This blog was written by Ed Friedrichs and originally appeared on edfriedrichs.com. Ed Friedrichs has envisioned what it takes to create successful buildings. Now he envisions what it takes to create successful teams and places, sharing his vision with business leaders around the world.
While having a glass of wine with colleagues from New York, we reflected on the scale and complexity of the projects each of us has underway today. These are exciting times in the design professions, as many of the cities in which we are working were built out a long time ago, leading to redevelopment, often in severely blighted areas.
Most redevelopment agencies and districts around the country have exceeded their bonding capacity, making it impossible to bond against future tax revenues to fund needed infrastructure necessary to move beyond blight. We certainly have that problem in Reno.
The site we’re developing, West Second District (west2nddistrict.com), is seven large city blocks comprising 17 acres. Some parcels are vacant, and several properties hold run-down weekly motels filled with compromised individuals, including a criminal element. There’s an old Greyhound bus station, the toilet rooms of which have become a haven for the homeless, and a former printing plant, currently owned and used by the University of Nevada for continuing education programs.
First, we have to secure enough investment capital to fund the purchase of the land and for working capital as we begin construction. That is being accomplished. Properties are being acquired, and we expect to start construction on our first building within weeks.
As an architect, funding was always the developer’s problem. The only way it affected me and my firm was that we frequently found ourselves being used for free financing for the developer through our unpaid invoices for service. Don and Susan Clark of DJ Clark Group, the developer of the District, invited me to “play” with them about a year and a half ago. They have been incredibly responsible as developer/architects, seeking local investors to help us with cash flow to pay our bills until the major funding was in place.
We received none of what is traditionally the source of funding for infrastructure from the City of Reno to do things such as utility lines, sidewalks, curbs and gutters, traffic signals and the like. That’s because the City holds $24.1 million in senior debt on this district that must be paid off from the tax increment (the differential between taxes currently being paid and what the project will generate) before we can be reimbursed for our infrastructure investment.
Since we knew that this was going to take a considerable amount of time, and as I came to know the Clarks’ ambitions for the project – to truly become an exemplar for how development
should could be done, to become a model standard that the City would use to inform other developers going forward how things are to be done in Reno, and to be environmentally responsible, and to reduce ing the cost of ownership and occupancy for the people and companies for whom we’re building West 2nd District – It became apparent that we needed a world-class team to guide design, particularly in our infrastructure, a process that normally begins after the developer already has City approval and funding in place. Rarely is this process very creative.
I’m fortunate to have worked with some of the most innovative engineers and consultants in the world, so I came forth with my Rolodex to help. Before long, we had assembled a team that could successfully execute a project of this scale and complexity anywhere in the world. But we did it in a rather unique fashion. Those that were located in Reno but had offices elsewhere in the country or the world were required to bring their best and brightest, no matter where they resided, to work with us. If they had no office in Reno, they were asked to establish one, which would be located in our building, allowing all of us to work as a collaborative team under one roof. It also offered an opportunity for local engineers to learn from professionals who were leaders in their field, thus spreading the innovative approaches to infrastructure to local professionals.
This approach resulted in a level of complexity and challenge that has generated some fascinating creativity as we designed the approach to our infrastructure. Since we’re paying for it until the City is able to reimburse us many years from now, we’re determined to do it well. Here are some examples:
Many other innovative programs are emerging, simply because the design and engineering teams have had the opportunity to work together as a collaborative body as we’ve planned and financed the project. We’ve been able to explore economic tradeoffs during this period, resulting in much stronger financial performance for the project. The response from our investors to our thoroughness, creativity and working process has been extremely positive. I’ve been in this business for a long, long time and I’ve never seen such a remarkable response. Talking about this with my colleagues from New York confirms they’re having similar experiences.
My advice is to embrace projects of grand scale and enormous complexity. Do this with a collaborative team of complementary professionals – architects, engineers and contractors. Get them on board before all is set in stone with the City so you can draw City staff into the creative process. See if it doesn’t bring out your own creativity and that of each of the team members.
Review and approval processes vary greatly around our country, and two extremes are California and Nevada. I’m from California and practiced there throughout my career. For the past two years, I have been exposed to processes in Nevada.
My experience in California was much different than what I’m experiencing now. Beginning with the discretionary review cycles with Planning Commissions, Architectural Review Boards and City Councils, not to mention outside agencies such as the Coastal Commission, review and approval often stretched into a multi-year process. Some requirements were so outlandish that we would often abandon a creative and excellent approach for a more mundane solution.
