Investment Ready Places

INVESTMENT READY PLACES A FIELD GUIDE TO COMMUNITY BUILDING IN THE NEW AMERICAN FRONTIER Version 1.0

INVESTMENT-READY PLACES A FIELD GUIDE TO COMMUNITY BUILDING IN THE NEW AMERICAN FRONTIER Version 1.0

Kevin Lavelle

James Michael Joseph Nickol Atul Sharma

www.street-sense.org @streetsense

INVESTMENT READY PLACES

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A FIELD GUIDE TO COMMUNITY BUILDING IN THE NEW AMERICAN FRONTIER

Table of Contents Preamble

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Patterns of American Settlements

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Investing in the New American Frontier

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Characteristics and Strategies

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Call for Action

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Appendix: The IRP Toolkit

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INVESTMENT READY PLACES

PREAMBLE The small towns and cities of America are once again becoming the new frontier for development.

Having languished for decades with the decline of the manufacturing economy, these communities lost population, jobs, and capital. However, today an intersection of three overarching phenomenon presents a unique opportunity to reconsider these communities as places worth our time and investment: The Great Migration: Americans, young and old are gravitating towards communities that are mixed use, walkable, diverse and transit served. This puts an extraordinary burden on our Gateway Cities that currently exhibit such characteristics. At the same time, Suburban Settlements are ill equipped to provide such amenities to residents in the near future.

A Systemic Failure: The Great Recession clearly exposed the shortcomings of our financial, civic and infrastructure models along with their decision making processes. A recalibration is in order. Gateway Cities, due to their sheer size, make such restructuring difficult, while the isolationist frameworks of Suburban Settlements lack the interconnectedness of systems and concentration of critical mass required to generate resilient prototypes.

A Widening Rift: Across the country, we see an increasing gap based on income and wealth. The American Dream is predicated on a strong middle class, and yet it is rapidly shrinking today. Gateway Cities are self-segregating themselves into homogenous pockets in terms of income, race and ethnicity, with the middle class being pushed outward. Suburban Settlements on the other hand are incapable of supporting diversity and encouraging upward mobility, the impetus for growth for middle class.

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A FIELD GUIDE TO COMMUNITY BUILDING IN THE NEW AMERICAN FRONTIER

We assert that mid-tier towns and cities provide us with the right opportunities to build on our past while accommodating these societal changes positively. They present us with Investment Ready Places (IRP’s), whose resilient chassis in fact, benefit from change and deliver a stronger framework to future generations for realizing their dreams.

We outline a set of characteristics inherent to IRP’s that allow us to fulfill our basic human needs and achieve our creative potential as individuals and community. Organized under six categories, these characteristics double as a diagnostic tool to determine places where we should invest at a time when investment is at a premium.

We recommend strategies that can maximize the development potential for IRPs. These strategies build upon the resilient DNA of IRP’s and help identify short and long term actions that communities can undertake to maximize returns on their investments.

We provide you, the reader with a tool kit to help navigate this “new” terrain and undertake projects in your local IRP’s.

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INVESTMENT READY PLACES

PATTERNS OF AMERICAN SETTLEMENT

Gateway Cities: Today, the United States’ urban landscape is comprised of three basic types of settlements.

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These are the alpha cities of the United States. Cities like New York, San Francisco, and Chicago that have millions of inhabitants and billions of dollars’ worth of investment embedded in them. With Suburban Settlements in stasis, these cities are currently experiencing a renaissance, regaining population and prosperity. They represent a third of our national GDP and will likely continue to be the anchors of large populations, mostly along our coasts. While the ultimate test of these settlements will unfold in the decades to come, as climate, food and water security issues play themselves out, they will continue to thrive in the near term.

A FIELD GUIDE TO COMMUNITY BUILDING IN THE NEW AMERICAN FRONTIER

Suburban Settlements:

The New American Frontier:

Suburban Settlements represent a large chunk of the built environment accumulated since the Second World War. With their auto-oriented, segregated uses and complete dependence on subsidized fossil fuel supply, these settlements are out of touch with the new realities of resource constraints and the shifting demographic trends in the United States. With the Baby Boomers and Gen-Y’ers both gravitating towards urban areas, Suburban Settlements are losing their appeal to the two largest segments of the American population. Their faulty DNA makes them highly unsustainable and their inadequate chassis demands high energy to restructure, making the return on further investment questionable.

