoy it off season and you can live there off season.

Eve: [00:35:10] I’ll have to try that. So, I’m going to put a plug in for Australia because you know, that’s where I grew up and those cities really sprawl. I mean, Sydney has a huge sprawl, a lot of land area compared to a city like New York. But I, when I was a kid, I could walk everywhere. I could catch a bus. I lived in what you would consider a suburb. There was sidewalks on always on one side of the street, if not both. Every neighborhood had, and has to this day, a main street. And those main streets have survived.

Jeff: [00:35:43] I spent some time in Sydney, in Melbourne, in Adelaide, lovely town, in Perth. I have to say clearly Sydney is the most spectacular and most exciting to visit. I found Melbourne to be the place where I wanted to live.

Eve: [00:35:57] Oh, Melbourne’s fabulous.

Jeff: [00:35:59] So much character. But here’s what I observed about Melbourne. Street after or I should say neighborhood after neighborhood of almost endless main streets with no chain restaurants or chain stores on. Mile long. And I think what does, that is the trams. So, you’ve got streetcars in the middle of your main streets throughout, I mean the parts of Melbourne that I enjoy, and that combination of, you know, moderate density. But the streetcar corridor is what allows for all these neighborhoods in Melbourne to not only have Main Streets that are successful and continuous, but have character and unique establishments of, you know, avoiding the chain stores which aren’t a blight, but they sure make places boring. It’s really remarkable.

Eve: [00:36:53] It is remarkable. You know, Australia was a coffee culture well before Starbucks happened and somehow Starbucks could never get a foothold there because you have flat white. And so, yeah, but I think it’s a very, very different expectation about how you’re going to live your life. Not that people don’t have cars and drive a lot, but I think what you said before that I wanted to hang on to is the fact that you’ll walk if there’s something interesting along the way and interest can come in all sorts of shapes and forms, or if you have a destination to go to, you won’t walk if there’s nowhere to go. And so, is that what you think about when you’re designing a place? It’s like a it’s like an anchor on a mall, right? There’s an anchor at each end.

Jeff: [00:37:36] Well, you need to do everything you can to change the zoning and to direct the city investment through tax increment financing or any other tool at their disposal to impact what real estate developers are building. So, If a place needs more housing, then you find a way, which most places do, most urban places do need more housing in the US to be successful or more successful, You reorient the zoning and the investment around that. But that does that takes time. So, you know, the useful, comfortable and interesting walk are all a function of almost entirely the private market which the government can influence. But the safe walk is what the government can typically control immediately and invest in immediately. And so, that is where we short circuit the investment as fast as we can to make it happen. I think it is interesting also to compare Australia to the US or Canada to the US, to the degree our cities were undermined by both being reamed out by highways, but also each individual street being reamed out.

Jeff: [00:38:43] If you look at Manhattan, you know, Park Avenue used to have a park in the middle. Now it has a little median that no one would sit in because it’s just a break in 6 or 8 lanes of traffic. It used to be two lanes of traffic on each side and a big park in the middle. And so many American streets have had the trees removed, the parking removed other things to just carry more cars. In terms of highways, you know, you look at the US cities versus Canada cities and Canadian cities have done so much better in their downtowns. Well, in the US, the federal government invested $0.90 on the dollar. If you wanted to put a highway through your city centre in Canada, it was $0.10 on the dollar. So, you know, there’s choices like that that clearly. People say Americans love suburbs. We voted with our feet, but that’s completely false. I mean, there were incredible subsidies between highway building and home loan, insuring that led to the outcomes we now see.

Eve: [00:39:37] So, I have just a couple more questions. And one is, do you still get pushback? Who gives you pushback?

Jeff: [00:39:45] So, there’s this. Inchoate mass called the automotive hordes, that in certain places and certain circumstances will you know, is the specter that’s looming when you’re trying to make changes in a community. I’ve found that to some degree they’re mythological. Like everyone’s worried about what the motorists are going to think. But most places I work, and I’ve got to tell you, in most places I work, I’m not trying to make driving harder. I’m just trying to make walking and biking easier. And there are ways to do that that don’t make driving harder. Like every city, however congested it is, has certain streets that aren’t congested, or you’ve got a main street. This is, here’s a perfect example. You’ve got a main street that’s in a network, and that Main Street is handling 18,000 cars per day. And like in Lancaster, California, it is dismal. It’s five lanes. It’s a highway, 18,000 cars a day, but it’s in a network. They made a decision in Lancaster to make it only two lanes. They put a parking plaza in the middle. So, they use it for farmers markets and stuff. And when there’s no farmers market, people just angle park in the middle of the street, and it’s become a linear plaza.

Jeff: [00:41:04] This like ten block Main Street. It now only handles 12,000 cars a day. But guess what? The cars are moving on the parallel streets, which is fine. The parallel streets aren’t contributing to the social heart of the city. And in fact, most cities, most small cities and towns, they have only one chance to have a great main street. There’s no reason why that Main Street’s design should be dictated by maintaining the existing throughput. That’s the term, like maintaining throughput network wide. Sure. You know, most communities will fight any decision that limits network wide auto mobility. but you can easily make an argument that you’re going to shift traffic over a street or simply take some lanes away from a street which isn’t congested. And that’s how I work. Understanding, in fact, that behavior adjusts that when you reduce capacity, more people walk and bike and that actually the carmageddon that’s predicted by reductions in capacity never comes when you remove a highway or narrow lanes.

Eve: [00:42:10] That’s a much more sophisticated conversation that I’d love to have and that almost never wins, which is that in fact driver demand is not static, it’s not fixed, it’s dynamic, it responds to the environment. And whenever a highway has been closed or a lane has been removed, we’ve never witnessed the gridlock that people predict because people adjust their behavior and they’re often happier for it. But that’s an argument I try not to make in communities because it’s counterintuitive. Mostly I say we’re going to find ways, and I demonstrate that we can find ways to improve walking and improve biking without in any way hampering the motion of automobiles except to get drivers going the speed limit as opposed to 10 to 15 miles an hour over the speed limit, which is how our our streets are designed.

Jeff: [00:42:57] And, you know, I love to rant and I had a recent editorial in the Hill that your listeners can look up under my name, Speck and The Hill talking about how actually in the US engineers as a matter of practice design streets for ten miles an hour over the speed limit because they’ve learned safety from highways instead of learning it from reality and in reality.

Eve: [00:43:22] That’s interesting.

Jeff: [00:43:22] In urbanized areas where people walk, driver speed is not determined by the speed limit, it’s determined by the environment. And therefore, anything you do to create elbow room or forgiveness is actually causing speeding and death. So, that’s a whole nother aspect of how the traffic engineering profession does not acknowledge that environment influences behavior. They don’t understand that environment influences behavior in terms of traffic, and that traffic demand is dynamic. They don’t understand that environment influences behavior in terms of speeding, and that speeding is caused by the very forgiveness that they introduced to our town centres and it’s really angering because they figured it out in Europe. But here in the US they have not figured that out.

Eve: [00:44:04] No. So, I have one final question for you, and that is what keeps you up at night? Or maybe nothing.

Jeff: [00:44:17] I’m fairly convinced that I’m going to lose someone that I love to traffic violence.

Eve: [00:44:24] Oh.

Jeff: [00:44:25] I mean, the odds are very high.

Eve: [00:44:27] That’s a horrible thought to keep you up at night.

Jeff: [00:44:30] The odds are very high that any of us will lose someone we care about to traffic violence. There’s a 1 in 100 chance that is how you will die in America. Um, it’s more than 40,000 people a year. It’s going up every year. And if anything keeps me up at night, you know, those are the only sort of thoughts that keep me up at night. I’m a good sleeper, but, you know, it’s those near and dear. Otherwise, I would say that, you know, I don’t think we’re taking the right measures to stem climate change by any means. This idea of electrify everything is perhaps necessary, but by no means sufficient to solve the climate problem. You know, the idea that Joe Biden is driving around this 9,000 pound Hummer, not to mention that it’s an anti-pedestrian device whose battery weighs more than a Toyota Corolla. And that that’s going to save the planet is just preposterous.

Jeff: [00:45:27] You know, and between 85 and 90% of the airborne particles that come from driving are from your tires and brakes. So, what are we doing about that? You know, so I mean, there’s so many reasons why different better cars is not the answer. And the question, the question people ask in America is always, how can we make cars better? It’s the wrong question. So, of course you get the wrong answer. Yeah, I think electrification is important, but they’re looking entirely at the supply side and not the demand side for energy and pollution. And that was the mistake of, you know, the war on poverty. It was the mistake of the war on drugs. You know, supply side solutions generally don’t work. And you have to look at the demand side. And the demand side is how can we live lives wonderfully enjoyably, you know, delightfully that cause us to use less energy? And the answer is to collect into villages, towns and cities that aren’t automobile dependent.

Eve: [00:46:26] Well, I’m totally with you on that. And I thank you very, very much for joining me. And I’d love to. I’m actually going to go order your Walkable City Rules immediately, so I know what they are. It sounds like a really useful book. So, thank you, Jeff. I really appreciate you joining me.

Jeff: [00:46:42] Both Walkable City and Walkable City Rules are also on Audible. The Walkable City Rules. I do recommend you get the hard copy because there’s pictures. Walkable City, remarkably, for a planning book has no pictures, which is why it’s one reason it’s sold so well is that it’s, you know, it’s written to be entertaining.

Eve: [00:46:59] Well, thank you, Jeff. I really appreciate it.

Jeff: [00:47:02] Hey, I love the attention. I’m grateful for what you do. And I am happy that you are willing to listen to me rant for so long.

Eve: [00:47:26] I hope you enjoyed today’s guest and our deep dive together. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. If you like what you heard, you can support this podcast by sharing it with others, posting about it on social media, or leaving a rating and review. To catch all the latest from me, you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing, head on over to smallchange.co, where I spend most of my time. A special thanks to David Allardice for his excellent editing of this podcast and original music. And a big thanks to you for spending your time with me today. We’ll talk again soon, but for now, this is Eve Picker signing off to go make some change.

Image courtesyˆof Jeff Speck

Fix Development.

April 5, 2023

Juli Kaufmann believes in a quadruple bottom line return. Her company, Fix Development, applies this philosophy to each and every real estate project in their portfolio, prioritizing economic stability, environmental stewardship, social equity, and cultural continuity.

Juli founded Fix Development in 2009, and has since developed more than $25 million in real estate projects in Milwaukee. While Fix Development operates as a “for-benefit” company, Juli’s focus is on businesses that generate earned income but give top priority to social mission. The Aux Evanston, a project to be owned 100% by the community, is a great example of this.

Juli is also the managing member of Riverbee Collective, a collective of over 40 investors who all own a piece of a Milwaukee building formerly known as the Cream City Hostel. This building was redeveloped by Fix Development, and the Riverbee Collective is currently transitioning the building into a housing cooperative meant to support people dealing with losses and uncertainty such as jobs, instability and landlord challenges. She is also a founding member of Fund Milwaukee, an investment group that seeks to match unaccredited local investors with opportunities to support local entrepreneurs, all while focusing on impact. The effort has raised over $1 million in local capital to date. Juli is also a founding member of Bublr Bikes, Milwaukee’s bike sharing system. She also consults on impact-based commercial real estate development projects, providing guidance on real estate and financing development strategies.

Awards include the 2020 Milwaukee Magazine Betty Award, which honors remarkable women in the community: 2018 Woman Executive & Executive of the Year by BizTimes Milwaukee;  2017 Biggest Neighborhood Impact Award by the Milwaukee Business Journal: and a 2013 AIA Top Ten Green Projects in the Nation, for The Clock Shadow Building, in Milwaukee.

Read the podcast transcript here

Eve Picker: [00:00:19] Hi there. Thanks for joining me on Rethink Real Estate for Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone. And speaking of building better, I’m very excited to share that my company, Small Change, is now raising capital through a community round that is open to the public. Small Change is a leading equity crowdfunding platform for impact investment in real estate. For as little as $250, anyone 18 and over can invest in Small Change, helping to fuel our growth as we disrupt the old boys club of capital that routinely ignores so many qualified people and projects. Please visit wefunder.com/smallchange to review the full details of our raise and to make an investment if you can. And remember, investing is risky. Don’t invest more than you can afford to lose.

Eve: [00:01:59] People, planet, profit and place. This is the return that Julie Kaufmann believes all real estate should achieve. Less than that is simply not good enough. Julie founded her company, Fix Development, with this explicit goal. She applies the philosophy to each and every project in her portfolio, prioritizing economic stability, environmental stewardship, social equity and cultural continuity. One recent example is The Aux in Evanston, Illinois, a vacant warehouse destined to be converted to a black owned business wellness hub. The goal is for the community to own and manage the building, with investors contributing through a crowdfunded capital raise, and Julie has orchestrated this in the background.

Eve: [00:02:58] Hi Julie, it’s really great to have you on my show.

Juli Kaufmann: [00:03:01] Hi Eve. Good to see you.

Eve: [00:03:04] So, you’ve said that the driving force behind the fixed development business model is your quadruple bottom line philosophy, and I wanted to learn about that. What is that?

Juli: [00:03:16] The quadruple bottom line is sort of a morphing of what’s more commonly referred to as a triple bottom line for people, planet and profit. I think that’s language that got some traction in recent years. I in my work really just, personally in my life really, just care you know a lot about people, a lot about planet and I understand we live in a world where profit or money drives basically everything. So, for me, it was always just more about finding pathways that had to do, had impact beyond just my pocketbook. But the fourth element really is about place or culture. So, people, planet, profit and place, recognizing that, you can’t just drop in something that’s beautiful for the environment and good for a few people. It really has to be of the fabric of place to be meaningful in a way that I think transcends time. And I try to integrate that fourth bottom line in the work I do as well.

Eve: [00:04:17] So, how did you build your development company around that idea? That’s a lot.

Juli: [00:04:24] Yeah, I mean, it’s a lot. It just I think it makes sense in hindsight when people are like, what do you do? Try and creating a framework to make sense. But what I really like to say is I built my company and I called it Fix Development because I was just an individual who was an activist and wanted to fix shit. If I can say that in your podcast.

Eve: [00:04:41] Of course you can.

