- PNC is proud to support Business Forward, where community leaders discuss the issues confronting business in Central Illinois.

(instrumental music) (bright upbeat music) - Welcome to Business Forward.

I'm your host, Matt George.

Joining me tonight, very special guests all the way from Memphis.

Dee Brown, Dee is the CEO of the P3 Group, and he's been seen on Yahoo Finance, the world news, Forbes, much more.

We're going to get to all that in a second.

Welcome Dee.

- Matt, thank you for having me.

Well, there's so much.

I was just telling you before we got on camera.

I probably studied your businesses for hours in the last couple of days, because you have so many different, fascinating angles we could go here.

So, we're just gonna get right down to it, alright?

- [Brown] Absolutely.

So two questions right off the bat, talk to me about the P3 Group, but also kind of wind in there.

What is a public private partnership?

- Sure if so, I start with the last part of the question first and then kinda tell you about the P3 Group.

- [Brown] Okay.

- So a public private partnership is essentially, a joint partnership between a private sector enterprise, and a government agency.

Where you essentially combined resources, and the goal is to transfer as much risk from the public sector to the private sector, and provide a lot of skills, technical capabilities and capacity to the government, to execute projects.

And so, with the P3 Group, we are a real estate development firm that specialized in public private partnerships.

So, that's essentially all that we do.

We represent government agencies throughout the United States, and the Caribbean islands where we go in and form these P3s, or public private partnerships.

And we take on projects that we feel like are very critical projects to communities.

So, unlike a typical Commercial Real Estate Developer, we're not necessarily developing strip centers, or really what I call 'Sexy projects.'

We're developing projects, that are critical to the survival and revitalization of communities.

So things such as healthcare facilities, police, fire, educational facilities, things of that nature, courthouses.

So, we call it social infrastructure.

Because these are facilities that are very critical to the communities.

- And you know, it's interesting.

I feel like I'm, well-rounded in business.

And when I saw PPP, I thought to myself of the PPP loan (both laughing).

and I'm sitting here going, wait a minute, "I better do a little more study in here."

And so, I'm glad you explained that.

So you're an entrepreneur, you're an author, a philanthropist.

I'm going to get to that in a second, but, let's say, let's say I was going to bring a potential project to you under the P3 model.

I mean, what would that... You just said a few, but- - [Brown] Yeah.

- How does that even go about like, what's the process?

- Sure so typically, when we engage with a government agency or non-profit organization, there is some project that they have been trying to get delivered for some period of time, or that they have dreamed about having.

And so what we do, we come in and we provide a complete turnkey solution.

So, we designed the project, - [Matt] Okay.

- We build the project, and we finance the project for the government.

And so the government typically will start making lease payments on the project, after completion, typically 6-12 months after the project has been completed.

And so, by partnering with us under a P3 model, the government sector, get the project delivered in a much more rapid pace.

So typically, where it may take them years to get a project under construction, we can come into a community and have a project under construction, in as little as 90 days.

And then we can complete the projects on schedule, and on budget because we control the relationships between the architects and the contractors, as well as the design.

And so we prevent the project from getting out of budget, and costing the government, additional money and resources.

- And now you're going straight from my questions then, then why wouldn't this happen all the time?

Or does it?

- Well, it's a pretty popular model, but the model that most government agencies are familiar with, it's your typical... What we call design-bid-build model, where the government identify a project, they hire an architect and engineers to design the project and they put it out for public bid, and then they give the product to the low bidder.

The problem with that process is that projects often come in higher than anticipated.

Because there's no interaction between the architect, and the construction community during the design process, which under that model is prohibited.

And so, I think from the... To answer your question as to why they wouldn't do it?

Sometime is an education process, like you have to go in and educate agencies on why they shouldn't do this.

And sometimes it's just the desire not to do anything different.

Sometimes people like to just stick with the status quo.

But, the reality of it is that there are a lot of communities around the country that have come to the realization, that they are not efficient at constructing projects.

And that they get better outcomes when they partner with the private sector, and get the projects brought to market at a quicker pace, and in a manner that controls the cost.

- Yeah.

I'm kinda comparing it into the healthcare world of care coordination.

I mean, you're talking about your one-stop shop.

