When Generations Collide


By Dean Strombom, Principal, Gensler, Houston, TX

This is the first time in history when five generations of employees may co-exist in the workplace: the Silent Generation, Baby Boomers, Gen X, Millennials or Gen Y, and Gen Z. At the same time, older employees are delaying retirement while Gen Z, the generation we know the least about, is making their first appearance in the workplace.

Talkin’ ‘Bout Your Generation

The Internet and bookstores are full of writings by psychologists, sociologists, and human resource specialists about the differences between the generations. According to them, The Silent Generation likes stability and order and hates to take risks. Baby Boomers are ambitious and materialistic. Gen X is self-reliant and cynical. Millennials are self-confident and achievement-oriented. And, Gen Z is tech-dependent and big on multi-tasking. The problem with such generalizations is that there are always those that don’t fit neatly into a category. Instead of putting people in boxes, the new workplace can break down hierarchies, encourage collaboration and communication, and instill a shared sense of purpose and promise.

 Today’s savvy CEO should understand potential communication, work-style, and motivational differences that may exist between employee populations, but focus on creating a work environment that will keep all employees happy, productive and healthy. Harping on generational differences just preserves stereotypes and creates division. Instead, the focus should be on building common ground that gives all employees a choice in how and where they want to work, and in adding elements to the workplace that make everyone feel valued and part of a larger whole.

Maine REI

How Design Can Help

Research on the dynamics of the workplace points out that only one in four U.S. workers feels they are currently in an optimal workplace environment. There are 10 design factors that can increase employee engagement: activity, ergonomics, air quality, lighting, restorative environments, acoustics, nature, nutrition, user control and motivators.

Let’s talk about acoustics for a moment. All human beings with normal hearing are distracted by noise. Noise is one of the reasons older workers have clung to private offices. But, even in a 100 percent open work environment, designers can plan to minimize noise. They can locate workstations away from major gathering areas. They can improve HVAC acoustic performance. They can provide quiet zones for focus work. They can include sound-absorbing ceiling panels and fabrics. Workers that grew up plugged in to earbuds and headphones may opt to add those to handle distraction, but a good design can largely mitigate this issue.

All workers want to feel part of a company that they can be proud of – one with products, goals, and aspirations they think are worthy. Adding branding elements into the workplace that underscores corporate goals and improves employee engagement creates a sense of place that is distinct and meaningful. The experts say a branded workplace is particularly important to Millennials, but the argument could be made that this is a universal human need that spans the generations.

Creating Places Where People Meet

Another big differentiator in employee engagement and success is communication. The generations may differ in the way they communicate – face-to-face, email, Snapchat – but all effective workplaces are environments that support the free-flowing exchange of information. The best offices have intersections where people meet informally. Great workplace designs encourage people to get up from their desks and move around. They also provide the technical infrastructure to enable people to work where, when and with whom they need to, seamlessly. Much of the tension between the generations can be dissipated by talking to each other.

Intersection and interaction are important. Creating a more transparent workplace where people can see the work of other teams, experience different jobs within the organization, and have access to mentors of all ages adds a layer of richness and connection to the environment. It also encourages continuous learning and development.

Creating a strong corporate culture valuing individual and team accomplishments, providing employees with a healthful work environment offering group and individual work areas, and embracing cultural and generational diversity will boost employee engagement, profit, and employee retention.

Dean Strombom is a Practice Area Leader in Energy and Landlord Services in the Houston office of Gensler, where he leads the planning and design of corporate campuses, commercial office buildings, workplace interiors and mixed-use developments. Dean is on the advisory board of the University of Houston Graduate School of Real Estate at the Bauer College of Business.

Dean Strombom was also a presenter on this topic at MEREDA’s 2016 Spring Conference.

Original article published on April 16, 2016 in Texas CEO Magazine.  http://texasceomagazine.com/departments/when-generations-collide/ 

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Morning Menu Breakfast Event: Sustainable Stormwater Infrastructure = Sustainable Growth Perspectives on Stormwater Service Fee Programs and Credits

breakfast-logo-for-press-releases-social-mediaWith each passing year, cities and towns are faced with increased requirements, under the federal Clean Water Act, to protect and restore water quality in our streams, rivers, lakes and coastal waters.  These mandates require communities to ensure they appropriately operate and maintain stormwater public drainage systems that collect, store, treat, and discharge stormwater runoff in order to reduce water pollution. They must also encourage and require that property owners reduce their impacts on water quality.  All while accommodating growth and development, which may require an expansion of the public stormwater management system. The future sustainability of these public systems depends on a steady stream of revenue, which more equitably shares the costs of stormwater management and pollution prevention by tying them directly to the sources of stormwater runoff and pollution. So in response, a stormwater service charge program has been implemented by the City of Portland, similar to other municipalities, in order to fund the required upgrades and on-going maintenance of its stormwater management systems and water quality programs.

