Those funky flannel loving Canadiens known as the Bare Naked Ladies had plenty of thoughts on what they would do with a million dollars, but never once does the song mention fostering a local real estate developer program. An oversight, of course.
This morning my sister informed me that her town in upstate New York was just awarded $10 million dollars of state grant money for downtown revitalization investments, which got me to thinking, how would I spend $10 million if I wanted to have as much impact as possible in a city.
A decade or two ago, as a fresh young planning grad with all the answers, I would have claimed a comp plan was an absolute must. ‘How can a town operate strategically without a plan’ I would have asked, but having worked in this field long enough, I can see where a plan just won’t make a difference in many places.
Not only do I have my degree in planning, I am a planner by nature. I love to plan things. I have found I am personally and professionally happier and more successful when I list out my goals and my strategies to achieve them. I am a firm believer that the reason I have been able to build a successful consulting and writing career is because of my commitment to plans and strategizing. Yet, plans aren’t right for everyone and they aren’t right for every town. There is a reason the “plan collecting dust on a shelf” cliché gets uttered in every single town at every single meeting. Yet no one seems to stop and think- maybe we should stop doing these.
I hear the exhaustion and the pessimism from residents and stakeholders in all the towns where I work, when they find out their city is about to invest in another comp plan, because the last five plans didn’t change anything. The problem isn’t with the plan itself though, these are thoughtful, well-meaning documents that just aren’t capable of fixing what’s wrong.
Some towns are quite capable of utilizing a comp plan. These are the towns with capacity, with functioning leadership, and established processes. These are the towns that have already proven themselves as capable. These are the towns that already have their shit together. These are not the towns I am concerned with, and generally these aren’t the towns that receive $10 million.
A caveat, as this has led to some confusion lately. There are many types of plans and this makes all the difference. I am a firm believer that a community led planned process is beneficial for any town, they are engaging, empowering and cost effective. Conversely, I also believe that if you pay tens of thousands of dollars for a two hundred page planning document, you are wildly dangerous and should seek out help.
The places that really need help, aren’t capable of utilizing a the mega plans. Plenty of cities across the country have been in decline for so long, that traditional revitalization strategies don’t stand much chance of being successful. Once apathy fully sets in, we have to start to look at other methods.
I always try and think about the behavior of a city, the same way we think about the behavior of its residents. A person suffering setback after setback is eventually going to grow apathetic. They will find themselves, not believing in themselves, without any self-confidence and no conviction. They become negative and recalcitrant. They may even grow depressed because nothing ever goes their way. All of us have felt this way or known someone close who has. Someone at their lowest, someone struggling to get out of bed, they cannot effectively utilize a plan, they need something simpler. They need to find a way to believe in themselves again. They may just need a little self-confidence boost.
Cities that have grown apathetic can’t make use of a comp plan. A plan, may in fact, make the situation worse. Spending more money on a study, which will then become another expensive document that no one ever uses, will lead to more feeling of frustration and the sense that progress never seems possible. The cities are in the shape they are in because they are dysfunctional so planning only makes the predicament feel worse. Dysfunctional cities don’t need plans, they need to believe in themselves again. They need small victories, just the slightest improvement can be the first step towards greater achievements. They need something to be proud of. If you can’t get pull yourself out of bed, you probably won’t appreciate it when I deliver you my “How to run a marathon” plan.
So back to the question at hand. How should a struggling community spend $10 million?
To be as effective as possible, it must do the following
Personal pride and civic pride operate much in the same way and we can apply those lessons in similar fashion. We are proud of ourselves when we improve, so whatever we do has to be an improvement to the city, not a study or a plan. We are proud of ourselves when we like our appearance, so we have to do something to improve the city’s aesthetics. We are proud of the things in which we feel a sense of ownership, so whatever we do has to improve the community’s sense of ownership.
A concept comes to mind that would easily check all the boxes. The training and financing of entrepreneurs and developers. No plans, no infrastructure, no streetscape project, no events, none of the above. Isn’t the point of revitalization to have a bunch of cool buildings full of a bunch of cool businesses? So instead of 10 year plan where we sprinkle a little money here or there hoping to get to the cool buildings full of cool businesses, let’s just cut straight to the point. Let’s just tackle the building and business thing first.
Take the $10 million and start by training anyone interested in being a building developer, how to be a developer. Teach them this lost trade that our cities so desperately need. 100 years ago, our cities were full of small developers. How do you think all the buildings got built, how do you think all the houses got built? There were no national developers when our towns were built, which happens to be why they looked so nice and why there was so much more money.
