Goodwill of Greater Washington to build Arlington affordable housing as part of a first-of-its-kind redevelopment + the Flint YMCA

The Washington Business Journal reports that in Arlington County, Virginia, Goodwill is working with the Arlington Housing Corporation, a nonprofit, to redevelop a store site where they will have their store on the ground floor, with affordable housing above.  From the article:

Goodwill, a nonprofit that provides job training, education and other services to people with disabilities or who face other employment challenges, has owned the 1.4-acre parcel at 10 South Glebe Road since 1999. The property includes a 1950s-era, 26,000-square-foot building and parking lot, where the charity collects and resells donated items to help fund its operations. Goodwill now aims, in a joint venture with a Arlington-based nonprofit developer AHC Inc., to demolish and redevelop that site with a multistory housing complex, including something like 100 affordable units over a new store and donation center.

Nonprofits tend to not be particularly innovative so this is a big thing.  But I don't understand why nonprofits don't think of themselves as more intrepid, as "social enterprises" and become more oriented to this kind of activity.

Some nonprofits run social enterprises as a way to generate income for their program.  In fact, Goodwill, which works with the disabled, has done this for decades with their thrift stores.  In the early 2000s, some Goodwill stores repositioned around higher end thrift and fashion, by differentiating among the goods that were donated.

The Orange County Register reports ("Tiyya Foundation expands culinary program to help young immigrant mothers begin careers") on an immigrant support group, that runs a catering operation and a one star Michelin restaurant in Los Angeles to raise funds and employ people.

By contrast, a church in my greater neighborhood in Salt Lake is dissolving, and rather than sell their property so it can be redeveloped for affordable housing, they've sold it to a developer who will build market rate housing.

In "When BTMFBA isn't enough: keeping civic assets public through cy pres review" (2016), I've suggested that Attorney General offices need to pay more attention to nonprofits and how they deal with their real estate.  There is the tension between getting the most money and doing "good works."  But it seems to me that the Church missed the boat, compared to Goodwill in Arlington.

Basically, I guess I'm saying apply the "transformational projects action planning" lens to nonprofits when it comes to opportunities for better using real estate resources, and for seeding projects like social enterprises that can contribute to communities in extranormal ways.

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The Flint Michigan YMCA building is beyond its useful life and needs to be replaced.  They are doing a development ("Downtown Flint YMCA project gets $1.5M grant, $5.5M loan from state," Flint Journal) that will include:

a 2,400-square-foot medical rehabilitation facility, 50 apartments and more than 7,500 square feet of office space.

YMCA officials have said their new facility is expected to include a competitive lap pool, family splash pad, basketball court, exercise studios, a running/walking track, men, women’s and universal locker rooms.

Years ago the Boys and Girls Club on 14th Street NW in Washington DC suggested a similar kind of project, with housing above, as a way to generate revenue from the land to support their programs but it was opposed by the Ward 1 City Councilman. Apparently, a development did occur on the parking lot later, but the facility still there, seems to be closed.  And the development doesn't look like it's affordable housing.

Revisiting Participatory "budgeting" and disposition of funds from legal settlements

In 2015 I wrote "Participatory "budgeting" and disposition of funds from legal settlements," because the DC Attorney General, Karl Racine, won some settlements, and he directed the proceeds to particular nonprofit organizations.

I found this troubling because (1) these are grants and (2) there was no "open and transparent public process" for making the grants.

Instead it was at the whim and interest of the Attorney General.

While it is likely he involved other people in the office in the process, citizens had no say. 

At the time, I suggested "participatory budgeting" processes could be used, where citizens set the agenda for how to use and direct such funds.

It happened again. (And has probably multiple other times as well.)

The Washington Post reports, "Trump organizations agree to pay $750,000 to settle lawsuit with D.C.," and that the funds will be directed to two nonprofit organizations.  From the article:

Racine’s office identified two D.C. nonprofit, youth-oriented organizations — Mikva Challenge DC and DC Action — that will each receive $375,000 via the settlement. 

