YOU WANT ME TO WHAT? › 2019 › 08 › ...•Video or Pitch Deck •Signage •I wish I was...

July 23, 2019

YOU WANT ME TO WHAT? TIPS FOR BUILDING CONSENSUS AND

INCREASING PROPERTY OWNER SUPPORT AND INVESTMENT

Hilary Greenberg

Greenberg Development Services Hilarygreenberg28211@gmail.com

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SPEAKER

• Importance Of Having Good Working Relationship With Property Owners.

• Reasons For The Disconnect Between Owners and Main Street.

• Tips For Building A Stronger Relationship That Can Lead to Reinvestment.

Session Content

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The Problem

Our Buildings Matter….• House local businesses.• Provide residential options.• Support events.• Enhance community image.• Support the tax base.• Contain local jobs.

Some properties are more important than others due to location, history or impact on surrounding uses.

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The Problem

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Revitalization Efforts Will Not Succeed Without the Building Owner’s Support…

• They are our largest stakeholder.• They control downtown’s tenant mix.• They fund the improvements that extend

a building’s economic life.• They help to fund the organization and

program activities. • They provide important input and

leadership. • They fund repairs that enhance historic

character extend economic life or increase space utilization.

The Problem

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Frederick city declares downtown building

'blighted' amid structural

and safety problemsConcerns stalling streetscape project in

Some Property Owners are “Difficult” to Work With ….

The Problem

Some Property Owners Are Unwilling to Reinvest in Their Property….

• Property has declined in value. • Cash flow will not cover improvements. • Changes to zoning, parking or infrastructure discourages

reinvestment. • Owner does not have the money to make required

improvements.• Owner does not have the skills to make necessary

improvements.• Owner does not want the “hassle” involved with making

repairs or leasing to multiple tenants. • Property is a tax shelter not income producer. • Don’t like being told what to do.• Irrational. 7

The Problem

Some Property Owner Do Not Support the Main Street Program..

• Don’t trust government programs.

• They are unfamiliar with the program and benefits to property owners.

• They don’t agree with vision, priorities or regulations we support.

• Program does not provide benefits to owners.

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Greenberg Development Services

We Need A Strategy That Will Build Stronger Support and Encourage Redevelopment ….• Their support will encourage others to

participate.

• Their involvement will result in better projects.

• Their investment will accelerate the pace of reinvestment.

The Strategy

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The Strategy

• Develop A Better Understanding Of Downtown Real Estate.

– Properties– Surroundings– Individuals that own the buildings

• Develop A Stronger Relationship By Providing Tangible Benefits.

– Property Redevelopment

– Business Recruitment– Tenant Support 10

Understand Downtown Real Estate

Downtown Real Estate Can be Viewed Through a Number of Lenses…

• Tenant “Readiness”

• Income or tax revenue

• Highest/best use

• Architectural or historical importance

• Surrounding uses (clusters or nodes)

• Traffic (pedestrian and vehicular)

• The cost of doing nothing

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Develop a Property Data Base: • Location

• Floor plan

• Rent or sale price

• Taxes

• Tenants

• Surrounding uses

• Building condition

• Known issues

• Amenities (loading dock, parking, elevator etc.)

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Understand Downtown Real Estate

Evaluate Physical Environment:• Streets• Sidewalks• Lighting• Trees • Landscaping• Signage• Utilities• Parking• Pedestrian access• Litter

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Understand Downtown Real Estate

Regulatory and Social Issues:• Building Code

• Zoning and Ordinances

• Crime

• Homeless

• Flooding

• Litter

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Understand Downtown Real Estate

Evaluate Business Mix: • Type of businesses

• Function: destination, neutral, detractor

• Ownership: local, franchise, chain

• Niche

• Location

• Viability

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Understand Downtown Real Estate

Understand Downtown Real Estate

Who Owns Downtown?• Ownership structure?

• Owner’s skills?

• Why do they own property?

• Financial goals for their building?

• Business motivations?

• Social or emotional needs?

• Succession plan?

• Others that are involved?