Stormwater utilities or service fees are often based on a property’s impervious area and can become substantial for property owners with large building footprints and parking lots. But many municipalities offer credit programs that can reduce the amount a property owner has to pay, providing they implement and maintain stormwater management and pollution prevention systems that reduce the community’s overall cost of meeting its Clean Water Act obligations. This panel discussion will focus on the City of Portland Stormwater Service Charge – why it is needed by the City and what measures property owners can take to qualify for credits. Participants will also learn what fees/credits other municipalities in Maine such as Bangor and Lewiston, and in other areas of the United States have implemented and/or are planning, and hear first-hand how property owners have successfully improved the quality of their stormwater runoff while reducing their stormwater service bills.

Meet our Presenters:

  • Scott Collins:  Managing Principal and Senior Engineer at St.Germain Collins 
  • Brian DesMarais:  Environmental Protection Manager at Waste Management
  • Doug Roncarati:  Stormwater Program Coordinator with the City of Portland

About the Event:

November 10, 2016 – 7:30AM to 9:00AM

DoubleTree by Hilton Hotel
363 Maine Mall Road
South Portland, ME

Buffet Breakfast: 7:30-8:00 am
Program: 8:00-9:00 am

Registering for this Event:

Member: $45 pp | Non-Member: $55 pp 
Prices increase by $10 after November 3

Your RSVP is requested by November 3, 2016. Payment is expected at the time of registration. No refunds will be granted to anyone who registers, but fails to attend or who cancels after November 3. 

Visit www.mereda.org for more information and to register.

This MEREDA “Morning Menu” Breakfast Event is Sponsored by Norway Savings Bank and St. Germain Collins

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The Right Equation for Responsible Development: Spotlight on Pepperell Mill Campus

In the fifth of a 6-part series exclusive to the Maine Real Estate Insider, we’ll provide an up-close look at the most notable commercial development projects of the past year that are helping to fuel Maine’s economy in terms of investment and job creation.  MEREDA is proud to recognize responsible development based upon criteria including environmental sustainability, economic impact, energy efficiency, social impact and job creation.  Please join with us in celebrating Pepperell Mill Campus.  A conversation with Doug Sanford.

MEREDA:  Describe the building and project.

Doug Sanford:  The Pepperell Mill Campus is a large mixed-use complex formally used for textile manufacturing. The property sits on a 16-acre site on the banks of the Saco River falls, and is also in the heart of downtown Biddeford. The campus includes 16 buildings with 1.1 million square feet of interior space. The goal is to redevelop and repurpose the mills. To date 550,000 sf of space has been built out and leased to a broad number of mixes uses. 120 businesses lease at the mill and 100 apartments are home to 180 people. 500 people either live or work on campus.

MEREDA:  What was the impetus for this project? 

Doug Sanford:  Opportunity and vision. The development team purchased the former Biddeford Textile complex in 2004, and then made the larger purchase of the rest of the mill complex in 2010. This created the potential to develop a fully integrated campus of complimentary mixed uses and residences. The vision of creating a campus came to shape with the opportunity to purchase a 1.1 million square foot fully connected mill complex.

MEREDA:  That sounds like quite a process.  How long were you in the planning stages before construction started?

Doug Sanford:  From the first phase purchase date in 2004 it took 12 months to create a preliminary plan to commence work on the project. Architectural plans, municipal approvals, state approvals, permitting and financing were secured and the project was on. It is interesting to note that we purposely did not spend an extended period of time and expense with a “master planning” process. It was the development team’s opinion that the project needed to prove itself quickly and create tangible results. So, once approvals were obtained for a broad set of tenant uses, construction commenced. It was that early momentum that carried the project through the troubled economy of 2008 – 2011. Once the project was well on its way, the clear path of master planning was established.

MEREDA:  Tell us about the most challenging aspect of getting this project completed. 