Kimberly Perry, executive director of DC Action, said the 30-year-old child advocacy organization plans to use the funds to continue various initiatives for D.C. youths on education, health and economic security. ...

Mikva Challenge, which has been in the District since 2015 and part of a national organization, trains D.C. youths on civic leadership and democracy. It also provides summer jobs for school-age youths to work with D.C. political leaders such as the city council, attorney general’s office and the mayor’s office. On May 17, the organization will hold a mayoral debate regarding issues affecting D.C. youths.

They might be the best youth serving organizations in the city.  They might be the worst.  We don't know.  And we as citizens had no way to weigh in on the decision making process that led to the disbursement of these grants.

WRT the disbursement of legal settlements to "worthy organizations," the Attorney General's office should be required to have a strategic plan developed in a public process, setting consensus priorities for what to fund, and a process for organizations to apply for funds, and for the proposals to be evaluated, and funds awarded.

I know that Mr. Racine decided not to run for reelection ("D.C. Attorney General Karl Racine will not seek elective office in 2022," Post).  But still, this kind of grant making is a classic example of the potential for steering funds to supporters and incumbency.

When BTMFBA isn't enough: keeping civic assets public through cy pres review

Buying and holding buildings for arts uses.  In "BTMFBA: the best way to ward off artist or retail displacement is to buy the building" I discussed my incredulity at how the local arts community in DC doesn't seem to understand that if they don't want to be displaced, they have to own the properties they are using for artistic endeavor.

This isn't a new idea.

In Pittsburgh, the Pittsburgh Cultural Trust runs a number of downtown cultural establishments.

The Playhouse Square Foundation does the same thing in Cleveland, but also takes on a greater role in real estate development beyond arts uses.  I wrote about Cleveland here, "Real estate value capture and the arts."

At the neighborhood scale, the Gordon Square Arts District in Cleveland is another example.

But there are hundreds of such examples across the country.

Buying and holding retail spaces for retail uses, rented at below market rates.  Comparably, in Paris, the Vital'Quartier initiative charged the community development corporation SEMAEST to buy and hold real estate and rent it to desired retailers at sub-market prices.

According to Next Paris ("Opération Vital'Quartier: pour le commerce de proximité à Paris!") so far the initiative has supported 372 businesses and controls more than 500,000 s.f. of in-demand retail space.

What do you do when the arts organization sells the property to the highest bidder and the space is removed from the portfolio of civic assets supporting arts (or other public) uses?  There are many examples of arts uses being a component of an otherwise for profit development.   Usually these are generated by proffers by a developer in return for zoning bonuses and other allowances.  If they are negotiated well, the artist use is protected in perpetuity by an easement.

But a lot of times, at least in DC, such proffers are not protected by including easements or other protections to keep the space dedicated to arts uses.  Instead there is a belief that the organization "can be trusted" to do so.

A few years ago, in the case of The Source theatre, the city had to step in and stop the conversion of the sale of the building to a restaurant group ("Debt-Ridden Source Theatre Closes, Plans to Sell Building," Post).  But that was a rare direct action by the city, which had provided capital improvement funds to the theatre company.

Similarly, but with a much different outcome, the city through the Attorney General's Office, was a party to the dissolution of the Corcoran Gallery of Art through what is called a cy pres proceeding:

The doctrine originated in the law of charitable trusts, but has been applied in the context of class action settlements in the United States. When the original objective of the settlor or the testator became impossible, impracticable, or illegal to perform, the cy-près doctrine allows the court to amend the terms of the charitable trust as closely as possible to the original intention of the testator or settlor to prevent the trust from failing. -- Wikipedia

where they represented the public interest in nonprofit organization's operations.

But sadly, the Corcoran was allowed to shut down ("National Gallery of Art acquires 331 more works from the Corcoran," Post).  In "Should community culture master plans include elements on higher education arts programs?" I realized two years too late that the idea should have been "put out there" that the city should have taken over the Gallery and converted it into a locally-focused fine arts museum.

