Obtain Financing Now
Richard Baron on how McCormack Baron Salazar has obtained development funds
Richard Baron is chairman and CEO of McCormack Baron Salazar (MBS) in St. Louis. The firm specializes in developing and managing mixed-income communities with an emphasis on large-scale redevelopment projects in central city locations.
Since its founding in 1973, it has developed 124 projects in 33 cities with development costs in excess of $1.8 billion, including more than 13,895 residential units and one million square feet of commercial space. The firm’s management portfolio includes 14,970 residential units.
Early projects focused on small, single sites and on mixed-income rental housing. Aiming for greater impact on disadvantaged neighborhoods, McCormack Baron began to develop multi-block areas, with a mixture of rental and single-family housing. The firm’s mixed-income developments began to demonstrate that with the re-emergence of a healthy housing market, entire communities experienced positive growth and new investment.
In recent years, MBS has expanded its vision and scope of work, creating long-term partnerships with local governments, key institutions, and employers. The goal is to create lasting impact throughout a large area of the inner city, and link neighborhoods to the downtown core and major employment areas.
MHN’s Online News Editor Anuradha Kher talks to Baron about his firm’s strategies during the economic storm and how the firm was able to obtain funding for some of its current projects, as well as the progress of rebuilding New Orleans in the wake of Hurricane Katrina.
How is McCormack Baron Salazar dealing with the downturn?
Baron: We continue to move on projects. It’s a mixed situation depending on where we are in a particular market. We continue to hope that state housing finance agencies find funding from the stimulus money and remain interested in the redevelopment of cities so that we can continue our work.
How many projects does the company have in development right now?
Baron: We have about eight projects in development. They are mixed-income and New Markets Tax Credit (NMTC) projects in St Louis, Memphis, California, New Orleans and Pittsburgh.
How did you get funding?
Baron: We worked through small local banks and state agencies. There are many small banks that have been spared the meltdown in the financial services sector and they are still lending and benefiting the communities in which they reside.
We have been through a lot of economic downturns, and as a company we have figured out ways to navigate the issues by being nimble. We haven’t made any cutbacks, and we continue to maintain our staff. Of course, we are hoping for an increase in [development] activity.
Why does the firm specialize in building mixed-income communities?
Baron: Mixed-income communities provide opportunities to a broad section of people and allow people to socialize and mix with people from various backgrounds. We have understood for a long time that people living together is an issue of values, not money. This is a better way to approach housing for low-income communities as opposed to the public housing model.
How are things in the Gulf region?
Baron: Things are checkered there right now. It is a very slow process. In New Orleans, we are challenged because there aren’t enough people with expertise. It is challenging both in the public as well as the private sector side. It’s amazing what hasn’t happened since Katrina. There is money stuck and there is no way to move things forward.
What construction techniques do you use so that buildings in the Gulf Region can better withstand effects of global warming or other natural disasters?
Baron: We implement green technologies such as green roofing and flooring. We are also looking at solar-powered technologies. In addition, we have raised the level of our buildings in the Gulf region in order to avoid what happened there during Hurricane Katrina. We have added a foot or so, so that our buildings can withstand things like flooding.
How is the apartment sector faring in the regions that your company works in?
Baron: It is flat but we are hopeful that Congress does something with the lending situation. There is no lending going on right now and that’s got to be corrected. The pump needs to be primed and multifamily needs to be back in gear.
What is the company looking to do over the next few years?
Baron: Transit-oriented workforce housing communities—we think that’s what will be in demand when the economy picks up.