How it Counts
What Would Count as Success Where You Are?
- Spurring neighborhood or downtown redevelopment?
- Jump starting more affordable housing options?
- Redeveloping vacant or abandoned properties?
- Activating a large, hard to development property?
- Taking control of your local tax base production?
- Showing quick signs of success in a particular geography?
- Supporting neighborhood-based entrepreneurs and small businesses?
- Attracting new residents and businesses?
- Adapting existing spaces to contemporary business and residential needs?
- More inclusive, accessible, and local wealth building opportunities?
Small-scale development is a winning strategy for all of the above.
How it Counts?
Benefits of Small-Scale Development in a Submarket Neighborhood
HOW SMALL SCALE COUNTS
In South Bend, IN small-scale developer, Mike Keen, has started a bit of a movement in his Near Northwest Neighborhood. It hasn’t seen a new residential project built in over 40 years—until now. Mike started with rehabbing a small residential and commercial space that had sat vacant for several years. And then another. He convinced Habitat for Humanity to site their next project across the street. He then partnered with a nearby homebuilder and together raised three zero net energy homes. Others joined in nearby rehabs. More new construction projects are being planned by a network of small developers he’s cultivated. Within eight years they will have collectively added 50 residential units at various price points financed by a methodical approach to building appraisal “comps” in a devalued rust belt neighborhood that through the efforts of these small developers can now attract bank financing. And they provide a diversity of unit types, configurations, and rental and sales prices further diversifying the neighborhood resident base while enabling some longtime residents the ability to stay, too.
While Mike initially started with only his own capital, the local government has been since asked to provide (usually repair and replace) public infrastructure and offset some of the historic devaluation with low-interest financing assistance. A water main serving multiple blocks (in which many of these future projects will be located) also needs replacement. All in, the requested public investment is $1.8 million.
At the projected rate of small development, the local government will recover that investment in its public infrastructure in 10 years.
AN ALTERNATE SCENARIO
A more familiar approach to generating 50 residential units would be a single building. Often, such a project would have more layers of finance than stories in the building. Including tax credits and other public subsidies. About $8 million for such projects in this city.
The tax value of the property is generated quickly, upon project completion and occupancy. But the public payback of just the portion of general budget funds is over 20 years. The opportunity cost of that local government subsidy is 3-5 firefighter or public school teachers for those 20 years.
Of course, the local labor income, neighborhood wealth building, income, and other diversity of new residents are just a few of the unique benefits of the small scenario too.
These two scenarios are an illustration of how small development counts and there are permutations possible for nearly every neighborhood in America.