Mather Building, G Street NW, Washington, DC.

Another case of an arts group selling their space to the highest bidder is the Cultural Development Corporation, which had two floors of the Mather Building, located across the street from the Martin Luther King Library.

The building was converted to a condominium more than a decade ago ("D.C. sells long-vacant Mather Building" Washington Times; "Mather Building Renovation Set," Washington Post, 2001), and because it was in an arts overlay zone promoting arts uses downtown, some of the housing was sold to artists (live-work) at a discount, and space was provided--to Cultural Development Corporation--for arts uses.

A cy pres review should be initiated.  But Cultural Development Corporation sold their space ("CulturalDC Sells Flashpoint Gallery," Washington City Paper) and they claim this will benefit cultural activities in the city.  From the article:

CulturalDC, a prominent D.C. arts incubator, has sold its downtown office space and will search for new headquarters. CulturalDC will continue to operate Source, its theater space on 14th Street NW, and other programs around the District, but it will be shuttering Flashpoint, the longtime art gallery that shares its home at 916 G St. NW.

The organization put the second floor of its Gallery Place base up for sale last fall, according to interim executive director Tanya Hilton. Groups such as Fringe Festival, Washington Improv Theater, and Step Afrika! got their start in that second-floor incubator space. “Twelve years ago, it was a thriving haven for artists and nonprofits that had a need for administrative space,” Hilton says, but in recent years the space has since gone under-used.

While CulturalDC only intended to sell its second floor, Joe Reger, principal for JCR Companies, approached CulturalDC with an offer for both: the offices as well as the storefront gallery Flashpoint and the black box Mead Theatre Lab.

“We weren’t really expecting that,” Hilton says, who would not disclose the final sale figure. “The great news is that it gives CulturalDC the opportunity to really expand and move forward and have a bigger impact on the arts community, not only in the short term but in the long term.”

I believe that in such situations, it should be automatic that the Attorney General's office initiate a review of the transaction, and that it likely would be best for there to be an automatic "pre-sale" review of such transactions to determine whether or not they are in the public interest.

I would aver that the transaction should not go through, if keeping arts spaces downtown is a planning priority, and because the Cultural Development Corporation received control of these properties through extra-normal consideration and preference within land use planning processes.

Note that I recognize that an arts organization "incubator" or office space doesn't have to be Downtown.  But losing a gallery in a prominent location is an unrecoverable loss.

The YMCA at Rhode Island and 17th Street NW as another example.  I never got around to writing about a similar experience  with the YMCA in Dupont Circle. They sold their property to a developer and the recreation use at that site was abandoned.

YMCA said they didn't have experience with a facility serving both workers and residents and that they tried their best to increase membership but were unsuccessful ("Downtown YMCA to close amid rising competition from upscale gyms," Post; "Akridge to redevelop YMCA at 1711 Rhode Island as boutique office," Washington Business Journal).  From the Post:

The YMCA approved a deal to sell the hulking, 1970s concrete building to Akridge, a big local developer, for an undisclosed amount. At 100,000 square feet, it’s the YMCA’s biggest facility in the region, and the property, according to the D.C. Office of Tax and Revenue, has an assessed taxable value of $27.2 million. ...

The National Capital facility was never a typical one for the YMCA. The nonprofit organization traditionally serves neighborhoods, not business districts, and Reese-Hawkins said the money from the sale of the building will boost the organization’s community, after-school and summer programs throughout the region.

She hopes to eventually open another full-service YMCA in the city and is in talks with community leaders to assess the best fit. There are no gyms in the District east of the Anacostia River, and Reese-Hawkins said it is possible that one could land there.

The building that will replace the YMCA.

Hope is not enough.

DC activities should benefit disproportionately from the sale of the property, since it enjoyed property tax exemption benefits conferred by DC and it is likely that this facility was one of the highest value assets owned by the organization.

The public interest in the disposition of that property should be protected at the very least by an automatic cy pres review of the transaction.