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Understand Downtown Real Estate

What Motivates Property Owner? • Business motivation?

– Profitability– Tax implications– Risk mitigation– Business model

• Social status?– Status in community– Relationship with neighbors– Lone wolf versus team play

• Emotional needs?– Connection to their building– Recognition– Independent business 17

Understand Downtown Real Estate

Ownership Structures:• Sole Ownership

• Partnership

• LLC

• Corporation

• Business/Property Owner

• Bank repossession

• Absentee owners

• Slum landlord

• Family Trust

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Understand Downtown Real Estate

Owner’s Skill Set: • Rehab (Contractor, Developer)

• Licensed and bonded

• Financial (Investor)

• Landlord

• Hospitality

• Food and Bev

• Retail Business

• Legal

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Understand Downtown Real Estate

Why Did They Acquire Property?• Bought for my business

• Investment

• Flipper

• Retirement nest egg

• Family inheritance

• Tax shelter

• Divorce or other legal issue

• Bottom feeders

• Hoarders20

Understand Downtown Real Estate

Financial Goals: • Make money.

• Improves their ability to attract quality tenant.

• Extend economic life of building.

• Increase cash flow and tax.

• Reduce expenses.

• Create good will in community or reduces friction with other property owners, tenants, City or Main Street.

• Required by City.

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Succession Plan:• Sale price? • Who do you want to sell property to? • When do you plan to sell? • Will you use Realtor (that understands)?• Owner financing? • What happens if no one wants to buy your

building? • Improvements that would facilitate sale?

Understand Downtown Real Estate

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Understand Downtown Real Estate

Who Has Influence? • Family members

• Tenants

• Lenders

• Realtors

• Contractors

• Architects/Engineers

• Main Street

• Community

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Assessment Tools:• Property inventory

• GIS mapping

• Historical photo

• Surveys and Interviews

• Asset mapping

• SWOT assessment

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Understand Downtown Real Estate

The Strategy

Business Assistance Program

Business Recruitment

Campaign

Financial Incentives

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Provide Tangible Benefits To Property Owners…

• Provide financial assistance to help owner improve property.

• Provide recruitment assistance to fill vacancy or improve cashflow.

• Provide assistance to their tenants to reduce turnover and increase cashflow.

The Strategy

Key Takeaways:• Build relationships by face to

face meetings, social interactions and overlapping networks.

• Maintain regular communication with owners via Email, letters and phone conversations.

• Identify sources of and reasons for opposition.

• Most (but not all) can be improved with education

• Work to find common ground. (Be a facilitator not a regulator)

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The Strategy

Use Financial Incentives and Regulations to Build Stronger Relations and Influence Redevelopment…

• Renovation grants and loans

• New ownership structures

• Regulations to require improvements

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Carrots Work Better Than Sticks…• Directed to a specific need or motivator

• Relate to the “gap”

• Paired with regulations

• Clearly communicated and marketed

• Are easy to implement

• Part of an overall policy

• Depoliticized

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Financial Support

Financial Support

Incentives Work Better When Paired with Sticks.…

• Existing regulations should be enforced before adding new ones.

• Must be legal.

• May require additional staff.

• Should be structured to fit community.

• Should be easy to understand.

• Require community support.

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Financial Support

Redevelopment will not occur if costs exceed “after rehab” value…

• Cost includes all the things you have to pay for to finish a project (acquisition, rehab, legal fees, labor etc.)

• Value is what the building is worth based on cash flow, financing and comparables.

• Difference between cost and value is called the “Gap”.

• Projects will not occur unless “Gap” is eliminated.

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Renovation Incentives:• Façade grants or loans

• Tax credits: ITC, new market, LIHTC, enterprise

• Tax abatement

• Tax increment financing

• Lower interest loans

• Fee waiver

• Volunteer sweat equity

• Soft services: legal, design, feasibility, tax application

Financial Support

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Customized Incentives:• Sign grant

• Slip cover removal

• Interior store improvements

• Roof repair

• Change of use grant

• Sprinkler

• Rental subsidy: incubator, pop-up, accelerator

• Tenant Bonus

Financial Support

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Acquisition Incentives:• State or Federal Programs (SBA, USDA,IRB)

• P3 Partnerships: (CID, CRA, CDC)

• Tax credits: Opportunity zone, ITC, LIHC

• Donations/Gifts

• Condominium

Financial Support

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SBA 504 Loan:Good program for business looking to buy or renovate their building.