Juli: [00:04:42] So, I was like, I shortened it to Fix Development to be a little more appropriate. But I think that I’ve evolved as a human, as an activist, it’s my nature. And that started back in college, you know, protesting and being activist around a number of topics, including climate change. We didn’t even call it climate change back in those days. But nonetheless, thinking about, how do I be the change I want to see in the world? And eventually I found my way to entrepreneurship only because I was living in neighborhoods all the time and concerned about what I saw in my own neighborhoods. Why were there toxic brownfields? Why was there disinvestment? Why were there lack of things that I wanted to go to like ice cream shops in my neighborhood? And what can I do as an individual to make that look differently? And so, it really is just around that activism background and a do-it-yourself mentality that the world is not going to change for us and the systems are increasingly morphing against us, if you will, us being the euphemism for the individual and our own self-determination. And so, through that lens, I started to think about what I wanted my little corner of the world to look like, and development became the vehicle I used.

Eve: [00:05:55] So, you know, then Fix Development, what needs to be fixed in development? I sprung that one on you, right?

Juli: [00:06:04] What doesn’t need to be fixed? Yeah. I mean, I think what you focus on in your podcast, are these themes are very common for us change agents in this work and it’s really the financial systems and real estate systems themselves. They’ve been, the architecture of those systems, are built around white male dominance and that’s not always bad but it’s exclusionary and we’re a diverse, multicultural world. And in my community, that’s certainly applies. And in my neighborhood that applies. And when you don’t have all those voices and perspectives and ideas at the table, it changes what the world looks like. And it’s not always for the better. And when you’re increasingly driven by solely economic profit of singular profit, financial profit as a bottom line, it’s no surprise that there’s toxic waste dumps all around us and that people are marginalized in decision making because they’re not valued. And so, I even forget the question, but I think all of that needs to be fixed.

Eve: [00:07:05] All of that needs to be fixed. Yeah, yeah, yeah. And it goes really deep, doesn’t it? Because that filters into zoning and all sorts of things that impact the physical world around us. But what led you to launch Fix Development? What were you doing before?

Juli: [00:07:21] You know, my background is, I started in corporate America. I worked for Procter and Gamble, and I sold like Downy fabric softener. You know, gross right? Sort of sucked the soul right out of me. But it’s useful, I have a business degree background and I think it’s useful as a training to understand the mindset of a lot of smart people in the world and how they apply their intellect. And I didn’t view it as meaningful. And I eventually worked my way through some nonprofits thinking mission driven work would be a solution. But you find very quickly that all sectors of the world have systems that are oppressive and dominant paradigms that are part of the problem and not the solution. And so, you know, I found my way, like many entrepreneurs, to entrepreneurship. And I think the reason real estate was my calling had more to do with just neighborhood activism. Like I could see places and wanted to see places look differently. I don’t have formal training in real estate development.

Eve: [00:08:19] Oh, who does?

Juli: [00:08:20] Yeah, right. I mean.

Eve: [00:08:21] That’s why so much of it is bad.

Juli: [00:08:24] Amen, sister. I think that partly that I recognize that, like, there were a lot of bros in my community who were like, doing some stuff. They just had access to money. And I was like, oh, what are you doing that for? You know, because they can, I guess. And so, what’s beautiful about it is, the flip of it is because, quote unquote, anyone can do it, but can do it badly. Anybody can also do it and do it well, was my belief and I did put that to the test. And so, I do use this DIY strategy in all of my work now, do it yourself. I learned it myself. And then I said, you know, I’m nothing special. Why can’t I collaborate with other neighbors in other parts of my city and teach them alongside me as I’m learning, and we learn together and do it ourselves?

Juli: [00:09:11] So, a big part of the Fix Development model is this co-development model, bringing together spheres of expertise that aren’t necessarily developers but that know communities are, you know, community leaders who are opinion leaders, who can rally neighbors around an idea, bringing together folks who just have lived there forever, who know the real estate and are like, oh, that building is such an important asset in our community. Here’s why. Those kinds of values are critical to successful development. And so, it’s been a mechanism I continue to use now, is just working with quote unquote average neighbors to raise up real estate.

Eve: [00:09:49] Interesting. So, it must be really difficult to balance each project’s financial return on investment to reach that quadruple bottom line goal. What does that look like for you?

Juli: [00:10:03] Every project is different because every project is such, you know, that cultural resonance that being embedded in of the community is so critical that each community defines the project for us and therefore they’re never the same. So, I have projects where, you know, Black leadership, Black equity, Black ownership is a critical social impact of the project, and other projects I have a real driving force around climate change and minimizing environmental impact and celebrating resilience. And those aren’t mutually exclusive. But, you know, in each project, a different set of values emerges as kind of the leading set. And that’s fun. It keeps it interesting. And, you know, in an ideal world, all of the bottom lines are represented, and they are to some degree, just some have different priorities, I guess I would say.

Juli: [00:10:52] And it’s just being true to that and bringing that as a through line, through everything, weaving together those priorities in each decision. So, for example, a project I have in Illinois right now, African American equity is the critical driving factor. And so, they are making decisions at every step. And for example, we’re hiring a Black architect, we’re hiring a Black general contractor, we’re hiring a Black graphic designer. So, it’s not just, you know, who the tenants are, who the leaders are, what the project looks like, who owns it at the end. It’s every step in between where that priority is paramount. But at the end of the day, we’re making strong environmental decisions. It’s going to be a cultural icon and there will be a positive bottom line financially. So, each project is a different tapestry. And so, therefore they’re all extremely hard and take a lot of work. And it’s not easy to cookie cutter these.

Eve: [00:11:41] Well, I’m going to dig into one aspect of it. You mentioned this project that is really all about building an asset for Black people, for African Americans. So, you know, you seen the statistics on investments in Blacks and in women, and they’re like shockingly low. 1% of all venture capital invested goes to Black-owned companies. So, in real estate, that must be really hard. If you’re putting together a project where Blacks have ownership and are the driving force, what does that look like when you go to a financial institution or try to raise money for that project?

Juli: [00:12:17] Yeah, you don’t go to financial institutions because you get what, you know you get, which is no. Or patronizing maybe that’s eventually a no. Or you’re doing it wrong, here’s the way to do it. And I think that for me, in my work, I’m white, but I’m a woman. And when I started, I happened to be a bit younger, too. So, those were a couple strikes against me anyways. You know, people just pat you on the head and say, oh, isn’t that cute? It’ll never work. And I think now I’ve done my work for over ten years, you know, I still get no, but I’m less patronized because I have examples I can show. And in this case, we don’t bother to just waste time on it anymore. We go to a contingency of the willing. And increasingly there are more of us. There are platforms like Small Change that you’ve helped lead that bring together like-minded compatriots. I’m often asked the question, who else out there is doing the work you do? And for the longest time I said, I have no idea. I’m sure there are brilliant people.

Eve: [00:13:13] Yeah.

Juli: [00:13:14] I’m no different in some ways, and there are probably people just like me so frustrated everywhere in this country and beyond. But I’m too busy trying to get this job done to know. But I knew of you a little bit. So, now I think there are mechanisms through the World Wide Web where we’re finding each other, and that means investors too. So, I don’t generally use banks. I can’t. They don’t want to party with me, so I don’t party with them. But we have to find more angels. It’s still the case that a lot of projects that I work on and folks like me and entrepreneurs like me, we’re not just trying to build in suburbs, in affluent neighborhoods and then layer on it something we’re trying to solve way more than that. And we recognize, we want to be in the urban community because density is important to climate change. We want to be in the urban community because equity is important to human existence and there are lack of projects in certain communities. So, we’re already layering on to our developments, so many barriers that most of our traditional colleagues don’t have. So, we still need subsidy if you will. We need angels and impact investors.

Eve: [00:14:14] You know, you need subsidy basically, because the world thinks that Blacks and women are not investment worthy.

Juli: [00:14:21] Right. And that has built up a system of, that the real estate won’t get appraised, even if I can show you that I have a business model that will work, you’re not going to value my piece of real estate in a certain neighborhood because of all the other systemic racism and oppression and all those things. I mean, of course, all real estate development projects have subsidy. They just call them different. They call them tax incremental financing, or they call them, you know, the government will give $1 million handout to our very successful corporation in our town because they asked for it. When we ask for it, we have to do a song and dance all day to the end of the moon. But I think it’s worth it when you see the impact of these projects once they’re built. They are transformative in people’s lives, truly. And now we have ten years of experience in my company where you see the impact of the jobs that have been created, the companies that have been formed, the commercial corridors that have been catalyzed to greater impact, neighborhoods that have become more stable. I mean, it’s very real and very tangible.

Eve: [00:15:19] Can you tell me about 1 or 2 of your very favorites?

Juli: [00:15:23] They’re all my Children and none are my favorites, Eve.

Eve: [00:15:25] Okay, well, 1 or 2 of your children then. You know, I suppose a couple of projects that best exemplify this quadruple bottom line and what you can get out of it.

Juli: [00:15:38] Yes. I have a wonderful project in a neighborhood called Walker’s Point. It’s a historic neighborhood in Milwaukee, one of the three founding neighborhoods of the city. And it was my first project. So, that’s probably why I love it. It’s a very hard-core example of my philosophy in action. I lived kitty corner from a toxic waste dump in my neighborhood, and that just infuriated me. And on that site, I ultimately built my first huge project. It’s an $8 million building called the Clock Shadow Building, and it has a urban creamery on its first floor, and then it has health related businesses on the top three floors. It’s a smaller set of investors. It was my first project before crowdfunding was really even going. It’s over, it’s now 12 years old this year and it had had incredible impact. And now that neighborhood is actually quite transformed. And what I’m proud of is we set the standard and I think we helped catalyze change in that neighborhood. And now it’s actually outpacing, it’s one of the few neighborhoods where change is outpacing the rest of the community.

Juli: [00:16:35] And so, we set rents back in the day that are now renewable in long term leases that are affordable. So as the tides raise all ships, our ship is staying anchored. And those tenants remain viable and have a growing base of customers because the neighborhood has grown up around it and it has won international awards for its climate impact, we use rainwater to flush the toilets, we have a farm on the rooftop. So, it’s demonstrated a lot in terms of environmental impact, it’s generated returns for its investors every year, and it has thriving nonprofit and for-profit tenants. So, I’m really proud of that project. And it’s one of my first.

Eve: [00:17:10] Let me ask you about that. You have this anti-gentrification strategy. How does that work?

Juli: [00:17:14] It’s, first of all, it’s community owned, right? So, our neighbors, our owners aren’t looking to flip and get out and make a big profit. They would like a return on their investment, but by definition, they are neighbors who own our real estate and therefore their vested interest is in their neighborhood staying great for them. And they don’t want Applebee’s, you know, they want a local coffee shop. They don’t want all these mega chains come and taking the soul out of their neighborhood. They want our local neighbor who opened a ice cream shop to continue to thrive with that ice cream shop. That’s a literal example. It’s called Purple Door Ice Cream that we got into one of our projects in this neighborhood. So, I forgot the question.

Eve: [00:17:50] No, that’s good. That’s a great answer. Because it’s community owned, it’s community controlled, and decisions are made that keep the project full of the sorts of businesses the community wants. Right?

Juli: [00:18:02] And it comes, those owners have a philosophical alignment with the quadruple bottom line. So, they’re getting a financial return. They’re not looking to increase those rents every year just because they can. They’re looking to ensure those tenants stay. They keep getting return, but they get those cultural, social and environmental impacts as part of their valued return. And if we were to forgo those returns, sure, we could recruit different tenants at this point. But that’s really critical. And I think without owners like this working in combination with tenants, you don’t have that kind of outcome.

Eve: [00:18:34] Right. So, how do you find the projects or how do they come to you?

Juli: [00:18:39] Yeah, there’s an overabundance of brilliance and opportunity and properties in all of our communities that could be developed. So, there’s sort of some special magic and sauce. I started by working my own neighborhood and picking off projects that were meaningful to me. As the model grew and more neighborhoods were attracted to it working in their neighborhoods, I’ve partnered with Co-developers. And so, I usually look to find somebody who’s extremely motivated, who has time and capacity to give to the project that is a recognized leader, and they may not have the business model fleshed out, but they know a lot and they will come as a co-equal to the table minimally. And then we build the project together. And at this point, I’m not taking on any more because I have way too much on my plate.

Juli: [00:19:25] But most of my projects have been in different neighborhoods throughout the greater Milwaukee area, and I now have a, I was recruited to a project in Illinois which I resisted for quite some time because, I mean, it’s so hyperlocal, the work we do. You know, it’s knowing your community that really matters. But in that particular case, there are five other co-developers. So, it’s a really strong local team and I’m able to just bring the real estate experience that that team did not have and add it to their expertise. So, the common threads are that there’s passionate co-developers, that there’s a really cogent idea. In the case of the Illinois project, it’s a coalition of tenants focused around wellness and racial equity. So, they have a common theme they want to get after and that’s it. Then we just build it from the ground up. We do it ourselves. Each one’s different.

Eve: [00:20:10] Have any disappointed you, any of these co-ownership models?

Juli: [00:20:15] Yeah, that’s a great question. I would say the one thing that’s been beautiful and not disappointing me, but it’s restored my hope is that there have been so resilient through pandemic that because of that local ownership, there is such a strong base of community support that buys into these tenants that goes and shops there even during the hardest times or where experts from the ownership community come in and help them pivot from a brick and mortar model to a virtual model so that most of our tenants not only survived but thrived during pandemic. That was an upside. A downside, a hard thing I learned, I guess, one project I’ve had was a hostel project. It’s the first hostel in Milwaukee and we partnered on that project, we had about 80 community owners. We still do. But it was a single tenant project.

Eve: [00:21:01] 80.

Juli: [00:21:01] Yeah. I mean, I think that was that’s one of my larger ownership groups, 80 owners. All in the neighborhood, really excited about the hostel concept. And then it opened right before pandemic.

Eve: [00:21:10] Oh.

Juli: [00:21:12] Hostel is like the worst possible business to have.

Eve: [00:21:15] Oh yeah, that’s pretty bad. How do you pivot from that?

Juli: [00:21:16] So, it died. It died, and then it was our only tenant, so then we had a real tough challenge. We were able to pivot. But the learning there is diversify your revenue streams.

Eve: [00:21:28] Yes. Yes, So.

Juli: [00:21:31] But not too many. Not too many.

Eve: [00:21:32] What are some other influences on your work? Maybe that’s enough. You sound to me, I’m an introvert, you sound incredibly brave for taking on this sort of vast array of new people and always sort of putting them together in this big jigsaw puzzle of development projects. 80 investors in a little project is significant.

Juli: [00:21:56] It’s such an astute insight, Eve. I’m also an introvert, and when people who meet me learn that they’re stunned because you have to cultivate your extroverted and I think I’m shocked by you telling me that as well. I’d say who inspires me are ironically, people. It’s such a hard thing to explain to people who aren’t like us in terms of introversion, but I really don’t want to spend a ton of time with people, yet awe inspired by all of them. And they are the reason the work happens. But I just would like to go away from all of them. And it’s not because hate people so much as it sucks the soul out of me sometimes.

