Developers
The image of the real estate developer in rural small-town Appalachia has not always been praiseworthy. Stories abound of developers who failed to deliver on their promises to the community. More recently, however, it appears the role of the developer may be evolving toward that of a trustworthy collaborator. Contemporary developers in Appalachia are finding innovative ways to work together with local partners to accomplish the priority projects set by the community.
Typically, real estate developers identify and purchase land, construct new buildings or renovate existing ones, and then sell the improved property at a profit. This is a risky venture, especially in a rural setting. They may yield an acceptable return but they’re also vulnerable to substantial losses. Shouldering that risk can lead developers to go it alone and look out for their own interests. Developers motivated chiefly by maximizing their financial return are unlikely to be willing to take on any projects in a rural community. This aversion has often meant it can be challenging to identify and recruit private developers.
New waves of developers in Central Appalachia, however, are stepping up to align their work far more closely with the hopes and dreams of the communities in which they work. Sometimes developers are involved from the beginning of a project as spotters, framers, or even early investors. In other instances, they may be hired by community partners to take the reins when the capital stack is nearly or already in place. If no professional development firm seems like the right fit for the project, a local nonprofit itself may decide to take on the responsibility of directing the construction or renovation phase.
Developers will succeed to the degree they can stay focused on building a dynamic bridge among all the diverse players, assemble or manage the capital stack to pay for the project, and figure out how to do whatever must be done to complete the project. Most importantly they must faithfully adhere to the community’s declared vision, values, and key priorities. The broadly based support of local residents is essential to creating a pipeline of investable projects.
Profile: Philippi, WV
What does it take to turn a downtown around? The Downtown Appalachia Center has estimated that it might take revitalizing 5 buildings to attract 5 businesses.
The Barbour County Economic Development Authority (BCEDA) was interested in experimenting with this concept in the City of Philippi, WV. The hoped-for outcome was that redeveloping 5 buildings would spur other businesses to locate in the downtown and perhaps even motivate other business owners to work on their own properties.
The BCEDA purchased and renovated three buildings, while Woodlands Development Group purchased and redeveloped 2 other buildings. The plan was for commercial operations on the bottom floor, and living space on the second floor. There are now businesses in these buildings, including a successful ice cream shop on the bottom floor of one with market rate apartments above. BCEDA had to be flexible on renting commercial space by giving tenants three months with no rent to allow businesses to get on their feet. According to Cheryl Wolfe, Executive Director of BCEDA, “For us, it’s a win. It’s been great for us. We’ve had no trouble getting tenants. These are income-producing properties.” BCEDA is not as focused on a ROI, and because of that, they’ve been able to attract entrepreneurs to these properties. The experiment was a success.
However, BCEDA laments that their investments have not been transformative overall for the downtown. There are property owners in town that have money that they could invest in buildings and attract businesses, yet this hasn’t happened. According to Cheryl, “I thought once we showed that we could attract new businesses and residents to the downtown, some of the existing property owners would rehab their spaces. ROI is key for potential investors. Some are hung up on the quick, profitable return.”
Promising Factors for Investing in Downtown Development
Questions for Communities
What professional qualities and/or expertise would you seek in a Developer for a downtown revitalization project in your community?
What sort of adjustments might you need to make on your own team to move your project into the Development stage?
Here are a few noteworthy examples of especially resourceful developers who are pioneering the way forward:
Shawnee, OH
As a gateway community to Wayne National Forest, Shawnee, located about 65 miles southeast of Columbus, is riding a wave of revitalization that comes on the heels of decades of disinterest. One important cluster of new projects are the work of Dublin, Ohio-based Black Diamond Development, which brings together a group of southern Ohio developers. Thanks to the developers’ efforts, Shawnee hosts new retail shops, a tavern with a brewery and distillery, an Airbnb, and even a downtown campground.
Shawnee, OH
John Winnenburg is a local historian who purchased the Tecumseh Theater for a mere $500 in the 1970s. Decades later he became a downtown developer. Having made patient progress with the theater, Winnenburg now hopes to raise $1M in new investment to complete renovations and bring live performances back to his 350-seat facility.
Pulaski, VA
Steve Critchfield is a developer whose Pulaski-based firm, West Main Development, has developed downtown apartments with premier amenities. Critchfield is also mentoring a group of about 20 investors who have been purchasing and developing properties in Pulaski. They have also invested in two thriving small businesses, including a green technology company working to capture air pollution.
Elkins, WV
Woodlands Development Group is a nonprofit based in Elkins, WV that tackles projects across three counties in north-central West Virginia. Woodlands often buys older structures and fixes them up to serve as mixed-use commercial buildings. They also work with private building owners to redevelop vacant space in rural downtowns. They often facilitate the predevelopment work needed to structure a deal. They also have their own construction crew. Woodlands also has their own CDFI (community development financial institution) arm that makes patient, lower-than-market rate loans to help finance priority projects.
Princeton, WV
Disruptive Investments, founded by regionally-based developer Barbara Wyckoff, has acquired a building in downtown Princeton. The goal is to make it possible for low-wealth residents to purchase ownership shares in the property. Share ownership is based on making a nominal monthly payment of about $50 per month over the next 10 years. These first-time local shareholders are renovating the building themselves and, when it’s completed, will manage rental operations.