Advising the World

Counselors bring feasible, achievable plans to governments, nonprofits.

February 1, 2006

Martin Bednareck was worried. As a member of Philadelphia’s school reform commission, a five-person panel charged with revamping the city’s perennially troubled public school system, he knew the commission needed help in figuring out how to spend $1.5 billion in capital improvement funds.

“You don’t get that kind of money to spend every day,” he says. “Rather than shooting from the hip and saying we need a new school here or there, I felt we needed somebody to come in, take a general overview of the whole city and give us some recommendations.”

Luckily, Bednareck, a banker who is also a real estate appraiser, knew just where to go for expert advice: The Counselors of Real Estate Consulting Corps.

The CRE Consulting Corps is a public service program of The Counselors of Real Estate, an affiliate of the NATIONAL ASSOCIATION OF REALTORS®. Corps volunteers provide real estate analysis and action plans for public and nonprofit entities. The range of expertise within the CRE membership enables Consulting Corps teams to handle a wide range of complicated real estate problems, including feasibility of development; adaptive reuse and urban redevelopment; strategic asset management; financing and capital formation; and highest and best use strategy. A Consulting Corps Steering Committee determines the skills needed to conduct each assignment. Typically, a team of four to six volunteers goes on-site for a week or more, conducts interviews and site inspections, and then issues one or more reports that summarize their recommendations.

CRE team members volunteer their professional time and are reimbursed for travel, lodging, and meals only. A modest fee for each assignment, negotiated on an individual basis, is paid to the CRE organization.

“It’s rewarding to give something back and to feel that you’re making a difference,” says Howard Gelbtuch, CRE, who chairs the steering committee. “The Counselors invariably have a wonderful experience. You always wind up learning something because you’re on a team with some of the smartest people in the industry.”

Whether they’re assessing a large municipal school system or an economic development plan for a county government, Corps volunteers say the work is always compelling and rewarding.

School days

“This was not a typical Consulting Corps assignment,” says Charles Shapiro, cre, team leader of the Consulting Corps task force assisting the city of Philadelphia in its efforts to revamp its public school system.

Most Consulting Corps projects are conducted in less than 10 days. The Philadelphia project involved more than 2,000 hours of work by the eight-member CRE team. “We realized that just coming in for a week or two and giving advice wouldn’t be enough to address the real problems facing the district,” says Shapiro, a practitioner in Armonk, N.Y.

The district’s problems are formidable. Several years ago, the state of Pennsylvania dissolved Philadelphia’s board of education and replaced it with a five-member school reform commission charged with upgrading the city’s perennially troubled schools. “The commissioners needed feedback and guidance about how to spend about $1.7 billion in capital improvement funds,” said Shapiro.

Enter the CRE Consulting Corps. “The commission had done a lot of work on condition assessments, so they knew which schools were in need of repair but they didn’t have specific guidelines on when to improve a school or when to replace a school due to changes in demographics,” says Shapiro.

Over a nine-month period, the team interviewed more than 50 people, sifted through reams of demographic data for various neighborhoods, and composed three large reports summarizing the findings.

“Our first report had to do primarily with analyzing the supply and demand for public schools in every neighborhood of Philadelphia,” says Shapiro. “The second report discussed alternative approaches to satisfying demand in terms of new and existing schools and also the size of schools. The final report presents specific recommendations for the entire district.”

The final report had not been made public at press time, but Shapiro says it involves “closing some schools and building others.” It also makes projections for the next 10 to 15 years. “It gives us a bible we can refer to,” says Bednarek. “So if people ask, ‘Why are you putting a school here or there?’—if they start to criticize us—we can say we didn’t just pull this out of a hat. We have a study done by top professionals.”

Across the sea

Among the more intriguing assignments of the Consulting Corps are the international projects. In recent years, these have included everything from conducting a feasibility study for a new waterfront project in Gdansk, Poland, to overseeing the privatization of a government-owned real estate corporation in Sofia, Bulgaria.

“The international projects are some of the most rewarding work we do,” says Gelbtuch, a principal with Greenwich Realty Advisors in New York. “The analytic techniques we bring to an assignment are pretty advanced and are usually real eye-openers to people in emerging or formerly communist countries. Things that we take for granted, like cooperation between the public and private sector, are new ideas in those countries.”

The Corps’ most recent international effort, which began last summer, is helping the Polish National Railway System evaluate its real estate holdings.

“The Railway is the largest owner of real estate assets in Poland,” says Thomas Justin, CRE, leader of the six-member Consulting Corps team and a principal with The Weitzman Group Inc. in New York. “They own office buildings, residential buildings, and a lot of other properties. But they’re hard up for money for improvements and infrastructure. We’re trying to help them maximize the value of their holdings.”

Recently, Justin’s team spent six days in Poland touring properties and consulting with government and civic leaders. The team is currently working on its final report.

“It’s definitely challenging,” he says. “Everything has to be done through translators. And there are a lot of legal issues involving clear title and restitution of properties.”

The Polish project, Justin adds, is the first of what the Corps hopes will be a number of similar assignments in Eastern Europe.

“If this planning initiative is successful,” he says, “we hope to take it on the road and do the same thing in countries such as Romania and Hungary.”

