Life at the intersection of public-private partnerships, neighborhood regeneration and real estate development.

Friday, July 25, 2014

The P3 is Dead: The P5 as the 21st Century Tool for Placemaking and Urban Regeneration

Hellllooo PPPers, Detroiters and those of you don't know the difference between boy bands One Direction, The Vamps and Five Seconds of Summer (5SOS)! 

Which group's lead singer is this?  Put your answer in the comments!
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The P3 is Dead: The P5 as the 21st Century Tool for Placemaking and Urban Regeneration

"It takes a village to raise a child" - African Proverb 

If you think of urban regeneration projects as your babies (like I do), then you see the applicability of the proverb above:  It takes a village to get community development projects done!

It also takes a village to raise Honey Boo Boo!
Not only does it take a village to get placemaking and urban redevelopment projects done, it also takes every tool in our toolkits, including Public-Private Partnerships (or "P3s").  However, if you think about the urban neighborhoods and cities that have the greatest challenges, or the placemaking projects with the greatest obstacles, you'll see a new trend:

The P3 is dead because the village has expanded.

Let me explain.

A public-private partnership (or "P3") is typically made up of only two players: The Public sector and the Private sector.  Those two players collaborate, allocate resources and risks, and get a project done. 

A diagram of the P3 Village looks like this:   
"Juuuust the two of us.  We can make it if we tryyy, just the two of us.  You and I."  - Bill Withers
But when you analyze the most complex urban placemaking and community development projects around the country, you'll find that getting things done is no longer a two-player (P3) game. 
The village has expanded. These projects take a village where there are 5 players working together to get things done. 

Behold...the Rise of the P5!  The Village looks more like this: 

Public.  Private.  Philanthropic.  Non-Profits and the People!
As you can see in the chart above, in addition to the Public and Private sectors, there are three new players actively making urban regeneration projects happen:
  1. The Philanthropic Sector;
  2. The non-Profit Sector (non-community based); and
  3. Everyday People
The increased public presence, activity and resources of these three players changes everything.

It changes the scale of projects.

Do you know a philanthropic organization that is taking a public role in a large-scale urban revitalization project? Many of these current projects wouldn't happen without proactive philanthropic support.  For example, in Detroit there are a number of philanthropic organizations that are actively supporting urban redevelopment projects: Kresge, Skillman, Ford, Surdna, and Hudson-Webber all come immediately to mind.  The newest philanthropic player in Detroit is JP Morgan Chase, which recently announced a $100M investment in Detroit's redevelopment efforts.   $50M of that $100M investment is being made into CDFIs.

Source:  www.jpmorganchase.com
The new prominence and assertiveness of the Philanthropic sector is not limited to Detroit. You'll find foundations and philanthropic organizations catalyzing urban revitalization projects all around the country, including my friends over at Anne E. Casey in Baltimore, the Baton Rouge Area Foundation in Baton Rouge, and at the Rockfeller Foundation, in, well everywhere! 

Anne E. Casey supported the first new school built in East Baltimore in 20 years
The Second New Player is a Not New in General, but is newer to this game:  

Non-Profits which are not neighborhood or community-based.

I won't talk long about community-based non-profits since they have been the on-the-ground leaders of neighborhood revitalization efforts for decades.  They have also been critically important and will continue to be until the last neighborhood has been regenerated.  However, the non-profits that represent the new players in the P5 world are the national, regional and non-neighborhood-specific non-profits who are actively creating, impacting and leading revitalization efforts.   When I say "non-neighborhood specific" I am referring to non-profits that are not based in a particular neighborhood or community.  Examples include national non-profits like LISC, NeighborWorks and Enterprise who are doing wonderful work in urban neighborhoods around the country.  They also include non-neighborhood based (but area-focused) organizations like CDAD (focused on the entire city of Detroit) or BRIDGE Housing Corporation in San Francisco (focused on affordable housing development throughout California).  All of these non-community specific non-profits are putting their imprint on neighborhood revitalization by bringing a different set of resources, experiences and perspectives to the table.  
I worked on BRIDGE's Mandela Gateway TOD project in Oakland.  Source:  MWA Architects.
Finally, the Rise of the P5 also changes who are the Placemakers in neighborhoods:

Everyday People are becoming the placemakers and redevelopers in neighborhoods.

Tyree Guyton didn't wait to effect change in his neighborhood in Detroit.  He just did it.
Mr Guyton isn't a public official and he isn't a private developer. He is just one of the everyday People around the country deciding to personally become a placemaker and changemaker.  There is power in the People!!  A big reason everyday People are able to effect neighborhood change is the revolutionary capacity of the internet and mobile applications ("Apps").  Websites like Fundrise, Motor City Mapping (shoutout to Jerry, Mary and Mike at Loveland in Detroit!) and Kickstarter all let individuals spark and make change happen in their neighborhoods. 

Conclusion.  So there you have it.  The P3 is dead because the predominate tool in the regeneration of urban neighborhoods, and impactful placemaking in the future, will be P5s.  