Eve: [00:22:26] It really does. Yeah, I taught for a while and it was just exhausting, and it took me a few years to figure out why because, you know, I gave it my all, but I was so exhausted afterwards, it would take me the whole next day to recover.

Juli: [00:22:40] Yeah, exactly.

Eve: [00:22:41] And other people get energy from that. And we were sucked dry, right. So…

Juli: [00:22:48] Yes, but I think it’s an important point to say that these projects, this work that we do, it requires people with incredible passion and energy and commitment and perseverance to lift such hard things and believe in them for so long. And part of the reason I stand in my two feet and come and be present all the time is because I do see how many people are moved by it. And one by one we turn minds and hearts and I just keep telling others, you can do it too. Please do it.

Eve: [00:23:17] Yeah, yeah, yeah.

Juli: [00:23:18] So I can take a nap.

Eve: [00:23:19] Yeah. No, I feel exactly the same way. So, the big question is, and we know the answer, is this kind of real estate development harder than developing a market rate building?

Juli: [00:23:32] Isn’t that hysterical? It’s a hysterical question.

Eve: [00:23:35] But it’s an important one because, you know, sometimes it’s actually really hard to get to that magical 21% internal rate of return that, you know, deep pocketed investors are looking for. That’s hard.

Juli: [00:23:45] Never get to that. Never get to that. But I guess I will say in fairness, I don’t think I’ve ever done a traditional real estate development. So, what do I know how hard they are? What came to mind to me right now is like what people say to you when they haven’t had children, and then once they have children, they’re like, I had no idea.

Eve: [00:24:02] It’s true.

Juli: [00:24:02] Traditional development is really hard. I get it. I’m sure that it is. Now layer on all these other things and try and do it. You’re really just trying to change systems in this kind of work, and I think people can all understand how hard that is. And what for me at this point in midlife is difficult, is looking backwards and thinking, wow, so many of these things have been amazing. And then while I’ve been doing them, I’ve felt so proud, and I’ve seen the impact. And yet at the same time, it’s crushing to see how little the world has changed.

Eve: [00:24:34] Completely crushing.

Juli: [00:24:36] That’s where I have to look to the next generation for hope and inspiration, because I’m short of it. I feel like I do feel proud of what I’ve accomplished. Yet, I’m just so dismayed at how little progress as a society we’ve made and.

Eve: [00:24:49] We actually seem to have stood still. I think we’re working in this little corner of it, and it feels like progress. But then when I look outside this little corner, I realize there really isn’t any progress at all and that is, it is crushing.

Juli: [00:25:01] Yes, the end. Thank you for coming to our depressing podcast.

Eve: [00:25:06] Well, if you’re going to listen to two women developers, this is what you get.

Juli: [00:25:11] Reality sucks. We’re in it.

Eve: [00:25:14] Yes. My first really significant project downtown. When I went to the first banker, I approached, I got, oh, honey, no one’s going to live downtown. And that was, that just motivated me to go to the next one.

Juli: [00:25:28] Right. I mean, I do think, like, there’s a point at which it motivates you, right Because we’re so wired to not take no for an answer because we can see the vision. And I think that’s the power of continuing to do the work, is helping others continue to see that there is an alternative. It’s like when we had the first Black president in the United States. I know how meaningful that is. One of my other favorite projects we didn’t talk about is called the Sherman Phoenix. What happened in Milwaukee was police shot a Black man, there was an uprising. A ton of buildings got burnt down. One was a bank, and me, together with co developers, redeveloped that into a hub for 30 black owned businesses. All to say, I now get to lead tours where all kinds of folks, not just Black people, come and walk and say, and you can literally see the tears in their eyes saying, I’ve never seen a place like this in my world. And these are Milwaukeeans who live in predominantly Black neighborhoods, who have never seen a marketplace where the business owners and the building owners look like them. And it is literally transformative.

Eve: [00:26:30] That’s really fabulous.

Juli: [00:26:31] Yeah,

Eve: [00:26:32] Will you conduct an Eve Picker podcast tour?

Juli: [00:26:36] Yes.

Eve: [00:26:37] For all our listeners, that’s really fabulous.

Juli: [00:26:39] Of course.

Eve: [00:26:39] So, then how do people perceive you and how do they respond to the work that you do?

Juli: [00:26:44] I think you have to ask them, right? My sense of it is people like you and I have fans and haters, I’m sure. I don’t know. I mean, you don’t get to this point in Systems Change work without ruffling a few traditional feathers. I speak truth to power all the time. It’s increasingly easier for me to do that in rooms where I look different than the audience I’m talking to because I have the power to do that. I try in every speech I now give to talk about my white privilege. I talk about white men, and it’s not an attack. It’s just a statement of reality that we need to keep saying out loud. I date a white man and sometimes I can see how uncomfortable he gets with that conversation. It’s not personal, it’s reality. And until you. When you’re the dominant paradigm, you don’t see it. You don’t see how it affects those of us who aren’t in it. So, I think that that makes people less comfortable with me sometimes. But certainly, I know that there’s plenty of people who view this work as inspirational and I hope that they’ll replicate it in their little corners of the world.

Eve: [00:27:52] Yes. So, I’ve heard you say that much of your work has less to do with construction and more to do with advancing social entrepreneurship and developing new models for social investing. What does that mean and how has that played out in your life?

Juli: [00:28:09] Yeah, I think really real estate is just the vehicle. You know, it’s a tool, but what’s really important is how we change. I don’t even like to say change the narrative, but actual change the reality of the corner of the world. It happens to be through brick and mortar, but the real power of the model starts with co-development. Teaching neighbors that this is a skill set and a power they have that they can access and that they can take control of in their own little corner of the world. That’s number one. Number two is that then you can imagine not only leading a project, but populating a project with your friends and neighbors who have brilliant ideas, who never had access.

Juli: [00:28:48] That guy down the street who makes this new thing he calls a spring roll, but that he bakes, not fries. And it has sweet potato and black beans in it because that culturally feels more acceptable, that idea is brilliant. And it doesn’t have to be that you go to a big bank and get a big loan, your neighbors can pull together and help you start that little business in this little building that’s on your main street. That’s all possible. And guess what? Those banks won’t finance it. Well, that’s great. You know why? Because we don’t want that kind of system oppressing us any further. Look what they’ve done to put us in this position. Let’s do it ourselves together and own this building. So, when I started, there weren’t mechanisms to self-fund and do it ourselves. I mean, learning how to do real estate was somewhat possible because I did it in places where nobody gave a crap, to be honest. And so, there were so many opportunities that we could just take.

Eve: [00:29:33] That’s exactly what I did. Yeah.

Juli: [00:29:35] Get buildings for free here, please take this building for free. And then, oh, no, only a crazy person would do that. And then, right. You know.

Eve: [00:29:43] Oh I know exactly.

Juli: [00:29:44] And then you do it. But then you feel so proud because you did it together and you have this amazing thing that exists in it and it’s a powerful beacon. When we started, there wasn’t sort of a mechanism, there wasn’t crowdfunding, there weren’t crowdfunding laws, believe it or not. I mean, the Internet did exist, but not much more. So, we formed a group called Fund Milwaukee, which in many ways is a precursor to what you have as Small Change or many other platforms that aren’t real estate focused now. But we just looked to a lot of local living economies across the state and country and said, how are you pulling your assets and resources as neighbors to get things to happen? And we built off of that. So, we built our own little micro funding mechanism in Milwaukee. It’s now been supplanted mostly by some of these platforms, but it still works because we’re all volunteers, so we don’t layer on any fees which any platform needs to survive.

Eve: [00:30:37] Yeah, absolutely. Yeah.

Juli: [00:30:39] You can’t do this for free forever, even though we do a lot of it for free. And then it’s because people give to people, right? And so, people like us, who don’t look like the power structure, who don’t have the right language, come to a safe environment and say, I have this idea. I don’t even know how to put it into a business plan. It’s a group that wraps around and helps and says, here’s why this might work or here’s why it wouldn’t. We’re not going to reject you because you didn’t have a good business plan. We’re going to help you. It’s a supportive environment. So, all of that is meaningful and has impact. And at the end of the day, yes, there’s a building, but what we’re left with is people whose lives have been changed and whose skill set has been expanded. And that can be adapted and replicated and expanded in their families and in their neighborhoods and in wherever they go next. And that’s intrinsic wealth.

Eve: [00:31:25] And that’s an amazing legacy to leave behind, which is only, because you’re pretty young, it’s only going to get better. It’s pretty fabulous.

Juli: [00:31:34] I’m pretty young. I’m trying to retire soon.

Eve: [00:31:38] That’s young. It’s just a state of mind.

Juli: [00:31:40] Fair enough, right. I need another lifetime to hike for a while away from everybody.

Eve: [00:31:46] Yes. So, I have one last question. And that’s what keeps you up at night?

Juli: [00:31:51] You know, it’s what we touched on earlier. It’s not anything specific to my projects. It’s specific to the world. And, you know, will we survive climate change? Will my kids survive climate change and wealth inequality? Those are the two main disparities that I see just getting worse. And I am very scared that we’re not substantively making progress in the right direction. I see, there’s very few women world leaders, and I think it matters when we have them and they’re stepping aside because they’re exhausted from the work. And I think we need more people with bold and just profoundly transformative disruptions at this point.

Eve: [00:32:31] Yes, the New Zealand prime minister stepped aside, which was really sad for exactly that reason. Yeah.

Juli: [00:32:37] So, I hope, I want to stay hopeful, but I have to say it’s hard to see how we get to the other side of wealth inequality and climate change. And those are the two things that I think really are spiraling us out of control these days.

Eve: [00:32:51] Yeah, well, I want to believe that there’s a lot of people like us out there squirreling away in their little corner, making things happen because, you know, there’s got to be, right. I wish I lived in your little corner of Milwaukee. It sounds fantastic. Thank you so much for joining me today. It’s a great conversation and I want to come visit.

Juli: [00:33:13] Well, thank you and thank you for Small Change. We are raising for my projects on your platform, and it’s been an incredible vehicle to do that and it’s transformative in the work that I do to have platforms that advocate the same values. So, thank you.

Eve: [00:33:46] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. You can support this podcast by sharing it with others, posting about it on social media or leaving a rating and review. To catch all the latest from me you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing yourself head on over to wefunder.com/smallchange where you can invest directly in Small Change and our mission to democratize capital formation to create impact in commercial real estate development. A special thanks to David Allardice for his excellent editing of this podcast and original music, and a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Juli Kaufmann

Ready. Set. Homes.

March 22, 2023

Necessity is the mother of invention.

In 2019, Dafna Kaplan embarked upon an investigative journey to uncover the obstacles preventing true construction innovation from widespread adoption. Extensive research and development led to the launch of Cassette, an integrated product and service model with an innovative delivery approach.

In 2022, Cassette introduced a beautifully designed one-bedroom apartment pod that can stack up to six stories high into a multifamily development.  And their first order for 200 pods came in.

The company’s commitment is simple and straightforward: Deliver one manufactured product exceptionally well, improve that product’s performance and features over time, and with that discipline and repetition – reverse the cost escalation in housing construction.

Dafna is a recognized futurist and design influencer, with a vast and varied career spanning two industries: consumer product tech and construction. Her past roles have included VP Marketing at MATT Construction where her leadership helped the company achieve over 300% revenue growth and senior roles in several rapid-growth organizations, from Inc. 500 startups to mid-size ($500M) companies. In 2017, she co-founded a live entertainment company, HATCH Escapes, before exiting the role with 30% return on investment in 12 months. Between 2009-11, she launched successful products for high-net-worth clients and influencers, including Marley Coffee and the Johnny Carson Digital Archives. And there is more!

Dafna has been a board member and advisor to several organizations, including American Institute of Architects Los Angeles, Western Museums Association, HATCH Escapes, Consumer Electronics Association, Urban Land Institute Los Angeles, the Consumer Electronics Association accessories division, and A+D Museum, among others. She  completed an MBA at UCLA Anderson School, where she graduated top of the class with honors, and completed her BA at the University of Oregon.

In 2020, Dafna received the Presidential Award from the Los Angeles Chapter of the American Institute of Architects (AIA) for her work at Cassette, addressing the housing crisis.

Read the podcast transcript here

Eve Picker: [00:00:09] Hi there. Thanks for joining me on Rethink Real Estate for Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone. And speaking of building better, I’m very excited to share that my company, Small Change, is now raising capital through a community round that is open to the public. Small Change is a leading equity crowdfunding platform for impact investment in real estate. For as little as $250, anyone 18 and over can invest in Small Change, helping to fuel our growth as we disrupt the old boys club of capital that routinely ignores so many qualified people and projects. Please visit wefunder.com/smallchange to review the full details of our raise and to make an investment if you can. And remember, investing is risky. Don’t invest more than you can afford to lose.

Eve: [00:01:43] Necessity is the mother of invention. In 2019, Dafna Kaplan embarked upon a journey to uncover the obstacles preventing true construction innovation from widespread adoption. Extensive research and development led her to launch Cassette. In 2022, Cassette introduced a beautifully designed one-bedroom apartment pod that can stack up to six stories high into a multifamily development. Dafna’s commitment is simple and straightforward. Deliver one manufactured product exceptionally well, improve that product’s performance and features over time, and with that discipline and repetition, reverse the cost escalation in housing construction. In 2020, Dafna received the Presidential award from the Los Angeles chapter of the American Institute of Architects for her work at Cassette, addressing the housing crisis. Listen in to be inspired. If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast and go to rethinkrealestateforgood.co, where you can subscribe to be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:03:12] Hi, Dafna. I’m really excited to talk with you today. Thanks so much for joining me.

Dafna Kaplan: [00:03:17] Thank you. I’m excited to be here, Eve.

Eve: [00:03:20] The tagline on your website says, Accelerating construction, 1000 homes at a time. Tell me about that.

Dafna: [00:03:30] Sure. Actually, I appreciate you reminding me what it says. It’s been a long time since I’ve been on my own website.

Eve: [00:03:37] That’s a great tagline.

Dafna: [00:03:39] It’s really connected to, in some ways, how we started the business which was this observation that there was a lot of interest in construction, especially in housing, toward utilizing what we know works in manufacturing. So, there’s a lot of adoption of prefabrication and manufacturing construction in the form of things like what we do, modular. But there’s also this, what seemed to be a lack of understanding in the real estate and construction world, that part of what really makes manufacturing efficient is this ability to run at scale. And so, while your project might be 15 units of housing or even 100 units of housing, when you’re thinking about efficiencies that come from manufacturing, it’s really in the thousands or it needs to be thought about in the thousands to really capture the efficiency and more important, the process improvement that you get from doing the same thing over and over and over again.

