Today it’s known as socially conscious economic development. To Bill Kalkhof and a small group of Durhamights who believed, it was just common sense.
Moribund is a term used for someone or something at the point of death, in terminal decline and/or lacking vitality or vigor. It’s also the term that the local press had slapped onto the downtown Durham area before Bill Kalkhof stepped foot into the Bull City.
The last Bulls of Durham blog featuring Bill Kalkhof lefts us all hanging, wondering how American Tobacco Campus went from moribund to the most expensive real estate in North Carolina. How did downtown Durham transform from a ghost town you only went to if you had court, needed a bondsman or had to pay your water bill to the center of a heated, multi-faceted parking issue because there simply are not enough parking slots for everyone who wants to be in the downtown area. Most of all we were left wondering how Bill Kalkhof came to be in Durham, how Downtown Durham Inc. came into existence and who are the other members of this “collective we” he spoke of.
It may surprise you to know that Bill moved from Washington D.C. to Durham feeling like the unwanted half of a married duo. He came trailing after his wife Jennifer, who had immediately found a wonderful job in Durham, in a snowstorm that almost motivated him to turn right back around and never become a Durhamight. 21 years later Bill is enveloped as an integral part of Durham’s history and all of that seems impossible to imagine. But here it is in Bill’s very own words.
“I was living in downtown D.C., right by DuPont and Logan circles. I worked for the American Psychological Association. My wife, who passed away 6 years ago, she was from Pinehurst. We had built an oceanfront home on Topsail Island.
“Our son Adam was getting to be mobile and staring at public schools. We both had good jobs in D.C., but we were already at the highest level we could be in the organizations. We had to make the decision — move to the suburbs of Maryland or Virginia for the public schools because D.C. schools are terrible, and private schools out of our financial reach, OR do you make a pretty big life change? We decided on the latter.
“In late 1985 my wife Jennifer moved to Durham. She had already gotten a job. She sent out a resume and got a bunch of job offers, nobody wanted me. I stayed in D.C. to sell our home and in ’86 moved down. I was the trailing spouse at the time and I can remember the day I drove down was a snowstorm here. It was a miserable drive. I got here and thought what am I doing here? I was ready to turn around go back to D.C. Of course, we stuck it out.
“I found a job with the home builders association that at the time was Durham and Chapel Hill. That’s how I got to meet Nick Tennyson who became Mayor of Durham and, until this past election, was Secretary of Transportation for the state. He’s a very good friend.
“For 5 years I worked with the home builders association. During that period of time, like most people who end up in this community, it grows on you. Because of the job I had, I became very involved in economic development and the politics of Durham. And I found out that I had a talent for raising money.”
This is where the collective ‘we’ comes in and, spoiler alert, when a group of overly ambitious dreamers do the unthinkable and turn our downtown city center around. This is also a brief lesson in economics and the importance of a bold vision, all of which is notoriously Durham.
“In late 1992, a small group of business and university leaders led the effort to create an organization focused on the revitalization of downtown. At the time, the press referred to downtown as moribund. Candidly, that was a kind assessment.
“Less than 3000 employees, maybe 60% of the buildings were occupied. I mean it was populated by a couple of restaurants, wig shops, bail bondsman and government. At 5 o’clock everyone left and went home. Nobody was here on the weekends.
“That small group of folks, private sector folks led by Andy Widmark, who had invested in downtown, partnered with leaders from Duke University, and elected leaders like the late Howard Clement who was a long time member of the Durham City Council. Howard was considered the public sector founding father of Downtown Durham Inc. and Andy Widmark, who is still in town, was the private sector founding father of Downtown Durham Inc. Andy taught a graduate-level development course at Duke. He posed the question to his class back in the early 1990s, “if you’re going to do one thing to revitalize downtown, what would it be?”
“After much research, they recommended the creation of a focused economic downtown development group to lead the effort. With that paper, they outlined the plan to create an organization that became known As Downtown Durham, Inc. I still have the original copy of the paper.”
You can tell that Bill values his time and experience with Downtown Durham Inc. with both the way he speaks of the experience in vivid detail and the fact that he holds onto things like the paper that started it all for going on 3 decades. The proverbial they say that if you truly love what you do, you never work a day in your life. Maybe that’s why Bill’s description makes establishing Downtown Durham Inc. and following their vision through to fruition makes it all sound so easy and effortless — to him, it was all that because it was genuinely fun.
“I was executive director of the home builders association and I got invited to a breakfast of about 30 people to hear Andy’s pitch to start this downtown organization. Andy asked us to raise $50,000. We passed a hat around the table and came up with the private sector money. Howard Clement got the city to match it. With $100,000 Downtown Durham Inc. was now real.
“I was fortunate to be given the opportunity by Andy and a friend and business partner of his, Todd Zapolski, to be hired as the first president/CEO of DDI. The political and business leaders on April 15, 1993, started Downtown Durham Inc. with me as its only employee. Our mission was to create an environment for the public and private investment in downtown. 20 years later you’re looking at it.”
At the very heart of all things, Durham[ites] are people who dare to dream big enough and don’t know any other way but to hold onto their dreams. As far back as the city’s history goes you’ll find examples of this. Being flexible in our methods, but holding onto the dream to create something beyond anyone’s wildest dreams is what has built the Bull City and every great person the city has created. After all, the very roots of Durham are a tobacco farmer who thought he was ruined after the Civil War. These days social entrepreneurial ideology has replaced the additive qualities of Brightleaf tobacco as the spark that leads to great success around here.
When describing the vision of the collective we, Bill said, “In the early years, the broad Durham community had given up on downtown and did not see a reason to invest in it. It was a very small group of committed people who thought otherwise. We embarked upon our vision and journey and didn’t let anyone deter us.
