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Friday, April 28, 2006 | The walls of Market Creek Plaza are splashed with bright paint and hope. The eclectic, art-filled mall and public space that has grown out of a weed-infested, tar-stinking wasteland in southeast San Diego is a development that screams with possibilities.
Despite the corporate logos of Food 4 Less, Wells Fargo and Starbucks, Market Creek Plaza doesn’t feel like any other mall. The neon signs of chain outfits intersperse with loud murals of community figures and shining mosaics depicting ethnic tapestries.
The differences aren’t just physical. Next month, members of the local community – the so-called Diamond Neighborhoods of Chollas View, Emerald Park, Lincoln Park and surrounding neighborhoods – will be given the unique chance to own a part of the flagship development that transformed their neighborhood in 2001.
The current owners of the property, a nonprofit philanthropic foundation called the Jacobs Center for Neighborhood Innovation, plan to offer 20 percent of Market Creek Plaza to local residents in the form of a stock offering. Essentially, they are giving local people the chance to invest – often for less than $2,000 – in shares that will shape the future of their community.
In return, the investors will get a hand in the development’s decision making and receive the first share of whatever profits the company makes – in addition to owning a share of whatever equity builds in the property. Local residents’ capital will be used to further invest in other projects the Jacobs Center has planned in the neighborhood, said Jennifer Vanica, the group’s president and CEO.
“Give a man a fish and he eats for today, teach him how to fish and he eats for a lifetime – that’s great if you’re only concentrating on one generation,” she said. “But this is where I say you really have to concentrate on who’s owning the pond if you care about future generations.”
From its inception in the late 1990s, the Jacobs Center set out to design something that the residents needed and wanted, working from the streets up to design a plan for a showcase development in the heart of the Diamond Neighborhoods, Vanica said.
Early on in the discussions about how to develop the area, some community members began to question whether there was a way to truly give local residents ownership of the projects that would be built.
Sam Mason, a community activist and one of the first members of the community ownership group that has steered the development, said residents were told at every step of the planning process that they owned Market Creek Plaza. But theoretical ownership is very different to actual ownership Mason said, and one day one of the community members made a suggestion
“One of the group members said, ‘Why don’t we figure out how the community can own a piece of this?’ ” Mason said.
Seven years later, after countless meetings with lawyers, economists, community members and the Jacobs Center staff, that innocuous comment had morphed into a reality.
Mason said the U.S. Department of Corporations – whose blessing was required for the deal – was wary of the group’s plan at first, but eventually warmed to the concept of community ownership, an idea Mason said they had never seen before.
“Their job is to protect the consumer, and they wanted to make sure we weren’t trying to do something to milk poor people of their money,” Mason said, chuckling.
The IPO will not be open to everyone. In order to become a preferred investor in the company, an individual must be able to demonstrate a “proven commitment to strengthening the Diamond Neighborhoods.” They must also either live in the Diamond Neighborhoods, own or operate a business there, or work with or volunteer with a group or organization located there.
The organization hopes to attract 450 investors to provide a total of $500,000 in capital towards the project. That investment will be matched by a $500,000 investment by the Neighborhood Unity Foundation, a community-led charitable organization. The Jacobs Center will also retain $1.5 million worth of stock.
The community shareholders will be first in line for any profits generated by the company. Annually, investors and the unity foundation will each will be entitled to a 10-percent return on their investment if the company turns a profit; the Jacobs Center is eligible for a 7-percent return, and any remaining profits will be split according to ownership percentage.
Gary London, president of the London Group Realty Advisors in San Diego, said the scheme is very similar to real estate investment deals that are done every day. What makes this deal different, London said, is the requirement that the investors have an interest in the community itself. That, hopefully, will ensure that the project develops as the community wants it to. It’s also a very canny way to coax the project to success, London said.
By giving the community members a stake in the financial wellbeing of the project, the company is also giving local people an incentive to shop at Market Creek Plaza, London said.
“It’s no different than, for instance, I own stock in a bank, and you can be damn sure that I’m going to put my savings account and my checking account in that bank, because I want that bank to succeed,” London said.
It doesn’t seem as though the local people need much of an incentive to visit Market Creek Plaza’s grocery store, restaurants and bank, however. On a recent Monday morning, the parking lot in front of Food 4 Less was packed with shoppers while lines were already forming at El Pollo Grill, a broiled chicken joint where the burritos are “heavenly,” according to Vanica.
Bevelynn Bravo, a 30-year resident of the Diamond Neighborhoods, remembers what it was like before Market Creek Plaza went up. She would do her grocery shopping in small neighborhood liquor stores, often visiting several stores in one trip in search of basic necessities.
“Sometimes, in the little corner stores, I would find one thing, but then they wouldn’t have cheese, and I would be like ‘Oh shoot, now I’ve got to go to the other store.’ Then I would go to the other one and they wouldn’t have it either,” Bravo said.
These days, Bravo said, it’s nice to have a store that stocks everything from shampoo to sausages to supplies for her daughter’s birthday party. The large grocery store, the smaller locally owned shops and the cluster of neighborhood eateries have transformed her neighborhood out of all recognition, Bravo said.
A few years ago, people had lost hope in the local area, Bravo said. There was nowhere for local people to congregate. The land where Market Creek Plaza now stands was an ugly, abandoned factory and gangs of young men roamed the streets with little to do.
Now the community has a focus, and local people have been handed back their community pride, she said.
“Before, I felt like I was stuck in this neighborhood, like I didn’t do nothing with myself,” Bravo said. “Here I was, stuck in this ugly neighborhood, and the only thing left for me to do was to raise my kids. I had really no goals; I had kind of lost hope. But then the Jacobs Center came … I’m grateful that we were able to do that, that all of us together were able to make this come true, and that it wasn’t just another lost dream.”
The next phase in Market Creek Plaza’s development will be to attract investors to “Own a Piece of The Block!,” as a glossy brochure put out by the Jacobs Center proclaims.
Alan Gin, professor of economics at the University of San Diego’s Burnham-Moores Center for Real Estate, said he’s optimistic about this project’s future. He said that by going public with their development, the Jacobs Center have essentially done what any wise company does when they want to expand. What’s different, of course, is that in this case, the people who will control the expansion have an interest in more than the company’s bottom line.
“It’s different because of its goals. They’re still out to get money, but the goals are also more noble in that they’re also interested in community development,” Gin said.
San Diego Mayor Jerry Sanders said the Jacobs Center is one foundation that’s done it right. They have involved the community in every step of the process, he said, and other philanthropic organizations should take note.
Vanica said she and her organization are certainly not finished polishing the Diamond Neighborhoods.
Next in line for the area is a new community center, to be built right next door to Market Creek Plaza, then the group hopes to get plans to build about 800 affordable housing units, and several thousand more square feet of commercial space. Sanders, for one, said he welcomes the development as an example of how to do things right.
“The community deserves to have those amenities, they deserve to have what every other community in San Diego does,” he said.