Eve: [00:04:42] That makes sense. Although, you know, it’s the same problem with the missing middle housing, right? That’s almost too small to build efficiently, which is why there’s so little of it. You know, tell me about the company. When did you found it? How young is it?

Dafna: [00:04:58] Yeah, sure. And as long as you get back to that missing middle, because that’s a big part of, I think, why we’re doing that.

Eve: [00:05:03] Oh, we can get back to it right now. Go ahead.

Dafna: [00:05:06] Okay. Yes, I agree. Most of those projects are too small to gain any kind of efficiency. But that is part of the purpose of how we’re looking at the business of creating the housing as a product and at least a componentized part of that project that we could repeat over, say, 100 different projects, so that your project of maybe ten units, at least half of the cost of your project might be able to be encapsulated in this manufactured item that is getting cheaper over time, like your television set, as opposed to getting more expensive every year. And so, if we can capture a big chunk of your project and then aggregate that savings for a bunch of developers like you, then we have the potential at scale to really reduce the cost of housing.

Eve: [00:05:55] That makes a lot of sense. So, how long have you been in business?

Dafna: [00:06:01] So, in business, we actually formed and raised a little bit of friend and family capital to launch in early 2020, concurrent with the pandemic launching.

Eve: [00:06:10] Perfect timing.

Dafna: [00:06:13] And that set in motion a beautiful series of pivots that that I’d say every founder launches at the wrong time for some reason or another and at the right time for some reason or another. So, we formed the business. And as soon as the pandemic hit, we saw it as an opportunity to do two things. One, to start just consulting and taking everything, we had learned and understood about modular housing and modular construction and start doing feasibility studies for developers. While we were doubling down on our actual product design and engineering. So, we spent the last couple of years really focused on designing a best-in-class structural system that could go together very quickly on site and could be very easy to understand for the trades that have to interface with that object when it comes to the site to get the design finished. So, we launched that product, which is not only a structural system, it’s an entire finished one-bedroom apartment. This one designed by Hodgetts and Fung, an incredible design duo in California, and we launched that in late October last year.

Eve: [00:07:22] So, it took a while. Yeah, I saw the first Cassette Home you rolled out, the pod, and it’s absolutely gorgeous. I want to move right in.

Dafna: [00:07:32] Thank you. Same here.

Eve: [00:07:33] I’m wondering where you’re shipping it to at this point. Let’s start with how big it is and what it looks like finishes and windows and.

Dafna: [00:07:41] Yeah. So, as I mentioned, it was designed by a duo in California named Hodgetts and Fung, Craig Hodgetts and Ming Fung. They’re pretty well-known architects, but they have a lesser known history in industrial design. They actually had two modular patents, so unbeknownst to us before we met up and started chatting with them about a year ago, they’d been passionate about this idea of industrializing great design and we sort of landed on this idea and an alignment that just like, Target in the nineties, hired Michael Graves, a famous architect, to design your teapot for 20 bucks. Right? If you can really leverage manufacturing to do this at scale, there’s no reason you can’t have great design. And so, they took this roughly 600 square foot structure that we had, and they really made it sing from a livability standpoint. If you had 600 feet, that was about fourteen and a half feet wide and 43 feet long to live in, what would be the best version of that to live in?

Eve: [00:08:48] And so, what is the best version of that? Just how would you describe it?

Dafna: [00:08:52] Well, because of the structure, one of the real benefits of this unit is that we have a wall-to-wall window system on the front of the unit. So, about a 14 foot wide floor to ceiling window system. And on most applications that will be a window system with a couple of operable windows. A developer does have the option to get a sliding door system and to hang a balcony off of that unit.

Eve: [00:09:16] Right.

Dafna: [00:09:16] That’s sort of the… you see it the moment you walk in the door, you see that the end of the unit is just this giant, beautiful opening.

Eve: [00:09:24] It always makes space feel so much bigger when there’s light.

Dafna: [00:09:28] Yeah, and then a gorgeous sort of compact but luxurious cooking kitchen because both Ming and I love to cook, and I think a kitchen makes a great home. And then between the bathroom, which is immediately off the door and the living room is a bedroom that completely opens up with a three panel Hafele slider door. And the thinking behind that was that 80% of renters are one and two person households. We imagine that most of the time that bedroom would be open. And so, why make it a small door? Why not just open that entire wall so that your hallway doesn’t feel like a hallway?

Eve: [00:10:08] Nice. And again, anyone who’s listening, you should go check it out because it really is gorgeous. So, it’s a pod and how can it be used? You talked about, you know, someone who might use ten of them. I mean, how can it be put together?

Dafna: [00:10:24] Yeah, the design of the unit was really made for the business-to-business market. It was made for a real estate developer of any size who wants to deliver housing really quickly, to be able to stack it up to six stories high in multiple kinds of configurations. The constraints are really how it connects, which is at the corners. So, it is a bit rigorous in terms of a grid, but you could do a building with a single loaded corridor on the outside or you could do, if you have enough space, they’re long units, you could do a double loaded. And the unit comes with the structural support brackets to hold up that corridor or to hold up a balcony on the other side.

Eve: [00:11:06] So if someone purchases like ten of these units and they’re going to make a five-story building with two units on each floor, do they build the common areas and then these pods slot in? Or do you provide, or are you hoping to provide staircase pods as well?

Dafna: [00:11:27] Someday we would provide the staircase pods. At this point, I think what our interest is, how can you make a product that is the same every time so that as we discussed, what is the minimum chunk of a building you could replicate and not have it changed between buildings. And so, often the common areas and the stairs and the, say the amenity spaces, are the things you really want to customize. But there’s only so many ways to design a 600 square foot apartment. And most architects will accept that because we hired a great architect to design the inside of that, they don’t need to revisit that. And so, we are only going to prescribe the apartment part and then give you multiple options for how you can configure that as an architect on the site.

Eve: [00:12:15] That makes a lot more sense.

Dafna: [00:12:17] Yes, you will have to add the corridors. Yes, you’ll have to add a staircase. There are many miscellaneous metals companies that will prefab a stair pod. That’s not something that you need a special thing to do.

Eve: [00:12:28] Right, fascinating.

Dafna: [00:12:31] To help visualize the way they connect together. They don’t slide in; they actually stack like Lego bricks. So, the beauty of our particular system and the way we designed it and the benefit of those two years in a pandemic, is that we got ourselves to a system where you don’t even need to weld it or bolt it together. It literally just stacks on top of each other until you’re at the top of the building. And then we tension a cable down the columns. It’s a vertically post tension connection.

Eve: [00:13:00] I’m going to ask questions I hadn’t planned now because I’m wondering what that’s like to get through building, permitting, and if that’s going to vary from state to state. Where are you targeting as your, for your rollout?

Dafna: [00:13:13] Yeah, we are based in California, and while it may have been easier to design a system for Texas or for any other place in the country, housing is not only deeply needed in California, it’s the entire West Coast. And what makes the West Coast difficult for modular structurally is the seismic, just the seismicity of the West Coast. And so, we felt like the greatest need was here and steel construction and specifically post tension construction, the way we’ve done it, it’s beneficial in a seismic zone if you can get it right. It’s tricky. But we have designed this particular product to be able to stack up to six stories with no external bracing, which is very unusual, especially for a modular project and one of that height. And so, it can go together very rapidly in a seismic zone. You could use the same product in a different state. We likely just wouldn’t need all of the columns, if that makes sense.

Eve: [00:14:16] Right, yeah, yeah, yeah.

Dafna: [00:14:17] Right now there’s eight columns per unit. You probably will only need to connect the corner columns in a state that doesn’t have the same seismicity.

Eve: [00:14:26] That makes a lot of sense. But are you focused on California is your market for now.

Dafna: [00:14:32] It’s our launch market. We’re focused anywhere on the West Coast. And you are right in that modular is permitted differently in every state, but most states permit modular at the state level rather than for a small municipality. And so, the benefit is the same product we’re using in Los Angeles we can use anywhere in California. And it’s permitted through private agencies in our case, which is also the case, and I think more than 40 states, where the state farms it out to private agencies to really specialize in this manufactured housing division.

Eve: [00:15:09] Interesting. I have to ask, why 600 square feet?

Dafna: [00:15:14] Oh, it’s a great question. It’s really driven by the dimensions that would make the cost and constructability and shipping logistics most efficient in our minds. That is something that changes from state to state and from highway to highway because different roads have different regulations, even within the same state. Different highways allow different widths on the trailer for different costs. So, ours was driven around this, for us, it’s like, how do we get the 80% or 90%? And what we decided was to keep it under 15 feet wide, even with all of the wrapping and the tarp on a truck, and to keep it at a length that was kind of just in that sweet spot where there’s the greatest number of trucks available. They certainly can drive a 75-foot module on a truck. And there are a lot of wood modular companies that are doing 75 feet long so that they can get two apartments in one with the corridor. That restricts the type of building you can design, but it also does make the logistics quite challenging.

Eve: [00:16:25] Oh yeah, I imagine, yeah. 75 is long.

Dafna: [00:16:27] And while there are trucks that can do that, there’s only so many and you run out of them. And so, you don’t want your project being a slave to what the shipping industry has available. We wanted it to be something that could ship on the most widely available fleets. And so, that’s how we landed. And we wanted a livable space. We didn’t want an eight-foot-wide container home. In our minds, that’s not a livable space for most people.

Eve: [00:16:54] Right. So, you just launched. Do you have customers yet?

Dafna: [00:16:59] We do. We’re very fortunate. So, we launched the product, but we had already been working with a few developers and we’ve, both Nick and I, have been in the industry quite a while, so we’re fortunate to have a lot of goodwill. We have a signed letter of intent from a woman owned developer.

Eve: [00:17:18] Yay!

Dafna: [00:17:18] To do 200 plus units of workforce housing in the, not north of Los Angeles, but in LA County, in a city called Lancaster. And so, we’re just in the early stages of conceptualizing. It’s a ten-acre site, so we’re in the early stages of conceptualizing how that lays out.

Eve: [00:17:38] It’s a great first LOI to have. Congratulations.

Dafna: [00:17:42] Thank you.

Eve: [00:17:43] So, what’s your goal for 2023 and two years from now and five years from now? How do you get to the 1000 homes at a time? I suppose with five of those projects, right, and you’re done.

Dafna: [00:17:55] I would love to be serving projects of all size. I would love for more infill developers with ten units to understand that they can get the benefit of this, whereas they may not be able to get the benefit of most modular because you need a bigger scale or a bigger order. But by ordering a product that a company like Cassette has already prototyped has already put the R&D into, you don’t need to add that to your pro forma. And so, maybe now it pencils for you and maybe now we can scale that and make an impact across the industry with that as a product, as opposed to being a custom fab shop that kind of starts from zero every time.

Eve: [00:18:36] Interesting. So, I did talk to you once before and I was sort of really interested by the statement that you made that your hope is that eventually they will, costs will go down for each Cassette, not up.

Dafna: [00:18:50] Absolutely.

Eve: [00:18:50] So, let’s talk a little bit about that.

Dafna: [00:18:52] Yeah, I mean, why else would we do this, right?

Eve: [00:18:56] To make a lot of money. Not to bring costs down.

Dafna: [00:19:01] Yeah. I mean, making money is important, but there’s certainly easier ways to make money than starting a really complicated business. So, I could have stayed in an executive job. I could have done that. You know, life is precious. And I think a lot of us get to a certain point in life where we try to align the things that we know how to do and make money with the things that really matter. And that moment sort of came from me and my ability to think through that sort of came a few years ago, and that’s how that came about. All of a sudden, I forgot your question.

Eve: [00:19:34] You know, I suppose it’s how do you differentiate yourself in the marketplace? But also, I remember you saying that your ultimate goal was to drive the cost of each pod down.

Dafna: [00:19:44] Yeah.

Eve: [00:19:45] Purely because you’re not offering customized options.

Dafna: [00:19:49] Yeah, it gets down to a few years ago when I was leaning into industrialized construction. It wasn’t just because it was the hot new thing. It was because I had spent ten years in the manufacturing sector before I was in architecture and construction. And what I saw happening in prefab was not really manufacturing. And now there’s such an interest both from cities and the investment community in what prefabrication can do, because there’s this thought that, wow, manufacturing gets cheaper every year, right? We get better and better. We are so far advanced in manufacturing in terms of productivity improvement, that it is basically at the top of all other industries when it comes to productivity gains per year. And construction is pretty much dead last on that list. And in fact, we’ve probably lost productivity in the last 20 years for a lot of reasons, some of them good reasons for safety reasons, but some of them not so good reasons.

Dafna: [00:20:53] So, there’s this sort of understanding that there’s an inevitability around industrializing this construction industry yet, I think. You know, manufacturing is a really complex business, especially complex manufacturing, which would be more like automotive or aerospace. It’s not like manufacturing, say, a widget that has one plastic tooling form and then you amortize that form like we’re making plastic cups. It’s like, you have 50 different subassemblies inside of this product that are sub assembled by different. Call it mechanical, electrical, plumbing, subassemblies, etc…

Dafna: [00:21:33] So, it’s complex manufacturing. Yet if you look since the thirties, complex manufacturing, it’s been measured that for every time you double the number of units you make, there is a constant savings and there is a curve of efficiency and savings associated. But that is when you’re doubling the same unit over and over. That is something that the way that most developers are buying modular construction, it’s still not happening. Even if you have 100 units in your building, that’s barely enough for a factory to start understanding how to build that product. And those savings, don’t, they do come a little bit from material aggregate, but Katara proved that just having big volume doesn’t get the cost down the way that process improvement actually gets the cost down. Which is the primary driver of cost savings, and manufacturing is this process improvement. So, we thought, okay, how do we create a process that really could be the same every time, all the way through installing the product? And so, that’s sort of the target. And the answer to your goal is I want to get this one product to 1000 and start to measure that curve. And what is that constant savings for every doubling? Because then we have a way of predicting how the cost will come down and then we have a reason to launch a second product and a third product.

Eve: [00:22:57] So, you also will have to probably, I’m assuming, scale your manufacturing operations. I don’t know where you’re manufacturing right now, but how do you expect that to change over the next few years as these numbers go up?