Maybe I'm putting words in your mouth, but, you're talking about this efficiency that actually saves both sides a lot of money, because you're sticking to deadlines.

Right?

- Absolutely.

- I mean, and that's what I find interesting.

And that's why I find there's, so much red tape sometimes in some these projects that, you may sit here and say, "In this fiscal year, that this project was slated to be done.

And then all of a sudden you're already into the next fiscal year.

And what does that do for the other buckets you're looking at, right?

- Not only that it impact other projects that you may be planning, but it also impacts the cost of construction.

Because historically, construction costs increase on average at a rate of 3% annually.

And now what we have found out during COVID 19 is that, those percentages have gone out of the window and you've seen construction costs go up 30, 40% over pre-COVID numbers.

And so, time is money in the construction industry.

- Yeah, and I guess I go back to my original question as it would seem that I totally get somebody sitting here going, "I mean, this is how I've always done it."

Right?

- [Brown] Right.

- We all feel that all the time.

But, this is a good way of thinking of how do we progress a lot faster?

- [Brown] Right.

- Correct?

- Correct.

And then also this process offered the government opportunities to get capital projects completed, without voter referendums.

Now that could be a positive or negative, but in the instance where time is critical, for example, we're in a community where the Health Department is infested with rodents, it's raining in the buildings.

- [Matt] Mm-hmm.

- And they needed to get a new facility.

And they needed that facility erected in a really rapid time pace, times span.

And so, what they did, they entered into an agreement with us.

We were able to get under construction in 84 days, and complete the project in just over a year.

And then the people working in these facilities can now work in clean, safe sanitary conditions.

But more importantly, the people in the community can go to a clean and sanitary business, to receive care because that's what you expect, right?

And that's what the citizens deserve when they go to get health care from their community facilities.

- Okay so, now, let's go back to what you were originally saying and that is about community.

What you're talking about affects morale.

- Right.

If you think about it, it affects hiring, and retaining and everything.

So really, is a trickle across the whole board.

And what you're talking about, finding those efficiencies.

- Well, it is that plus...

It is a morale booster for the community.

- [Matt] Yeah, yeah.

- Because really what we're doing is about the people.

Because the facilities that we're delivering, are being delivered to serve the people of those communities.

And so, if you live in a community where your leadership is not providing you with public safety, adequate health care, adequate educational facilities, then ultimately that community will be abandoned by the people, right?

As people become progressive and realize that there are better opportunities in more progressive communities, they're gonna leave that community that are not... Those communities that are not providing facilities to support them.

And so, it actually serves as a catalyst to help reinvigorate these communities.

- Another side question are like food deserts, lack of grocery stores in certain areas.

Is that part of this too?

Or is that- - Well, we have not completed a grocery project, but we are... We do have projects where we're providing dining services for college campuses.

- [Matt] Okay.

- But on our non-profit side, we have a program that we launched called 'Attacking hunger.'

- [Matt] Yeah.

- And so what we're doing there, is we're going to college campuses and into communities, and we're adopting a pantry food... Pantries on campus, keeping those pantry stocked with food.

So, kids that are attending college suffering from food insecurity.

They have access to healthy food options, and we're also partnering with a community food banks, within communities that we serve to also help provide food and meals for people within those communities also.

- That's awesome.

So, I'm guessing when you're vetting these projects, risk mitigation is huge.

- Yes, so risk mitigation is a critical piece of that process, not just for us as a company, but also for our partners, for the community, for the bond holders who purchase our bonds when we take them to the market.

And so, we use number of risk mitigation tools to protect ourselves.

Those are, you know, obviously insurance is a significant risk mitigation tool, payment and performance bonds from the general contractors who provide us a guaranteed maximum price, to deliver the project, we use owner's reps to go out... owner's reps to go out and actually, inspect the work that has been put in place to make sure that it's safe, that it may meet our quality standards, and that it was done, according to the plans and specifications that were provided to the contractor and subcontractors.

And so, we also have an architectural firm who provide construction administration services.

That's also inspecting and checking the work.

And so, it's all these layers of risk mitigation that we put in place, to protect us, to protect the municipality or county, or agency that we're working with.

