"WHAT WORKS”: SOLUTIONS FOR CITIES Leveraging Your City’s Anchors

Mary Kay Leonard, CEO and PresidentMary Kay Leonard, CEO and PresidentNicki MacManus, Strategy Advisory Practice, ICICNicki MacManus, Strategy Advisory Practice, ICICAndrew Frank, Johns Hopkins University Andrew Frank, Johns Hopkins University

March 1, 2012March 1, 2012

Follow the discussion liveOn Twitter @icicorg#WhatWorks

Copyright © 2011 ICIC 2

The nation is experiencing the effects of economic decline and cities in

The Opportunity31% of U.S.minority poverty

19% of U.S.poverty

8% of U.S.population

0.1% of U.S.land area

CONCENTRATED POVERTY mandates a comprehensive approach

Copyright © 2011 ICIC 3

The nation is experiencing the effects of economic decline and cities in

The OpportunityREST OF U.S.+5.9M JobsSince 1998

INNER CITIES-300,000 JobsSince 1998

Percentage of U.S. Employment

Universities and Hospitals are the number one employers in two thirds of inner cities nationwide

Copyright © 2011 ICIC 5

The nation is experiencing the effects of economic decline and cities in

The Opportunity

HOSPITALSUNIVERSITIES HOSPITALS

ANCHOR INSTITUTIONS are a MajorEconomic Force in Urban Economies

ARTS AND CULTURAL INSTITUTIONS

Copyright © 2011 ICIC 6

The nation is experiencing the effects of economic decline and cities in

The OpportunityANCHOR INSTITUTIONS, THE COMMUNITY,AND SHARED VALUE

Michael E. Porter, Bishop William Lawrence University Professor at Harvard Business School

Copyright © 2011 ICIC 7

The nation is experiencing the effects of economic decline and cities in

The OpportunityFROMCOMMUNITY ENGAGEMENT

TOCREATING SHARED VALUE

Motivated by “Moral obligation” to help community

Service learning and community support at core

Focus on community benefits and economic impact reporting

Opportunity to drive long-term competitiveness

Long-term investments that are integral to core strategy

Measure direct impact of activities on anchor and community

Copyright © 2011 ICIC 8

ANCHOR INSTITUTIONS AND THE COMMUNITY: Strategic Framework

Purchaser

Real Estate Developer

Employer

Workforce Developer

Core Service Provider

Community Developer

Cluster Anchor

Offer employmentopportunities to local

residents

Build local community

capacity

Address local workforce needs

Direct institutional purchasing toward local businesses

Stimulate growth of related businesses

and institutions

Tailor core products/ services to serve the

community

Use real estate development to anchor local economic growth

ICIC’S MISSION IS TO DRIVE ECONOMIC PROSPERITY IN AMERICA’S INNER CITIES THROUGH PRIVATE SECTOR INVESTMENT TO CREATE JOBS, INCOME, AND WEALTH FOR LOCAL RESIDENTS. WWW.ICIC.ORG

Follow the discussion liveOn Twitter @icicorg#WhatWorks

East Baltimore Development, Inc.Presentation by Andrew Frank Special Advisor to the President on Economic

Development The Johns Hopkins University; former Deputy Mayor of Baltimore

Table of Contents

• Project Overview• Baseline Conditions• Governance Structure• Implementation• Sources and Uses • Accomplishments and Next Steps• New Framework Plan

Vicinity Map

Project Overview

• Started in 2001• Redevelopment of 88 acres in East Baltimore• Acquisition of 2,000 properties• Relocation of 750 households• Master Plan – 1.1 million sq. ft. of commercial

lab space, 2,000 housing units, 150,000 sq. ft. of retail space (grocery school), open space, new public school

What Made This a Priority?

• New Leadership• Renewed Connection to the Business

Community • New Strategy: Build on Strength • Parallel Efforts: Biotech Park • Neighborhood Despair

Baseline Measures

Middle East Baltimore City Unemployment Rate 23.69 10.86Poverty Rate 43% 19%Percent of Households Receiving Public Assistance

29% 16%

Average Household Income

$28,464 $42,090

Vacancy Rate 70% 14%

Middle East Baltimore City % of Population Without H.S./GED Degree

40% 32.8%

MSPAP: Gr. 3 reading (% scoring satisfactory)