Doug Sanford:  During the early stages of the project the most challenging aspect was financing. It took a local bank, with a philosophy of investing in community redevelopment, to allow for the purchase funding and early build out funding of the project. Thank you Saco and Biddeford Savings!

The next set of challenges centered on growing pains. To transform from the purchase of a vast amount of vacant interior space, into a management team to handle the day to day operations of 120 businesses and 100 residents, was no easy task. As a management company we had to quickly ramp up in size and put into place systems to handle the job at hand.

MEREDA:  Something unexpected you learned along the way was….

Doug Sanford:  Politics and public relations became part of the job of developing such a large project. We started the project as a construction and property management company. Now we handle marketing, manage a web site and spend a lot of time interfacing with our host municipality. To have a healthy and constructive relationship with your host city is important. It allows for a public / private collaboration on initiatives that benefit all involved.

MEREDA:  Now that it’s complete, what feature of the project do you think makes it the most notable? 

Doug Sanford:  The project is not yet complete, but it’s well on its way. The most notable feature is that the Pepperell Mill Campus and the North Dam Mill development have almost single handedly created the environment for the renaissance of downtown Biddeford. The city and area had become an economic victim of the declining textile mill industry. The redevelopment of the mill’s vacant space paved the way for Biddeford’s economic recovery. Numerous other real estate projects and municipal investments have followed. This is an exciting time for Biddeford / Saco!

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OSHA Provides Final Rule on Silicia – Major Changes Likely Ahead for the Construction Industry

By Michael R. Bosse, Shareholder, Bernstein Shur

On March 24, 2016, the Occupational Safety and Health Administration issued its final rule on crystalline silica. As many know, everyone has been waiting for this OSHA final rule on silica to come out, and now major portions of the construction industry will have to grapple with it. The new rule will have consequences for the construction industry going forward, and measures that will have to be put in place during the next year for construction companies.  The construction attorneys at Bernstein Shur are studying the rule and its implications and will assist clients through the upcoming compliance process.

Crystalline silica is a common mineral that is found in materials that we see every days in roads, buildings and sidewalks.  It is a common component of sand, stone, concrete, brick, block and mortar. Silica exposure can occur from construction activities such as cutting, sawing, drilling, and crushing of concrete, brick, block, rock and stone products and operations that use sand products such as sand blasting and hydraulic fracturing.  Silica also is carcinogenic and has been linked to silicosis, lung cancer and kidney disease.

OSHA acted to change silica exposure limits that had been in place for over 40 years and were based on research from the 1960s.  OSHA estimated that currently, more than 840,000 construction workers are exposed annually to unreasonable levels of silica. The new rule sets a permissible exposure limit that exposure to airborne crystalline silica cannot exceed 50 micrograms per cubic meter of air for an average eight hour day. The new rule could impact between half a million and a million workplaces and will require employers in a broad range of industries, including construction, to put in place new procedures to reduce the possible exposure of workers to silica.

Employers also are going to have additional obligations in complying with the final rule. For instance, they will have to implement procedures so that the silica amounts can be measured to determine if the 50 PEL limit is being hit. Companies will have to ensure that work practices exist such that silica dust is wetted down or vacuumed up before workers can breathe it in.  Additionally, companies will have to develop a written exposure control plan, train workers on silica’s dangers and how to limit exposure to silica.  Under certain circumstances, employers may have to offer continuing medical exams, such as chest x-rays and lung function tests, to those workers who are exposed to silica. Each company will have to have a competent person who implements the written exposure control plan.  Finally, employers may also have to provide workers with respirators or limit work areas where there is a potential high exposure of silica.    OSHA’s estimate is that the new rule will cost $511 million each year on the implementation cost just for the construction industry. Employers, of course, believe that the cost may be much greater than OSHA’s estimate.

Construction employers must comply with the requirements of the final rule by June 23, 2017, except for requirements for laboratory evaluation of samples, which begin on June 23, 2018.  That means that only one construction season exists before implementation must occur.

Original article published on April 26, 2016 in The Construction Advantage, http://www.bernsteinshur.com/what/publications/the-construction-advantage-7/#ledcor  

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MEREDA’s Morning Menu: The High Cost of Construction: Avoiding Surprises

MEREDA's Morning MenuBuilding new or renovating an existing facility is an expensive endeavor. Whether it is speculative office space, an industrial facility or a mixed use property, construction costs can spiral upward very easily.  The potential surprises and unexpected occurrences during the process are enough to keep some out of the market.