Mid-tier towns and cities are our most dynamic urban settlements and have the largest untapped potential for fostering economic growth. They vary in size from a town of a few thousand people to small cities with a couple hundred thousand residents. They are small enough to be affected by incremental change and large enough to afford opportunities to create substantial impact. They provide us the stimulus of direct action followed by relatively quick, tangible change.

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INVESTMENT READY PLACES

INVESTING IN THE NEW AMERICAN FRONTIER Real estate investing, regardless of scope or context, is a complicated and multi-faceted endeavor. It requires a unique and committed vision, with a lot of sleeve rolling and collaborating. By allocating the scarce resources of capital and time to their highest and best use, investors can achieve significant outcomes for themselves and their communities. Every project has a unique investment profile and investing in the New American Frontier requires a special vision by a special type of investor.

Just as with new technologies, where futures are as exciting as they are uncertain, pioneering back into our towns and cities requires a start-up mentality. With the overall time horizons for projects in the New American Frontier potentially being quite long (10 years or more), a Venture Capital-like incisiveness, risk appetite, and commitment of energy are required. The opportunities across this country are plenty and the canvas is broad for those with a long-term vision and the ability to undertake incremental efforts with a sense of urgency.

It is not a commitment to be taken lightly, as both capital and time are scarce resources today. These new realities necessitate an understanding of where the best opportunities lie and the new rules to follow while investing.

Capital Investing requires capital, either in the form of equity or debt. In the real estate boom of the 2000s, debt capital was abundant and over-used by investors. The result was misapplied investment in projects funded with far too much debt, not enough real long-term equity, and over-priced, over-leveraged properties. This model of investing has little to offer in the New American Frontier- its short-term focus produces a product commensurate with that effort, instead of creating longterm value for communities.

Neighborhoods and communities that need a long-term vision and commitment require far more equity. Debt

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burdens the owner with both financial and operational covenants, as well as demanding repayment in a period of time which might not coincide with a project’s optimal duration. Equity, on the other hand, offers the best alignment of interest between capital sources and the project types contemplated here. Transformational opportunities take time, creativity and long-term commitment, and a ticking debt clock is anathema to these goals. Equity is patient capital - investing in the New American Frontier requires patient capital as the foundation and proof of concept, to attract mainstream investors in years to come.

To some, the idea of raising large sums of equity capital can seem daunting. However, like any great investment, a strong real estate project will attract equity capital from local sources first - local business owners, community leaders and smaller investors – all networking within a community to produce robust outcomes. Additionally, there are an increasing number of platforms that can aid in sourcing equity for new investments. Kickstarter (www.kickstarter.com), while more focused on new businesses than real estate investing, is one example of a new genre of equity capital that is emerging. If one must rely on debt financing, local banks are an excellent resource, as they too have a stake in growing the community.

Regardless of the source, all capital expects a return of some type, and an explicit understanding of expectations for all parties is essential at every stage of an investment.

The rationale outlined above provides a defensible framework in which to make decisions and attract debt or equity capital.

Time The New American Frontier will not, nor should, be built in a day or a year. As much as capital, time is frequently a limiting constraint on scaling up investment activity.

With larger outlays of time associated with incremental redevelopment, investors are exposed to less predictable

A FIELD GUIDE TO COMMUNITY BUILDING IN THE NEW AMERICAN FRONTIER

investment dynamics and the cyclical nature of market economies. While few predicted home prices would ever recede in the pre-2008 world, eventually the music stopped and many are still recovering.

With slower growth as the new norm, investors must understand how much time commitment is needed to see a project through, and budget time as they would capital. The term of a project has implications on how projects are phased, designed, financed and are able to adapt to changing conditions. As the market constantly shifts, time constraints of formal or informal partners (banks, governments, contractors, etc.) exert additional influence on a development horizon. While developing in the New American Frontier is more time intensive, the projects are imbued with resilient growth characteristics, allowing them to hedge against, and capitalize upon, unknown events through their buildout and future use.