I remember, in particular, a second home which I was designing for myself. At the end of an informal review session with a planner in Santa Cruz County, which was notorious for its excruciating approach, the planner complimented me on my most creative solution to site drainage, and then asked me how old I was. At the time, I was 63. She then asked the following, “Did you plan on occupying this house within your lifetime?” Enough said. At least she gave me fair warning, saving me a long, drawn-out variance process, which she assured me I would lose in the end. On to plan “B.”
The lesson I learned: Do not accept an adversarial relationship between your design and development team and governing agencies. Start from the beginning by explaining your goals for the project, making certain they align with the city’s, and then, demonstrate a collaborative attitude at all times. Always listen carefully to city agencies’ concerns, and always work to solve them together. Remember, they have the authority to say “no,” and you’ll never win trying to force officials to change. Over time, I’ve managed to develop strong relationships with most of the elected officials and staff in the cities in which I’ve worked.
Reno, on the opposite end of this spectrum, requires little or no discretionary review and approval on our West 2nd District project. But that doesn’t mean there aren’t hurdles. We’re in a redevelopment district which, due to some historic decisions and a horrid recession in 2008 carries a senior debt against our site of $24.1 million. This and a few other municipal challenges leave the city with zero bonding capacity. Reno is unable to bond against future tax revenues to pay for the normal public improvements such as streets, sidewalks, curb and gutters, streetlights and utilities which are normally a city’s responsibility.
In this situation, we determined the first and most important issue was to negotiate a Disposition Development Agreement that allows these improvements to be self-funded (by us) and to be reimbursed from the future, presumably higher, tax revenues. We would be reimbursed only after the city’s senior debt has been retired. We are working with the City as partners, not adversaries. This allows the city to facilitate dramatic redevelopment improvements to a blighted area of its downtown while taking on no risk. Obviously, we must be successful in this project in order to recover our investment. We assume the risk, as do our investors in land purchase and construction, so we do not consider failure to complete a successful project to be an option.
This collaborative approach extends to virtually every other major piece of the project. With our waste water treatment system, which dramatically reduces our potable water consumption, we’re dealing with two entities: the City, which has built and manages the sewer system and the Truckee Meadows Water Authority. Current law precludes building a private utility within a public utility district. Working collaboratively, rather than as adversaries, all parties agree this is the right thing to do, setting a precedent for the future. Together, we’re committed to making compromises in a thoughtful fashion, so this approach can be replicated in future developments.
Another issue, which we are not by law required to do, is the relocation of people living in the weekly motels on various parcels we are buying. We know these low-income residents of the district will be challenged to find accommodation elsewhere in the area. We believe that, as responsible developers, we have an obligation to facilitate dignified and effective relocation. There are numerous housing and social service agencies in both the city and county, but they didn’t have a history of working with a developer on this common problem. So, we convened a strategic session to figure out how we could all work together. With the various agencies, which were pleased to participate, we have been able to share ideas on a collaborative basis, setting a new pattern of working together that did not exist before.
As a community, we are actively and collaboratively solving problems together. This is not the “normal” function of design and development professionals. I’ve found it sad over the years as I’ve watched developers, and sometimes architects, being treated by government agencies as adversaries, whose every move is doubted and as if we have other, less than noble motives for what we’re proposing.
and encouraged the governmental agencies to do the same. As the shields began to come down, we have been able to speak and work as partners on a common mission. It is more fun this way. All it takes is great resilience and perseverance. Through the same process of figuring out how we can all work toward a common end, we can actually achieve something great . . . and have fun doing it.
Ed Friedrichs is a California native who earned his bachelor’s degree at Stanford University and his master’s degree in architecture from the University of Pennsylvania, Ed joined Gensler, Architecture Design and Planning Worldwide, in San Francisco in 1969.
He was named president and CEO of Gensler in 1995, leading its development as one of the most influential and successful design firms in the world.
In 2003, he launched Friedrichs Group, LLC to share his wisdom about development of high-performance organizations and places. He is in high demand as a speaker, and his book, “Long-Cycle Strategies for a Short-Cycle World,” describes his strategies for the creative enterprise.
He continues to write a monthly blog, www.edfriedrichs.com, to share his continual learnings about leadership and management.
Ed has lived in Reno since 2014, where he is active as a mentor to startup companies through Summit VMS and as a member of the Reno Streetcar Coalition.
Ed serves on the board of Secundo Vita, LLC, a development company formed to redevelop the West 2nd District,www.west2nddistrict.com, a large section of the west side of downtown Reno. He also serves on the Board of Miyamoto International, a multi-office seismic and structural engineering firm.