Endowing a university

Few universities have as rich a history as Tougaloo College on the outskirts of Jackson, Miss. In 1869 the American Missionary Association of New York, an abolitionist group founded in the wake of the Amistad affair, created Tougaloo and five other colleges in cities throughout the Deep South for the purpose of educating former slaves.

During the civil rights struggles of the 1950s and ’60s, Tougaloo’s faculty and students played leading roles in the struggle for racial equality both nationally and within the state of Mississippi. In recent years, however, Tougaloo, like many private colleges, has had to scramble for funding. The college sits on 500 acres of land, 400 acres of which are mainly undeveloped.

“We’re not a wealthy institution,” says Kelle Menogan Sr., vice president of facilities and real property management. “We wanted to find out how we could develop the land and create a quasi endowment for the college.”

In 2004 a five-member Consulting Corps team was formed to assist Tougaloo in creating an action plan to monetize its assets. “We explored ways for the college to benefit from some of these nonproducing assets without having to sell all or most of them,” says Paul T. Chiles, cre, president of Chiles & Co. Inc. of Seattle.

One of the team’s main ideas concerned property along a county road that’s being straightened and otherwise improved. “We recommended the college partner with a developer to do a retail project that would provide services for the students and the surrounding neighborhood,” says Chiles.

Another recommendation focused on a parcel of land convenient to a Nissan automobile plant. “What we found,” says Chiles, “is a well-defined opportunity to create some affordable neighborhoods for the workers.”

For the retail development, the team recommended leasing the property to a developer or forming a joint venture. For the housing component, the team suggested an outright sale.

“The team validated some of the ideas we already had,” says Menogan, “and also cooled the heels of people on our board who were saying ‘Just sell it.’ ”

River running through it

“It’s a great piece of real estate,” says Michael Cannon, CRE, speaking about the City of Phoenix’s Beyond the Banks project. “It just needs to be fixed.”

In the early decades of the 20th Century, the Salt River flowed through the center of Phoenix. However, upriver dams and water diversion projects had, over the years, left the bed a dry ditch for much of the year.

Meanwhile, the land on either side of the river, about 1,000 acres in all, “became this forgotten area,” says Joy Mee, former assistant planning director for the city of Phoenix. “The parcels closest to the river were used for mining sand and gravel and later for landfills. The rest was mainly brownfields and older neighborhoods.”

In the mid-1990s, however, the city began implementing Beyond the Banks, a $100 million restoration project that included routing water back to the river and creating a series of landscaped terraces.

The city also decided to get serious about redeveloping the surrounding neighborhood. “Our task was to figure out how to turn the land on either side into an amenity that would support what was happening with the river,” says Mee.

Recognizing that those goals would best be achieved through private development, the city engaged the Consulting Corps to provide recommendations. Cannon, managing director of Integra Realty Resources in Miami, was part of a six-member Consulting Corps team that analyzed the project in 2002. “We wanted them to help us understand the needs of the private sector,” says Mee.

“It was kind of like real estate boot camp,” recalls Cannon, whose team spent a week analyzing the project. “We toured the property, interviewed more than 80 people from the public and private sector, reviewed all the legal aspects, and came up with a vision statement for the site.”

Among the conclusions were phasing out the remaining mining operations and emphasizing the area’s potential for residential and recreational uses.

Since then, the city has announced plans for a scenic drive along the river, as well as for a new nature center to be operated by the Audobon Society. Mee says the city was very happy with the Corps’ work. “We got our money’s worth,” she says.

Shoring up the neighborhood

In the late 1990s Abilene Christian University in Abilene, Tex., found itself in a situation faced by many urban universities.

“We had a deteriorating neighborhood on two sides of our campus and open area on the other two sides that was starting to be developed for commercial purposes,” says Jack Rich, executive vice president of the university. “We needed a plan to deal with these issues.”

In 2004 the university asked the Consulting Corps for assistance in drawing up a plan. “It was pretty much an around-the-clock thing,” says Theddi Wright Chappell, CRE, of Pacific Security Capital in Beaverton, Ore. Chappell led the four-person team that took on the week-long project. “We met with a number of people from the university and also with community leaders and local government officials.”

The panel suggested that the college become more aggressive about acquiring properties in the area and possibly create an enclave for graduate student housing. Also, because there have been misunderstandings between students and neighborhood landlords, the panel recommended that Abilene create a seminar to explain the intricacies of the local housing market to students.

With regard to the open land question, the panel noted that a new Wal-Mart planned for an adjacent parcel could increase the value of the college’s holdings. “We recommended that they sell some of their property, but since the college was not in any immediate financial pinch we said they should wait and time the sale to other developments in order to get the best price,” says Chappell.

“I was very impressed,” Rich says. “The Corps’ team members were an objective panel, and that was very appealing. They gave us some new ideas and confirmed ideas we were already considering.”

Commitment to a mission

Consulting Corps engagements have been conducted for small towns and large cities, community service organizations, county and federal agencies, and educational institutions. Although the Corps volunteers bring a variety of skills to their work, Gelbtuch says, they share a passion for helping organizations use their real estate assets to advance and support their goals and mission.

Robert Sharoff is an architectural writer for The New York Times, Washington Post, Chicago Tribune, and Chicago Magazine. With photographer William Zbaren, he has produced books highlighting the architecture of Detroit and St. Louis. He is a former senior editor with REALTOR® Magazine.

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