Join MEREDA on October 26th for breakfast as Greg Patterson of PATCO Construction and Paul Lewandowski of Lavallee Brensinger Architects discuss how to better understand and manage the construction costs for commercial projects. Discussion topics will include right-sizing the building, the escalating cost of labor and materials and sharing insider knowledge and success stories.

About our Presenters:

Greg Patterson, President of PATCO Construction, focuses on providing innovative building solutions and extraordinary customer service that builds trust and confidence with customers. Founded in 1987, along with Greg’s father and brother, PATCO Construction is experienced in all project phases. Greg was born and raised in Sanford, Maine and currently resides in West Kennebunk. A graduate of Sanford High School in 1983 and the University of Maine Orono in 1987, Greg enjoys biking, skiing, boating, golf and spending time with his kids and family.

Paul Lewandowski AIA, IIDA, LEED® AP, Design Principal of Lavallee Brensinger Architects and President of the International Interior Design Association of New England is an award winning Architect and Interior Designer with projects in corporate, civic, hospitality, education, and health care markets throughout New England and New York. As Design Principal at Lavallee Brensinger Architects, Paul’s work begins at project conception. An excellent facilitator, Paul brings a collaborative approach to each project, engaging clients and users in a thoughtful and creative design process. His holistic approach simultaneously focuses on multiple design considerations including budget, user experience, and overall aesthetics, helping clients  successfully achieve their goals.

A Rensselaer Polytechnic Institute graduate, with a Bachelor of Architecture, Bachelor of Science/Building Science, Paul’s work has been featured in Architectural Record, Martha Stewart Living, Maine Home+Design, Design New England, Floor Focus Daily, and Marie Claire magazines. He has spoken nationally on design, color, and creativity. Most recently, Paul’s work received recognition at the AIAMaine’s 2016 Design awards. Paul lives in Portland Maine’s West End neighborhood with his wife Mary, daughter Ava, and several friendly pets.

About the Event:

October 26, 2016 – 7:30AM to 9:00AM

Pepperell Mill Campus
40 Main Street
Biddeford, ME

Buffet Breakfast: 7:30-8:00 am
Program: 8:00-9:00 am

Registering for this Event:

Member: $45 pp | Non-Member: $55 pp 
Prices increase by $10 after October 19 

Your RSVP is requested by October 19 , 2016. Payment is expected at the time of registration. No refunds will be granted to anyone who registers, but fails to attend or who cancels after October 19.

Visit www.mereda.org for more information and to register.

This MEREDA “Morning Menu” Breakfast Event is Sponsored by Norway Savings Bank, CES Inc., and Pepperell Mill Campus.

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How Technology is Disrupting Real Estate

By Blueprint, presented by CBRE

Commercial real estate has historically relied upon in-person interaction to get things done, but an influx of new technology is transforming the space.

Now, transactions, updates, searching and more can all be done with a few taps on your phone, from anywhere in the world.

This shift is radically altering how commercial real estate brokers and landlords approach properties and handle data.

“We’re in the middle of a complete sea change in terms of how tech is transforming how we access data and how we, as professionals, get access to data and lower the cost of that access,” says Brandon Weber, CEO of Hightower, a leasing management software company.

There are five major areas of opportunity for tech to disrupt real estate, SoftBank Capital partner Josh Guttman (who has invested in real estate tech) wrote in TechCrunch last year.

Aside from mobile apps, areas like property management, research and analytics, listing services and residential and commercial lending can be reconfigured, all thanks to technology.

Property management software allows owners and management companies to track their assets. With property management software adoption around the 10 percent mark as of last year, according to Hightower’s Weber, a lot of opportunity remains.

With municipalities allowing more access to their data than ever before, developers are altering how the data can be used, with analytics software being used on an on-demand basis.

The regulatory environment is also helping push tech further into the space. Thanks to new regulations, there are now opportunities for tech to play a role in real estate lending.


Not only is the proliferation of smart devices dramatically shifting the landscape for real estate, but there’s also a “one-stop-shop” mentality altering the scene.

Hightower has developed a cloud-based platform for commercial real estate landlords and brokers to analyze, track and manage various properties in real time.

The platform allows landlords to manage their deal pipeline, run financial analysis, and track performance relative to a benchmark, among several other features—all while integrating it with the landlord’s property management system.

“Before Hightower, you’d have to go to 20 different places to find all these answers, and then get the answers in a day or two,” Weber says of his company.