Dafna: [00:23:10] That’s exactly true. And so, the business was designed around scaling manufacturing from the start. And so, we actually have two agreements right now. We have two manufacturing hubs, and we’re bringing a third one online. And they’re in all in different places to have some diversification, to have scalability, but also have geographic diversification. Sort of, what’s best for this project? Where should these come from? And then building the back end, one of our goals in 2023 is starting to build what they call an ERP system in product where you start to really have control and data on every single material that goes into that product. And to be able to move that material and supply database across your different hubs of where you’re manufacturing it.

Eve: [00:24:03] Interesting. So where did the inspiration for this come from?

Dafna: [00:24:08] Oh, boy, I don’t think it was sort of a sudden inspiration. It was really more of a leaning in. It started with the hypothesis that manufacturing should work in construction, specifically around multifamily, because you have the ability to do the same thing over and over. It’s a lot harder in this country to do that with single family. That’s a whole other conversation, but I thought it should work. I’m going to lean into this, and for about a year I traveled around the world. I talked to different manufacturers, and not just of modular, but different forms of prefabrication, from CLT to panelized housing to volumetric. And in Asia, there’s a lot of volumetric that’s been going on for decades, actually. And I asked a lot of people in the US who’ve been doing these projects. And so, it was really a leaning in that led to just a lot of observations and questions. And one day I wrote a business plan. I thought, there’s something I see that I don’t think other people see. And as I started speaking about it, there were large companies and partners that were very interested right away in working with me.

Eve: [00:25:24] Another question I have is we know that buildings are responsible for probably about 40% of tainting our environment, our world. How does this process help, or does it help?

Dafna: [00:25:36] Yeah. I mean, that’s one of the most exciting parts about this, is that construction is also one of the most wasteful industries.

Eve: [00:25:44] Very wasteful.

Dafna: [00:25:45] When you think about things that are thrown in a landfill and a dumpster.

Eve: [00:25:48] That’s beyond the 40% emission number, right?

Dafna: [00:25:51] Yeah. No, no, absolutely. So, from a sustainability perspective, there’s been some measurement. Obviously, I’m not big enough and don’t have the track record yet to start measuring our specific business around it. But the early studies, at least in the UK and I think now in Canada have shown something like 70% less carbon emissions just from less trucks to the site.

Eve: [00:26:15] That’s what I was going to say. You’ve got one truck run instead of like probably hundreds, right?

Dafna: [00:26:20] I believe you have to be really honest and say, okay, well then you also have to measure trucks to your manufacturing hub. And so, people get very concerned about having a manufacturing site maybe where they think it should be. But what I would say from a sustainability perspective is the biggest thing you want to make sure is that all the suppliers are in close proximity to that manufacturing hub. So, and we have a manufacturing hub in Korea. We have a partner in Singapore. We’re working on a couple in North America right now. But the bigger important piece of that is designing the product and supply chain that goes into that manufacturing and making sure that that doesn’t have a big distance to travel and that that’s a sustainable material. If you’re doing it to really be sustainable rather than to just get points on a board, it makes you think about a lot of different things. And it’s one of the things I think we’re most excited to start measuring from day one is, how do we benchmark our carbon emissions and then over time, how do we improve that?

Eve: [00:27:24] Yes, fascinating. So, what’s standing in the way of producing housing like this? What’s making it harder for you? Or harder than it should be?

Dafna: [00:27:36] Yeah, harder for us versus harder for the industry may be two different things. I mean, we are, like a lot of women owned businesses.

Eve: [00:27:44] Oh, well, that’s hard right there.

Dafna: [00:27:46] Yeah. That started in a pandemic. I’m not complaining, but we’ve bootstrapped and that’s just a slow process. You know, maybe it’s my optimism. I don’t think things are standing in our way. I think there’s a lot of capital markets that don’t understand how to calculate a risk of something that’s very new. And so that’s not just me, that’s the modular industry facing industries like banking and insurance that are not incentivized to take risks, right. So, changing things in that industry usually takes a crazy amount of capital to be able to guarantee loans and those things. So, that’s one of the obstacles to the industry. But it’s softening. And then what I would say is the bigger obstacle, and this is the less talked about obstacle, is this culture of custom start from scratch. And even a lot of architects are looking at prefabrication and saying, Oh, I want mass customization. And what I would say is, well, you haven’t even figured out how to make the industrialization work. Great, let’s get to mass customization. I love that.

Dafna: [00:28:49] I was, the contractor I worked for, built the Broad Museum and the Academy Museum of Motion Pictures, and every kind of iconic, like one off unique thing and using 3D technology, and it’s all great. But that’s not where construction started and that’s not where prefab or modular needs to start. We need to start by understanding that when I build a project as a developer and a general contractor, my typical process involves 80 different stakeholders down the chain, from the lender to the plumber on site to the neighborhood to the permitting agency. There’s a lot of people involved in this process. And the crazy part about what we do, is that every time you develop a new project, you change all 80 of those entities, or maybe like 75 of them are different every time. And so, if you’re going to say like I do, that cost savings over time comes from process improvement, how in the heck is that going to happen when you have a different 80 companies doing that process every time?

Eve: [00:29:54] Right.

Dafna: [00:29:55] And so, I’m trying to sort of cordon off this 50 to 70% of what you’re doing to make sure we can have a repeatable process for you. But what that means for everybody else is that I need to make sure that my product is actually created in a way that’s simple enough that I can teach it to a very fragmented industry, and they can quickly get it every time. So, I think one of the obstacles is this sort of desire to customize everything and not really respect and understand the investment that goes into creating a product in a manufacturing environment. But I do believe that just by showing the industry that a beautiful product can be created and it has a fixed price, and you could actually know exactly what you’re getting for the price you’re getting it, which is unheard of in construction, that developers will buy that. If you build it, they will come. And that’s what we’re starting to experience and it’s, hopefully that will be transformative in the industry when that starts to happen.

Eve: [00:31:00] Well, I feel like I’ve missed some question somewhere. Is there anything else you want to tell us? It’s a fascinating business.

Dafna: [00:31:07] I feel like I’ve been talking too much, and I’d like to know more about you, actually.

Eve: [00:31:12] Well, that’s not what this is about, but we can talk about that later. It’s really fascinating. What’s next for you? I mean, what do you have to do over the next three months to keep this going and keep building it?

Dafna: [00:31:25] Yeah, well, we’re set on executing perfectly, right? I mean, there’s a lot of people that want to get a lot of projects. I want to get our first project in the ground and have the project work the way we’ve promised and to keep our word and to measure it. And we’re fortunate enough to have at least one customer that wants to move forward and work with this system. And I think our job is to just execute well. So, that’s my goal. I believe everything else falls into place from that.

Eve: [00:31:54] Well, I can’t wait to see it. Thank you very much for joining me. It sounds fantastic.

Dafna: [00:31:59] Thank you, Eve.

Eve: [00:32:18] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. You can support this podcast by sharing it with others, posting about it on social media or leaving a rating and review. To catch all the latest from me you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing yourself head on over to wefunder.com/smallchange where you can invest directly in Small Change and our mission to democratize capital formation to create impact in commercial real estate development. A special thanks to David Allardice for his excellent editing of this podcast and original music, and a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Dafna Kaplan

Disability Forward Housing.

March 8, 2023

Micaela Connery is co-founder and CEO of The Kelsey, a San Francisco–based nonprofit that co-develops accessible, affordable, inclusive multifamily housing, advocates for policy changes that promote inclusive practices, and provides tools and templates for others who want to build housing based on its model.

Since founding The Kelsey in 2017, Connery has secured more than $120 million in funding to pilot programming in existing units in Oakland and to finance new buildings in two of the nation’s most challenging housing markets—San Jose and San Francisco. She also oversees strategic planning across program areas, including housing development, field building, and community and political advocacy.

Connery’s lifelong advocacy for people with disabilities stems from her relationship with her late cousin and close friend, Kelsey Flynn O’Connor. The Kelsey co-founder and chief inspiration for the organization, O’Connor lived with multiple disabilities. As the two grew up together, Connery saw firsthand the obstacles many disabled people face in accessing the same resources as their nondisabled peers. Determined to work on solutions, Connery realized there was no cohesive model for housing that would allow people like her cousin to live independently in a mixed community, so she set out to build one.

The Kelsey’s model for accessible, affordable, inclusive communities allows disabled and nondisabled people with a wide range of incomes, needs, and life experiences to live side by side in equally high-quality homes. Locations are chosen for their proximity to jobs, community, culture, services, and transit, while architecture and engineering go beyond building code requirements to implement universal design. In addition, thoughtful but optional community outreach programs foster interaction, understanding, and connectedness, leading to mutual support and a sense of belonging.

Connery is proudest of the role The Kelsey plays in shifting the narrative of what disability-forward housing looks like. The Kelsey is spearheading a movement for equity co-led by people with disabilities—voices that should have been at the forefront a long time ago. Connery envisions a world where inclusive housing is the norm and people with disabilities have true options for community-based living. She believes The Kelsey’s work will show that everyone is better served by design choices that include disabled people. Prior to founding The Kelsey, Connery published leading research as a fellow at the Joint Center for Housing Studies at Harvard University. Her findings identified what became the core elements of The Kelsey’s design and programming principles. Before that, she served for 12 years as CEO of United Theater, a nonprofit organization she founded at age 15 to foster inclusion and leadership among disabled and nondisabled students through the arts.

Read the podcast transcript here

Eve Picker: [00:00:10] Hi there. Thanks for joining me on Rethink Real Estate for Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone. And speaking of building better, I’m very excited to share that my company, Small Change, is now raising capital through a community round that is open to the public. Small Change is a leading equity crowdfunding platform for impact investment in real estate. For as little as $250, anyone 18 and over can invest in Small Change, helping to fuel our growth as we disrupt the old boys club of capital that routinely ignores so many qualified people and projects. Please visit Wefunder.com/smallchange to review the full details of our raise and to make an investment if you can. And remember, investing is risky. Don’t invest more than you can afford to lose.

Eve: [00:01:51] Michaela Connery is co-founder and CEO of the Kelsey, a non-profit focused on inclusive housing for people with disabilities. Michaela’s lifelong advocacy grew out of her relationship with a late cousin and close friend, Kelsey Flynn O’Connor, who lived with multiple disabilities. As the two grew up together, Connery saw firsthand the obstacles many disabled people face in accessing the same resources as their non-disabled peers. Determined to work on solutions, Connery realized that there was no cohesive model for housing that would allow people like her cousin to live independently in a mixed community. So, she set out to build one. Since founding the Kelsey in 2017, Connery has secured more than 120 million in funding to pilot programming in existing units and to finance new buildings in two of the nation’s most challenging housing markets, San Jose and San Francisco. You’ll want to hear more.

Eve: [00:03:08] If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast and go to rethinkrealestateforgood.co, where you can subscribe to be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:03:32] Hello Michaela. I’m really excited to talk with you today.

Micaela Connery: [00:03:35] Thanks for having me. Excited to chat with you too and share more.

Eve: [00:03:40] So, let’s start with this. What is The Kelsey?

Micaela: [00:03:44] Yeah. So, The Kelsey is an organization that both advocates for and develops disability forward housing that’s affordable, accessible and inclusive. We are a not-for-profit based in San Francisco, working both in the Bay Area but also nationally. Our work began with Kelsey, our co-founder, who was a disabled advocate and my cousin, and can share more on that. And yeah, our mission is really to address what we see as both a really critical but too often overlooked housing need of people with disabilities. 1 in 4 Americans who live with a disability, addressing their housing need, and also recognizing that building housing that meets that need, that’s affordable, accessible and inclusive actually just makes better housing and communities for all people.

Eve: [00:04:35] It does. So, let’s go back and tell me why you started it. Like, take me on the journey.

Micaela: [00:04:40] Yeah. So, as I mentioned, my co-founder and my cousin and dear friend Kelsey, she and I really grew up together and, you know, went through every life milestone together and through all of those, you know, experienced, you know, access and inclusion or in some cases, lack of access and inclusion through really all life stages. And, you know, whether that was at our schools or in summer camps or church or recreational stuff or travel. And so, that was just a part of our lives and how we saw the world. And when we were both in our 20s, similarly, life milestones going through at the same time. We were both, you know, in that phase of life where we were looking to move out of our parents’ home, and Kelsey didn’t use verbal language to communicate, she used modified signs. But she made it very clear that she was ready to move out on her own. And the options were just incredibly lacking and limited for her and particularly lacking the option for integrated, community based, inclusive housing where she could live not only with other people with disabilities, but in real community, with people of all backgrounds and disability.

Micaela: [00:05:52] And, you know, recognized really quickly that what I thought might have been a unique issue to Kelsey based on her level of support need and where she lived was not unique to her at all. And in fact, Kelsey was an example of a much larger systemic issue of a lack of housing for people with disabilities. We had affirmed in this country through a lot of policies and rights-based work, the right of people with disabilities to live in the community of their choice and can talk more about what those policies are. But that that right was 100% not made a reality and that it was particularly acute for people in lower income communities and communities of color. And so, that led me to go on this journey to first understand like, what was this problem, who was solving it, what was the system around it that I could plug into and be a part of solutions and ultimately realize that solution didn’t exist and created that within the Kelsey.

Eve: [00:06:49] Wow. So, can you talk about some of the biggest issues you saw her struggle with? I mean, what were the reasons why it was so difficult to find housing?

Micaela: [00:06:58] Yeah, this is something that I really looked to investigate right off the bat, both as it related to Kelsey, but also as it related to like disability housing more broadly. Because one of the things that was really clear once I started to both, you know, with Kelsey and her family, but also talking to other people with disabilities, is that nobody kind of disagreed that there is a need for housing for people with disabilities. But, you know, it was hard to create some clear language around what that actually means. What is housing mean for people with disabilities? And that gets to your question around like what were the barriers and what I categorize and saw as the barriers, and this still informs our lens of our work today. I said earlier, affordable, accessible and inclusive. Those are our focus areas at the KELSEY, because those are the three barriers that we’re actually seeking to overcome in our model of both housing development and housing advocacy. And so, really what gets in the way of people with disabilities ability to live in community of their choice is one, a lack of affordability where folks with disabilities are disproportionately likely to be low and extremely low income. Our SSI system forces people to live in extreme poverty. So, those individuals, 4 million plus Americans who rely on SSI are at the lowest of incomes in our country. And other disabled people, you know, have other affordability considerations, not to mention just broadly in this country, we have an affordable housing need. So, the first barrier is really people couldn’t afford to live where they wanted to live. The second barrier then came that even in some cases if you solve for affordability, which was not being solved for, that then there was the gap in accessibility.