What do you think?  Share with us in the comments examples of P5s in your city.  My next blog post will discuss an example of a deal in Detroit, and how the 5Ps play a part in getting it done. 

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Monday, July 21, 2014

Entrepreneur's Thoughts #275

Take "NO" as a "Maybe If." Take "Maybe" as a "Yes When You." A "Yes" means it's Closing Time. 

However, an "I Don't Know" is a call to action.  What's the hesitation?

Is it your brand? 

Is it what you're offering? 

Or is it you?

Thursday, June 12, 2014

Are Your RFPs Working For You?

Hellooo Detroiters, PPPers, and those of you who are NOT one of the more than 2 million people who "liked" Kanye and Kim's wedding kiss on Instagram!

Uh huh, honey 

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Are Your RFPs Working For You?

How many staff hours have you wasted on ineffective RFPs and inefficient RFP processes?

How many dollars have you lost on lawyers negotiating PPP deals based on bad RFP structures?

How many political headaches have you had because your RFPs (or RFP processes) are indefensible, unpredictable or just incoherent?

Do you know why your RFPs aren't working for you?  It's time to fix your RFPs now!

I have so much to say on this topic, I'm going to make this a three-part blog series.  In the tradition of those "Eat This, Not That!" segments, I'll call this segment of the blog series:

Do This, Not That!

*Do This:  Only ask for things you need to efficiently make a decision, or to get down to a short-list.

*Not That!   Ask for every single piece of information from every single bidder all at the beginning.  

Snarky Sidenote:  Do you really need ten hard copies? Why do you need my fax number?  What is this, 1987?

You keep it up, and I'm going to send my proposal in on microfiche.
Specific Advice:  Strongly consider (particularly in real estate development procurements) distributing a "Modified RFQ" as a precursor to a full-blown RFP.  The Modified RFQ process has two stages: 1) A qualifications stage where you analyze bidders on key qualifications only, and then 2) A second stage where you go through a more detailed analysis and request more extensive information.   You can "modify" the RFQ by requesting information in the first stage on any "deal breaker" factors that might usually be reserved for the second stage.  These deal breakers usually don't directly relate to the "experience" of the bidder, but are factors that would rule a bidder out for further consideration if the bidder's response doesn't meet a certain minimum standard of quality. So for example, you could ask for a detailed community engagement strategy as part of a modified RFQ, because if the bidder doesn't appear to be able to handle the particular community involved, you know that they (and you) are dead in the water.  Or you might request from bidders in the first stage their key team members' financials, letters of credit and financial partner information because you know that there's no deal if they don't have the dough.

Benefits of the Modified RFQ Approach:  The Modified RFQ allows you to first weed out bidders based mostly on their experience, financial capacity and analogous project qualifications.  This weeding out process occurs prior to reviewing detailed financial proformas, elaborate site and building designs and complex deal structures.  This approach saves you time and money from reviewing tons of submission materials from bidders you know aren't going to win, but who submit anyway. It is also fairer to the bidders themselves, who spend thousands of dollars on bids where they didn't really have a chance.  Finally, the second stage (where you request more detailed information from a small number of short-listed bidders) allows you to do a deeper dive with teams you know could win and therefore allows you to get better information that will lead to a better selection. 

*Do This:  Your scoring criteria and scoring allocations accurately reflect your project goals and priorities and the key factors which will cause you to choose one bidder over another. 

*Not That! The scoring criteria or weightings of each scoring factor have no coherent relationship to your stated goals on the project, or any alignment with your priorities when selecting between bidders. 

Snarky Sidenote:  Why do you keep asking for the "percentage of time each of your personnel will spend on the project"?  My answer doesn't seem to be that important because the scoring criteria includes no mention of personnel time.  Moreover, it's an 18-month long project that probably won't begin until 3-4 months after I put in my submission.  You realize you are forcing me to make something up right?  My ability to know how much time my team will spend, per person, on the project over the next 18 months, is as high as my percentage chance of predicting what Tyrion Lannister will do next to avoid death on Game of Thrones...

I'm going to try this in my next shortlist interview.
Specific Advice: It's worth saying again:  Your scoring criteria and scoring allocations must accurately reflect your project goals and priorities and the key factors which will cause you to choose one bidder over another.  Don't use the same criteria and weightings for every project.  Understand the priorities of the decision-makers on the procurement, and make sure the criteria reflect those priorities.  The worst thing is when a selection panel makes a recommendation to a decision-maker and the decision-maker wonders how they got there.

Benefits of Aligning Your Scoring With Your Goals:  Strategically selected criteria and weightings signal to your most coveted bidders that you want them to bid, and signals to folks who just routinely bid on everything that they don't have a chance.  Small firms clearly know whether they have a shot to win a project as the lead - bigger boys with "marketing coordinators" and single purpose "proposal writers" think twice about putting in a bid "just to see."  Alignment saves you time and gets you more worthy applicants.  If you want an efficient, effective, and defensible RFP process, your scoring, criteria and goals all have to be aligned.  If they aren't aligned your RFP and RFP process will suck -- just like that market study you just bought sucks.

