Developing a project can often feel like an uphill battle. We feel you and we are here to help. Welcome to our Community Development Playbook. This series walks you through the best practices we’ve seen in developing and supporting community-oriented projects. Outlined below, we have specific advice to help you generate project proposals that are ready for funding.
How to Start Projects in your Community
Four things must come together for a project to become a reality: a project idea that meets community needs and fits the market context, land where the project will exist, a project sponsor who will develop the project, and capital to fund the project. This article dives deep into how cities and economic development organizations can bring these four things together to make a development project a reality.
In terms of order, it does not matter which comes first: idea or land. We can start with an idea and look for land that suits your needs. Or the other way around, a piece of land may inspire your next project idea. We can see where this becomes a proverbial question of whether the “chicken” or “the egg” comes first, but in the end, both must come together for a project to be successful.
Understand Market and Community Needs
Start by exploring existing community development plans to generate ideas for projects. Development plans, neighborhood plans, market studies, and prospectuses are great materials to explore that may already exist. When looking through these documents, we want to generate a shortlist of at least a couple of ideas for projects that meet community needs and make sense in the market context.
Let’s look at a specific example to see how market and community development needs are coming together in Alabama. Our partners at Opportunity Alabama are hosting a Rural Recovery Accelerator to support the development of projects in rural counties. They have hosted a series of conversations with community leaders and organizations to understand the needs and the market of each rural county. Based on these conversations they have found that grocery stores and workforce housing are two common needs.
Their next step was to compare those needs to the market. They have discovered that almost every county has a need for a grocery store, but not every county has a market to support one. In those cases, there are not enough people living within a reasonable distance to that county to make the finances of a grocery store work.
Workforce housing looked more promising. Some of their counties are regional manufacturing hubs. They have found that these counties have a lot of people who work in the county, but do not live in the county due to a lack of housing. In this case, the market supports the project idea because there is a reliable source of tenants for the project.
Looking for Land
In order for any project idea to become a reality, we need to have a place to build it. The adage for place- “location, location, location”- matters in community development projects as well. Start by looking for land in a land bank, land trust or other inventory kept by a local development agency. For example, Louisiana Economic Development has an Opportunity Zone (OZ) project portal
that features profiles for land for sale in an OZ that do not have development plans attached to them yet.
When considering a parcel of land, there are three crucial questions we must gather answers to. The first is determining if the land is available and who owns it. We need to see a realistic path forward to acquiring the land. The second is confirming that the land fits in the market context determined from the previous section. As an example, if we are building workforce housing, how far is the land from the targeted employers. Finally, it is important to ensure the planned uses for the land align with local zoning use and other regulations.
Looking for Developers
Once we have a specific idea attached to a redevelopment site, we need to find someone to execute the idea. To find developers, one option is to issue a request for proposals (RFP) or qualifications (RFQ). Here is an RFQ example from the Michigan Economic Development Corporation
. The RFQ offers important information about the community context, site vision, preliminary cost estimates, and other information such as a video of the project.
A second option is to make a call for developers through a press conference. In Riverhead, New York, city leadership announced their plans
for a mixed-use development site near a major transit station. The city was seeking developers to support a multi-million dollar revitalization project.
A third option is to research previous development projects that have been completed, and reach out to their developers. We know that looking for developers can vary by location, and can be more difficult for rural communities. It is important to not let the availability deter the search for developers. In these cases, we need to expand our search by trying to locate any rural completed project in our state and reaching out to those developers.
If we still cannot find an experienced developer who is willing to take on the project, then supporting home-grown developers is an avenue. This method may require a lot of support and will involve a lot of learning on the developer’s side. We can decrease the training we have to give by having them participate in a developer academy such as the National Development Council’s
or Detroit’s Developer Academy
Stacking Capital for Development
Let's say we have found the perfect redevelopment project idea, found the land and even secured a great developer. The last step is to figure out our capital stack - or the mix of ways we will fund our project. Determining our capital stack involves determining the right combination of various capital sources such as grants, debt, or equity. Having the right make-up of capital will be important for determining the return on investment (ROI).
This step is so critical that we developed a free tool called The Ground Up
to assist. This tool is designed to walk you through the steps of figuring out your capital stack for an Opportunity Zone development project and explain key terminology along the way.
After following the steps above, you are likely to emerge with a portfolio of projects. To keep track of all those projects, use The Opportunity Exchange’s Connect tool. There are over 500 projects around the United States being managed on The Opportunity Exchange and 13 communities are actively using this tool to manage their pipeline of projects.
We look forward to watching your project ideas become a reality. Ready, set, develop!