Micaela: [00:08:37] And accessibility we really define as anything to do with the built environment, so that even once people found housing, it wasn’t located in an accessible space, their unit wasn’t accessible to them, the amenities weren’t accessible, it didn’t meet their specific access needs and wasn’t designed for them. And then really the third barrier that came in had to do with inclusivity, which was really about the operations and the services that, you know, if you solve for one and two, that then still, and this was particularly true for Kelsey. Kelsey was somebody who used 24-hour support and care and that communities, you know, weren’t designed to be connected to the kind of services that, you know, Kelsey needed in her home, in the community. And that still, and we can have a long conversation about this, that still there’s a really, what I would say, unfortunate, if not dangerous sort of, you know, divide in saying, oh, people with disabilities use supportive services, those ones go to facilities and group homes. Like if you have less needs, then you can live in community-based housing. And we reject that concept. And really then it’s about how do you design communities where people with disabilities, regardless of the level of their support need, have access to integrated, diverse community with diverse neighbors and diverse experiences and within that community have access to the services they need to not just survive, but thrive there.

Eve: [00:10:03] Yeah, because disabilities come in all shapes and sizes, don’t they? Which makes it. And yeah, we have, I mean it’s already very difficult to build affordable housing, but to then be able to address all of the issues that need to be overcome, that must be an enormous project.

Micaela: [00:10:19] Yeah, well, you know, I think I would say yes to people with disabilities, you know, have diverse access needs and are a heterogeneous population. One size does not fit all. I would challenge a little bit that building disability forward housing has, you know, additional complexities by nature of the fact that disabled people have different needs because, you know, what we found is that actually if you just anchor on these access needs from the start, they’re just better design choices that for, you know, in 90% of times don’t actually bring additional costs to a project or make it any more difficult. It’s just shifting to have that consciousness, that access and disability is a natural part of the human experience, and we should be designing spaces that reflect that, you know, just like we would, you know, now it’s, you know, there are so many things that are standard around how we think about and develop housing and include within that, you know, access can be one of those things. It’s it’s a choice not to include that. And we would say it’s an opportunity to include that to create better spaces.

Eve: [00:11:23] Yeah, no, that makes a lot of sense. I think at least where I live, the zoning codes have required inclusion of accessible units in all sorts of projects and sometimes it doesn’t make sense. They can be really high-end projects and you’re required to set aside a certain number of accessible units which, you know, they might be available, they might not be available, they may not be affordable. It makes a lot more sense to address the entire building in some way.

Micaela: [00:11:53] Yeah. And we think that that’s the interesting thing about disability too, is that like, while I mentioned the affordability consideration, like and it is the case that, you know, many people with disabilities live on low and extremely low income. There are people with disabilities at all levels of income, including high income, workforce housing, you know, teachers, you know, direct service workers. There are disabled people at all levels. And so, we should be really thinking about how do we define and design housing of all types to include accessibility. The design principle that we’ve used at the Kelsey Air Station, which is our first community that’s under construction right now, is that 100% of our units are visitable and adaptable, meaning that if you are a person with disabilities, you can one visit any unit. So, because we would see communities where, you know, you couldn’t have a friend over if they used a wheelchair because they couldn’t get into your apartment. That’s a terrible way to build community.

Micaela: [00:12:48] So, that 100% of our units are visitable and adaptable, meaning a guest with disabilities could come in, enjoy dinner, use the restroom, you know, be in the unit, and then 100% of units are adaptable without, you know, skills or training that somebody could come in and adapt their unit to make it fully accessible for their needs. And then 25% of the units are specifically already adapted and designed with, you know, enhanced accessibility features. But like, all countertops are the same height. And I’m a very tall person, and I would tell you that that works. All the countertops are the same. All the widths and spaces and additional design features for access are included everywhere. Backing for grab bars are included everywhere. And that’s just.

Eve: [00:13:33] That’s basic, yeah.

Micaela: [00:13:34] It’s smart to do also from an efficiency and a turnover because you’re not saying, oh, like you have to go into that one unit or what if you have less or more or whatever it is. It’s just a, it’s a better, it’s better for disabled people, it’s better for owners and operators, and it’s better for future residents who could become disabled or have a disabled child or have a disabled guest. It’s just all across the board better.

Eve: [00:13:55] I’m sure you’ve made comparisons between these buildings that you’ve built following these procedures versus a regular building and what is the cost increase when you provide 100% adaptable units?

Micaela: [00:14:08] Yeah, so our community, I mean, we’re in the Bay Area, so cost is expensive to start with. But we have found if you compare our buildings to comparable projects, it is not like significantly more expensive. I don’t have a specific dollar amount to give you and that’s something that we once we’re finished with construction, we can probably give those numbers more directly. But that from our initial budgeting and estimating that we’ve done with all of our contractors and partners, it is not measurably more expensive to do these accessible projects than it would to do other kinds of projects. The cost comes in on accessibility when most people grumble about accessibility being more expensive, it’s because they didn’t do it from the beginning, and it’s incredibly expensive to retrofit.

Eve: [00:14:52] To retrofit yeah. Because you’ve got to have wide enough doors and you’ve got to have, you know, think about your hallways and everything from the beginning, right?

Micaela: [00:15:00] Yeah. But if you build that in, then it’s just in your cost. And our units are tighter. Our studios are at 490 our twos are around 700ft², about. So, there are like also people are like, Oh, that’s going to be this huge building. It’s going to have a massive footprint. We’re doing like dense infill development with these kinds of accessibility. So, it’s really feasible to do it. But again, it’s the intentionality of doing it from the start.

Eve: [00:15:26] I can see a primer in the works here.

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

Eve: [00:15:30] For contractors.

Micaela: [00:15:32] Yeah, we do actually have something called our Housing Design Standards for Accessibility and Inclusion. Those are at thekelsey.org/design and these are a set of design guidelines and design strategies for people doing cross disability accessibility and not just around some of the stuff that we’ve talked about, but it starts with community engagement and outreach from the project conception, obviously through all the units and the built environments, but up into resident services and operations. And it’s, you know, 300 elements that people can use in their own projects or, you know, as a funder or as a developer to define what accessibility looks like. And we’ve got folks using them all across the country and they’re just a really, we like went from our first community to our second and we felt like we had to retrain our whole design and development team on all of our accessibility goals and what it meant and what cross disability accessibility meant and all of that. We were like, why isn’t there a standard that we can just share with our team? And there wasn’t. So, we created one and it’s up for folks to use exactly in that way as a primer.

Eve: [00:16:34] That’s great. So, when did you launch the organization?

Micaela: [00:16:37] So, we are just coming up on five years. Our first round of funding came in March of 2018 and that launched us into a community organizing work we did across the Bay Area called, Together We Can Do More, as well as securing our first two sites in that time. So, we’ve been around for just about five years.

Eve: [00:16:57] And how many projects have you built? They’re all in the Bay Area so far.

Micaela: [00:17:00] Yeah. So, we have a project under construction in San Jose of 115 mixed income homes for people with or without disabilities. We’ll be breaking ground soon on a similar 112 home community in San Francisco right across from City Hall. We also have a small pilot that we operate providing residents services within an existing project in Oakland, so all in the Bay Area. But then we also do technical assistance where we might not be the developer, but we help support other people working on housing projects or housing adjacent projects where they’re working on being disability forward and needing capacity building or project scoping or feasibility studies or community engagement support. And so, we’ve done technical assistance both across the Bay, across California and nationally, too.

Eve: [00:17:51] So, it sounds like you’re not always the developer. How do these projects get developed?

Micaela: [00:17:56] Yeah. So, we are not always the developer in these examples of the projects that are under construction or about to be, we are the co developers, so we work in partnership with local, you know, both for profit and not for profit housing developers, building, you know, these communities and they come on and we share development responsibilities. Us obviously really leaning into the disability forward elements of the project and our development partners, you know, sharing their, you know, track record with just developing standard affordable or mixed income housing and our technical assistance work that really ranges from, you know, as we talked about at the beginning, disability. You know, disabled people are, you know, parts of communities everywhere. And so, our technical assistance clients range from affordable housing organizations who, you know, know that they are serving or desire to serve disabled people, but it’s not explicitly their mission and want to do that better and understand, you know, community engagement or dealing with regulation around disability services and compliance there or involving more disabled people in their design and development process. And so, we do that.

Micaela: [00:19:03] We’ve also worked with disability service organizations who deliver services, and as part of those services, aim to provide housing or support somebody in the provision of housing for the people that they serve but aren’t a housing developer or housing expert. And so, we’ll lend development capacity to them. And then we’ve also worked with some finance organizations who are thinking about how to think about accessibility or disability inclusion within the projects that they fund. And so, helping them think about, you know, design and development guidelines like our design standards as it relates to ecosystems of multiple projects, not just a single one. And so, you know, it really ranges in terms of all the different players, and we do a lot of stakeholder mapping of, there’s a lot of players who impact how housing gets built and who housing gets built for. And so, we really are open to lending capacity for any of the people who are moving the needle on getting housing out there to make sure that needle is moving towards more disability forward models.

Eve: [00:20:04] So, how is leasing managed and how long is the waiting list?

Micaela: [00:20:09] The community that’s under construction in San Jose will open in the first part of 2024. And so, we’ve actually just hired our resident services director who’s just starting that leasing, the marketing and leasing process and partnership with our property management and other compliance partners. Um, we don’t know how long the ultimate wait list will be, but I can tell you that even just on having like a, we have like a general form that people without any active outreach just sort of having it up there, we’ve got several hundred people who have like put their names to be notified when the lottery comes on. We imagine when we actually market it, that number will grow just from based on what we’ve seen both in affordable housing generally and particularly for people with disabilities. Our process works in that 25% of our homes are explicitly reserved for people with disabilities who utilize supportive services. And we have tenant referral organizations and partners who help us verify, you know, residents, you know, having eligibility under that criteria of being disabled and using services. And then within that, people qualify. And based on that criteria and income and there’s a lottery, then out of the qualification. And then the other 75% of the homes are available and marketed based on income, whether or not you have a disability. And it may also be the case that there are people, it will likely be the case, that there are people in those 75% of homes who might not qualify as a person with disabilities who use supportive services, but they’re a teacher who uses a wheelchair in San Jose, who likes the middle-income home, who still is disabled and comes through those 75%.

Micaela: [00:21:47] So, you know, people with disabilities will exist in both categories. And I’ll just note that we do specifically do a lottery. I saw a lot of communities that operate, especially in disability founded models or disability focused models that do waitlists. But we feel really strongly that, you know, we shouldn’t preference people who had involvement in the process or who are in the know and able to get in line first that we, you know, have a very specific affirmative marketing goal to make sure this community is known and particularly underserved and underrepresented, low and extremely low income communities, as well as communities of color in the cities we build and making sure that all people have an equal chance of getting a home in the building so people will qualify, get in and then be ultimately selected through a lottery, to try to give the most open process.

Eve: [00:22:43] I do want to get back to some of the policy questions you alluded to. And I’m just wondering what the biggest hurdles have been for you and what challenges you still have.

Micaela: [00:22:52] Yeah, I think we look at our policy focus as not far off from the framing of affordable, accessible and inclusive either. The biggest hurdles around building disability forward housing as we created at the Kelsey as one like, you know first of all, full stop, we don’t have a universal right to housing in this country and we are under subsidizing a system that needs more subsidy overall. And so, we exist within that as a housing development organization, regardless of whether we’re focused on disability. But I will say that the existing financing sources for affordable housing, very few target disabled people as they’re kind of, you know, when you apply for funding, there’s different sort of target populations and disability is not included typically in like preferences or scoring for programs. And often if it is included, it only applies if you are a disabled person experiencing homelessness. And we 100% believe that disabled people experiencing homelessness should be provided housing. But we also believe that you shouldn’t have to become homeless.

Eve: [00:23:59] In order to get it, yeah.

Micaela: [00:24:01] In order to get it. And so, it’s a both, and situation there that we need to have subsidy that provides housing for disabled people who are living in a household with parents or guardians who are aging. We need to provide funding to disabled people who are in an institution or a hospital and are ready to move out but have nowhere to move into the community. And so, just one like increasing public subsidy into, you know, housing and particularly making sure that that subsidy includes, you know, either incentives or requirements to include homes for disabled people. The main federal program that exists around that is the HUD 811 program. And we do a lot of advocacy to increase that. But that can’t be the only, and I’d also say that like we’ve also seen that a lot of our funding sources, even including like, you know, recent Nofas put out by the city of San Francisco, while well intended, a lot of these funding sources actually like don’t adhere to some of the goals of community integration and building mixed communities of people with and without disabilities of all incomes. You know it’s this sort of like let’s solve all together and concentrate extremely low-income housing. And I understand the need because we need to build more of that housing. But we also do need to think about Olmstead, which is the the Supreme Court ruling that mandates, you know, the right to community living for people with disabilities as well as, you know, the integration mandate of the Americans with Disabilities Act, that we need to make sure our housing policies live up to that integrated community model and that our funding sources not only incentivize it, but don’t actually disincentivize it, which sometimes they do.

Eve: [00:25:42] Right, right.

Micaela: [00:25:43] And then I’d say the two other policy focuses are around that accessibility. As you pointed out, there’s a lot of confusing and sometimes compliance heavy accessibility focuses where, when people think about accessibility of the built environment, it’s like one just like, oh, endless regulations, you know, opaque guidance. You know, I never know what I’m going to get. This funding source requires this, and this funding source requires that. And so, doing some work to streamline and clarify baseline accessibility so that all communities meet increased baseline accessibility, which they should, as well as that would be considered a stick. That’s a requirement and we think that’s important. But also layering that with incentives, carrots of how do you, in addition to just requiring a baseline accessibility, how do you provide incentives or systems that support enhanced accessibility or provide technical assistance or capacity building for people to do really robust accessibility? And so, we’re working on some federal legislation that’s going to be introduced in the Senate soon, specifically around that.

Micaela: [00:26:49] And then the third area is really about housing related services and that, you know, we have underfunded Medicaid in this country significantly. And California, where we’re based, relatively speaking, has robust supportive services. But that’s even that relatively is still not enough. We don’t pay direct care workers enough. We don’t, some states haven’t opted into waitlists or into waiver programs and still run waitlists where people can’t have access to services and are waiting to receive the services that they need. And so, even though we are not a service provider at the Kelsey, we recognize that people’s access to Medicaid and other supportive service programs directly impacts their ability to live in the community of their choice. And so, we we don’t necessarily lead advocacy in the service funding area, but we definitely participate in support and lift that up as that. Those two things have to go hand in hand. And perhaps there’s also opportunities which we do work on, is how to better coordinate between housing systems and service delivery systems to serve people better. When we de-institutionalized in this country, we sort of said, okay, here all you disabled people, you can take your money for services and go live wherever you want, and quote unquote, and we never actually built the live wherever you want things. And therefore, our housing system sometimes don’t even think about disabled people who use supportive service as like their responsibility or on their docket. They think, oh, those people are like served in group homes or some other things. They’re not like who the state of California is developing affordable housing for or who the city is responsible for. That’s like another system, and that’s absolutely wrong. The housing infrastructure has a responsibility to serve these people but has an opportunity to leverage service dollars coming out of the service systems once that housing is built. And so, how do we get those systems in our post institution world, getting those systems to work better to to meet the true goal of community living?

