In the early 2000s, Cathy Ward, then-Chairman of NAIOP Maryland’s Legislative Committee, was concerned about the volume and complexity of state issues arising annually that affected commercial real estate. Managing new legislative and regulatory proposals had also become time-consuming work.
“We had a small team of people working on legislative issues on behalf of the Chapter, but we all had full-time jobs in the commercial real estate sector,” explained Ward, who worked at the time for Corporate Office Properties Trust (COPT). “To hire an outside lobbyist to engage on a particular issue that affects the entire industry could easily become a financially unsustainable situation in the long term.”
Ward attended a NAIOP National Forum, which gathered leaders from Chapters across the country to discuss pressing issues of the day. At that session, a representative from the Colorado Chapter explained that the price of water was rising to astronomical levels, so local commercial real estate companies began “pooling their resources” to help defray a portion of the costs. A simple formula was used. Developers were charged one penny for every square foot contained within their commercial real estate portfolio. For example, if a company owned one million square feet of space, the contribution would be $10,000 annually.
Relatively speaking, that did not seem like a great deal of money to Ward. The concept also launched an idea. Would it be possible to implement this program in NAIOP Maryland as a funding mechanism for the Chapter’s legislative activities?
“At the time, our Chapter was fighting several battles in Annapolis, and I thought this would be a way to establish and maintain the long-term presence we needed during the legislative session each year,” she said.
Ward remembers well the time she presented her idea – dubbed the Penny Per Square Foot Fund – to the Chapter’s Developers Council during a lunchtime meeting at the Capitol Grille.
“Even before I finished my presentation, Ed St. John literally jumped out of this chair and exclaimed, ‘We’re in! Then he scanned the room and said, ‘I want to know right now who is NOT in.’ Of course, many immediately followed his lead,” Ward said. “I had pre-sold the idea to the COPT management team, so I knew we were off to a great start beforehand. But generating Ed’s immediate support meant a lot.”
Manekin’s Cole Schnorf, who served as president of NAIOP-MD from 2008 to 2009, was also intimately involved in the Penny Per Square Foot formation and remembers creating lists of potential development companies to attract broader support.
“Our pitch included reminding these groups that a proactive legislative effort would cost far less than dealing with issues after they became law and negatively impacted activities,” he said. “There is always something new being proposed, and it was in our best interest to reach a comprise to achieve less impact. That takes an organized effort and sustainable funding resources.”
Several months later, with the leading companies in the market providing dedicated funding on an annual basis, NAIOP Maryland hired its first full-time Vice President of Public Policy who, together with a committee chaired by Tom Pilon of St. John Properties, leads the efforts of the Legislative Committee today.
“Hiring Tom Ballentine as Vice President of Public Policy was undoubtedly my single best decision when I assumed the Presidency of the Chapter,” Ward added. “Under his leadership, we were able to shift the tide in Annapolis, establish NAIOP Maryland as an important and credible voice, and bring a new level of professionalism to our activities in Maryland.”
“The Penny Per Square Foot Fund is an honor system and, actually, we need additional support from local developers to help pay the freight,” Ward said. “More bills are being introduced each year, and the time and cost to fight damaging pieces of legislation are only rising. As more companies contribute, NAIOP Maryland gets stronger.”