A presentation on improving cross-sector real estate development relationships

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

2. 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

3. 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!

4. 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

5. 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

6. 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

7. 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

8. Still, what’s
holding the
deal together?
Developer
City and
Agencies
NFP
Partner
enhanced
programming
and services
facilitation
of deal with
developer

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

10. 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

11. 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

12. 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

13. 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.