“Landlords like it because it’s not only saving hundreds of hours a month on reporting, but they see it helping them reduce their risk in real time because of the data.”


Most real estate tech companies seem focused on improving the efficiency conundrum. Renters may be contacting more people than they need, with landlords suffering from the same issue.

With real estate being one of the largest expenditures in business, money is flowing into the space hand over fist. In 2015, nearly $1.5 billion of venture capital money entered into real estate tech companies, up from $1 billion in 2014, according to research firm CB Insights.

Continued advancements in global positioning systems, and especially map-based search, have aided the process.

“[Map-based search] puts it into context where someone is going,” Zillow’s vice president of rentals Dan Hang says.

Data mining and targeting has become much easier in real estate over the past several years, with terabytes of data now available.

Residential renters can now give information, such as income, credit score, number of family members and pets, much earlier in the process than in years past. This may result in the landlord getting fewer leads, Hang notes, but “higher quality leads.”

There are around 10 million people who move into a new rental every year on the consumer side, Hang says, with more changing spaces commercially, thanks to 2.7 million jobs being added last year, according to a white paper from the National Association of Realtors.

Technology has radically altered how easy it is to access data—the lifeblood of the industry—with broader implications down the line.

“We’re in the first inning of this [commercial real estate] ballgame and it’s really going to get interesting over the next 12 months as these companies hit scale,” Weber says.

“Now, everyone has access to every piece of data they care about in the palm of their hand, which I think will not only change the speed of the industry, but how it reacts to things, and can alter the analysis on how we buy and sell as well.”
Article originally published on May 27, 2016 – https://blueprint.cbre.com/how-technology-is-disrupting-real-estate/#prclt-gE52353V

“Blueprint, presented by CBRE, is an online magazine dedicated to telling timely and insightful stories about the transformational role real estate plays in the world.”

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MEREDA Hosts Annual Fall Networking Social


Another great “meet-and-greet” opportunity, this time on Portland’s Waterfront, join the Maine Real Estate & Development Association (MEREDA) at its highly-anticipated Annual Fall Social on October 20th!

MEREDA’s networking events attract key players in Maine’s real estate industry and provide excellent opportunities to interact with the experts.

Join MEREDA on Portland’s waterfront for hors d’oeuvres, spirits, and great conversation with colleagues, friends and other industry professionals for the Annual Networking Fall Social on October 20 from 5:00 – 7:00 PM.

Registering for this Event:

Your RSVP is requested by October 13, 2016. Payment is expected at the time of registration. No refunds will be granted to anyone who registers, but fails to attend or who cancels after October 13.

Ticket Prices:

Members: $45.00 per person
Non-Members: $60.00 per person
Prices increase by $10 after October 13.

MEREDA’s Annual Fall Networking Social is sponsored by Bangor Savings Bank, Preti Flaherty, and J.B. Brown & Sons.

Visit www.mereda.org to register online.

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The Right Equation for Responsible Development: Spotlight on The Mill at Dover-Foxcroft

In the fourth of a 6-part series exclusive to the Maine Real Estate Insider, we’ll provide an up-close look at the most notable commercial development projects of the past year that are helping to fuel Maine’s economy in terms of investment and job creation.  MEREDA is proud to recognize responsible development based upon criteria including environmental sustainability, economic impact, energy efficiency, social impact and job creation.  Please join with us in celebrating The Mill at Dover-Foxcroft. A conversation with Arnold Development Group.

The Mill at Dover-Foxcroft

MEREDA:  Describe the building and project.

Arnold Development Group:  The Mill at Dover-Foxcroft, is a 60,000 sf historic complex that has been renovated to include housing, office space, data center, cafe and inn.  The complex is located in the heart of Dover-Foxcroft and each building of the historic complex featured a different construction material from different eras with the Piscataquis River wrapping around 2 sides of the building.

MEREDA:  What was the impetus for this project?

Arnold Development Group:  We first discovered the buildings on a recreational visit to the area and asked to be included in the RFP process being conducted by the town of Dover-Foxcroft.  Our vision to the proposal aligned perfectly with the town’s vision and the collaboration began.  We worked closely to support the efforts of the Town, PCEDC and CEI to identify programs to make the project financially viable.

MEREDA:  That sounds like quite a process.  How long were you in the planning stages before construction started?

Arnold Development Group:  The planning process lasted 5 years and the construction lasted 1 year.