*Do This:  Include a clear, concise and budget-realistic Scope and Deliverables in your RFP.

*Not That!  You're fishing.  You really don't know what you want -- or need -- so your Scope asks for the kitchen sink, it doesn't reflect your budgeting realities, and it's hard to decipher for bidder budgeting purposes.

Specific Advice:  Use pre-solicitation focus groups to better pinpoint your scope and which deliverables will fulfill your objectives.  Invite bidders in the applicable industry to share their thoughts on current best practices, the newest innovations and practical considerations.  Leverage their thoughts to write a more focused RFP.  Get their advice on how to get the best level of response from the most competent selection of bidders.  If a big priority is the participation of local, small or minority businesses, talk to these groups prior to sending out your RFPs as well.  Ask them what would induce a better response rate from more qualified firms within their group.  Lastly, I would advise that you only request a full budget from short-listed bidders, rather than from all applicants.  Why skim 10 budgets on the front-end when you could do a deep-dive on only 3 from firms you might actually choose?
Benefits of Not Fishing:  Value their time, and they'll value yours. Fishing expeditions get fishermen. We know when you don't know what you want.  We can see a champagne scope with a beer budget a mile away.  The best of us will not respond, the savvy among of us may put in a half-hearted effort, and the worst among us will leverage the lack of clarity to overpromise and underdeliver. 

So...those are my initial thoughts on why your RFPs aren't working for you. 
Do you agree or disagree?  Let me know in the comments!  PPPers, do you have suggestions on how government and philanthropic organizations can improve their RFPs? Put them in the comments!

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Tuesday, April 8, 2014

Catalysts, Bridges and Drivers: Sorry, the Market Study You Paid For Sucks

Helloooo Detroiters, PPPers and those of you who are counting the days to the next episode of Game of Thrones!
Will Khaleesi be able to handle her dragons?
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Catalysts, Bridges and Drivers:  The Market Study You Paid For Sucks
Raise your hand if you've ever paid for a market study that sucks.  (I'd raise mine but I'm typing right now).  "Sucks,” by the way, is a technical term.  "Sucks" means that the study didn't give you information useful to changing the trajectory of the area. Urban areas need market studies that do more than just study the market.  In Detroit, Baltimore, Memphis and Southeast DC, projections based solely on data aren’t enough to help regenerate their neighborhoods.  Generic market studies will have no effect.  Those market studies, in a word, suck. 

Luckily, you don’t have to accept sucky market studies any longer.  The three things your market study needs to assess to be useful:

1) Catalysts,
2) Bridges, and 
3) Drivers 

CATALYSTS.  How do we start moving in the right direction?  Your market studies need to look for opportunities to spark change, not just diagnose the ills that you already knew were preventing progress.  Catalysts inch the neighborhood forward.  They are often authentic to the neighborhood and ride on the backs of history.  Does your neighborhood have a history of music, art or culture that could be leveraged to spark change?  Is there a site where someone could take a stand, make an investment, and it would spark others to invest? It could be as small as a community garden, or the re-painting all of the houses on a block. 

In Detroit, Tyree Guton's Heidelberg project went beyond painting just the houses, and made everything art!
BRIDGES.  How in the world do we get from here, to there?  Bridges deal with the reality that long-term urban disinvestment prevents instant revitalization. You want a market study that identifies the investments, activities and resources needed to bridge the time between your area’s recent past and its long-term future.  For example, bridges can be major investments like government-led transportation infrastructure that accelerate a moving market.  The big boy developers and seasoned retailers who invest large amounts of capital come to an area when they see bridges not catalysts.  Catalysts are the spark for the fire, but the bridges are the accelerant to the flames.

Streetcar on H St. in DC was really a bridge, not a catalyst, to the overall change in the area.  The clustered redevelopment of vacant storefronts into bars, and the rehab of rowhouses nearby, were the real first catalysts for change.
DRIVERS.  What will keep the new momentum going?  Drivers are the actions and investments that solidify the long-term upward trajectory and stability of the area.  When a government helps a developer build a mixed-use, transit-oriented development that wouldn’t otherwise happen- that’s an investment in drivers. When a private company decides to move to an urban area, build things there and bring new jobs? That’s a focus on drivers.  When a philanthropic organization & non-profits fund a groundbreaking plan to understand what are the best employment and land use strategies for Detroit’s future? That’s a push to identify drivers.  Notice that all of the 5 Ps are involved in drivers - the Public, Private, Philanthropic and non-Profit sectors - and the People!  P5s, as we've discussed before, are the wave of the future beyond P3s.

Kresge Foundation's Future City framework focuses on drivers
What’s the difference between catalysts, bridges and drivers in a nutshell?  Catalysts get people to visit a city, bridges get people to move there, and drivers get people to stay there, build a career and raise a family.

Our urban neighborhoods don’t need market studies that just point out our uphill battles.  They need studies that get our neighborhoods going up the hill!  Authentic catalysts.  True bridges.  And sustainable drivers.  That’s what your market study in an urban area should be assessing. 

If it didn’t, or it won’t, then the market study you paid for sucks. 

-- Calvin 

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