 Welcome. My name is Lily Weinberg and welcome to episode 19 of Coast to Coast. For those of you who aren't familiar, we started the show Coast to Coast right as the pandemic occurred more than five months ago. It's hard to believe. And what we're doing here is we are looking at the future of cities during this really dynamic time. How are cities responding to this moment in time? And we've examined all sorts of topics from public spaces to smart city solutions to mobility and we're really thinking around how equity in particular plays a role in this work. Last week, we looked at how to measure social impact and make tough decisions during a time of budget constraints. And most importantly, we really want our audience, all of you, to leave with practical solutions for your cities. So today, I'm really excited to talk about how universities are grappling with COVID and the major decisions that they're dealing with during this time. In particular, we'll look at how cities, especially ones dependent on economic benefits of these universities and how they're dealing with the pandemic. What are some creative solutions that universities and cities can explore together? So I want to welcome Omar Blake, the CEO and co-founder of U3 Advisors. Hi, Omar. How are you? Hi, Lily. I'm doing great. Thanks for having me. Of course. And where are you located? I am located in Philadelphia. Philadelphia. And I know we've had Catherine Ott level on our show. They've done an extraordinary job of really keeping their public spaces open, too. They did. They did very much so. And Philadelphia so far, we are doing very well, at least in mitigating some of the impact. That's right. That's right. Okay. So I'm really excited to talk about universities and cities. You, in particular, are extraordinarily qualified to talk about this subject. As part of U3 Advisors, it's a firm that's really working with anchor institutions to advance their missions and unlock their impact. And like I said, you're uniquely suited to speak on this topic with your experience in advising universities and cities and creating long-term economic strategies. I mean, you've worked all across the country, all over the world, really, and really thinking about unlocking economic impact. So I'm excited to dive in and discuss that topic. And so how we're going to structure this is we'll have 15 minutes for an interview. Okay. And then we'll open it up to live questions with our audience. And so for audience members, please put your questions in the Q&A box. Or if you're watching on Facebook or Twitter, it will be hashtag night live. All right. So let's do it. Let's get started. So Omar, I would love to start with some context setting. If you can tell us a bit about your work with universities and cities, and how do you think about unlocking the impact in these institutions? Like what does that really mean for our viewers? Thanks for the introduction, Lily. We have a unique perspective because we sit in this in-between space, the space in between institutions, communities, and cities. And while people think of us as experts in the real estate market, we sometimes talk about ourselves as urban therapists. Because at the end of the day, you are trying to really connect the institution to the community that surrounds it. And in doing so for the benefit of both, to be able to actually create a more sustainable economic development strategy that benefits both the institution and the community. We are, as you said, we work in many cities, small and large. Most of our work is in majority minority cities. So we tend, because of our work, deal with the question of equity, question of access, question of social justice as just a part of the fabric of what we have to deal with. These are elite institutions in many cases grounded by impoverished neighborhoods that have been disinvested in. And then what are the connections that you can make to actually lift everybody up? Okay, so I want to explore two things here. So one is, tell me a bit more, let's ground it a bit. Tell me a bit more about what that means connecting a university to a community. Can you give me some examples of how that works? So while the conventional thinking about institutions is about, we produce knowledge, teaching students for re-entering a productive life and solving the world's problems, as well as research, we actually tend to think of institutions as an enterprise. And that's our kind of theory of change. But what is the hypothesis that we have carried? It's not a hypothesis sector, given how much it has been implemented, is that these institutions are really enterprises. They produce knowledge, of course, but they own real estate, they procure a lot of goods, they hire people, they invite students to their campuses, so there is a lot of traffic coming and going, and they are producer of culture, they are producer of content that is of interest to the larger public. And as such, in most cases that enterprise is diluted in its impact because there is no place-based strategy to it. So we bring in a place-based strategy or a lens to the enterprise, and we say something very simple. If we buy more local goods, if we hire more local residents to work at universities and hospitals, if we live closer to those campuses, we by nature of the buy local, hire local, live local, which we created literally in Detroit about now 13 years ago, it actually creates an economic underpinning for that locality that creates more sustainable economic growth. So that's the theory of how we go around it. And when you think of it, research is a big part of that. Research is actually pushing the boundaries of knowledge and the boundaries of discovery. And if you connect that to entrepreneurship, to commercialization, and licensing of discoveries