Getting more out of cross-sector real estate development relationships PREPARED BY NETGAIN PARTNERS INC.

Right now, developers are leaving money on the table

u  A bad deal with not for profit (NFP) partners diminishes value of: u  Community/cultural equity for prospective buyers and investors

u  Positioning, relative to competitors with media, politicians, bureaucrats, and the public

u  Reputation with better NFP partners in the future

When partnering with NFP’s in large development projects, “it’s better to be well hung than ill-wed” (William

Shakespeare)

But it’s even better to be unhung and well-wed!

What’s the essential difference? WELL HANGED OR ILL-WED: •  Suboptimal for both parties, •  Detrimental to one or both

u  Urbancorp and TMAC - Lisgar St.

u  Financial and reputational damage to both parties

u  Daniels and Centennial College - Guild Inn

u  Financial and reputational damage for the College

u  Squandered opportunity for the developer

u  Cityscape and Artscape – Distillery District

u  Reputational damage to developer’s brand (with City and Artscape)

u  Dissatisfaction with services and costs for Artscape’s clients

UNHANGED AND WELL-WED: •  Beneficial to both parties, •  Optimal for one or both

u  Daniels and Artscape – Regent Park

u  Helped remediate investor and buyer perceptions of neighbourhood at risk

u  Brought new assets and amenities to underserved community

u  Context and National Ballet School - Jarvis St.

u  Helped to overcome opposition to development and enhance value of new condominiums

u  Delivered free land to kickstart planning and funding of $100 million school redevelopment

u  Collaborative planning produced award-winning designs

u  Castlepoint and MOCCA - Sterling Rd.

u  Community /cultural equity used to enhance value of surrounding brownfield development

u  Creative lease agreement emerged from non-adversarial negotiation process

How are these outcomes determined?

WELL HANGED OR ILL-WED u  NFP partnership is primarily a means of

securing sites and approvals

u  NFP partner is selected for expedience, not strategic value

u  NFP partner is unprepared for the demands of the project and is dominated by the developer in negotiations and planning

u  The deal is one-sided and unstable, shifting or collapsing over time

UNHANGED AND WELL-WED u  NFP partnership is understood as a

means of bringing long-term value to their project plans

u  Careful consideration is given to engagement of the right partner to optimize this value

u  NFP partner has the competence and confidence to engage as a peer in negotiations and planning, or has the means to acquire expertise

u  The deal is balanced and structured to hold its shape over time

Conditions for success:

u  Genuine appreciation of NFP’s cultural /community equity by the developer

u  Genuine understanding of developer’s business imperatives by the NFP

u  Upgrade of NFP’s competence and confidence in negotiation, planning, financing, and project administration

u  Early identification and engagement of the right NFP partner in project planning

But it’s not so simple… The City and its agencies add another dimension of complexity

Developer

City and Agencies

NFP Partner

enhanced programming and services

facilitation of deal with

developer

Still, what’s holding the deal together?

Developer

City and Agencies

NFP Partner

enhanced programming and services

facilitation of deal with

developer

And, what happens when a deal loses its shape? TMAC, Urbancorp, and the City

Urbancorp

Someone needs to advocate for the deal, rather than for exclusive partner interests

enhanced programming and services

facilitation of deal with

developer

Developer

City and Agencies

NFP Partner

Deal Advocate

Deal Advocate’s Terms of Reference u  Mandate: u  Act for the developer to help identify the best NFP partner and to

prepare that partner for negotiation and execution of a balanced, wise, and enduring deal.

u  Work Stages: u  Isolate and prioritize developer’s community/cultural objectives u  Identify suitable NFP partner prospects u  Prepare NFP partner for demands of project development u  Establish relevant City objectives for the site u  Facilitate negotiation of a non-binding MOU u  Mediate conflicts arising from process u  Assist NFP, under direction from the developer, to resolve legal, financial,

and architectural issues pertaining to purchase or lease u  Assist developer in lobbying efforts with City and its agencies

What changes if the Deal Advocate delivers?

u  Developers will get better value out of their NFP partners u  NFP partners will thrive in their new facilities u  Economic Development Committee and other City departments and

agencies can reduce the depth and frequency of intervention in the developer-NFP relationship

Examples: “1% for art” - the City’s policy intention can be satisfied, to much better effect, without the City collecting developer’s funds and determining what’s best Section 37 agreements – greater success of NFP partners in development deals will help to rationalize greater use of this mechanism for EDC priorities (in addition to affordable housing) in the future

What does NetGain know about this?

u  National Ballet School of Canada / Context u  Planning, change management, and capital fund raising by NetGain founders

Doug Simpson and Graeme Page u  Centennial College / Daniels

u  Planning, lobbying, and project management by NetGain principal, Doug Simpson u  Artscape Launchpad / Daniels

u  Business planning by NetGain principal, Doug Simpson, and associates Suzanne Wilcox, and Mauricio Ramirez

u  Toronto Media Arts Cluster / Urbancorp u  Intervention and counsel by NetGain principal, Doug Simpson, and associate,

Genevieve Tran u  Museum of Contemporary Canadian Art / Castlepoint|Numa

u  Interim ED services, lease negotiation, and project management by NetGain principal, Doug Simpson, and capital fund raising by NetGain founder, Grame Page.