Sitting in the first row of seats inside a municipal van, Eighth District City Councilwoman Cindy Bass provided fellow passengers with a running assessment of the current conditions, and former state, of Germantown’s commercial corridor.
Drawing attention to the takeout restaurants and hair and nail salons, she used the word “repetition” to describe the enterprises.
She also suggested that greater business diversity was necessary, and expressed hope that the issue of cleanliness would be addressed by the second iteration of the Germantown Special Services District, which is expected to start later this year.
Reaching Maplewood Mall, Bass spoke to the site’s potential, itself symbolic of Germantown’s future.
“We think it can be so much more,” she said. “It can be vibrant, it can be attractive, it can be inviting. The idea is we want to change what you see here in a significant way.”
Seated in the van were Benjamin and Daniel Miller, two brothers whose presence in Philadelphia was the trigger for the Bass’ guided tour on May 30.
The Millers are the creative engine behind Fundrise, a start-up that offers real-estate crowdfunding, the heart of which is the pairing of active community members with property projects in need of cash to get off the ground.
It’s been described as the real-estate version of Kickstarter.
“There’s a disconnect between the capital and the people,” said Benjamin Miller, who described the reality of real estate to Bass and a handful of local stakeholders at Wired Beans coffee shop prior to the tour.
Starting the company in Washington D.C., the Millers took on an underdeveloped corridor along H Street, working with local developers and polling community members about what they’d like to see there.
Raising a third of the money needed on small investments of approximately $100 each, they secured a restaurant and a clothing store for a once-vacant property.
“The process of raising money through the old regime is broken,” said Miller, referencing both the economic crisis of 2008 and capital-raising difficulties that small businesses face.
Down with middlemen
The Millers created Fundrise to provide this capital, allow to small-scale local investment and eliminate financial intermediaries – middlemen – that add costs no longer necessary in the digital age.
Along with Philadelphia, Fundrise is currently touring other major cities in the Northeast and on the West Coast to discuss the potential for the crowdfunding platform with city developers and legislators.
The Millers expressed optimism about the potential for it to become established locally, noting the abundance of property and wealth to develop it.
“Philadelphia is an obvious place for this,” Miller said, “because everybody in Philadelphia can build themselves up, and not look to outside capital.”
At the same time, he predicted would-be investors could expect sizable returns on their investments, with eight- to 10-percent yields not being farfetched.
Fundrise would be sustained by transaction fees of a few percentage points.
While the allure of profit is tempting, Miller emphasized that communities will react to enhanced access to desired services.
“For an average person, the difference between eight and 10 percent is not material,” he said. “The difference between having a great restaurant — or a great something — is material.”
Bass: The time is right
Recognizing its potential impact, Bass originally became involved with Fundrise as a means of connecting capital to segments in her district most in need of it.
Noting the potential for “innovative” partnerships between real-estate developers and community members, she said it helps to fulfill the desire of communities for certain kinds of businesses as well as giving citizens a financial stake in these projects.
“This not only improves community support,” she said, “but also the chances of the business surviving in the long term.”
After the federal Securities and Exchange Commission missed a mandated deadline in 2012 to update crowdfunding regulations, Bass introduced a city resolution that encouraged the SEC to pursue action on establishing regulations surrounding such crowdfunding projects relating to small-business development.
It passed City Council unanimously on March 7.
Prior to the tour, Bass touted the various projects currently taking place nearby, specifically referring to the Chelten Plaza shopping center, the planned installation of townhomes at the PHA’s Queen Lane Apartments site and extensive renovations at SEPTA’s Wayne Junction station.
She expressed a belief that the timing is right for investment in Germantown.
“You’ve got a lot happening within the confines of a small area,” she said. “We want to take the opportunity to capitalize on that. We want to make sure we don’t lose this opportunity.”
State Rep. Stephen Kinsey, who attended the pre-tour discussion, envisioned a multi-faceted consortium for neighborhood that would include government, non-profits and the private sector.
At the time, Kinsey signaled a commitment to work with Fundrise to bring about neighborhood growth.
“We believe that Germantown is on the cusp,” he said, “and it’s going to take partnerships to do these great things.”
Those present for the trip were overwhelmingly in favor of what they heard.
Sloane Folks of the Germantown Restoration CDC said it was an opportunity for self-determination.
“It addresses a number of issues that Germantown grapples with — we want this type of restaurant, we want this type of shopping center — without isolating any one segment of the community,” he said.
Andrew Trackman of Germantown United found the presentation inspiring, noting that the bottom-up approach to investment is well-suited to Germantown.
“Our reputation outside might be such that the bigger investors don’t want to invest, but we know what we’ve got and we know what we can do here,” said Trackman. “To have a vehicle like [Fundrise] is just perfect, and hopefully we can make it work.”
Ahsan Nasratullah, president of JNA Capital, was pleased with the brothers’ pitch, especially for removing the middleman.
“What they’re doing is creatively solving a problem in urban America,” Nasratullah related, “which is the value of property never approaches what the cost is — the cost is always greater. I think they’re brilliant for what they’re doing. Bankers can learn from them.”
Asked for his personal assessment of what he saw on the tour, Benjamin Miller told NewsWorks, “The potential is there.”
Since Fundrise is also about social capital, assessing the interests of the community is a key aspect, he added.
“You have to put it out there and find out where people coalesce: Do they coalesce at Maplewood Mall?” he asked. “To do something here, you have to let it come from the bottom up.
“There are clearly enough people, there’s enough middle-class, so the question is: Can you actually organize them in a way that they can realize that they can build their own neighborhood? It’s not something they ever contemplated before.”