Neither Capital or Time are unlimited. However, aligned partners and truly robust research help mitigate the constraints and enable further qualitative and quantitative scaling.

Partners Stakeholders with a strong belief in their native or adopted community are best suited to undertake long term investment efforts. Around us, a renewed focus on sustainable, resilient and long-term building is gaining hold. This groundswell is a natural reaction to the flipping and trading of the last decade, which has been exposed as a zero-sum game. The consensus now is focussed on investing to create long term value.

Partnering with other investors or local stakeholders can alleviate the capital / time constraints to a degree.

Partners are not simply formal financial partners, but rather represent a full scope of project stakeholders including neighbors, local business people, construction and maintenance crews, debt providers and regulators.

Knowing and developing relationships with each of these constituencies allows for making the best investment possible. Relationships help navigate the full spectrum of real estate challenges from a leaky roof, to a change in tax law, to a recession. A shared vision of scope and quality among partners allows for the best investment results.

Research Research is simply knowing, in great depth, where, how and what is to be created. The investing activity of the past decades lost touch with this important step.

A robust knowledge of a community’s past, present and future was glossed over in favor of a singular focus on financial statements—a necessary, but insufficient activity. In addition to financial analysis, an investor in the New American Frontier must research all the factors expected to drive the value of their project.

Engagement is essential. Local government, local business leaders, employers large and small, other property owners and long-time residents all have essential perspectives to share. A new investment, by definition, creates new real estate supply, changes the landscape, alters the path, and therefore demands a nuanced view of what a place truly needs, what it truly demands. The New American Frontier requires a renewed due diligence.

Within the New American Frontier, certain places are better equipped to receive our investments than others. We call these Investment Ready Places. The following pages present the inherent characteristics and recommended strategies to undertake projects in such places.

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INVESTMENT READY PLACES

INVESTMENT READY PLACES IRPs can be a block, neighborhood, town or an entire city. Their size is determined by the magnitude of the opportunity they present and the number of citizens willing to undertake the revitalization efforts. IRPs have the ability to expand and contract over time, as new opportunities and constraints emerge. An effort that starts at the block level can become a city wide initiative and vice-versa.

IRPs embody a set of characteristics that allow us to fulfill our basic human needs and achieve our creative potential as individuals and community. These set them apart from their peer towns and cities that, in the absence of such qualities, do not provide realistic grounds on which to make significant future investments. These characteristics are organized under six categories, listed on the following page. Under each category, we also outline strategies that can maximize the development potential for IRPs. These strategies help identify short term actions and long term restructuring efforts that communities can undertake to maximize impact.

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A FIELD GUIDE TO COMMUNITY BUILDING IN THE NEW AMERICAN FRONTIER

NOURISHMENT FOR RESIDENTS STABLE SUPPLY OF WATER MANAGEABLE INFRASTRUCTURE CONNECTED PLACES CREATIVE KNOWLEDGE HERITAGE AND LIVING CULTURE

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INVESTMENT READY PLACES

NOURISHMENT FOR RESIDENTS Food is a basic human need. Most traditional settlements were organized primarily around the production, distribution and consumption of food. During the past 50 years, our connection with food has been severed as people moved to Suburban Settlements. This is ironic, since ideally, suburbia promised a reconnection with nature. Instead, the separation of uses disconnected people from farms, restaurants and markets.

A reconnection with food is no longer just a matter of preference, but has great economic, social and public health implications. As we experience increasing natural resource constraints and transporting food becomes forbiddingly expensive, places that supply their residents with a stable supply of locally grown food will become increasingly attractive.

Culturally, food provides a common platform that draws communities together. Food establishments often tend to be the pioneering businesses in many communities trying to revitalize themselves. Food can be a catalyst and a stabilizer, bringing people together and fostering strong communities. At the smaller scale, the cooking and eating of food is integrally tied to time spent with the family, where values and wisdom are passed on and new trends are reported back to elders, encouraging a cross generational exchange of information.

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A FIELD GUIDE TO COMMUNITY BUILDING IN THE NEW AMERICAN FRONTIER

Characteristics: • IRP’s provide a stable supply of food that is local, healthy and affordable.

