The 548 Enterprise philosophy is to redevelop metropolitan communities by utilizing renewable and sustainable technologies, allowing us to create savings for families, lower environmental impact, and drive value for the community.
Conversation between Rose Stephens Booker and AJ Patton
Let’s start at the beginning…
In 1999, my mother received a $400 gas bill, the gas was shut off and we were boiling water on our electric stove in order to take baths for over a year. Unfortunately this experience is all too common. This stuck with me; the experience branded me. Fast forward and I became an investment banker and was working my way up and was pitched by a utility solar company and found myself asking the question, “Have you ever considered selling to everyday people?” I was met by awkward silence but the answer was “You need to find the building owners and it would change our model completely.” So then I asked, “What if I owned a real estate company that had thousands of units and I owned a solar company that could provide discounted solar to my own tenants.” The answer: “Whoever does that is going to change the market!” So I quit my job and started 548 Enterprise. Everything is branded 548 which is the unit number of the projects I grew up in. 548 is more than a number, it is the mission. We’re staying focused on investing in disinvested communities. I want to push back on the idea that we can’t do well and do good at the same time. Most of what we do is on the for profit side but it’s about the execution.
Barriers…
Quitting my good job and trying to start a solar company wasn’t easy. I had never started a business. No one in my family owned a business. It took awhile to get off the ground. Trying to make the pitch, I sounded a little bit like a mad man! We went to every angel investor from Connecticut to San Francisco telling them that solar powered affordable housing was the future but in 2014, 15, 16, 17 it wasn’t connecting. The market wasn’t ready, people didn’t believe that I was the right messenger for that. It was hard to connect the dots. It took years. I lost every dollar I had invested. So, I started driving for uber from 5am to 10am and from 5pm to 10pm and in between I would put on my suit and try to make the pitch. In my uber I had a sign, “I have a solar start-up, ask me questions.” After more than a year of this grueling 80-hour a week schedule a man got into my uber, asked questions, and eventually gave us the $2 million seed capital we needed to truly get started.
Getting Started
It all started with a couple of 6 flats on 79th street. The idea was to start small, make a boat load of mistakes and scale up from there. We built our team on the fly. We gutted the building and maximized energy efficiency. In these communities the only fresh air you’re getting is if you crack a window. This was all new. We thought our impact was sustainability but we realized that what was equally important was who got the jobs. The contracts, engineers, lawyers, brokers, electricians, builders. If we were intentional about letting southside contractors rebuild one of the most important corners of 79th street, we could get buy-in from the community about sustainability and rebuilding their community. This was a light bulb moment. I’m the lead investor and developer. I pick who gets these jobs. I pick people from the neighborhood. I pick people of color for every dang seat, and I don’t hide it. I stick my chest out with the banks. The neighborhoods love it and we’ve had no problems andi it’s one of the most celebrated projects we’ve done.
Gaining Momentum
Everything changed for us when a young lady named Lori Lightfoot became the mayor of Chicago and wanted to invest a billion dollars in infrastructure in neighborhoods that had never been invested in before. She was accepting proposals and heard about this little guy in southside Chicago talking about sustainability and inclusivity together and her team called and told us to respond to the RFP because we’ve got something. We won RFPs to some of the largest developments in the city. She was the first mayor that didn’t play the donation game but focused on the merit of what we were doing. That was spectacular and we’ve been off to the races ever since.
We brought in a new network of workforce and unequivocally said these people would get the jobs. How do we replicate it? There’s nothing we can’t do. It’s not that hard when we try. I have no theory, whitepaper or subcommittee–you just have to do it. It wasn’t all perfect and some people flopped but it’s all about leadership and if you want to you will.
Successful businesses in Chicago are successful because of successful programs. If you want to change the narratives in these communities you have to change the opportunities. There’s a ripple down effect.
Humboldt Park
Our Humboldt Park Project is so unique. It’s all-electric, passive house with a grocery store and is completely solar powered. Our level three charging stations will quadruple the number of level 3 charging stations in Chicago just with this project. About 2/3rds of Chicago has no EV charging infrastructure. There is nothing past 47th street. EV is going to be the norm but we have to have the infrastructure to support it. It has to be done. Additionally, we were very intentional about the engineers, lawyers, and other workers we chose for this project. All are women or people of color. We’re set to break ground in October.
What hurdles are left to overcome?
I’m just a regular dude; I just care a boatload. The biggest hurdle is the banks. It’s still an antiquated process. People love what we’re doing, but the banks aren’t always comfortable with me being the lead dude. And I don’t have to be the lead singer! I’m happy to play the bongos! I just want the work to get done. Our mayor has helped put a lot of pressure on the banks and forced them to work with us, but the banks are still a hurdle.
How does this translate?
As we complete this passive house project, we are going to open source all the data. The biggest question we get is, “Does it pencil?” We are going to share all our data and show that it works. We’re not trying to hold back any trade secrets. We have open sourced our strategy. We want to be accessible and open and available to everyone. We want this model to be replicated.
The other thing we don’t talk enough about is the lived experience. Not only does this lower utility bills but it raises the quality of the home.
Pitch a bigger tent
We also want to pitch a bigger tent about who’s in the conversation. We need to be intentional inside the sustainability community about pushing back against the same people receiving all the opportunities. Go make new friends, new connections. We need to have lots of options, and we do, we just need to make sure that those options are on the table.
Thinking ahead…
“What do you want to leave behind for your kids?” Service. I’m not going to define service for my children but they will serve their community. Right now we’re sharing and that’s important and “cheersing” because celebrating is so important too.
Resources
- Resource Library - BDC
- https://www.548enterprise.com/about
- Email: ajpatton [at] 548capital.com, Linkedin
Q & A
- As we ask/require landlords (single family and multi-family) to electrify their buildings, what ideas are available to protect renters from displacement if landlords want to raise rents due to electrification costs/improvements?
- If it operates better, maybe operation costs come down and that is less of a burden that has to be passed on to renters.
- How will tax credits from the Inflation Reduction Act help your business model expand? Other opportunities in that legislation that you are tracking?
- I think the IRA was grossly undervalued. I think it will impact the country in ways we haven’t even accounted for yet. There’s a world now through the IRA where if we install solar where you can get a 60% tax credit. We are banking on it and planning to expand to three other markets because of it. We think its impact will be felt for a long time.
- Do you have any analysis on resident energy costs savings AND/OR the cost comparison to build this all electric/Passive House v. standard build with gas?
- Not yet but happy to circle back to this in about 18 months and I will be putting all of our data open source on our website. No trade secrets.
- How did you build a relationship with someone as influential as Doug, in order to tell him to make new friends and push back?
- My superpower is being self aware and making friends. Doug knew how sincere I was about this effort. I think people remember how much you care and buy in from your sincerity.
- Can you talk about the innovation center I see in your developments? Are you planning a workforce training center?!?
- Received a surprise donation to start training people in the community. Program starts April 10th. It will be hosted at a Catholic school on the westside. Want to train thousands of people each year to get them into the clean economy. Actively fundraising and going full steam ahead.