MEREDA:  Tell us about the most challenging aspect of getting this project completed.

Arnold Development Group:  The coordination between the various financing programs and entities utilized to complete the renovation was particularly challenging from a scheduling perspective.  The installation of the geo-thermal system along the river in the dead of winter presented some hurdles to overcome.  The replacement of 427 windows to meet the State and Federal Historic Requirements was challenging, but the views to the Piscataquis River was a suitable reward.  The actual building construction process went very smoothly due to the expertise of Wright-Ryan Construction, and under the field supervision of Dave Sickles.

MEREDA:  Something unexpected you learned along the way was….

Arnold Development Group:  All of the apartments were leased before construction was finished, which was a real validation of the need for quality housing in walk-able rural neighborhoods.  The support we received from the town and the residents of Dover-Foxcroft provided us the motivation to see the project through to the end.

MEREDA:  Now that it’s complete, what feature of the project do you think makes it the most notable?

Arnold Development Group:  Prior to construction, when you arrived in downtown Dover-Foxcroft there were looming empty buildings with broken windows that hailed to a previous era of prosperity.  Now when you arrive downtown the complex is bustling with activity, year round residents, new business being launched and an inviting inn and cafe overlooking the gorgeous river.  It is an honor to work on a single project that has such a positive effect on an entire community.

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Morning Menu Breakfast Event – Complete Streets: Can We Drive, Walk, and Bike in Harmony?

MEREDA's Morning MenuNarrowed vehicle lanes, “Share the Road” signage, multi-use paths, traffic calming, flashing pedestrian crossings – have you heard these terms and wonder what it means here in Maine and the Bangor region?

Join the Maine Real Estate & Development Association (MEREDA) for breakfast on October 4, 2016 from 7:30 – 9:00 AM at the Hollywood Casino Bangor to hear from experts on how the “Complete Streets” doctrine is being implemented statewide and in the Bangor Region to balance transportation needs of our community.

About our Presenters:

Kierie Piccininni is a Bangor resident and an advocate for safer walking and cycling. She spent ten years commuting by bicycle in two high-profile Complete Street cities, San Francisco and New York. She moved here to stay close to a friend who suffered a traumatic brain injury due to a bicycle-car collision. That experience developed her interest in advocacy for cyclists, pedestrians, and equal accessibility for vulnerable users. She joined the Bicycle Coalition of Maine’s Community Spokes program in 2014, then organized Bangor’s safety advisory committee, Walk-n-Roll. Kierie serves on the board of the Bicycle Coalition of Maine and the City of Bangor Commission on Cultural Development, and she is a manager at Winterport Boot Shop. 

Bradford Foley has worked for the Maine Department of Transportation for more than 25 years. He is currently the Highway Program Manager tasked with oversight of the design and construction of Maine’s roadways. Prior to that, he served as Director of the Safety Office. In that position he directed and coordinated all safety activities, initiatives, and programs within the Department to achieve meaningful safety improvements to Maine’s Transportation Systems. Previously, within the Department, Brad worked as a Designer and Project Manager on numerous projects, as well as a Consultant Coordinator overseeing the design efforts of outside consultants. He is a graduate of the University of Vermont with a Bachelor’s Degree in Civil Engineering and is registered as a PE in the state of Maine.

About the Event:

October 04, 2016 – 7:30AM to 9:00AM

Hollywood Casino Bangor
500 Main Street
Bangor, ME

Buffet Breakfast: 7:30-8:00 am
Program: 8:00-9:00 am

Registering for this Event:

Member: $25 pp | Non-Member: $35 pp 
Prices increase by $10 after September 29th  

Your RSVP is requested by September 29, 2016. Payment is expected at the time of registration. No refunds will be granted to anyone who registers, but fails to attend or who cancels after September 29th. 

Visit www.mereda.org for more information and to register.

This MEREDA “Morning Menu” Breakfast Event is Sponsored by Bangor Savings Bank, Eaton Peabody and Webber Group.

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The Art of the Donald | Presidential primary politics as a real estate development deal?

by George Casey, CEO of Stockbridge Associates, LLC

Like most of you, I suspect, I have just been shaking my head at what has been going on this Presidential Primary season.

