Common Ground -- Developers Make Low-Income Housing Their No. 1 Priority

COMMON GROUND

-- Employees: 14

-- Headquarters: Seattle

-- Business: Nonprofit developer of low-income housing

-- Chief Executive Officer: Steve Clagett

-- Expected 1990 revenue: $465,317.

-- Major customers: Nonprofit housing agencies, churches and other community groups, which pay Common Ground's development fees with grant money.

-- Strategy: Uses grant money to help nonprofit agencies develop low-income housing, then collects fees and turns projects over to clients. Hopes are to expand outside of King County next year.

In the world of real estate development, the phrase ``nonprofit'' doesn't come up much in conversation.

After all, this is the business that made - and might unmake - Donald Trump. It's the business of high finance, wheeling and dealing and leveraging investments into more investments.

At Common Ground development, all that is true.

But at Common Ground, the wheelers and dealers shoot for a profit of zero.

Common Ground is a developer that operates as a nonprofit agency - a rarity in the nation, according to housing leaders.

Common Ground was founded in 1980 by Steve Clagett, then a county housing planner. Clagett wanted to get involved in development and saw a need for permanent, low-income housing - not the type designed as someone's temporary tax shelter.

Clagett said he had heard of other groups with the same idea, and it wasn't long before Clagett, the Church Council of Greater Seattle and the metro branch of the YMCA agreed to incorporate Common Ground, a name chosen to represent their shared goal.

Having just marked its 10th anniversary, Common Ground is developing a record number of projects, celebrating a national grant awarded this month and planning to expand next year outside its King County base.

Common Ground, run by a board of directors, works with other nonprofit agencies that own and operate housing. Most of the residents are disabled, drug addicted or otherwise in need.

The development staff finds land or buildings to remodel, applies for government and foundation grants, hires architects and contractors and mediates when projects upset neighbors. Housing that serves mentally ill people - a large share of Common Ground's business - is especially controversial.

Nonprofit agencies that hire Common Ground pay a development fee, the same way a large investor might pay a private developer to develop a high-rise. In this case, though, if Common Ground begins working on a project then can't obtain a grant, it earns no fee.

When a project is finished, Common Ground moves on. That's what makes it different from typical nonprofit agencies, whose strength is in operating the housing.

Clagett, executive director of Common Ground, said he sometimes wishes he and his staff could get out more to the homes after they are occupied.

``A lot of times we just do our thing and move one. We're kind of coldblooded about it.''

That isn't the description used by agencies that work with Common Ground.

``They're a great people agency,'' said Pamela Elessa, director of housing services for the YWCA. ``They want to eliminate homelessness. That's unique in itself. They're not looking at it for any profit, any gain.''

Nationwide, it is rare for a housing agency to take on development as its only business, said Carla Okigwe, executive director of the Seattle Housing Development Consortium, a group of 16 housing organizations. There is a similar organization in Boston, but it didn't start out with the same purpose as Common Ground, Okigwe said.

Jeanne Anderson, chief executive officer of Volunteers of America, said Common Ground employees offer their ``shoulders to cry on'' to ease the stress of developing projects. Volunteers of America is building a 16-unit apartment building in Greenwood for the physically disabled.

``I don't take a step without talking to Eric or Steve,'' Anderson said.

``Eric'' is Eric Brown, one of Common Ground's housing specialists. He has a degree in urban planning but says the field is a tough one to break into. He had been a modern dancer for four years when he decided to volunteer with Common Ground. That led to his full-time job.

As a housing specialist, Brown manages several projects.

One recent afternoon at a construction site, he gathered in the contractor's trailer with the construction supervisor, architect and two people from Community House, the nonprofit agency that will run the three-story apartment building for drug and alcohol addicts.

The group discussed, among other things, an information sheet Brown and Community House had drafted. Construction workers were using the sheet to explain the sensitive project to curious passersby. The area, on Northwest 85th Street, is mainly commercial, but some older homes - occupied by longtime residents - remain on side streets.

The morning of the meeting, construction supervisor Mike Kirry said the sheet had helped ease some of the neighbors' concerns.

Not all of Common Ground's projects have gone as smoothly.

Common Ground arranged a lease on a 10-unit building, with an option to buy it. After spending $20,000 and several months refurbishing the building (which was in such poor condition all but one tenant had abandoned it), the developer could not negotiate a low enough purchase price and had to walk away from the deal.

Clagett said failures like that hurt Common Ground more than most developers because Common Ground, as a nonprofit agency, doesn't build a profit reserve to cover large losses.

The most difficult project Clagett remembers, in 1983, was renovation of the 13-story Olive Tower. The previous owner had financial problems, and the gas company kept shutting off power to the building. The elevator kept breaking and the place was in general disrepair.

To manage all the problems, a Common Ground employee and her husband moved into the dilapidated building for 15 months.

Common Ground's challenge now, Clagett said, is keeping its personal touch.

``I guess the . . . tough thing is just growth,'' he said. ``You change as you grow. We started out as a kind of warm and fuzzy group. We're becoming so large, we're relying on more of a hierarchy. I can't have everybody reporting to me.''

The agency apparently hasn't suffered much from its evolution.

Great Western Financial Corp. this month gave Common Ground one of four national awards for nonprofit housing organizations.

The award came with $50,000, which Common Ground will use to hire two development assistants. The staff will help Common Ground expand outside King County, Clagett said. Until now, expansion has been hard because Common Ground's grants have come from King County sources such as the local United Way and cities.

Clagett said Common Ground isn't ``getting rich,'' but has increased its revenue enough over time to expand its staff and the number of projects it can take on.

Four people worked for Common Ground in its second year, seven people two years later. A staff of 14 is now handling 29 projects at once - a record. Three years ago, Clagett said, three simultaneous projects would have been a lot.

He credits the public for making Common Ground's achievements possible. Most gratifying, he said, is the way the group has found a specialty helping people with disabilities and other specific problems.

``You really change people's lives around.''

Strategies appears weekly in the Business Monday section of The Seattle Times.