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Monday
Oct292012

Capitalizing the Extraordinary

The Waffle Shop Billboard broadcasts messages to the community for as little as $100 a week. (Courtesy Waffle Shop)

A new model for urban regeneration

Incremental development is the new [yet not at all new] normal. With slow growth comes different approaches to development, paying for it, priorities, understanding the end user, and identifying those places that are most investment ready given these realities. As difficult–and important–as this new frontier is, it leads us down a road of stronger town building. 

Regeneration of our highest-potential neighborhoods and the development of new places out of the same gene pool requires that we flip upside down the debt-fueled models we are all accustomed to operating under. With many communities, builders, and institutions currently over-leveraged and no longer able to convincingly make massive public commitments with speculative returns based on optimistic projections, a different kind of project capitalization is required.

Where the conventional post-World War II model looked liked this:

  1. Assemble large tracts of land to achieve a critical mass
  2. Create a detailed master plan
  3. Bundle financing (public and private) with available equity
  4. Build infrastructure (usually public) that assumes growth to pay for itself
  5. Develop parcels (either build to suit or on spec)
  6. Hope the rest will come as projected
  7. Exit strategy

The incremental approach looks more like this:

  1. Analyze and identify places with high regeneration potential 
  2. Establish a social capitalization environment that attracts local “investors”
  3. Leverage accrued social capital to connect potential end users with potential community entrepreneurs 
  4. Identify most actionable development initiatives and build the minimum viable product (MVP)
  5. As uses and tenanting mature, develop an appropriately scaled infrastructure framework that supports the early and next initiatives
  6. Incremental installation of infrastructure
  7. Repeat

The old model relied on the "build it and they will come" philosophy using risky justifications such as projections and debt financing to make and support decisions. The new model says "come and we will build it [together]." It is pay as you go. Using available social and local equity to slowly build a place allows us to tenant first and figure out the right-sized infrastructure once we know what sprouts.  Because it is diverse, the process repeats itself across a number of players (some of which may come and go) rather than depending on the success of one entity’s exit strategy.

This may sound backwards or counterintuitive. But this has proven time and time again to work. While we intuitively understand that the places that last in our memories are those that evolve to a continuously stronger state, we can actually point to examples around us where this process is unfolding as a real regeneration strategy.

Take, for instance, East Liberty in Pittsburgh, Pennsylvania's East End. East Liberty was once a thriving theater and retail center within the region that was destroyed in one of the nation’s largest urban renewal projects. Disinvestment persisted until recently when neighborhood leaders, entrepreneurs, residents, and business owners came together to put back the pieces. 

East Liberty's Waffle Shop outlined in red (Bing)Plans were hatched and the difficult process of unwinding the destruction that had been wrought after World War II began. Change started to happen. The changes were too slow for some and too fast for others but as the ’08 recession began to set in, the momentum slowed. The question then became, “what do we do now?” 

How about a waffle shop?

A what? Why? How? What does this have to do with getting back on track? Will they have chocolate banana waffles? These were but a few of the questions that surrounded the coming of the all-day breakfast joint. 

The Waffle Shop in Pittsburgh's East Liberty (Courtesy Waffle Shop)But founder Jon Rubin, who joined the faculty at Carnegie Mellon in 2006, had in mind a broader role that the shop could play. Long interested in engaging communities who don’t often get to interact, Jon noticed that East Liberty’s journey had left several generations of folks simply not talking to one another. The Waffle Shop was designed as a platform to make these connections. 

The Waffle Shop brought together all ages and social groups to engage one another (Courtesy Waffle Shop)Over the past several years, the format that consists of a live-studio audience talk show featuring a constant rotation of community-generated hosts, guests, and viewers generated scores of invaluable conversations. These invited yet spontaneous interactions connected people such as developers with potential partners, enterprises with end users, and grandmas with musicians. It spanned divides that had slowly grown between different generations, ethnicities, genders, and social groups. 

Councilman Bill Peduto on stage at the Waffle Shop (Courtesy the Waffle Shop)A crowd gathers in the Waffle Shop (Courtesy Waffle Shop)The Waffle Shop also brought a lot of people over the tracks and into a neighborhood that previously was previously too far away, too dangerous, or too different to trek there before. Lines now would form around the block. Soon after, uses such as Conflict Kitchen opened next door and a new restaurant or two opened across the street. As the conversation kept growing, the social capitalization of the neighborhood kept building. As we were living, working, and enjoying being in the neighborhood, we began to see, one-by-one, vacancies recede and storefronts coming back to life. 

Lines forming around the block enlivened the public realm in East Liberty (Courtesy Conflict Kitchen)As East Liberty continues to evolve, the shape, scale, and prioritization of public investments is coming into focus. Because we didn’t have to invent the type of activity that was intended for the district, we could develop a strategy with confidence for untangling the one-way traffic pattern created by urban renewal. Because the lifestyle, creativity, and entrepreneurial spirit was there, no one had to trick Google into locating their Pittsburgh headquarters next door. They could see the territorial assets they thrive upon already in place. Buildings that have sat vacant for decades are now coming back alive. With such an authentic story, the neighborhood was able to compel the federal government to grant 15 million of some of its most competed for dollars in matching TIGER IV funds to build a multi-modal transit facility. And, because of the integrity of the social capital formed, everyone involved has a constant, vocal, and empowered community that ensures that even large projects such as the transit center are implemented in a way that keeps with the spirit and funkiness that powered the regeneration in the first place. 

Centre Avenue in East Liberty has incrementally come back to life by leveraging community-based anchors. This segment reopened as a two-way street for the first time since the district underwent urban renewal incentivizing the building on the left back to active use for the first time in decades.The lessons from a place like East Liberty are not that bottom-up incrementalism discredits having a coordinated plan or developing a high-level strategy. Nor does it rule out, necessarily, all conventional approaches to financing. But it does demand more attention paid to how we structure and implement a flexible and not-at-all predetermined program: 

  1. focus on people first to accrue and understand the strength of the local social capital;
  2. diversify participants and risk instead of a single, large player; and, 
  3. after the launch (the MVP) is shown to be successful, sculpt an infrastructure package to support the sensibilities of those that ultimately will use it and cover its costs

As we continue our joint efforts in repopulating Investment Ready Places, we are slowly re-learning the toolkit required for building resilient and authentic neighborhoods. Leveraging the social capitalization inherent to the people, their stories, and their overflowing quirkiness is essential to developing something extraordinary. 

 

This week I am in Cincinnati, Ohio, uncovering some of the magic in a few of her investment ready neighborhoods. 

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Reader Comments (1)

Something I might add is that even when large-scale, master-vision projects succeed, they often never quite shed that mantle of 'master-vision', and it's totally detectable when you visit the place. Take that new development off Notre Dame's campus. That place could be economically viable, could be bustling with people, etc, but it would never quite overcome the humiliation of being a place subjugated to some single entity's conception of it. It's almost worse when something like that succeeds because you see all these people using the place and it's like they're humiliated, too (like they weren't complex enough to defy the place's equation). Whereas in the bottom-up approach it's the complexity of the people involved that actually drives the development.

October 30, 2012 | Unregistered CommenterBen Nickol

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