Sunday, October 18, 2009

The Hard Truth about The Rouse Company

Now that General Growth Properties has begun their pitch to the county council for the legislation that will allow their redevelopment program for Columbia Town Center to move forward, the spirit of Jim Rouse will inevitably hover over the proceedings.

Alan Klein, the spokesperson for CoFoCoDo, got things started last week when he commented on GGP’s presentation to the county council. According to this story by Don Markus in The Sun, Klein thinks that GGP’s priorities are different than those of Rouse.

"Jim Rouse listed making money at the end. These people, their job is to make money," Klein said. "If they don't make money, they will be sued by their shareholders. They've got a business to run. Their job is not to do well by Columbia; their job is to do well by their shareholders. We're not dealing with Papa Jim Rouse like we were before. We've got to grow up."

Papa Jim Rouse?

First of all, Alan’s statement that Rouse “listed money at the end” is a misnomer. Rouse had three goals for his company; to improve the lives of the people in the places the company did business, to provide a good place for his employees to work and to produce a profit for his shareholders. He believed all these goals were equally important. I know this because I worked for the company.

Secondly, Jim Rouse had very little to do with Columbia development after 1974. I’m not certain of the exact date but when Jim stepped down as President and CEO and installed Matthias DeVito in his place the company was in deep financial doo doo. Columbia almost took the company down. Now sooner had they occupied their shiny headquarters building on the Columbia lakefront, then 500 employees were laid off. Some still refer to this as the Christmas massacre as it occurred in mid December.

Everything built in Columbia after 1974 was driven by a simple profit motive, not some benevolence of a mythical character Alan calls “Papa Jim Rouse.”

In many ways Columbia is fortunate that GGP replaced The Rouse Company. The Rouse Company’s plan for Town Center was to sell land to anyone at the highest price. They really had no master plan. As far as I’m concerned, if anyone is channeling the true spirit of Jim Rouse these days its Greg Hamm.


Anonymous said...

Thank you for this refreshing perspective.

Bob O said...

Interesting, and one of the reasons why I regularly read your blog.

Yes, the Rouse company was a for-profit operation, and the bottom line is always just that: the bottom line. If Mr. Rouse had not envisioned a profit in the whole effort, I'm sure he would not have gone into the effort of envisioning, designing and building Columbia.

Optimizing your profit by providing people a nice place to live and a good environment to work in is just smart business, and provides a social benefit.

I think GGP is also motivated by profit, but not by any sort of altruistic or business case that will provide a social benefit; they have a more naked need to turn some money around in the short- and long-term future, and may pursue any course neccesary to do so.

High-density urbanization is a sure-fire way to maximize shareholder value and minimize the time it takes to do so. Will this also provide a social benefit? I don't think so, if you define social benefit as having a nice, quiet, "low" density place to live.

Anonymous said...

Some further background. 1974 was a terrible recession, the first that Columbia experienced. It was due to that recession that The Rouse Company was compelled to sell Owen Brown Village Center to Giant Food.

While Jim Rouse was the consummate businessperson, driven by profit as much as anyone, perhaps more than most, 1974 marked the end of his reign at The Rouse Company. It took a few years before he left, but his time effectively ended in the 1970's.

Flash forward to the 1990's. After The Rouse Company reacquired Gateway, downtown became much less interesting. Indeed, as you said, Wordbones, TRC sold off varous parcels of land that were previously supposed to be commercial properties for low-density residential projects, such as the Whitney. Some day, a book needs to be written... "The Sell Out of Columbia by The Rouse Company."

Why anyone was surprised that The Rouse Company sold itself to GGP is the real surprise. Tony Deering's sole focus was towards that end. And he succeeded, at least for himself. I believe his personal stake in the sell-out approached $80,000,000. Not bad for a few years work!

GGP came in. After a bit of a rough start, GGP and Greg Hamm did what the old Jim Rouse would have done. He brought the best and the brightest together, developed a plan, and then took that plan to the community.

In my opinion, we are back to the good old days now, with Greg Hamm and GGP!

sobohon said...

good 'un, Wordy.

I like your Mobbie badge, too.

sobohon said...

good 'un, Wordy.

I like your Mobbie badge, too.

Bob O said...

Interesting information. Thanks.

I remember coming across one engineering/planning book written about Rouse, I'll have to go search Amazon for it.

Any other suggestions on good books to read about Columbia/Rouse Company?

wordbones said...

Bob O,

I think the best place to start is Better Places Better Lives a biography of Jim Rouse by Joshua Olsen.


Barbara Kellner said...

Good perspective. Columbia Archives houses the James Rouse Manuscript Collection and a collection of other maps, documents, photographs from The Rouse Company. Anyone interested in knowing more about Jim Rouse and the plans for Columbia should spend some time in the Archives.

D. White said...

Those interested in this subject might want to take a look at my new business novel–Pink Slips and Parting Gifts. It is fiction, but the story was in part inspired by the sale of The Rouse Company.