and the like, suddenly you are not just trying to employ everyone in a pie that is the same pie, you actually are increasing the pie. Yeah. That's how we think about it. And that makes perfect sense. And he said buy local, hire local, create local. But why, Omar, I work in a lot of, as you know, I work in a lot of university towns. Why is that sometimes missed, like something so basic and practical? Why is there sometimes a disconnect? It's a first time we are blessed because if it was not missed, we would not have a business. So let me just acknowledge that. I actually would say that it is a very natural product of higher education. And you know, you ended up with the heritage of campuses being this place where you retreat from the hustle and bustle of the cities to actually have very good thoughts and think about whether it's philosophy or it's about science or what have you. So there is actually almost in the DNA of the sector is this sense of seclusion, because I don't want to get distracted. But then of course, you know, you have, as institutions grew over time, it became obvious that they are also trying to solve the practical problems that people. So then that retreat doesn't work in that sense. But institutions by and large are staffed by folks that are focused on the poor mission. And there's nothing, there's no problem in that. But there is a missed opportunity to making the connections that are much closer to them than they think. You know, institutions will see their peers as peers in the same, you know, four, four year elite, four year college, or a top 50 Carnegie research institution or the like. But they may actually have more in common with retail store across the street from campus. And they have with another institution because the person who owns that retail store is actually physically there they have a common sense of what's important and what's good and so on and so forth. So you kind of try to come in and say you have been looking at it in the right way for the poor mission. But now your core mission is to actually extend to the local geography around you and make those connections to the people around you, because that's how you generate knowledge and generate experience by students that are grounded in the realities of what they do around them. But thank you that that's really helpful. So I want to move into this moment in time. This is incredibly relevant during COVID-19. And as you know, and as our audience knows, this has led universities across the countries, across the country, excuse me, to shut down or to have a hybrid model for safety precautions. And what we know also is that, and we talked about this before, is this will likely exasperate a trend of universities potentially permanently shutting their door. And I want to make sure that we link to U3's research and dashboard on the geography of campus closures. So can you talk a bit about you know, what you're seeing and learning in particular during this moment in time of COVID with respect to universities and cities? So let's let's take a step back before COVID. Higher education has been, I believe, an existential threat of business model is not working anymore. And that is again, not because of COVID. You have demographics in the country that are not growing as it has been the case in the past 20 years. In a crude way, there are more seats than warm bodies to fill those seats. That's a very crude way of explaining it. And that is not a blip of few years. That is a trend that is going to stay with us according to demographers for 20, 20 some years. So there is that pressure. Then there is the pressure of affordability. We have really been working off a system of, you know, you borrow your way into college, but then with the tremendous sense, tremendous debt, that is just not going to be working anymore. And then online that online education that really is begging the question of, do I need to have built as much square footage as much buildings and take on in debt to build those buildings? In a way, COVID exacerbated all of that. We have, you know, in many ways, higher education is in need to rethink its business delivery model. And not all of the institutions will survive. You know, the elite are going to continue to be elite. And for every seat, there is going to be 10 or 20 applications. But you know, the next year, when you are going to spend 60 and $70,000 and you will not be getting a top degree, there is a question of a value proposition here of, you know, why I would do that versus going to a public institution. But even on the public side, where you would think that that will push demand to the public, we have for now 20 some years across most states, we have been decreasing public funding for our education, which has been a tremendously bad public policy that even the public institutions are not able to take on the growth or to be able to actually have a sustainable business model, given the pressures they have on on tuition. So in all of that, you then bring in a pandemic that accelerated the online interesting online education has been talked about as a displacer of current methods of teaching. And in fact, there are not many have gone there and it has had a marginal effect. But now, you know, most universities are either hybrid or fully online. So that I think will have a sustainable impact moving forward. You have, and that then begs the question on pricing, am I still paying $70,000 if many of my courses are online? Right. But then also that begs the question, how much did I build on campus? And do I want to rethink the campus facilities because why am I carrying that overhead in terms of square footage that in fact is not as productive as it used to be because of the online delivery? I still believe tuition is