Can real estate development be sustainable, socially responsible and still remain highly profitable? For Los Angeles real estate developer and investor Scott Chaplan, the answer is a resounding yes.
Chaplan began his law career at Argue Pearson Harbison & Myers, and in 1995, co-founded the Los Angeles-based real estate, nonprofit and corporate law firm Greene, Fidler, Chaplan & Hicks LLP. In 1997, he went on to create the Urban Group of Companies, an integrated multiservice commercial real estate services firm with the capacity to structure financing, acquire, develop, rehabilitate and manage over $1 billion of multi-unit residential, mixed use, commercial and office properties. Many of Urban’s projects involve historic buildings which have been rehabilitated to provide affordable family housing in low-income communities.
As a pioneer in developing environmentally sustainable projects in the inner-city, Chaplan founded Urban Acquisitions to service this need before any of his competitors. Leveraging the knowledge built in urban development, he has created a comprehensive consulting business that assists organizations and individuals in low-income communities with developing successful and sustainable business skills and strategies. Thousands of community leaders attend Chaplan’s Urban Seminars across the U.S. each year, with many of them having become clients of Urban Consulting Group.
Chaplan advises or serves on the governing boards of directors of several faith-based nonprofit organizations, including City of Refuge Ministries, Perfecting Faith Church, God’s Grace Covenant Church, Temple Kol Tikvah, Force of Hope International, Iglesia Fuenta de Vida, Iglesia de Cristo Mission Elim and Century Christian Center. He is also a board member of The Foundation for Camp Max Strauss, which serves thousands of inner-city youth annually; the Chase Foundation, serving Los Angeles’ extremely ill youth through Children’s Hospital; Forest Stewardship Council, which ensures sustainable forestry practices worldwide; The Environmental Media Association, the green standard for the entertainment industry; and the Mid-City Housing Task Force, which serves L.A.’s lowest-income tenants.
He has utilized his expertise and experience in co-authoring The West Corporation’s Code Form Book, the National Business Institute’s Landlord Tenant Guide and, with Bishop Noel Jones, A Vow of Prosperity. Chaplan teaches courses for the National Business Institute, the Beverly Hills Bar Association and Pepperdine University School of Law, where he serves as an advisory board member and adjunct professor for the Palmer Center for Entrepreneurship and Technology Law.
NREI spoke with Chaplan about his career mission to “do well by doing good.” An edited transcript of that interview follows.
NREI: As a real estate entrepreneur whose personal and professional mission is to “do well by doing good,” you wear a lot of hats. Let’s start with your work as a real estate developer and investor. You’ve been working on environmentally sustainable inner-city projects in at-risk Los Angeles neighborhoods. Tell me about your whole-community approach to sustainability.
Scott Chaplan: Our holistic approach always starts with the people who form the fabric of each community in which we invest. Without tools relating to financial literacy and homeownership, costs attendant with substandard credit, a lack of understanding regarding their appropriate acquisition capacity and budgeting, the cycle of poverty continues. We are holding workshops, including the Urban Seminars Survive to Thrive series, which began in September, designed to create owners out of renters and financially informed and responsible stewards of their own and community resources. Our workshops also focus on sustainability and our collective responsibility for the environment. Our partnerships with Hayward Lumber Company and Forest Stewardship Council, both of which I serve on as general counsel and as a board member, respectively, allow us to provide cutting edge information to participants on appropriate materials, systems, benefits and burdens surrounding choices when remodeling and/or building a home or building.
What are your greatest successes in sustainability?
Scott Chaplan: Our formation and sale of Eco Laundry, a sustainable coin operated laundry operation, to Web for an undisclosed amount was certainly an economic and environmental success. The workshops themselves afford us the opportunity to give back while creating buyers for our local inventory of formerly distressed residential property that we have improved responsibly and readied for sale. The launch of our second distressed residential opportunity fund is another milestone we are proud of, and with any triple bottom line oriented organization, our delivery to our investors of above market returns have allowed us to do well doing good as promised.
What have your greatest challenges been so far?
Scott Chaplan: Financing and the quantum shift in the institutional lending market have caused us our greatest challenges. We had substantial projects in various stages of development that, through a succession of bank failures, required restructuring which we are grateful for having endured and learned from. Adaptation to the new market economy is the jewel we garnered from the experience, and we have restructured our business accordingly.
You are a firm believer in the benefits of a “triple bottom line”—in other words, you work to revitalize and stabilize blighted urban areas with sustainable development and retail service programs that move residents from poverty to prosperity. How did you come to adopt this as your mission and how easy or difficult has it been to accomplish this and stick with it?
