Stories of Philanthropic Leadership in Advancing Regional and ...

I. G. REVITALIZING WHILEASSURING DIVERSITY ANDSOCIAL RESPONSIBILITY:“VALUE LATCHING” INALBUQUERQUE, N.M.Funders Highlighted:Enterprise FoundationFord FoundationMarshall L. and Perrine D. McCune CharitableFoundation“Regional equity efforts cannot be top-down.Affected communities must be involvedproactively and we should take the process tothem.”— Ed Rosenthal, Enterprise Foundation,Santa FeValue latching is a strategy created as a response to theemerging gentrification forces being felt inAlbuquerque, N.M.’s, neighborhoods as a result ofrecent progressive downtown real estate development.It represents a strategy to provide early funding foraffordable housing, commercial, arts, and publicspaces with equity as the guiding principle. Thisprofile is an example of an approach to the regionalequity framework that extends beyond a single issuearea and strategically utilizes funder resources andprivate equity investments to support smarter growthdevelopment patterns in tandem with supporting theneeds of low-income and minority communities.Project ProfileAlbuquerque, N.M., like many cities, is attempting toattract investment and development to its downtown.Regionalism, in this case, calls for a revitalizeddowntown characterized by mixed-use,transit/pedestrian-oriented developments as a means tocounter sprawling patterns of development. Quotingextensively from two recent articles (“FinancingProgressive Development,” and “TamingGentrification”) by Chris Leinberger, a developer withArcadia Land Company, he explains that, “Downtownredevelopment seems to perform financially differentlythan conventional suburban development … which hasa built-in, short-term financial pay-back time horizon.”That is, according to Leinberger, conventionalsuburban development provides a return on investmentin five to seven years, a real estate industry response tothe financial underwriting standards of banks and WallStreet. “This short-term bias has forced the real estatedevelopment industry to rely upon a standard list of …product types … [and] has also forced real estatedevelopers to construct buildings that have an equallyshort-term life by slashing construction costs.” Incontrast, for Leinberger, downtown, mixed-use, andpedestrian-oriented developments “have a differentinvestment return curve,” a curve that, “does notperform as well as conventional development in theearly years, but accelerates during the mid- to longterm.”This timeline complicates financing for these“progressive developments,” but, in turn, can offersubstantially better mid- to long-term returns to morepatient investors. 16The Century Theater Block in downtown Albuquerque, an example ofprogressive development, “burys” a 50,000-square foot, 14-screen big boxtheater behind seven individually designed retail/office buildings thatsurround the theater, except for the two-story entrance on a full two-acrecity block that was formerly a surface parking lot. (Source: Arcadia LandCompany and HDIC).Experience demonstrates that progressivedevelopments face significant challenges, however,including access to mid- to long-term (“patient”)capital, and “ripple effect” displacements of lowincomeand minority communities as redevelopmentspurs a rise in land values and rents in adjacent areas.Gentrification and displacement are processes longfamiliar to low-income and minority urban residents,from older models of urban renewal to the morerecent “back to the city” movement resulting fromchanging demographics of homebuyers. This newurban demand is spurring a strategic procession ofpublic and private investment which is creating newdevelopment opportunities, purposefully attractingnew residents to previously disinvested16For more information on Chris Leinberger’s articles and other work,visit www.cleinberger.com.EQUITABLE PUBLIC INVESTMENTPart III: Section 1: Promoting Equitable Public Investment 44