going to be a huge, huge issue. And that in a way is going to fundamentally change or force a change in the business model for institutions. What do you mean by that, Amar? Like what the tuition piece like that they're going to have to lower tuition because of the virtual? Yeah, to be that pressure. And I actually believe that there is going to be a greater push at a public policy level for free public education at public institutions. And then institutions that are not public are going to have to work in making the case for a what is the value proposition. If I go to university X, I get it for free. I get a four year diploma for free versus going to a private institution that I have to pay for. Now institutions that have big endowments are able to subsidize the tuition for many students. But many of the smaller colleges are not really endowment-rich and they are more tuition dependent. And this goes to the question of closure that you raised, Lily. Many of the colleges that are under tremendous, tremendous pressure are the smaller colleges in smaller towns. And those towns are college towns and larger employer is the college. But those are the colleges that are under the highest pressure. And in many ways, if you step back and you take that subsector of higher education, you find that it is the type of college that teaches more of the first gen and the minority students than any other part. Even I am not 100 percent certain about the numbers, but it may compete even with the public's. You know, most of the public's, the minority students are somewhere between, you know, 10 to maybe 20, 20 some percent. But many of these institutions, the minority students first gen women are constituting 50 and 60 and 70 percent. So you have really a double bad impact, negative impact, negative impact economically on the town. The entire economy of that town is largely driven by the college activity. And then you have, you are cutting off access to the most vulnerable population to the latter that can actually get them into society to be productive and to move up in income and health and all of the other indicators. So I actually, I mean, that's a very difficult part for me to accept that, you know, we have a system that in fact is going to punish the vulnerable rather than to actually find a way to deal with, to mitigate that. So there are some really major equity issues too. As we, as we see, you know, particular schools that are being threatened. And I'm starting to look at the questions. And there is a particular question around HBCUs. And it's been well documented in news, you know, some of the financial issues that they've had across the country too. Any comment about that? I mean, they are part of that most vulnerable cohort of institutions. And my sense is that they are kind of the leading indicator of how institutions that are serving first gen and minority students are in fact being under tremendous stress. I believe that the answer, Lily, is it's right now. The answer is each institution on its own. But the fundamental problem with that construct, I am as an institution, it is very difficult for me to just pull the plug and say, I'm done. So I wait and wait and wait. And I try my best. And I keep changing programs and changing ways to recruit students. But I am still competing for the same limited number of students. I am competing across the entire country. International students are not coming in as they used to. And certain regions, the demographics of certain states are even more pronounced than other states, you know, in the Midwest, there is just the cohort going into college is much, much less than it used to in the past. But right now, each institution is left on its own. And in my opinion, that is an extremely, extremely difficult path because you are asking a president and it's bored to either put themselves out of business and kind of land softly to come up with a creative idea of how they can change the business model and survive. And I believe that the answer needs to be at a higher level. Either there is a federal bailout of higher education that actually looks at higher education as a tremendous investment, not any different than when we started the land grants and institutions back in the days. That was a way to say, I'll give you land and give you funding and you will create an institution that will produce productive citizenry. I mean, there was a time when we actually invested in our people. And so either there is a level of state or federal intervention, intervention by philanthropy or a group of civic leaders in a region or in a city that brings institutions of that that are impacted by this in a coherent way to actually address it as a group. Or it's the individual mergers and acquisitions. We can talk about it as if we are in other sectors of the economy. But it has to be the case that public institutions taking over smaller colleges, large research institutions merging with smaller colleges and rethinking then what that campus is going to focus on compared to the larger institution. But right now I would say largely we are leaving institutions on their own. Some of them have a longer runway to figure this out. Some don't and are tremendously stressed out. Or we are starting to see the mergers you know here in Philadelphia, Jefferson University merged with the Philadelphia University smaller college and that has been a successful model. So those are the two interventions that we see. But this idea of a statewide look at the sector at large, we don't see that. Just to give people a sense of how big the sector is. We have 4,000 plus colleges. We have about 20 million students that are going into these colleges in all of these years. We have 4 million employees. It's a sector that employs 4 million people