Eve: [00:28:47] How many people with disabilities are there in the US?

Micaela: [00:28:52] 61 million, I believe, is the most recent number. That’s 1 in 4 people.

Eve: [00:28:58] 1 in 4 people. And if you add into that, seniors who are having trouble getting around and could probably benefit from housing that thinks about that, you know that’s a lot of people yeah.

Micaela: [00:29:10] Think the 1 in 4 does include older adults with disabilities but yes. You’re exactly right.

Eve: [00:29:15] I mean, it’s not even necessarily a disability. You know, your knees are creaky. You don’t want to take steps anymore like, you know, sort of basically, you know, lifestyle hurdles that you start having.

Micaela: [00:29:26] Yeah, it’s a huge population. It’s also a diverse population, as we talked about before. We spend a lot of time too, like, I think it can be a both, and of thinking about the big tent disability of we are a stronger political movement when disabled people and allies like think about and advocate for disability holistically and don’t separate based on you know, do you have this type of disability or that type of disability or are you this age or that age or, you know. Just really take a big tent approach. And then you can within that big tent also be very intentional around specific interventions of supporting specific access needs or specific service needs. I feel like, you know, sometimes we’ve diluted our power as a disability rights movement of, you know, I go to conferences where it’s like, well, this is for high support need people not low support. And it’s like, okay, let’s just like talk about that all people need support and let’s like build for that.

Eve: [00:30:21] I love that approach, yeah. It makes a lot of sense. Who else is working in this space? Should there be more of you?

Micaela: [00:30:27] Yeah. Fortunately, I think there have been more and more developments coming up focused on disability access and inclusion. We actually, with that in mind, you know, part of the Kelsey’s mission has from day one always been like, we seek not to be the only. We seek to be a part of a robust field of a lot of people doing these kinds of developments. Like it would be crazy if there was one senior housing developer in the country. There’s not. There’s, you know, thousands of developers who do that. And there should be, you know, all developers should be doing disability forward development as part of what they do. We convene a group called the Inclusive Houser Network that includes housing developers that have, you know, individual projects. You know, one in Maryland, another one that’s getting developed in Maine, some work out of Chicago, something happening in Denver, in the DMV, Washington, DC area, to name a, Pacific Northwest.

Micaela: [00:31:24] So, there are some, you know, single projects. And one of the things that we do at the Kelsey is really try to bring those disparate organizations together to share best practices, start to build like an industry group, and then also have that group be working on shared policy priorities. Again, building power for this issue together. And we also hope again with things like the design standards and our technical assistance, like one of our goals is also like, hey, you developer, take what we have, run with it, it’s free, it’s Available. We want to make it so that every developer can say that they are a disability forward housing developer and sharing the tools and strategies that make that possible.

Eve: [00:32:04] So, I have to ask, what’s your background? You’ve got a lot of knowledge wrapped up in this.

Micaela: [00:32:09] Yeah. So, you know, I often say as it relates to this work, my initial background is as Kelsey’s cousin and just really from a young age, and I think about this a lot as a currently non-disabled person leading a disability organization, but that my whole life has been really wrapped up in, you know, disabled allyship and what that means in a, you know, a powerful way to share power and build opportunities in that way. And Kelsey really taught that to me. And that, you know, was from a very, whether when we were like 13 years old and our mothers had the brilliant idea that like we would be each other’s support staff at a summer camp, just the two of us or many other things that throughout our lives. I think I actually was younger than 13. But anyway, so my background really started with Kelsey. I also, prior to this, because of Kelsey, I had started a school-based inclusion program. I was a theater kid growing up and was perturbed by the lack of disabled representation in our arts programming in our school, and so redeveloped arts programming for people with and without disabilities that was student led and led by students with and without disabilities to do theater. And, you know, just as it leads to this, that was like this aha moment as Kelsey was going through her own housing challenges. And I was seeing this on a family level. I was running this education program and seeing our young people who were graduating our school programs was in middle and high schools. And we had talked in the education programs, all our entire kind of theory of change was like, inclusive education and recreational programs like prepare students for more meaningful inclusive adulthoods.

Micaela: [00:33:47] And it was like those inclusive adulthoods did not exist. And that was really a part of the inclusive concept of the Kelsey really building integrated communities was to realize that promise of inclusion that our education system is making to students with and without disabilities. But our housing and community development infrastructure is not meeting. And so, that was that. And then I kind of did, more formally before launching the Kelsey in 2018, was a graduate student at the Harvard Kennedy School and eventually as a Mitchell Scholar at the University College Dublin too. But at Harvard I was a Research Fellow on housing and disability publishing my initial research on this that really formed the Kelsey and did the Social Innovation Fellowship there also to initially design the Kelsey’s business model so that that helped launch into this work.

Eve: [00:34:40] So, one final question I have for you, and that is what keeps you up at night?

Micaela: [00:34:46] You know, I think what keeps me up at night is, it depends on the day is either out of concern or out of hope of just, how do we as a society create and in some cases return to true community and like, true like interdependence and recognizing that an interdependence is a principle of disability justice, that, you know, I’ve really been moved by and that really try to both internalize in my personal but also in obviously the work we do at the Kelsey and like their interdependence exists, we can point to really great communities. And I think we even saw it in many of our communities in this country during COVID, that we really recognize that like we are only as strong as our neighbors biggest trouble. And so, we really have to look out for one another and care for one another and that, you know, we need to create communities where that’s not just possible, but it’s encouraged and supported. You know, some of the systems we build go right in the face of that. And so how do we both, on an individual level, lean into that, you know, and I feel when I see moments of interdependence and moments of true community, I feel so inspired and like, oh, we can do this, it is possible. And then I feel worried when I see, you know, how isolated people are and how much our sort of capitalist systems, you know, create this false narrative that we are only, you know, little cog machines that are going to get forward by ourselves and nothing else. We just need to go, go, go. And so, yeah, that keeps me up at night, of just thinking about what it really means to have community, what it means to have communities that take care of one another. And with inclusion of diversity and both seeing when people do that really well and seeing where we have a lot of work ahead to make that happen in a real way for everyone.

Eve: [00:36:46] Well, it sounds like you’ve only just started, and I can’t imagine you’re not going to be wildly successful. So, I’ll be really interested to see where this goes, and I’ll be looking for that download too. I’m really interested in what you’re saying. It’s fascinating.

Micaela: [00:36:59] Awesome.

Eve: [00:36:59] Very sensible.

Speaker3: [00:37:01] Thank you so much, Eve. Well, it was great to chat with you on this and appreciate you lifting up, you know, disability forward housing in your storytelling.

Eve: [00:37:10] Okay. Thank you.

Micaela: [00:37:11] Thanks, take care.

Eve: [00:37:21] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. You can support this podcast by sharing it with others, posting about it on social media or leaving a rating and review. To catch all the latest from me you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing yourself head on over to wefunder.com/smallchange where you can invest directly in Small Change and our mission to democratize capital formation to create impact in commercial real estate development. A special thanks to David Allardice for his excellent editing of this podcast and original music, and a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Micaela Connery

We Own This.

February 22, 2023

Lyneir Richardson is working to empower entrepreneurs and strengthen economic conditions in urban and underserved areas across the United States. He wears multiple hats, investing in commercial real estate, educating and advising entrepreneurs and MBA students, consulting corporations, foundations and government agencies, and structuring deals to get capital to Black entrepreneurs and real estate developers.

Lyneir is CEO of The Chicago TREND Corporation, a social enterprise funded by prestigious impact investors to catalyze urban retail development. TREND has deployed over $25M of impact capital, owns four shopping centers, and assisted numerous Black retail operators and commercial real estate developers in cities across the country. Lyneir recently raised $330,000 in equity from 130 Black, small and/or impact investors for a shopping center in Baltimore, MD.

This project is at the core of  his strategy – to build Black wealth through community-owned shopping centers. He’s planning to buy 16 community shopping centers and invite 1,000 small investors to co-own them with his company, Chicago TREND. To accomplish this, Lyneir and his team have developed a rigorous set of criteria for finding and buying shopping centers in majority Black Demographics that are on the cusp of change, and offer added value over a time. His plan is to empower Black entrepreneurs and community residents to have a meaningful ownership stake in the revitalization and continued vibrancy of commercial corridors and Black shopping districts.

Lyneir wants every neighbor to be able to say “We Own This”

Lyneir is an Assistant Professor of Professional Practice in the Department of Management and Global Business at Rutgers Business School in Newark, NJ and serves as the Executive Director of the Center for Urban Entrepreneurship and Economic Development. He leads capacity-building programs that have assisted 600+ racially diverse entrepreneurs and launched the Black and Latino Investment Fund of New Jersey.

Lyneir served as the Chief Executive Officer of the primary economic development corporation in Newark, NJ, for Mayor Cory Booker and Mayor Ras Baraka. As Vice President of Urban Development at General Growth Properties, Inc., he led the national initiative to improve shopping centers in ethnic neighborhoods in U.S. cities. Early in his career, Lyneir was named a U.S. Small Business Administration “Young Entrepreneur of the Year”. Lyneir started his career as a corporate attorney at the First National Bank of Chicago. Lyneir graduated from Bradley University and the University of Chicago Law School. He is a member of the Urban Land Institute and the International Council of Shopping Centers. He has served on the Board of Directors of the International Economic Development Council, New Growth Innovation Network, Equal Measure, Southland Development Authority, Investor Advocates for Social Justice, Cook County Land Bank, and many other nonprofit organizations. He has served as Vice Chairman of the Illinois Housing Development Authority Trust Fund Board and as a Commissioner on the City of Chicago Planning Commission. He is a Nonresident Senior Fellow at Brookings Metro, the Brookings Institution. He is a proud (but slow) finisher of the Chicago Marathon.

Read the podcast transcript here

Eve Picker: [00:00:09] Hi there. Thanks for joining me on Rethink Real Estate for Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone. And speaking of building better, I’m very excited to share that my company, Small Change, is now raising capital through a community round that is open to the public. Small Change is a leading equity crowdfunding platform for impact investment in real estate. For as little as $250, anyone 18 and over can invest in Small Change, helping to fuel our growth as we disrupt the old boys club of capital that routinely ignores so many qualified people and projects. Please visit Wefunder.com/smallchange to review the full details of our raise and to make an investment if you can. And remember, investing is risky. Don’t invest more than you can afford to lose.

Eve: [00:01:59] Lyneir Richardson is building Black wealth through community owned shopping centers. He’s planning to buy 16 community shopping centers and invite 1000 small investors to co-own them with his company, Chicago Trend. To accomplish this, Lyneir and his team have developed a rigorous set of criteria for finding and buying shopping centers in majority Black demographics that are on the cusp of change and that offer added value over time. His plan is to empower Black entrepreneurs and community residents to have a meaningful ownership stake in the revitalization and continued vibrancy of commercial corridors and Black shopping districts. Lyneir wants every neighbor to be able to say, we own this. If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast and go to rethinkrealestateforgood.co, where you can subscribe to be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:03:23] Hi, Lyneir. Thanks so much for joining me today.

Lyneir Richardson: [00:03:26] Eve, it’s a pleasure to be with you.

Eve: [00:03:28] So, I’m looking forward to this conversation. But let’s start by talking about Chicago Trend. What does Chicago Trend do?

Lyneir: [00:03:37] Chicago Trend was formed in 2016 to strengthen commercial corridors and retail in neighborhoods that are on the cusp of change. Most of our work has been in majority Black neighborhoods. As you know, the first impression of a neighborhood is the commercial corridor. So, if you drive into a neighborhood and you see a shopping center that’s underdeveloped or a boarded up storefront or a liquor store and check cashing, even if the homes are in good shape, your first impression of that neighborhood is that something could be better here. And we see disinvestment all around, and our goal is to come up with strategies to arrange capital, to make the case for retailers to strengthen commercial neighborhoods, which ultimately will strengthen and strengthen the commercial corridor, which ultimately will strengthen the neighborhood.

Eve: [00:04:35] So, to turn the first impression into an opportunity instead of a ‘let’s not go here’. Right?

Lyneir: [00:04:40] Instead of the retail being a liability, it should be an asset for the community.

Eve: [00:04:45] Yes. How does Trend work? How many people work for you?

Lyneir: [00:04:48] We’re still a small team. We have six people total. We have a whole lot of advisers and consultants and part time experts, subject matter experts, best legal team architects and contractors. What’s been fun is, you know, we own four shopping centers now. And there’s one part of the work that’s about the shopping center specifically, but there’s another part of the work that we’ve been able to engage. Black property managers, Black leasing agents, people of color as architects and engineers. Even the landscaper on one of our shopping centers is Black. And the way I talk about that is that being intentionally inclusive doesn’t mean exclusive. We have other people as well, right, that work on our properties that are not Black. But the thought of being able and being in a position to give opportunities to retailers and entrepreneurs who connect with these communities, who have not only a professional expertise but also a deep sort of history, their family still, they grew up there. Ideally, it means that we’ll get better services and more intense quality of work.

Eve: [00:06:08] It’s pretty powerful. So, now you have a plan to build Black wealth through increased ownership opportunities of real estate assets. So, tell me about the plan and your strategy and how it emerged.

Lyneir: [00:06:20] Yes. So, when we acquired our first shopping center in Chicago, it was initially the strategy of if we owned it and we could control it and we can hire experts. And then right after George Floyd was murdered, I remember seeing a guy holding a sign up. There was civil unrest in the neighborhoods we were working in. And the sign said, ‘Please don’t destroy, my business is Black-owned’. And what I remember thinking is, wow, who owns the shopping center? And that became the inspiration for our work. The way I talk about it is, wealth is created by owning assets, assets that generate revenue and appreciate over time. And that if we really are going to close racial wealth gap, if we really are going to strengthen neighborhoods, we got to create a way to do more inclusive ownership of real estate assets and other assets that can close the racial wealth gap. So, one of my proudest moments in the history of this business is we raised $330,000 from 130 Black local small investors on Small Change. We did work together, and it was, it was the plan.

