THE SECRET TO HEDGING NIMBY RISKS

Not-In-My-Back-Yard (NIMBY) opposition is a qualitative risk that’s rarely factored into the investment calculus of sustainable real estate projects.  This absence of risk management practices has caused a NIMBY Law of Attraction that exposes an untold number of sustainable real estate investments to political and social liabilities around the globe. 

This “rolling of the dice” paradigm directly inflates the risks that leads to billions of dollars in quantitative losses for investors, shareholders, executives, and developers.

We get a sobering example with a 2011 U.S. Chamber of Commerce study, Project No Project, which looked at 351 energy projects that were delayed or denied by NIMBYism. The sample study found that NIMBYism cost the American economy $1.1trillion in economic losses and 2 million new jobs – that’s just for one sector!

What if I told you that as a real estate investor, you could significantly reduce the risks and losses of NIMBYism by as much as 80 percent? No more betting on status quo forces mobilizing to delay, disrupt and defeat your real estate investments.  No more Russian roulette uncertainty. No more black eyes to the reputations of corporations and partners.

It’s a matter of understanding how a broken system and outdated business models consistently alienate communities and empower angry opposition with an “us vs. them” posture.  Once you know how to correct these self-inflicted practices, then you can take action.

That action is fostering community goodwill for your sustainable project, which is the secret to proactively hedging your investments from NIMBY risks and losses

Prologis has been an outlier in this area, demonstrating how building bridges in the communities that grant the license to operate is the pathway to greater success.

I will highlight more of Prologis’ success, but first, we must understand how theNIMBY Law of Attraction is created and why anti-development agents are costing investors billions of dollars in lost capital, shareholder value, revenue, and market share.

DENYING THE REALITY OF RISK

The uncertainty of status quo opposition is the white elephant in the room that no one wants to recognize or address. More often than not, the community-at-large is relegated to local project managers and consultants who believe their sustainable projects will win the license to operate within their time tested “legal, logical and sustainable” constructs.

This is a false reality that enables hundreds of thousands of real estate professionals to blindly ignore, overlook and underestimate the community-at-large. This short-sighted perspective is what causes the perception of contempt that increases risks and losses associated with NIMBY opposition.

There’s an aversion toward community engagement, which creates a NIMBY Law of Attraction that emboldens anti-development opponents (alienated citizens, professional activists and competitors). These groups freely and adeptly manipulate social perceptions that influence “political, emotional and ego-driven” constructs.

As we all know, political anxieties nearly always trumps rational narratives, especially when it pertains to controversial land use projects during an election year.

This partly explains why a lone individual with a smartphone and an axe-to-grind, can single handedly defeat an international corporation’s multi-million dollar project. It’s not an isolated case.  There are thousands of reported media stories featuring the David vs. Goliath genre that almost always ends in political defeat of good real estate projects.

THE SECRET IS COMMUNITY GOODWILL

The secret to hedging NIMBY risks is securing community goodwill.

The cultivation of community goodwill has become more prominent in corporate sustainability practices.  A small, but encouraging number of corporations are embracing “top/down solutions for bottom/up success” when it comes to neutralizing NIMBY related risks and conflicts.

Prologis is leading the way on corporate sustainability practices that are the result of the REIT’s E.S.G. (Environmental Stewardship, Social Responsibility and Ethics/Governance) standards.  In its recently published 2015 Sustainability Report, the company included both community and government stakeholders as part of its priorities for fostering community goodwill.

Under its “social responsibility” section, Prologis reported community “meetings before, during and after the development of properties.”  The word “before” is a significant step forward in the development of new risk management standards and practices.

Prologis is not waiting to see if a project comes under attack before it engages a community to cultivate goodwill. By the time the NIMBY genie leaves the bottle, it becomes less likely and more expensive to secure stakeholders to support a demonized project.

The fact that a global, public company, such as Prologis, has formal practices that require community engagement increases the odds of winning the approval of more projects, in less time, less cost and less uncertainty.

EXORCISING THE STATUS QUO

What do real estate developers and anti-development professional groups agree upon?  Neither wants to see the “legal, logical and sustainable” way of doing business changed or altered.

Anti-development groups know that without establishing community goodwill, the perception of greedy, arrogant and wealthy developers comes into play.  These DC-centric and local anti-development groups have published “playbooks” on “how-to” exploit the time-tested blind spots reliably exhibited by developers beholden to their status quo business models.

Real estate thought leaders need to come together to fashion risk management standards and best practices that will help shift industry perspectives toward proactively and confidently securing community goodwill.