23.7% 14.1%

Teen Birth Rate (per 1,000 teens) 102 83

Infant Mortality Rate 17.1 11.7

Baseline Measures

Middle East Baltimore City Juvenile Arrest Record (per 1,000 age 10-17) 23.19 10.66

Violent Crime (per 1,000 residents) 51.8 26.19

Homicide Incidence Rate (2005-2009) 61 20

Lead Paint Violation Rate 25 11.8

Child Abuse and Neglect (per 1,000 children)

14.3% 4.5%

Baseline Measures

Key Initial Partners

• Baltimore City• East Baltimore Development, Inc. • Casey Foundation• The Johns Hopkins Institutions

Governance Structure

• East Baltimore Development, Inc.• Mayor and City Council• Land Development and Lease Agreement • Economic Inclusion Agreement• Master Developer: Forest City – New East Baltimore

Partnership• Master Development Agreement

Casey Foundation Inspired Development Principles

• Involves residents in consequential way• Offer intensive family advocacy• More equitable relocation compensation • Right of Return • Training and job readiness • Maximize local, minority and woman owned business

participation• Strict safety protocols for demolition

Public Private PartnershipUrban Renewal - Condemnation

• Required legislation to amend five urban renewal plans

• 2,000 residential and commercial properties• Approved before landmark “Kelo” Supreme Court

decision • City Council rejected previous relocation benefits• Supplemental relocation benefits• Gentrification fears

Public Private PartnershipEconomic Inclusion

• Central to the fundamental purpose of EBDI – physical and human capital

• M/WBE Participation • Right-to-Return• 37% of EBDI’s $181 million in contracts have gone to

MBEs• Minorities and women have worked 57.5% of the

man-hours generated by the project as of 12/31/10. • Third party monitor

• Acquisition - fair market value, as determined by two independent appraisers

• Relocation benefit package includes supplement to the fair-market price for current home to reestablish family in comparable home elsewhere.

• Supplemental benefit package includes:– closing costs and moving expenses– home appraisal and home inspection– $1,000 resettlement benefit– benefits provided by EBDI for real estate tax differentials over a 3-year

period

•  

Public Private PartnershipRelocation Benefits

• Average home value increased from $30,000 to $156,000 in first phase

• 57 renters used relocation benefits to purchase homes

• Three post relocation surveys – larger majority report being better off

• Family Advocacy and Supportive Services

Public Private PartnershipSupplemental Relocation Benefits

• Family Advocate assigned to every household• Connects families to needed services• Job training, substance abuse, mental health

counseling, childcare, credit counseling, health care

• Of 206 homeowners relocated, only two foreclosures

Public Private PartnershipFamily Advocacy and Supportive Services

• Resulting from the Workforce Pipeline (1/2004 12/2012): 554

• Construction jobs: 813• Permanent jobs: 759• Total Job Placements: 2072• Total Job Placements East Baltimore: 755

Public Private PartnershipWorkforce Pipeline and Job Creation

Sources and Uses

Public Private PartnershipSection 108 Funds

• Federal program to borrow against future Community Development Block Grant (CDBG) allocation

• Approved for an earlier failed program.• Approved prior to “Kelo” decision

Public Private PartnershipTax Increment Financing

• What is Tax Increment Financing (TIF)?• $85 million EBDI TIF• TIF Repayment • Casey Foundation• Vertical Construction

– Government Buildings– Non-Profit Development– Residential Development

Public Private PartnershipFoundation Partners

• Johns Hopkins Institutions• Casey Foundation• Weinberg Foundation• Rouse Foundation• Goldseker Foundation• Abell Foundation• Atlantic Philanthropies

• 1,800 of 2,000 properties acquired

• 720 of 725 households relocated (to better housing in safer neighborhoods)

• 96% of residents of remained successfully housed; only foreclosures of 228 homeowners.

