Changing the World (Or At Least One Country)

A Personal Account by John

This assignment, begun in 2002 and expected to continue through 2007, is not likely to be relevant to any present or future private-sector client of Rutledge Company, but I am passionate about it. From the number of requests I receive to describe this work to various groups like Rotary, Kiwanis, and various professional groups, it is apparently interesting to others as well.

For background, give some thought for a moment to the real estate disciplines involved in a simple house sale. There may be a real estate broker, attorney, mortgage lender, title insurance company, surveyor, appraiser, recorder of deeds, homeowner’s insurance company, and no doubt others. But under the old socialist systems of central and eastern Europe, with the government owning everything, there was no need for these services. One does not flip a switch to a private economy and instantly have competent and honest professionals in these disciplines.

The United States Agency for International Development, the foreign aid office of the State Department, is conducting work in many countries that are in transition. I was asked to assist in Croatia where the Urban Institute has a contract with USAID for this work called the Local Government Reform Project (LGRP).

Croatia is a country of about 4.6 million people. It was part of Yugoslavia prior to the Balkan Wars in the mid to late 1990s. It has a long coastline on the Adriatic across from Italy, more or less wraps around Bosnia, and borders Slovenia, Hungary, Serbia, and Montenegro. Its capital of Zagreb has a population of about a million.

As a result of the old system, the local governments own many parcels of property including apartments, retail shop space, office buildings, industrial buildings, and land. Management of these assets has not been up to modern western (including European) standards.

Because of the lingering effects of the old system, other functions have lagged as well. These include financial management, economic development, information technology, procurement, and others. For example, how do you get people to come out and run for office, serve on boards and commissions, and otherwise get involved if they are conditioned to stay home and be quiet?

LGRP includes components addressing each of these areas. I was retained as a consultant to the Urban Institute to assist with asset management, meaning real estate management.

This carefully-structured project involves enlisting volunteer local governments to serve as models for each component. The city of Varazdin (population 46,000) volunteered for the asset management component. Working with Zagreb- and Washington-based staff, we conducted a thorough analysis of the management of their real estate inventory.

We formulated a series of recommendations, presented them to the local government, assisted in their implementation, and observed the results. Based on this experience, we wrote a textbook on the process consisting of about a dozen discrete activities including inventorying the assets, appraising them, conducting financial analysis, preparing useful operating statements, improving leasing practices, etc.

A class of Croatian professionals including attorneys, engineers, and others was selected from a large number of applicants. A course was designed with the assistance of Training Resources Group, Inc. With a Croatian staff member, I team-taught our class of fourteen for an intensive week using the textbook as its basis.

This class of students then went on to seek contracts with other local governments to assist them as we assisted Varazdin . To help move the process along, the project provides for financial cost-sharing in those contracts, and we continue to provide technical support to them.

My work in Asset Management is mirrored in the various other components of LGRP being managed by the dedicated and hard-working small staff in the Zagreb office of the Urban Institute. They are a terrific crew.

I have enormous respect and affection for the people of Croatia, and especially for the local Urban Institute staff in Zagreb, for our students, and for the local government officials truly trying to make a difference. I am continually amazed by their commitment to the transition process in this tragic war-torn country, and am convinced that successful reform will pay huge dividends for their country and the world.

People ask me if I see progress in the years (and many trips) I have been working there. The answer is “yes, but it is slow.” But remember, all we are trying to do is change the world!

 

Rutledge Company LLC

License No. 481.000176

John K Rutledge, Managing Broker

License No. 471.004599

 

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