If we can overcome the status quo attitudes within our own industry, then we can begin hedging NIMBY risks and losses that will turn the NIMBY Law of Attraction into an attractive record of success and greater return on investments.

In the meantime, what are you doing today to secure community goodwill for your real estate investments?

###

Patrick Slevin is one of few national speakers, trainers and consultants considered a “NIMBY Expert”.  Mr. Slevin is a former Florida mayor, who for three decades has spoken, consulted, and written about mitigating the risks associated with status quo opposition.  Mr. Slevin provides “top/down solutions for bottom/up success” for corporate clients who want to secure community goodwill for sustainable and controversial real estate projects.  Go to www.PatrickSlevin.com for more information.

11 WORD CODE THAT DEFEATS NIMBY EVERY TIME

Hexed by NIMBY? Adopt this 11 word code and you will be able protect your real estate projects each and every time from the curse of status quo defeat!

WARNING! Once you learn this code and what it can do, you will be obligated to govern yourself by it. If you choose to ignore it, then you will suffer the consequences of status quo forces adept at destroying your chances of acquiring the license to operate at the municipal levels.

If you’re still reading, then congratulations: You’re the one percent who will have a knowledge that will forever improve your odds of passing more real estate projects, in less time, at less cost, with less uncertainty.

The 11 words that defeats NIMBY every time, every place and every stage of development are:

It’s Not What I Say, But Who Says It for Me.

It’s your word against angry voters when a NIMBY conflict arises. Tens of thousands of elected officials have forsaken sustainable real estate projects because of visible and vocal constituents voicing opposition to site and rezoning requests.

I’ve seen this happen first hand as a former Florida mayor as well as a consultant. Every day newspaper articles portray developers as the mighty Goliath being slain by the NIMBY David. This genre is a broken record replaying itself thousands of times in communities around the globe – going as far back as the early 1980s.

Why?

Corporate developers are outsiders seeking approvals in local communities. In nine out of 10 cases, corporate developers “ignore, overlook and underestimate” (IOU) community leaders who influence public officials. For those savvy enough to be in that 10 percent, stakeholder engagement is usually inadequate, because many defer to the archaic notice and hearing process, which only antagonizes potential third-party allies.

Thus, when a few citizens or professional activists attack your project with petitions, negative publicity, social media, and Jerry Springer type public hearings, elected officials begin to count votes toward their next election, which is a countdown to voting against your real estate project.

That no longer has to be the case. With my 11 word code, corporate developers can defeat NIMBYism in the press, defeat NIMBYism at city hall and defeat NIMBYism at the ballot box.

How?

Developers need a select chorus of community thought leaders singing the praises of their sustainable real estate projects. These local influencers are former elected officials, current/past presidents of local chambers, civic groups (Rotary/Kiwanis), HOAs, merchant associations, homebuilders, realtors etc. They are active in their communities and they influence voters, customers and most importantly, elected officials.

What most corporate developers and real estate professionals do not understand is thought leaders not only influence decision makers at city hall, but they control the grapevines that spread gossip that mischaracterizes sustainable real estate projects. I can write an entire column on gossip and grapevines, because they are very powerful and disruptive.

Winning the support of community thought leaders is vital and should be part of your game plan months before you formally file your application or notify municipal officials. By taking this proactive practice you gain several bonuses. You gain partners who often provide focus group type input that also includes insights on what the elected officials want and don’t want regarding concessions and negotiations.

Most importantly, gaining the early support of community thought leaders establishes backchannels to city hall that even the best land use lawyers and developers rarely obtain. This channel is priceless in the context of high-stakes, high-profile controversies fueled by NIMBY conflicts.

The elected officials know these influencers and trust them more than the applicant and more than the opponents who are often unknown, unreasonable and untrustworthy.

The “It’s not what I say, but who says it for me” code secures the approval, endorsement and public support of community thought leaders who will pre-empt and defeat NIMBYism, each and every time. When that happens, then the benefits of a sustainable real estate project will be truly enjoyed by the community that just granted you the license to operate.

So what are you going to do with this knowledge and code? The next step is up to you.

P.S. Forward this column to your partner, colleague or friend who has a great real estate project vulnerable to the attacks of anti-development contingents.

Patrick Slevin is one of few national speakers, trainers and consultants considered a “NIMBY Expert”.  Mr. Slevin is a former Florida mayor, who for three decades has spoken, consulted, and written about mitigating the risks associated with status quo opposition. Mr. Slevin provides “top/down solutions for bottom/up success” for corporate clients who want to secure community goodwill for sustainable and controversial real estate projects. Go to www.PatrickSlevin.com for more information