• Average Phase II homeowner relocation benefit: $175,000

• 58 renters became homeowners

• $67.2 million (37% of all contracts) to M/WBE

• 2,700 residents placed into jobs

Selected Accomplishments

Progress Ahead

Rangos Building Retail

• Teavolve• Milk and Honey• Atwaters• Cuban Revolution• 7-11

House for a Houseand Home Repair Program

• 20 “House for House”

• 20 “Home Repair Program”

House for a Houseand Home Repair Program

Graduate Student Housing

• 321 units• 573 beds• $60 million• Open August

2012

1,500 space Parking Garage

Maryland Public Health Lab

• 130,000 sq. ft.• $160 million• 350 jobs• 2011 second quarter

ground breaking

2011 SUMMARY RECOMMENDATIONS

FOREST CITY NEW EAST BALTIMORE PARTNERSHIP

21 August 2011

SUMMARY DISCUSSION DRAFT 21 AUGUST 2011

RetailR&D Proposed

HotelSchoolParking GarageNew ResidentialRehab Residential

R&D Built

Completed Residential

2006 PLAN 2011 FC-NEBPRECOMMENDATIONS

Demand:• Market research identified

wellness most desirable theme• Marketability of Beacon Park

as a cutting-edge, model wellness community

Need:• Urban/Suburban health

disparity• Preventative medicine can

lower healthcare costs

Opportunity:• Proximity to JHMI is a unique

opportunity to partner in pioneering wellness research

• Current political attention means opportunity for logistical and financial support

• Successes could be replicated throughout Baltimore, and even nationally

The Arguments for Wellness

DRAFT FOR DISCUSSION 7-28-2011

BIG MOVESGateway

43

Park Looking South to Gateway Block 44

Ashland Street at Wolfe Street Looking West 45

46

BIG MOVESResidential

47

1st Phase Eager Street Buildings Expected to Stimulate Demand

TOTAL UNIT TYPE COUNT

Apt / Loft Rental: 236

SF Townhouse For Sale: 28

Stacked Duplex For Sale: 34

SF Townhouse For Rent: 7

SF Rehab Townhouse For Sale: 40

Total Residential Units:       345 

UNIT TYPE BREAKDOWN1 Bedroom Apt / Loft Rental:

- Eager Street: 1552 Bedroom Apt / Loft Rental:

- Eager Street: 81

SF Townhouse For Sale: - Eager Street:

10- UME / Mews:

18Stacked Duplex For Sale:

- Eager Street: 34

SF Townhouse Rental: - UME / Mews:

7SF Rehab Townhouse For Sale:

- UME / Mews: 15

- McDonough: 25

EAGER STREET RESIDENTIAL PROGRAM

Apartments / Lofts (236)

Stacked Duplex (34)

SF Townhouse (28)

SF Townhouse Rental (7)

SF Townhouse Rehab (40)

BIG MOVESRetail

49

50

0 100’ 300’ 500’

RETAIL SPACE PLAN

Completed, Under Dev., and Next Phase Dev.

USE #SQUARE

FEET% OF

TOTALRestaurants 4 25,724 21%Cafes 5 11,863 10%Grocery 1 12,000 10%Retail Anchor 0 0 0%Apparel/Specialty 0 0 0%Service Retail 0 28,891 24%Fitness/Wellness 1 44,000 36%Total 16 122,478 100%

50SUMMARY DISCUSSION DRAFT 21 AUGUST

2011

Retail success depends on drawing shoppers from larger trade area beyond the 88 acres.

BIG MOVESOffice/Lab Buildings

51

PHASE 2 GARAGE

PHASE 3 GARAGE

PH 4

PH 3 PH 4

PH 4

PH 4

PH 4

PH 2

PH 3

PH 3

PH 4

PH 3

PH 1

PH 1

CompletedR&D:

Under DevelopmentR&D:Retail: 11,000 sf.Parking Garage (spaces):

Next Phase DevelopmentR&D:Commercial: - Hotel - Retail

Future PipelineR&D:Parking Garage (spaces):

TOTAL (GSF):

TOTAL (SPACES):

280,000 sf.

235,000 sf.

1,400

435,000 sf.

160,000 sf.80,000 sf.

815,000 sf.

1,000

1,955,000

2,400

COMMERCIAL

BIG MOVESSchool

53

Lessons Learned

• Community Support• Impact of Recession• Mixed-Income Community• Retail• Raised Expectations• JHU Leadership• JHU as an Anchor Elsewhere

ICIC’S MISSION IS TO DRIVE ECONOMIC PROSPERITY IN AMERICA’S INNER CITIES THROUGH PRIVATE SECTOR INVESTMENT TO CREATE JOBS, INCOME, AND WEALTH FOR LOCAL RESIDENTS. WWW.ICIC.ORG

Thank you for joining us today for the What Works webinar.

NEXT WEBINAR: April 18, 2012 from 2:00-3:00 p.m. “How to Cultivate Your City’s Food Cluster”

Share comments and suggestionson Twitter @icicorg using#WhatWorks