And also protect those bond holders who may purchase our bonds.

- I mean, this is...

I love this topic because it really shows how a community can really thrive or not thrive, right?

If a community decides not to move on any of these projects, they're, starting down a path, or they're already down a path that they can't dig out sometimes.

- And it's, and we see that from time-to-time.

It's unfortunate.

- [Matt] Yeah.

- But you see communities that make a decision that they don't wanna try something new.

And then you look back at that community a year, two years down the road, and you find out they're in the same situation they were in when we had the conversation with them previously.

But, sometimes you have people in leadership that feel like for whatever reason, they can get it done themselves, and don't want the assistance of a private sector company to come into the community to assist them.

And that's fine.

What I tell everyone is that, we don't try to sell our services.

What we do is look for opportunities to partner with municipalities, or counties or agencies that have come to the realization that they can't get it done themselves, and they want to part, bring in a private sector enterprise to help them get to the finish line.

And that's what we like to look at ourselves as doing is being that engine or horsepower, that helped get that project across the finish line, and create a success story for that communities, the communities, so that they can then begin to build on that success to have other success stories.

- Oh, I love it.

Because I can name you, my hometown of Danville, Illinois would, you lose factories, you lose jobs, you lose different things.

So it's interesting.

So, did you get your start in real estate?

Is that how you started?

- Well, yeah, not in public private partnerships obviously, because that's a really kind of niche.

So, I started off just being a regular residential salesperson, got into real estate investing, rehabbing buying and flipping homes, went into commercial real estate and then into a government contract and was a highway street and bridge contract.

I owned a company that built bridges and all types of projects for the state, federal, and local government agencies.

And that kind of graduated into me putting together my construction knowledge that I acquired, with my real estate knowledge that I had.

- [Matt] Yeah.

- And figured out that there was this opportunity, to create these unique relationships between my company and the government, that obviously we know now P3s.

And we found out that that was a really good market for us, a really good niche.

And it's really fulfilling because the projects that we're doing is a lot different when you go into a community, we just recently opened up a Veteran Affairs Center and it's also a Memorial and museum, right?

And so, that facility would served more than 6,300 veterans.

- Oh, wow.

- Who did not have service in that community.

It will also stand as a Memorial for nearly 8,000 people that lost their lives in the state of Arkansas, during the previous wars.

And so, for the community, this is a very, very meaningful and impactful project.

And so that's a lot different than, you know, building a Strip Center and putting a couple of stores in it, right.

It's- - Leasing, right?

- These are transformative projects that are actually impactful to people.

You see people come, they cry, they they're overjoyed about what we're doing in these communities.

So, it's a lot more substance behind it.

- You're changing, I mean, that's what you're doing.

So you're appointed National Policy Advisor on these public private partnerships and Urban Development to the National Bar Association.

That's pretty cool, right?

- Absolutely.

- So, explain how that happens.

Is that because you're best in class of what you do, and they hear, and they say, "Man, we need you."

How does that even happen?

- Well, you know, it's interesting that, all of these kinds of appointments with...

Whether it's the national bar, Forbes, they just kind of... - [Matt] They come to you.

- They come to me.

And I think it's because, I'm trying to not just go out and make a living.

I'm trying to make a difference.

And I'm trying to do things that are impactful to people's lives.

And I think that that's being recognized.

And I think that the positions that I get put in, it's just building upon those success stories that I'm going out and making around the countries.

- Nice, that's so good to hear.

So you do have a lot of awards and credits to your body of work.

But, one that really caught my eye and I was sitting here, I read it like two, three times.

(chuckling) I thought this is pretty neat.

So I need to ask you about it.

- [Brown] Sure.

- You hold the honor of being the first Minority Department of Defense Contractor to have a Federal Contract with the US Navy Nuclear Power Command.

- Yes.

- [Matt] That's impressive.

- That's one story I kinda liked telling again- - [Matt] Please do, because I'd like to hear - The Navy actually reached out to me and asked, would I be interested in pursuing the opportunity to hold a contract?

And the contract was, it was a public private partnership, but not for a construction project.

It was to change out sea anchors on nuclear submarines.