• Food production is an important component of the diverse economy of IRP’s; they are net exporters of food within their regions.

• Food is an integral part of the culture of IRP’s at the scale of community and family.

• Food production and soil productivity is not reliant on or withering under extreme petrochemical fertilization. IRP’s constitute healthy, abundant soil with equally strong husbandry.

Strategies: • Preserve existing agricultural land by focusing growth in already built up zones and areas unsuitable for farming (including stable hillsides).

• Consider creative reuse of vacant land as food producing businesses.

• Encourage small scale production of local and seasonal foods.

• Create robust food distribution systems that allow for several small growers and vendors, as opposed to a single, large supplier.

• Celebrate the gastronomical heritage of a place.

• Foster dynamic “value add” innovators (chefs, restaurants, food trucks etc.) that bring the farm to the table.

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INVESTMENT READY PLACES

STABLE SUPPLY OF WATER Water is projected to become one of the most valuable natural resources in the coming decades. Water scarcity is a growing concern in several parts of the United States: California, Texas, Arizona. Severe droughts have become common place, affecting our local economies and food supplies.

Water played a critical role in the settling of America as most of our oldest towns and cities depended on it not just for drinking and agriculture, but also for trade and transportation. As we repopulate our towns and cities, a comprehensive approach to using and managing our water resources is critical. We can no longer think of water use as a one-time linear process, simply managing its discharge. Incorporating water as an integral part of our transportation, trade and growth management policies is critical.

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A FIELD GUIDE TO COMMUNITY BUILDING IN THE NEW AMERICAN FRONTIER

Characteristics: • IRP’s are strategically located around existing water networks.

• IRP’s provide a stable supply of water for drinking, agriculture and industry.

• IRP’s offer water as a viable transportation option.

• IRP’s contain an in-place infrastructure for the distribution, collection and treatment of water.

• Water sources are inextricably tied to the culture of IRP’s.

Strategies: • Protect existing water sources and the aquatic ecosystems they support.

• Synchronize the development potential of IRP’s with their native watershed capacities.

• Reuse/revamp existing infrastructure for the distribution, collection and treatment of water.

• Celebrate existing water sources through cultural and recreational uses.

• Invest in clean water industries that utilize maximum energy output by symbiotic reuse of water.

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INVESTMENT READY PLACES

MANAGEABLE INFRASTRUCTURE Infrastructure presents a peculiar challenge within the American context, a result of misplaced investment, over-speculation, and make-work programs. The Gateway Cities of the United States achieved unprecedented growth due to a spectacular investment in infrastructure including railroads, bridges and ports, as well as social and public improvement projects.

Most of this infrastructure is currently in need of repair. Since the Second World War, investment has continuously flowed into Suburban Settlements, where the infrastructure is grossly over built and severely underutilized. As large parts of the American population gravitate toward urban areas, the geographic disconnect between people and infrastructure will be exacerbated.

Providing communities that cater to both demographic preferences and infrastructure requirements is a key part of the equation for a sustainable future.

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A FIELD GUIDE TO COMMUNITY BUILDING IN THE NEW AMERICAN FRONTIER

Characteristics: • IRP’s provide a vast pool of underutilized infrastructure that includes street frameworks, utilities grids, and housing stock. These can be adapted to our current needs relatively quickly, yielding a high return on investment.

• IRP’s are mostly built upon pre-automobile settlement patterns that naturally limited their increments of infrastructure development to what was locally afforded. These smaller increments proportionally relate to their ability to serve street-fronting development, delivering what a local community can maintain.

• IRP’s contain an inventory of pre-war urban fabric that was either forgotten or missed by post-war inner-city projects such as public housing and freeways. In some cases where freeways did affect IRPs, they are able to benefit from their connection points rather than be crippled by them.

Strategies: • Fully capitalize on current infrastructure for development prior to building expanded systems, except in those instances where expanded infrastructure is needed to connect IRP’s to their economic region.

• Build infrastructure proportionate to the ability to finance and maintain it.

• Maximize outputs per unit of energy inputs and minimize the amount of total energy used for transportation.

• Develop energy infrastructure on a diverse platform of local production, harvesting, and use.

• Promote multi-use infrastructure projects that serve more than just one need, utility, service or industry.