As the group Three Dog Night sang in the 1970s tune “Momma Told Me Not to Come”:

“This is the craziest party that could ever be

Don’t turn on the lights ’cause I don’t wanna see……

I seen so many things I ain’t never seen before

Don’t know what it is–I don’t wanna see no more”

Also, like many of you, I have been staring in raw fascination at Donald Trump’s campaign and many of the statements and actions that seem to be both designed to garner headlines and to just raise the hackles of specific demographic segments and, almost always, the Republican establishment.

My first reaction was to question why someone would do these things and think that they could somehow cobble together a coalition to win not only the primary, but the general election. Needless to say, the Republican establishment seems to be sweating bullets and divining esoteric strategies to derail the Trump Express in fear that in the general election the TE could cause the loss of the Senate, deplete a majority in the House and cause the loss of a conservative majority on the Supreme Court for a generation.

Hoards of locusts look better than this.

But, in a recent CNN article, I noticed a discussion about how fuzzy the laws are regarding being able to buy-off delegates to a political convention. It seems that almost anything goes and, although not perfectly legal, it seems like it is not overtly illegal, either.

That got me thinking about the race from a different perspective. That of a real estate developer.

I am not saying that what I am about to postulate is what is going to happen; only that with a new perspective it could.

Hear me out and think about it.

In real estate development, we try to generate value by creating something that is worth more than we have into the deal.

In an entitlement deal, we try to option a property, without really owning it, for as little as possible and then set out spending money to attain an entitlement to build something on the property.

If that entitlement is attained, usually the property is worth more than its costs and value is generated.

At that point, the developer has the option of flipping the deal and realizing a profit or continuing on to a development phase, where more money is spent and hopefully even more value is developed.

Again, in development, the project sponsor has the ability to flip what they have or to continue into the phase of actually building the vertical building(s), at which there is another opportunity to sell the asset again and realize more value.

As a real estate developer, Trump has done all of these things at one time or another.

Politicians, however, are driven by a combination of ego and desire for power. The pursuit of popular acclamation by winning and the ability to exercise power are goals in themselves. The fact that there may be future economic value after the holding of office (lobbying or giving six figure speeches to investment banks, included) I am sure plays in the equation, but is usually not primary.

But, what if a seasoned developer looked at the primary process as a development deal?

If you are able to collect 1237 delegates, you attain an “entitlement”: to be able to be the party’s candidate for the presidency. Just like in development, money has to be spent to attain the entitlement. If you can use other people’s money (campaign contributions and free media attention) rather than your own, all the better.

Just like positive value can be created (something that a lot of people want and are willing to pay for in an amount greater than your cost), negative value can be created also.

Think gaining an entitlement for a pig farm next to a high-end subdivision. What would the residents pay you to just get out or convert it to open space or…whatever! You want to protect YOUR asset and the value you are willing to pay to get rid of the nuisance bears little resemblance to the inherent value of that other use.

If one imagines a developer with a deal background looking at the current terrain, the phrase “Buy me out!” starts looking like it could be considered at several stages of the “entitlement”:

  • Don’t quite have the 1237 by convention time? Go to the establishment money players and ask the Buy Me Out question. Maybe they would pay hundreds of millions to have you withdraw and free the delegates. That way the convention could be manipulated into a consensus candidate and Trump could walk away with one of the biggest deals of his career monetarily. Of course, ego would have to subvert to pecuniary interest, which is not at all out of the question.
  • Have the 1237 at convention time? Maybe the price goes up even more?
  • Have the nomination? This is where it really gets interesting. I don’t know what the rules are for a nominee who pulls out of a race after attaining the nomination? In recent memory, only George McGovern’s VP in the 1972 race, Sen. Thomas Eagleton, withdrew after just a few weeks due to discovery of treatment for depression a decade prior. The party chose his replacement. How replacing a presidential candidate between nomination and the election would play out is totally unknown territory. But, the price for Buy Me Out could skyrocket initially, as the chance to salvage the undercard would still be a possibility. Maybe billions at this point?
  • Of course, once the full fall campaigning starts, the value of a buy out drops precipitously, particularly if the polls show a sure weak hand and the time for salvage dissipates.

A smart real estate developer would make a gut call on the risks and rewards of whether to monetize the value they have created and when.

As I said at the start, I don’t know whether any of this could happen. But, as a long time developer, one has to appreciate the art of creating potential value (primarily the negative kind that people will pay for to remove your project) with very little of your own money at risk.

This could be the deal of a lifetime and a first to recognize that politics and business have more in common than most realize.

And it would be HUUUUGE!

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