And (Matt chuckling), the Navy had some resources to get this done, but they lacked a significant amount of other resources, such as tug boats and cranes that float on barges, and things of that nature.

And so I had to procure all of that equipment- - [Matt] Wow.

- I had to partner with the local union and hire skilled personnel.

And then we had to train them.

They were crane operators, but they had to go through specialized training, to operate a crane on a floating derrick.

Because obviously when you're operating a crane on a barge, it's not a stable platform, right?

So, we had to do all of that training at the shipyard.

And then we had to deploy all the equipment by water, into the nuclear facility.

They had to bring out Navy divers to do a bomb sweep on the equipment.

- [Matt] That is crazy.

- And we were changing out 60,000 pounds, sea anchors on nuclear submarines for the Navy.

And that was one of the jobs that kept me up at night.

(Brown chuckling) - [Matt] I bet.

- I always thought something was gonna happen to the crane in the middle of this (both chuckling).

- And you flipping over whatever.

You talk about risk mitigation.

- Right so, that was a kind of a dare devil contract, but it ended up being a really good project.

We ended up getting a rating from the Navy as very good.

- [Matt] Very good, I read that.

- So, and we are proud of it.. - I love that story.

And when I read it, when I read into it, I'm like, You don't even think of things like that- - [Brown] Right (laughing).

- The average person has no clue, you know- - I never thought of it (laughing).

- I mean, it's just crazy.

So alright, Let's switch gears for a second and talk about the Brown Foundation.

This is interesting to me, I mean, non-profit- - Absolutely.

Lesley Matuszak who is CEO here at WTVP, she's been a nonprofit her whole life.

So, what is the Brown Foundation?

- So, we created the Brown Foundation, which is our family foundation to help carry out meaningful work within the communities that we operate in.

And so, the Brown Foundation has partnered with the P3 Group on a number of initiatives, but primarily, we are looking to provide educational opportunities to some of the most vulnerable people in our communities.

So, we were very big on scholarships, and endowments, and trying to make sure that we can get people to college.

That we can help people remain in college.

And that we do work within those communities to make sure now that while they're there, they can have access to healthy food so that... You know, obviously food insecurity impact a student's performance while they're in college.

And so, the Brown Foundation is there to really serve as a vehicle for us to create endowments, and leave a legacy within the communities that we serve.

- That's neat.

I mean, if you think about it, and until a few years ago, I really was...

I didn't know that there're a lot of kids in college that didn't have access to food.

I just figured if you got to college, you had the wherewithal to get there, and that you had an apartment, or condo or dorm or whatever, and everything was there.

And when one of my daughters went to University of Iowa, there was a whole group of kids that go there, that are struggling for food and it became a topic.

- Absolutely.

And so one of the goals we have at the Brown Foundation is to increase the number of college campuses that we're on, where we're sponsoring food pantries and increase the number of students that we can impact through not just scholarships, but also through making sure that they have access to healthy food while they are in school.

- Yeah so, a little side note, and I'll talk to you later, but Midwest Food Bank's nationwide, and they're actually started here in Central Illinois.

- [Brown] Really yeah.

- So, are you seeing, like with COVID I know there's been a lot of new businesses that have been formed and sadly there's some that have gone by the wayside, but are you seeing new minority businesses being formed at a pace that you're comfortable with?

Or do we still have a lot of work to go?

- There's still a lot of work to do?

That's a big part of what we do with our program is that when we go into these communities and we are developing projects for the community, we try to make sure that local small businesses, local minority businesses, the local workforce, have an opportunity to play a meaningful role in the construction of these projects.

And so, our goal is on every project that we execute, that we achieve 85% local participation.

- [Matt] Oh, wow.

- As for, as constructing those projects.

Because we recognize that when we leave money in the local community, people go to the stores, they spend money, and generate taxes for the community.

So it's a win-win for the community - (indistinct) right.

- And also from an efficiency perspective, the most efficient way to construct a project, is with local resources.

And so we try to stay away from importing resources into the community, to the fullest extent possible.

And so, whereas in some companies, they kind of like to bring their own people, and plant them in the community.

Our goal is to, as a company, is to focus on how do we use local resources?