Lyneir: [00:07:48] And initially Eve, the thing that also was fun about that project and that time is there was an article in the Wall Street Journal. Penny Pritzker, the former commerce secretary, was quoted in the Wall Street Journal. She sits on the board of the Harvard Land Company, and the quote was, Harvard had issued some RFP, and I believe Tishman Speyer won the RFP. As a part of the requirements of the RFP, they require that 5% of the equity in the project, big high profile, hundreds of million-dollar project, 5% of the equity had to be available to Black and Brown investors. And the quote in The Wall Street Journal was, Penny Pritzker says one of the reasons there’s a racial wealth gap in America is people of color don’t get invited into good real estate deals. And The Wall Street Journal was highlighting that the investors were Jay-Z and LeBron James and Wall Street executives. And I remember thinking, I called her, I like, sent a note immediately and said, hey, we’re doing the same thing. But our investors are millennials and grandmothers and charter school parents and the teachers, they’re investing 1000 or $2,000. So, it’s one thing to say, well, I want to have more people of color and I’m not knocking, we’d welcome Jay-Z or LeBron.

Eve: [00:09:12] Wouldn’t that be great? Yeah.

Lyneir: [00:09:14] But what’s equally important is that we have individuals that we can touch and feel. And I’m branding this. I haven’t created merchandise yet, but I have this idea to brand what I’m calling #WOT, we own this. And the ‘we’ doesn’t even mean the 130 investors that invest with us. The ‘we’ is, that’s my uncle, that’s my aunt, Eve.

Eve: [00:09:41] Yeah.

Lyneir: [00:09:41] That’s my, I went to school. That’s my fraternity brother. That pride of ownership. I saw it firsthand. We were doing a Little League parade with my brother in Harlem and my nephew had $1,000 in a local bank. And as we walk down the streets in Harlem, he said, I own that bank because he had $1,000 deposit.

Eve: [00:10:07] Yeah, yeah.

Lyneir: [00:10:07] He owned that bank. So, imagine if he had said, I own that shopping center.

Eve: [00:10:11] Yeah, well, this is why Small Change exists, because I feel very much the same way as you do. I mean, it’s great when people with a lot of money invest in disinvested neighborhoods. That’s a great thing. But it’s even better if the people in the neighborhood, you know, get get a chance to go along for the ride. And especially as home ownership is quickly becoming more and more out of the reach of many people, there has to be a way I mean, real estate assets are solid. It’s sort of a tried and true way to build wealth. Everyone knows that owning a home is the number one way to do it. So, there has to be a way to let people in. I think it’s really important. I love what you’re doing.

Lyneir: [00:10:55] Thank you.

Eve: [00:10:56] And then there are lots of statistics, right? The percentage of Blacks who own commercial real estate is much lower than the percentage of Whites, and the value of the real estate is also much lower.

Lyneir: [00:11:08] Yeah. You know, I have the good fortune of late last year becoming a nonresident Senior Fellow of the Brookings Institution.

Eve: [00:11:18] Congratulations.

Lyneir: [00:11:19] Thank you. And working with very esteemed researchers Andre Perry and Tracy Hadden Loh.

Eve: [00:11:31] They’re amazing.

Lyneir: [00:11:32] You know, they’ve done some incredible work. Andre’s work around the devaluation of assets, his research and Tracy’s research that only 3% of commercial property is owned by Black people, as opposed to six times that for people that are not Black just shows that there’s opportunity there. And so, we’re digging into that work. I’m looking forward to doing some more research and exploration and coming up with some new knowledge and tools that will help close the gap.

Eve: [00:12:02] And then I’m going to look forward to interviewing you about it. So, I’ve interviewed both Tracy and Andre. They’re both amazing. So, tell me the big plan. What’s the big plan?

Lyneir: [00:12:12] We have a project now. So, we own four assets. We raised a fund to allow us to buy 12 more shopping centers, and the goal is in each instance to make as little as 5% and as much as 49% of the equity available to entrepreneurs to and to local entrepreneurs, community residents, socially minded small investors. So whether it’s Black investors just in the neighborhood or as people who believe that there are thousand or $5000 investment, even if they live across the country, across the world, that they want a return but they also want to see that their dollars mean something in the neighborhood. So, it’s not just for residents. right. But I do a lot of work, Zoom calls, community meetings, setting up little coffees in the library, to talk to community. But I always tell people we need everyone. I last raised our Small Change raise, 50% of the investors. There about, 53% were Black people. But that means 47% were not, right, that we had 33% of our investors were right from the state of Maryland or in the zip code where the shopping center was. But that means the other two thirds were not. So, we need impact investors who want to see this strategy of making neighborhoods better, getting amenities and services and investment, reducing crime, you know, and attractive places. You know, that’s what our small offerings is aiming to do. So, we want to own 16 shopping centers. We think that’s going to be about $100 million of investment. We want to have 1000 small impact investors in our projects, and we want to do that in the next three years or so.

Lyneir: [00:14:06] Wow. So, you own four. And where are they all located?

Lyneir: [00:14:10] We own three in Chicago. We own the one in Baltimore. We’re about to buy our second in Baltimore, our fourth asset in Chicago. And we’re just getting, we have a property under contract in Columbus, Ohio. So, same way, in a vibrant retail corridor. We’ve been cultivating really good community leaders, local entrepreneurs, residents who want to see better retail and want to have an ownership interest in better retail. So our strategy of asking people to co-own with us right, is something that again I, you know, I get a lot of energy from.

Eve: [00:14:52] So, full disclosure you have a project that’s listing on Small Change right now and this is part of your strategy. It’s a big project. Where is that one? Tell us about it.

Lyneir: [00:15:04] So, this is in West Baltimore, three miles away from where we bought our first project. So, anyone that expressed an interest in our first project, we hope they will take a look at this one. This is a $41 Million acquisition and redevelopment, so it’s a big deal. However, this shopping center, Eve, when it was built in the 1940s, it was built with such great ambition. It had a movie theater and a pet shop and a department store across the street, a lunch counter that people loved that had holiday lights. Well, over the years it’s experienced disinvestment. Now it’s had, its recent history is two fires. There was a tragic shooting in the parking lot. Even though there is strong home ownership around it, a whole lot of traffic passes the shopping center. It needs redevelopment.

Lyneir: [00:15:59] So, our whole strategy is that we call it reimagine, revitalize, redevelop, reposition the shopping center, attracting a grocery store and sit-down restaurants and other services and amenities. Most of our projects, Eve, I call them service-oriented shopping centers. So, this is not Best Buy in West Elm and the Cheesecake Factory. This is the drugstore, the carry out pizza, Health Services, grocery, a place to have a sit down. For us to meet right now in West Baltimore for coffee, we’d actually have to leave the city, right? There’s no place. A TGI Fridays, you know, an Applebee’s, and you pick whatever. Nothing glamorous, it’s just a place that would serve and be a place where you can go and have a birthday party.

Eve: [00:16:53] And I love the way that you talk about these. These are not businesses that Amazon will compete with. They’re really service businesses in the neighborhood, which is just a really interesting way to think about it.

Lyneir: [00:17:06] Amazon doesn’t do fingernails yet, although I did see a machine somewhere where it was like a robot doing manicures. But so, it’s, it really is services.

Eve: [00:17:19] Interesting. So, what are some of the challenges you’re being confronted with in terms of financing or even perception or the tenant pool?

Lyneir: [00:17:28] Yep. So, we’ve had, you know, once a shopping center loses its franchise as a property, right, the retailers say, oh, you know, I’ve been there. I’ve seen a decline. Right? So, the first thing is painting a very big new vision and convincing people that you have the resources to bring that new vision to fruition. So, even as we got this property on the contract, the first thing we did was we went to the municipality, and we got an 8,000,000 million. This is not a promise. It’s now past the the City Council approval process, an $8 million commitment for capital improvements. We’re having those same level of discussions with the State of Maryland and hope to have those approvals lined up. So, imagine having $15-16 million of public money that’s focused on making a first-class renovation here, A. B, one of the challenges to the redevelopment here was, there was a, back in the Forties when the shopping center was developed, there was the set of quote unquote restrictive covenants that there were 120 parcel owners around the shopping center and it really precluded, you can’t do new signage. You can imagine back in the forties, you can’t do out parcels, you know, as we think about where a restaurant might sit or where a bank branch might sit. And so, we’ve had to go through this process of hosting community meetings and introducing ourselves and our plan and, you know, almost on a one-by-one basis, getting 59 people to parse the owners.

Eve: [00:19:13] It’s like a political campaign.

Lyneir: [00:19:14] Right. And again, but part of the reason that the shopping center is in this condition is nobody has had the energy and the strategy and the urgency but patience to work with the local parcel owners to get this approval process done. So, if you would have seen me out there. One hot August day, Eve, I was sitting in front of the shopping center with like a car table, and I wish I would have brought a Pitcher of lemonade. It would look like Lyneir’s lemonade stand know. But I was saying, you know, I have a contract to purchase the shopping center. Here’s our plan. And one by one, getting the support that we need to move forward.

Eve: [00:19:57] Wow, and you have that support now?

Lyneir: [00:19:58] We have. We’re almost done with it. We still have some process.

Eve: [00:20:02] Congratulations.

Lyneir: [00:20:03] Part of my thought of, we’ve lined up our first mortgage financing. We have our equity. We made this offering on Small Change to create opportunity for local investors. And it’s funny because it’s not as if we absolutely need the money. We really believe that if local people and small investors have a sense of ownership, they’ll patronize, protect, respect, support the project in a way like owners. And that’s what we really. So, I’d like to have, we need a few, I’d like to have many. Right. Because you want other people to care and protect them and respect and patronize the shopping center. And so, over the next two months, we’ll continue to work to get our Covenant amendments in place. We’ve got to get our permits to build the building. We’ve got to work with it. So, this is a multi-year multi-phase project, but we really do believe it’s going to be financially rewarding and rewarding to see this project come to life as a revitalization for this part of Baltimore.

Eve: [00:21:08] And are the current tenants excited?

Lyneir: [00:21:11] They are. So, you know, there’s an opportunity to do, to bring new tenants as well. So, there are tenants that have been there and have whether but there’s an opportunity here to bring, as I said, from financial services, to restaurants, to health services, to new grocery stores, all of which were in active discussions with right now.

Eve: [00:21:34] So, one thing you didn’t mention, Walbrook Junction, where you did raise funds on Small Change. What percentage ownership did those investors get?

Lyneir: [00:21:41] So they’re 49%.

Eve: [00:21:43] Isn’t that amazing?

Lyneir: [00:21:44] So, what’s interesting is our motto is we can make as little as 5% and as much as 49%. So, we raised our capital from big philanthropy to be able to buy these assets. And if we just get 5% of local investment, we’ll put the rest of the money in. But really, in some respects, that’s almost what we want because we like to keep 95% of the act. But our deal both with the city and getting public financing and with philanthropy is, we’re going to make this equity available. So, last time around there was a positive news article and within a few weeks after that, we had achieved our goal or our maximum goal of raising 49%, I raised enough equity so that local small dollar impact investors, residents own 49% of the of the property.

Eve: [00:22:35] Yeah, I remember one of our investors actually reaching out to you. He’s a white man and he’s been a very loyal investor on Small Change, invested in many things. And he asked your permission if he if he could invest, which I thought was really charming.

Lyneir: [00:22:51] That came out a couple of times. People like, I’m a white guy, Can I invest? Yeah. Again, intentionally inclusive doesn’t mean exclusive. You know, in this instance, we have over, a lot of opportunity, I should say. All the details on the Small Change website. I’ll be compliant, Eve. But again, we want to have a diverse set of investors who want to earn a return, but also want to see that their dollars are impactful. So, we need not just the local investors.

Eve: [00:23:25] This is in a place that’s never really had that opportunity before.

Lyneir: [00:23:30] Right. But but let me just add, you know, we have experience, resources, industry, relationships, track record, all of that. So, we believe people will earn a financial return. Right? So, they’re investing not just in a hope and a dream, and not just in a mission of revitalizing neighborhoods, but they’re investing in a team that has expertise to deliver the project.

Eve: [00:23:59] So, I have to ask, how did you get from your initial career choice of law to this?

Lyneir: [00:24:07] I started my career as a bank lawyer, and every day the bank would have us working on loan documents for $100 million or $200 million loan to some big publicly traded company. And every day, about 2:00 in the afternoon, I’d fall asleep at my desk. The work was so boring. It wasn’t until there was a pro bono assignment where the bank was going to make $100,000 loan or thereabouts to a barber who was buying his building on a commercial corridor maybe two miles from where I grew up, west side of Chicago. The work came to life. It had meaning. It was the same promissory note and mortgage. But there was something about connecting this entrepreneur to this big bank. Connecting resources to financing. And I can now articulate it this way. I couldn’t do it when I was 27 as a bank lawyer, getting resources to people and places that other people overlook or undervalue, that’s my passion. Making the case, connecting the dots. There’s narrative. You do some writing. The numbers have to make sense. That work is what energizes me.

Eve: [00:25:25] So, I have one last question for you, and that is what keeps you up at night?

Lyneir: [00:25:30] Yeah. So, it’s what keeps me up at night is a great question. So, you know, you want to be right. Right? And these projects, it’s going to take five or seven or ten years before you really would know you were right. But more than anything, I want people to be able to say at some point is, you know what? He had a plan, and he was right. So, I stay up at night going, am I missing a table? Do I have the right people on the team? Should I be doing something a little different way? How can I connect the dots? Right. So, part of my challenge is I’m solving problems at night while you’re trying to sleep and, like, all right, go to sleep.

Eve: [00:26:15] I’m exactly the same.

Lyneir: [00:26:17] Yeah. Yeah. Wakes you up more than it keeps you up. Wakes you up and I’m like, oh, so I can fall asleep pretty quickly. But I wake up early, you know, quite often.

Eve: [00:26:26] Okay, well, I hope, I really, I expect it’s going to work out very well. I certainly hope it does. And I hope you get lots of sleep between now and then. And thank you very much for joining me.

Lyneir: [00:26:38] Thank you for having me today.

Eve: [00:27:03] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. You can support this podcast by sharing it with others, posting about it on social media or leaving a rating and review. To catch all the latest from me you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing yourself head on over to wefunder.com/smallchange where you can invest directly in Small Change and our mission to democratize capital formation to create impact in commercial real estate development. A special thanks to David Allardice for his excellent editing of this podcast and original music, and a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Lyneir Richardson

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