For example, could a development there have been constructed in a manner that co-located other uses with the continuation of the recreational use?  Could the building have become jointly owned with the city's parks and recreation department? (Another reason why parks plans should include recommendations concerning other parks and recreation assets in a community not necessarily owned and operated by the local jurisdiction...)

Granted, DC has fewer options than other jurisdictions because of the height limit.  For example, a way that the YMCA could have generated money from the value of the property would have been to sell a form of "transferable development rights" to a developer to make a bigger property elsewhere. But for the most part that is a tool not available in DC because of the height limit.

Note that a cy pres review isn't a slam dunk.   In New York State ("A New Cooper Union," Student Activism), California, and Pennsylvania there are many examples of the State AG engaging in such matters and representing the public interest.

However, in DC, so far the AG's Office hasn't proved to be all that willing to buck real estate interests, which are the leading industry in the city, and these transactions generally benefit real estate development at the expense of the public interest.

-- "The Cy Pres Doctrine in the United States: From Extreme Reluctance to Affirmative Action," Frances Howell Rudko, Southern New England School of Law

But in terms of developing the capacity of the DC Attorney General's Office to one day take over criminal prosecution authority from the federal government, developing a proactive approach to oversight of nonprofit organizations in the city would be an important step ("Participatory "budgeting" and disposition of funds from legal settlements").

Participatory "budgeting" and disposition of funds from legal settlements

Participatory budgeting is a method of allocating discretionary funds through a citizen involved and led process.

-- Participatory Budgeting Project

The initiative started in South America, and over the past few years elected officials in a number of cities, including New York City and Chicago, have used the method as a way to set priorities and allocate discretionary funds to projects in their Council Districts.

Boston has use PB initiatives as a way to increase youth involvement ("What Happened When the City of Boston Asked Teenagers for Help With the Budget," Next City).

Image from Californians for Justice.

More recently, the Mayor of San Jose, Sam Liccardo, who as Councilmember proposed using participatory budgeting methods as a way to better engage citizens in local government, proposes to use PB processes on a wider scale ("Budget input from community set for March," San Jose Mercury-News).

San Jose also uses a form of PB, called "Budget Games," as a way to make recommendations on the city's general budget ("San Jose residents play 4th annual Budget Games," Conteneo).

DC Attorney General directs settlement monies to past affiliations.  The Washington City Paper reports in "Nonprofits With Racine Ties Benefit in Chartwells Settlement," how some of the monies from a recent legal settlement with Chartwells over allegations of wrongdoing concerning the company's execution of its food service contract with DC Public Schools are being directed to charities with ties to Attorney General Karl Racine.  From the article:

Last week, Racine announced that his office had settled with Chartwells for $19.4 million over whistleblower claims that its food was regularly late or spoiled. The settlement inspired two councilmembers to call for investigations of Chartwells' continuing contract with DCPS. ... 

The settlement worked out well for five nonprofit groups that will receive a combined $5 million from Chartwells as part of the agreement. $500,000 of that money will go to Everybody Wins! DC, a literacy nonprofit whose board Racine served on until his election. Another $150,000 went to the Abramson Scholarship Foundation, which also once had Racine on its board.

Racine spokesman Robert Marus says OAG came up with the list of organizations that would receive Chartwells money. "They were groups he was familiar with," Marus says. Marus says there's nothing inappropriate about Racine approving a settlement that benefits organizations whose boards he once worked on. "There's no conflict here," Marus says.

Why not use Participatory Budgeting techniques instead?  Such funds shouldn't be allocated arbitrarily and capriciously according to the whims and past relationships of the Attorney General.

Even if such organizations do good work and there is no reason to believe that they do not, it would be best for settlement monies to be allocated in a public process towards projects defined as priorities in a public exercise that determines community consensus priorities. Participatory budgeting methods would be a perfect way to do this.

It would also extend the concept of democracy in the city, of which the creation of a separately elected AG position was a recent step forward.