How do we go to colleges within those communities and offer internship opportunities to students that may have an opportunity to work on our job sites, and pick up valuable experience and learn that construction could be a rewarding field or endeavor.

And then also get an opportunity to come and see the business development side of a developer, and have the construction piece and the development piece tie together along with architectural and engineering.

And so, just really educating, providing opportunities is a really big thing.

So, to answer your question, there's a lot of work to do, but as a company, we feel like, Hey, we're gonna do our role to help increase those opportunities and those statistics (indistinct).

- I love it.

So, bond financing, it's very complicated- - Very complex - But you really have a process within what you do in bond financing.

Is that correct?

- Yeah, we have a team.

- [Matt] Okay.

So we have a team of attorneys and investment bankers that take our projects, and essentially create municipal bonds out of our projects.

So essentially, every project we do, we're essentially doing a public offering.

And we're selling those bonds typically to institutional investors who put those bonds in their portfolio as tax-exempt debt mostly, but sometimes taxable debt.

- So, if somebody wanted to get involved, you put a bond in, I could buy into that bond, have that be part of my- - So you could be either- - Portfolio or- - You have to be an accredited investor in order to purchase these bonds typically, if they are investment grade, then you don't have to be.

- [Matt] Okay.

- But, most of our bond buyers are gonna be institutional.

So, they're gonna be large firms, large banks, large funds, those- - The Morgan Stanley type of place or something.

- We're kind of capital one, public funding.

And so typically, it's not individualized purchases, mostly what we would call institutional.

- Yeah so, you've got a podcast on ForbesBooks Radio, you have a solid team around you.

And in my research, you've...

I mean, you have so many projects going on.

How do you stay organized?

- Strong team.

- Okay, that's what I was hoping you'll say.

And I was getting at it.

- Strong team.

I would not be able to do in any of the things I do without the team around me.

And so, what I've found is that whatever project or whatever business that I'm gonna take on, I make sure I hire the brightest and best minds- - [Matt] Yeah.

- And put them in a position to make us successful as a team.

- I mean, you make...

I got so fired up reading about it.

I actually wanna work for you (laughing).

I mean, this is fun stuff because it comes down to community.

- Yeah.

- It really does.

- It really is.

- It's about people.

And, I probably in the 100 shows or whatever I've done here, I talk about community, I probably... That's the one buzzword that I use every show, 1000 times.

- Well, the interesting thing about it is that what makes us successful, is our focus on the community.

It's not the projects that we do.

It's the community focus of the project.

- Well, you said something pretty cool.

You said, "When I go into, or we go into a community "or city or whatever, it may be, "we shop local, so to speak."

- [Brown] Right.

- [Matt] And that is important.

- That's important.

- Because if you decide to do something and you're bringing in people from even another state, it doesn't sit well with everybody.

- Right, that's right.

- Yeah so, kind of a little side question here.

Do you have a mentor?

Do you have somebody that you go to that has taught you the business?

Are you self-taught?

- You know, I don't really have a mentor, but I tell you what I do have.

I have a lot of smart people around me.

- [Matt] Well, - So, I have people that are smart in law, people that are smart in bond financing, people that are smart in business development, that are on my team.

- [Matt] Mm-hmm.

- And so, I don't hesitate to call a member of my team up and talk about whatever that topic is that I know is the focal point of what they bring to the table for us.

And I think, what has made me successful is just really identifying the best and brightest minds, and being able to bring everybody together as a team, and then able to treat people nice and treat people well and make sure people are compensated fairly, so that they don't leave, right?

So, they wanna stay and be part of the team forever.

- Well, and that says a lot because that longevity actually has that trust factor in there.

And these projects that you're doing, some of them are so big that, that you need that.

So, that's pretty neat.

We met recently and Leslie kind of connected us too, and a couple other people.

And after talking to you, I was pretty excited to have you on.

And now, I think we're gonna have to do another show down the road here very soon, because- - [Brown] Absolutely.

- This is great, great stuff.

And Dee, I am proud to have you on the show.

You do great things for your community in Memphis, but also you spread the love, basically.

- [Brown] Yes absolutely, and am glad you had me.

- Well, good I appreciate it.

Keep caring, and this wraps another show.

I'm Matt George, and this is another episode of Business Forward.

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