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INVESTMENT READY PLACES

CONNECTED PLACES Mobility is ingrained in the American psyche as a basic right. This stems from the country’s immense geography, culture of individual liberty, and history of frontier settlement. However, our preferred modes, patterns and range of transportation are changing.

Contrary to popular belief, the middle class is less mobile today than ever before, when it comes to relocating for jobs and housing. More young people choose to live with their parents longer; some move back to save money or provide domestic care. The Internet was predicted to usher the age of hyper mobility. Instead, it has enabled people to stay rooted while pursuing a wider set of opportunities. At the same time, we are paying more to live in compact, walkable and transit served neighborhoods than in Suburban Settlements.

All these factors are shifting the focus towards intra-regional connectivity. Alternative modes of transportation are being considered as automobile travel gets more expensive, inefficient and unhealthy. Biking and walking are a sensible response to our new mobility patterns and an integral part of our transportation frameworks.

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A FIELD GUIDE TO COMMUNITY BUILDING IN THE NEW AMERICAN FRONTIER

Characteristics: • IRP’s are strategically located along road, rail and water networks to facilitate intra-regional connectivity.

• IRP’s are built on street patterns that are compact and walkable.

• IRP’s contain interconnected transportation networks resilient to varying traffic loads and congestion.

• IRP’s are built on the framework of mixed-use neighborhoods, minimizing travel distances and daily vehicle trips.

• IRP’s contain housing typologies to accommodate a range of ages and price-points, creating life-long, economically diverse communities that are interdependent and continuously regenerating.

Strategies: • Integrate local and regional travel options through multimodal transportation facilities.

• Promote active modes of travel such as walking and biking as the basic unit of infrastructure design.

• Integrate transportation systems with natural features at all scales.

• Provide at least three modes of travel on all streets, none of which impair the ultimate flexibility of the types of development that front it.

• Focus reinvestments along existing infrastructure networks prior to expanding.

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INVESTMENT READY PLACES

ACCESS TO CREATIVE KNOWLEDGE Creative knowledge refers to a set of skills that allows individuals to directly participate in the process of value creation and innovation, be it in the service economy or specialized manufacturing. Today’s hyper-connected world demands that we compete globally to provide goods and services and attract economic development.

Here at home, the over saturation of the service economy and the rising costs of imports provides us a great opportunity to rebalance and create an economically diverse workforce that is not dependent on a particular industry or sector. As revitalization efforts gain momentum across mid-tier cities and towns, many types of services and products will once again be in demand.

The key is to locally manufacture these goods and retain these services, tying them into the local knowledge base and economy in the long term.

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A FIELD GUIDE TO COMMUNITY BUILDING IN THE NEW AMERICAN FRONTIER

Characteristics: • Work forces in IRP’s are not staggeringly large or regulated, making them flexible to self-test and recalibrate as needed.

• IRP’s provide a lower price tag for starting new businesses with access to cheap, serviceable buildings, reliable & sustainable energy as well as easy to navigate regulations.

• IRP’s provide a high number of small scale knowledge sources per capita including universities, hospitals, R&D firms, tech startups, culinary institutes, vocational training schools, etc.

• IRP’s provide “embedded local knowledge” related to manufacturing industries.

• IRP’s have a level of geographic and informational compression that leads to competition and innovation and inspires differentiation from relative generalities.

Strategies: • Diversify and improve the quality of knowledge sources available to residents.

• Encourage small businesses to share resources and collaborate.

• Foster interaction between the “embedded local knowledge” and emerging technologies.

• Create geographically compressed supply chains by mixing uses that bring producers closer to distributors, start-ups next to machine shops and lenders next to manufacturers.

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INVESTMENT READY PLACES

HERITAGE AND LIVING CULTURE The heritage and living culture of a place defines what communities see as valuable in their natural and built environments. The heritage of a place defines its very DNA and provides insight into why a place exists, how it evolved and arrived at its current state. The living culture of a place consists of customs, old and new, that are loved by a community. It highlights resilient practices that work best in the local context. Understanding the living culture of a place enables a focussed revitalization to occur by building upon the common threads that tie residents and can provide a framework to generate consensus, political will and development capital.