• Must create jobs.

• Long-term, fixed rate financing.

• Lower fees than 7-a.

• Lender 50%, SBA 40% and 10% borrower.

Financial Support

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Financial Support

Public-private Partnerships:• Reduces risk.

• Shared responsibilities.

• Greater price and schedule certainty.

• Quicker access to financing for projects.

• Higher level of maintenance.

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Property Donations:

• Donation to non-profit or City.

• Donation is Appraisal – Sale Price.

• Gift=30-40% depending on tax bracket.

• Can’t sell for less than appraised value for 3 years.

Financial Support

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Regulations:• Building Code

• Zoning: Density, retail, parking

• Vacant Property Registration

• Minimum maintenance ordinance

• Vacant building ordinance• Eminent domain• Historic or overlay districts

Financial Support

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Condominium:• Allows owner to split building into

manageable areas that can be sold.

• Common areas are maintained by association.

• Can be used to renovate upper-floors for housing.

Financial Support

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The Strategy

Help Property Owners Find Quality Tenants…

• Provide market or business data

• Provide marketing material

• Help owner or their realtor solicit leads or contact tenants

• Develop broker incentives to encourage leasing in the downtown

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Help Owners Find Tenants

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• Business or property information

• Demographic information

• Survey results

• Information on available incentives

• Project updates

• Development plans

• Business investment guides

• Traffic counts

• Area psychographics

Provide Business or Market Data:

Use Data to Improve Investment Climate …

• Reinvestment occurs more quickly when area is perceived to be “hot”.

• You can use data to promote reinvestment activity and improve investment climate.

• Slow and steady progress beats “magic bullets”.

• Transparency builds credibility and leads to greater influence…

Help Owners Find Tenants

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Help Owners Find Tenants

Help Market Downtown … • Fact Sheets• Brochures• Website• Property Listing Apps• Video or Pitch Deck• Signage• I wish I was Campaign• Tours

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Help Owners Find Tenants

Help Property Owners Contact Businesses:

• Identify possible leads

• “Qualify” prospects (and owners)

• Contact prospective businesses

• Sign the lease

• Follow up

Help Owners Find Tenants

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Establish an Agreement with Property Owner…

• Rent/sale price

• Desired tenants

• Owner responsibilities

• Main street assistance

• Role of realtor or broker

Help Owners Find Tenants

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The Strategy

Help Property Owners by Providing Assistance to their Tenants….• Reduces turnover

• Reduces tenant-owner issues

• Improve sales performance that can translate into increased rent and property values.

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Tenant Assistance

Rent And Sales Are Connected:

• Gross sales = 3 times the cost of construction/build out.

• Gross annual sales= 7-10 times annual rent.

500,000 gross sales = $160,000 improvements

500,000 net sales = $3-4,000/month rent

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Tenant Assistance

Typical Program Activities:• Provide market and business data.

• Coordinate events and promotions that increase foot traffic, sales and change image.

• Provide design assistance to improve increase customer sales and create places for people to gather.

• Provide financial incentives to support new or expanding businesses.

• Provide networking, training and education assistance that strengthens business skills.

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Promotions & Events Help Property Owners Retain Tenants...

• Are you using events to convert vendors to store fronts?

• Do your event strategies push consumers into local businesses?

• How do events highlight property opportunities?

Tenant Assistance

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Tenant Assistance

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Design Improvements

Tenant Assistance

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Small Business Financing:

• Façade grant

• Fee waiver

• Interior grants or loans

• Rent assistance

• Crowd funding SEC

• Legacy business grant

• Energy grant

• SBA or USDA loans

Education and Training:• One-stop permit• Business portal• Business centers• Business classes• New business competition• Mentors & networking• Webinars• Entrepreneurial training

Tenant Assistance

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Tenant Assistance

Improve Skills Through Education, Networking And Mentorship:

• Meet on a regular basis.