Scott Chaplan: I grew up in Los Angeles and have lived here all of my life. Our business interests largely focus on the urban core within Southern California. Our security firm, by way of example, Urban Protective Services, which is nearing its 10th anniversary, hires locally from within the urban core to serve and secure residents and visitors to and from the urban core, and consequently, our elite security team members secure their own neighborhoods, our properties within them as well as those of our clients and allows us to create meaningful employment with upward mobility while providing a critical piece of holistic health within a community, employment. Our sustainability bent came from my long time association with Hayward Lumber Company, the greenest building supply and service firm in the nation whose C.E.O, William Hayward, Chairman Emeritus of FSC, insisted I join his mission to give back to the world through the protection of forests. That impetus grew to LEED certification for projects, the acquisition and sale of Eco Timber and much more. It is now a part of the and of the Urban Group of Companies.
Many people in real estate still look askance at sustainability because they don’t yet see it as all that profitable. As a developer and investor, how does working in a sustainable and socially responsible way affect your own bottom line? What would you say to a developer who insists that sustainability isn’t worth it?
Scott Chaplan: A developer who says sustainability isn’t worth it is taking an uninformed and myopic position. The cost benefit analysis transcends dollars per board foot of lumber. Does LEED certification bring better tenants? Does the abatement of lead paint, the use of non-voc paint, recycling carpet, adaptive reuse save money, promote health, reduce cost and liability? Since the answer to the latter is yes, the cost benefit analysis actually augers in favor of sustainability. It is more an issue of education, particularly of the influencers and early adopters like the architects, designers and owners. The builders will follow the demand and the pull rather than push of change.
Tell us about your company Urban Eco-Laundry, which you sold in 2010 to WASH Multifamily Laundry Systems.
Scott Chaplan: Eco-Laundry was originally formed to take over the vending systems within our own multi-unit portfolio, primarily in California. It grew to third party properties we manage through Urban Housing, our property management and maintenance arm. Environmentally sustainable laundry soap, Energy Star machines and the paint in the laundry rooms themselves were parts of the value proposition as was the economic leg of the triple bottom line tripod. This division was sold within the past 18 months to WEB.
As a member of the Forest Stewardship Council (FSC) board, you’re spearheading a campaign to raise consumer awareness of FSC-certified projects, involving Home Depot, International Paper and Kimberly Clarke Corps. How is this campaign work progressing?
Scott Chaplan: My role as general counsel and board member for the FSC remains fascinating and an epic learning opportunity for me. The board, separated in chambers of environmental, social (which includes me) and industry creates a dynamic tension between very different stakeholders whose collective wisdom truly is changing and saving the world. Our upcoming October 20 “friendraiser” is designed to further marry Hollywood with the FSC to further promote sustainability within the Hollywood community. Our stakeholders, including but not limited to Kimberly Clark, Scholastic Publishing, Home Depot, most of the studios, Pottery Barn, Office Depot and many more will likewise be supporting and promoting this important effort to educate the world of the great work we do around the globe where over 40 percent of the world’s population lives within the forest. With hundreds of millions of acres under certification around the globe, FSC really is dedicated to saving our planet and disparate ways of life.
You’re also on the board of Bay Area-based Hayward Lumber Company, which focuses on eco-friendly building projects, and the Environmental Media Association, which is mobilizing the entertainment industry to educate the public about environmental issues.
Scott Chaplan: Hayward Lumber Company was founded in 1919 and is now run by the 4th generation. William Hayward ultimately decided that he needed to take his entire management team into the forest to determine how to give back after the realization that his lineage had been prospering, at least in part, from the forest for generations. The result of that epiphany was a transformation to the nation’s leading environmentally sustainable building materials and systems firm which I proudly serve as General Counsel and Governing Board Member. Hayward, along with Debbie Levin from the Environmental Media Association, an organization dedicating to engaging Hollywood in environmental causes, is helping us, through fellowship, engage the Hollywood community in the critical mission of education and preservation of our natural resources.
Last, but certainly not least, did your interest in sustainability start with your career as a lawyer? What inspired you to move in this direction and build such a big resume of work involving sustainability?
Scott Chaplan: My mentor, John Argue, who brought the 1984 Olympics to Los Angeles and is founder of the Los Angeles Sports Commission and president of the Los Angeles Town Hall, the World Affairs Council, the University Club and many more for-profit boards, taught me about giving back, as did my parents from a young age. My firm has brought me in contact with innumerable faith-based and secular nonprofit organizations, and through the New Markets Tax Credits program, Urban Seminars and more, we have been able to execute on our holistic triple-bottom-line investment and advisory approach.