Take the entrepreneurial minded folks, look to those that are already in construction, seek out those that seem civically engaged. Ask 100 people if they would like to own and operate their own building, I can guess quite a few will say yes. Beats the hell out of building disposable houses out at the subdivision. If you only trained 10 people in your town to be a developer, and then gave them the cash they needed to get their first project rolling, you could sit back and watch the transformation.
Next, get city leadership on board and go hard on renovations. Punish vacant and absentee landlords. Overhaul the building department and make it customer service friendly while also making sure they are versed in renovation projects. Bring in the Incremental Development Alliance to provide training to your pool of potential developers, then put your millions to work!
The money would go so much farther than you think. Let’s take a typical, downtown, three-story, 10,000 square foot building. Commercial on the first floor and residential upstairs. A pretty middle of the road renovation cost is $150 a square foot. So each renovation project, is going to run $1.5 million, but no one has to come up with $1.5 million because a portion of the renovation project will be financed. Just like you don’t buy a house with all cash, developers don’t renovate buildings entirely with all of their own money. Banks are likely seeking 20% equity from the developer. So $300,000 would be the amount each developer would have to have in the game to get the projects underway. So in this hypothetical town, just $6 million would result in a complete renovation of 20 buildings. That equates to 200,000 square feet of newly renovated space. Those 20 newly renovated buildings would add 40 street front commercial spaces and 80 new housing units on the 2nd and 3rd floor.
Now do the same for potential small business owners. Fund a program completely educating interested individuals on running restaurants and retail businesses. How many people in your town would jump at the chance to be a small business owner? Teach them accounting, inventory, marketing and customer service. Those that complete the program in good standing, give them they equity they need to get a loan to open up a business in one of the recently renovated buildings.
The Small Business Administration requires 10% equity for small business loans. RestaurantEngine.com shows the median cost to open a new restaurant is $275,000 so each new owner should expect to put in $27,500 in equity. So $1 million of the 10 could fund 36 new restaurants. Lightspeed HQ states that the average brick and mortar retailer costs just under $50,000 to launch. Again using the SBA numbers, the amount of equity needed would be $5,000. So $1 million invested in fronting equity for local entrepreneurs could see the creation of 200 new businesses.
A quick breakdown
And what if, of the 36 new restaurants and 200 new retails businesses that are approved, only 50% ever manage to open their doors? That is 118 new businesses to fill 80 recently renovated spaces.
The remaining $2 million should be used for training. For developers and entrepreneurs as already mentioned, but also training for carpenters, masons, painters and plumbers and the workforce that will be needed to put all this new investment in its place. This would create hundreds of jobs and give people much needed skills, the type that can’t be outsourced.
When you consider putting those dollars directly towards the intended outcome, the game gets changed. We can cut out all the process bullshit that usually eats up all the grant money, do away with all the wasted dollars and get them in the hands of the people that can really use them.
Facilitating developers and small business owners with those dollars should be the goal all along, but instead of planning for it, you just do it. Instead of coming up with clever ways to try and entice them, you provide for them. Instead of setting the stage, you just put the actors on the damn stage and scream action.
When you think how far $10 million could go to train local residents to run their own businesses and to renovate their own buildings, you begin to realize, it’s probably enough to transform most downtowns. Applying the money directly to the problem does some pretty amazing things too. One, it demonstrates progress in possible. No need for all the tired planning jokes-this is real life action. Two, the money gets spent in a manner that is extremely visible. Dollars that directly relate to visible improvements in the appearance of the community. Three, those dollars don’t just go into the hands of locals, but you also have provided them with ownership and the ability for them to have a meaningful income stream indefinitely. Four, these dollars lead to immediate and direct economic impact.
Not a pocket park, not a new sidewalk, not a plan, but real money for making real improvements. These are improvements that community gets to own. Forever. Now you have 20 people in town with an income producing property and they will have the desire to care for it and ensure their building remains viable and successful. On top of that, you have another 118 new business owners. Their pride in their endeavor, their new position of ownership and their regular income from being in this position. Add to it all of the employees that will be needed to pull this together.
On top of all the financial reasons, and there are about 40 million, there are the intangibles. Like living in a community where people feel a real sense of ownership. Being part of a monumental change and seeing your town come back to life before your eyes. Getting to experience progress and the sense of accomplishment that comes from improvement. The joy of seeing your friends and neighbors living out their entrepreneurial dreams. And the pride of seeing your city restored to its former glory.
If I had $10 million dollars, this is what I would do.