across the country. Between investments and expenses there is about 1.3, 1.4 trillion dollar is the size of that sector. So if any other sector is failing we would have said it's too big to fail and we would have intervened. But somehow the fragmentation of higher education and because it is really not in the main narrative of people thinking about universities as enterprises they are left to themselves. Interesting, yeah. I hadn't really thought of that Omar and that's so right. If I remember correctly there has been other bailouts. I'm making a joke. Other bailouts for other industries. This really does make sense. And my final question was crisis brings opportunities and you already answered what are some of the opportunities potentially. Whether it's a bailout or mergers and acquisitions. One more, Lily. It's really repurposing many of the campus buildings. There is a conversation about maybe some of the campuses will integrate vertically in secondary and elementary secondary schools that allow for a continuum of education. Something that working with the Kresge Foundation Detroit has proved to be extremely successful. There is also rethinking of some of those colleges as an extension of community colleges. And that it is not really any more a four-year degree as much as it is geared towards certificates that are much more practical for the local economy. But we need to be rethinking some of the physical assets of these institutions rather than just let it slide. Yeah, absolutely. So integrating vertically, extension of community college, I mean this is all really interesting. And you said you're working at Kresge. So this is already happening, if I understand it correctly. It's a tremendous example in Merry Grove in Detroit where a college seeing this, you know, all of these stress points, you know, was not able to continue as a business. Kresge has been saved the land and the buildings and reimagined the campus as a the beginning of a pilot for P2O 220. An education working with the University of Michigan in partnership with the school district in Detroit. The school opened last year. A great success story where the University of Michigan is now invested in the middle of Detroit in a very positive way and reimagining really the Merry Grove campus as a different type of an education institution. That's great. That's great. Thanks for that example. So I want to get to elevate a couple other questions that we have. We're almost at time. So there's a question around, and you've already talked a little bit about this, but how much do you think the traditional model of universities where students physically come to the campus for years at a time will be threatened by COVID? So tell me what, tell me your thinking around that. Of course, you can't predict it, but what do you think? I'm not really sure if COVID, so actually there is enough anecdotal evidence that students are longing to come to campus and to experience the college experience away from home. So I think there is enough evidence of even in the middle of a pandemic, students are not really saying I'm staying out. I was talking to a president of one local institution where the deferrals are very minimal in terms of students who didn't want to come and start. But I think the question is much more about online education and the question is about affordability. Okay. Then you would think that, you know, if you pick, if you take the cost of education, a big part of it is room and board, and will we find more tendency for people to stay locally rather than, you know, applying to 10 universities and colleges across the entire country and that the feeding, the feeder for each of those colleges and universities are much more regional and local than they have been national and international. But that's a speculation. We don't really know yet if that's going to be the case. But I would say affordability is going to impact that and online education much more than COVID. Got it. Got it. And so it's that business, so you touched on this before, but it's the business delivery model is really going to be disrupted. So just last question, any examples of universities and cities that are doing really interesting things during this time with COVID? Any that you want to highlight to be able to ground the conversation about it? Honest with you, most institutions are largely in a literally in a lockdown kind of mentality. We need to survive this pandemic. We need to worry about the students that are coming here. Either we are delivering online education the right way or they are showing up physically for their safety and health and wellness. So many institutions are really preoccupied and I would say till the end of this semester that will be the entire focus of institutions. Internally. Out of it, there will be the disruption is coming probably in the next year and two rather than in the in the focal points here of the pandemic. But some institutions are doing great ideas, small ideas, but important, you know, subsidizing retail rents for retailers that cannot pay the rent, trying to encourage for local, you know, merchandise. We are actually seeing a lot of push on the by local aspect as a way to responding to this. But it's, it's again, we are really focused on the sustainability of this semester before we can think about the long term sustainability. Got it. Okay. Well, well, Omar, this has been really interesting. Thank you for joining us on Coast to Coast. It's relevant for so many of our cities across the country. I also want to make sure that we share the dashboard that you three advisors also made, which I thought was fantastic for for geography and closures for cities. And with that, thanks again. And for our audience, we'll see you next Tuesday at 1pm. Thanks a lot.