Gateway Cities by their very nature act as a stepping stone for new urbanites, many of who move within the first generation either to Suburban Settlements or to smaller, more affordable cities and towns. Suburban Settlements on the other hand are isolationist, only retaining a narrow swatch of demographics, culture and ethnicity. Mid-tier towns and cities often provide the optimum balance between diversity versus maturity of traditions and residents. They contain a fairly diverse set of populations, each of which has evolved over several generations and crafted its own living culture.

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A FIELD GUIDE TO COMMUNITY BUILDING IN THE NEW AMERICAN FRONTIER

Characteristics: • IRP’s are places with a mature heritage and living culture.

• IRP’s are built in harmony with their natural surroundings, creating cultural landmarks out of natural features such as lakes and mountains.

• IRP’s have a physical framework anchored around civic and social institutions, such as churches, hospitals, educational facilities, clubhouses, coffee houses, bars, etc.

• IRP’s were traditionally built upon a small scale and diverse economy, spawning multiple traditions based on trade, innovation, consumption and surplus.

Strategies: • Preserve and reuse adaptable existing buildings, highlighting them as extensions of the local building tradition and culture.

• Strengthen connections to adjoining natural features, fostering new traditions around their cultural, recreational and economic use.

• Diversify trades and provide means for interaction between industries, spawning innovation of new technologies, crafts, and products.

• Avoid segregation of uses, enhancing interactions and interconnectivity.

• Encourage cross-generational interactions to facilitate the passing-on of traditions. Avoid segregation of neighborhoods into single demographic districts (young families, empty nesters, retirees, etc.)

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INVESTMENT READY PLACES

A CALL FOR ACTION In frontiers, we are moved by curiosity as much as necessity. It is a creative pursuit of the possible. In this New American Frontier, growth and regeneration efforts are at their core, community-driven.

The scale of projects is typically proportionate to the community and final results are the output of unrelenting trial and error by citizens. This process is supported by government policies and funding; it is aided by private sector financing and investments; but is not solely dependent on these externalities. At its core, this is a human-powered enterprise, a do it yourself version of community building.

We intuitively understand that places with the characteristics outlined here are all around us. They can be the next town over, they can be our downtowns, and perhaps they can even be our own neighborhoods. Wherever we find them, we must see them as opportunities, not liabilities. At a time when we have to make difficult choices on how to deploy limited funding, IRPs emerge not only ready for our investment, but as the best-suited and most realistic environments to yield positive returns. They are waiting for us to repopulate them, to flourish in them, and to once again call them home.

Moving forward, we invite you, the reader to join in the resettling of this New American Frontier.

In the following pages, you will find a series of tools that can help navigate this “new” terrain: 1. The IRP Locator: An interactive platform that enables you to search, identify and share IRP opportunities.

2. The IRP Checklist: A set of criteria to diagnose strengths and weaknesses of IRP’s, highlighting their true development potential.

3. The IRP Catalog: An evolving resource list of publications, projects and useful links related to the undertaking of IRP projects.

So let us move forth with purpose. Let us explore, be inspired by and collaborate to improve the communities around us. This is the biggest challenge and opportunity of our generation.

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A FIELD GUIDE TO COMMUNITY BUILDING IN THE NEW AMERICAN FRONTIER

Toolkit 27

The IRP Toolkit: Locator •

The IRP Locator is an interactive tool created to help you navigate The New American Frontier.

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Simply click on the map below to start exploring potential IRP’s across the country.

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If you would like to add an IRP you know or are currently working on, email us at sensiblestreets@gmail.com and we will invite you to collaborate!

The IRP Toolkit: Checklist •

The IRP Checklist is a tool created to help you gauge the true development potential of an IRP.

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Simply click on the image to the right to access the fully editable form. (If using a Mac, make sure to further right click and select “Open using Adobe Acrobat”

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Fill in the blanks and review your final score. As a rule of thumb for scores:

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25-50:

Address critical issues before investing

50-75:

Invest incrementally

75-100:

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Look elsewhere

Attract other investors

We encourage you to share your findings by clicking on the submit button. Your findings will be securely stored on our website and made available for fellow pioneers!

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The IRP Toolkit: Catalog

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