“What I discovered I was good at, is that I could look out a window and see something that needed to be fixed and I could figure out who in the community to bring together to fix it. Whether it was 2-way streets, buildings, tobacco warehouses, whatever, I could bring people around the table to get stuff done.
“Slowly but surely, we found people to invest — Martin Eakes, the founder of Self Help Credit Union, Hank Scherich at Measurement Inc. were very early, major investors. Also, Andy Widmark was a major downtown investor back in the early 1990s.”
This small group of ambitious believers saw 2 things: what needed to be done and what the final product would be. Focusing on what had been up to that point didn’t offer up anything productive and this group was steadfast in their conviction to do the impossible. What followed was a surprise lesson in ‘everyone benefits’ economics.
“As we began to have some successes with development and investment in downtown, government leaders stepped up to help us get to the next level. We figured out a way to do what I called synthetic tax increment financing — tax increment financing was not legal in North Carolina in 2000. However, I figured out you could provide cash incentives for job creation and capital investment.
“I came up with the idea of so-called “synthetic tax increment financing,” which basically means that I own a building and it has a tax value of let’s say $100,000. You buy the building from me and turn that $100,000 building into $1 million dollars. That’s $900,000 worth of value you’ve created because of the investment you’ve made. That $900,000 creates X amount of property taxes for the city and county of Durham. For you to be able to get the deal done, the bank will lend you some of the money, but they won’t loan you all the money- so there is gap financing.
“To figure out how to fill in the gap financing, I figured out that we would provide a cash incentive for the project if it met the 5 non-negotiable criteria I noted earlier in this conversation. If the development project you were doing was capital investment we would provide an incentive of 60–65% of the new tax revenues created by the project, and if capital investment also created living-wage jobs in Durham — living wage with benefits — we would give you more like 70–75% of that incremental tax credit.
“Every deal we did was based upon the original Downtown Master Plan we developed in 2000. Your deal had to fit our master plan. It had to be a good deal for Durham taxpayers. This is where the synthetic tax increment financing (TIF) comes in because the taxpayers always kept the original amount of taxes on the original value of the property. With the synthetic TIF, we would share the new property taxes with the general budget of the city and the developers over about an 8–12 year period. End of 8–12 years, now the taxpayer gets all of the revenue, we get another building finished, which brings in more revenue with whoever is going to be located in the building, the building has to be consistent with our master plan, so we’d stay true to our plan.
“The taxpayer incentive was never at risk because the project had to be completed and on the tax rolls before any incentive would be paid. We developed quantifiable criteria for capital investment and job creation to be met which further protected the Durham taxpayers. And, all of this is “new” tax money that otherwise would have not been realized if the project had not been developed. We started connecting dots that way. Everyone who came and invested in downtown in my 20 years running Downtown Durham Inc. liked the idea that there was a plan.”
Wondering a short ways from Main Street to Durham Central Park you’ll see a prime example of sticking to the plan and holding the vision. The park we all enjoy today, especially on Saturdays when both the Durham’s Farmer’s Market and Vega Metal Works Art Market are both in full swing, took a lot of grit and determination to get done. It also took saying ‘no’ to projects in order to stay true to the plan of always saying ‘yes’ to the long-term development of Durham.
“With the vision of two friends of mine, Curt Eshelman and Allen Wilcox, we pulled together the effort to build Durham Central Park. Back in 1993–94, an investor wanted to build a storage unit on what is now Durham Central Park. A storage unit was not the vision for what is now the Park. We said “no,” we cannot support your proposed project. Our vision is a park that will have development eventually around the park.” That is an example of where we were very specific about what we envisioned and stood our ground against projects that did not meet our vision.”
Many locals cite a significant increase in retail in the downtown area as a positive change they would like to see in the city of Durham. Something above and beyond restaurants, offices, and expensive lofts — retail by the locals for the masses. Retail shops have been a part of the downtown development plan from the very beginning and were put into the vision as something that would organically come to fruition once the core pillars of the downtown area were in place.
Bill explained it by saying, “Let’s go back to the example of you buy my building and you develop it. You’re going to then try to figure out, “what am I going to put in this building?” Say it’s a 3 story building. Retail on the bottom floor would be nice, but back 15 years ago there weren’t enough people here to support retail.
“I was more interested in Form-Based Zoning. What was important to us is that the building back in the early days of our journey gets developed so that it fronts on the sidewalk, parking in the rear; you have a storefront like this [referencing Beyu Café]. Most likely an office to begin with, but eventually, because we believed in ourselves, there would be enough people to make it a restaurant, a bar or a boutique shop.
“You want it developed in a way that it can be a retail establishment in the future — when the time is right. The upper floors might start off as commercial offices but then turned residential. What we were more invested in is that the building needs to be built correctly to fit into the landscape and character of downtown. What would be put into the building would be dictated by the market place at any point in time.
“The early developments were almost all commercial office space. But we knew once we started getting more people working, living and visiting downtown, once we did the DPAC and did the DBAP, bringing big entertainment venues to downtown, and developing ‘people places’ like Durham Central Park, more people would come downtown. Our vision was that these downtown buildings would transition from office space to more mixed-use: retail, office, residential. That was always our vision back in 1993 and over time we were able to achieve that.”
Bill had plenty more to say and we’ll cover some of it in the next installment. Got to save some goodies for when The Bulls of Durham project concludes in a book. For now, let all this sink in. Let it register that a group of people who didn’t know giving up was an option did the unthinkable for the greater good of Durham, North Carolina. If it can be done in a section of town that was viewed dead at best, where else can we replicate this success and in a way that benefits everyone, not just the fortunate few?