• Recognition and awards.

• Include on committees and Board.

• Provide mentor opportunities.

• Provide education and training opportunities.

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Greenberg Development Services

Entrepreneur Assistance: • Educational Support

- SBDC - Higher Ed- Customized “Boot camp”

• Financial Support− LLC or Angel investor− Crowd funding

• Rental Support– Pop-up– Incubator– Accelerator– Maker Space

Property owners are also entrepreneurs and may require specific assistance.

Tenant Assistance

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COMMON ISSUES&

SOLUTIONS

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Common Problems

1. Space is too large to rent. 2. Floor plan is obsolete.3. Owner doesn’t have $ or skills to renovate.4. Owner has retired from business and wants

to lease space.5. Owner lives out of town and doesn’t

maintain property.6. Individual acquired building through

inheritance.7. Building is danger of collapse due to neglect.8. Owner is leasing to “problem” tenant.

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1. Vacant Building is to Large to Lease…

• Work with owner to develop space as co-share project.

• Work with owner to identify opportunity for larger tenant.

• Work with owner to subdivide space for smaller storefront tenants.

Common Problems

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Common Problems

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Subdivide into smaller spaces

$3,000/month rent for 1 office

$200/month for small retail space$2,000/month rent

1 large tenant

Greenberg Development Services

Common Problems

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Subdivide into smaller spaces

Common Problems

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2. Office Space is Dated …• Provide design assistance • Provide financial incentives• Condominium versus rental

space

Common Problems

Property Owner Does Not Have Experience Or $$ To Renovate Building.

• Explore selling building.

• Find Partner to purchase and renovate

• Develop a preferred contractor list.

• Establish mentorship program to share lessons learned from renovation.

• Review available financing programs.

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Common Problems

3. Renovation costs exceed cash flow:

• Break project into smaller parts. • Provide grant or loan.• Work with tenants to do upfit in exchange

for rent concession. • Work with owner to find stronger

tenants.• Work with owner to find partner or sell

building to new owner. • Use tax credits to offset gap.

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Common Problems

4. Business owner Plans to Own Building After Store Closing …

• Provide owner with assistance in developing a plan to lease and manage rental space.

• Discuss opportunities to increase cash flow through redevelopment.

• Work with owner to find short term tenants.

• Provide sign or façade grant.

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5. Absentee Owner Is Not Keeping Up The Building….

• Find local connection to owner.• Ask to meet with owner when in town

visiting family. • Make sure owner is on newsletter and

receives updates on downtown.• Have influencer arrange meeting to

discuss plans.• If out of town, arrange for someone to

visit. • Offer to find manager or arrange sale.

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Common Problems

6. Building was Family Inheritance...

• Discuss plans to maintain property.

• Identify simple projects that could improve appearance.

• Provide information on property management.

• Discuss other ways to honor family legacy that could come through sale.

• Discuss partnership opportunities.

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Common Problems

7. Building in Danger of Demolition by Neglect. …..

• Discuss cost to demolish versus improvements.

• Discuss available incentives.

• Talk to owner about donation to avoid eminent domain.

• Use regulations to encourage decision.

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Common Problems

8. Owner Is Leasing To Tenant That Is Causing Problems….

• Talk with owner about issues.

• Offer incentives to encourage new tenant choice.

• Offer to help find better tenant.

• Work with tenant to reduce friction and improve relationship with neighbors.

• Revise regulations to prevent future issues from occurring.

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Common Problems

Property Owner Support

Key Takeaways From Session:

• Supportive property owners are essential to A successful revitalization effort.

• We can build stronger partnerships by understanding who owns downtown and by providing services that benefit them.

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Contact Information

Hilary Greenberg

Greenberg Development Services

Hilarygreenberg28211@gmail.com

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