Many public/private partnerships are alive and well—but only because they use creative and flexible new approaches, and adapt to new demands to show return on investment, said four national experts in the field. Moderator Stephen Betts led the panel discussion on public/private partnerships at the ULI Spring Council Forum on “Adapting Cities for the Future.”
Speaker Denise Gammon of Kitson and Partners recounted her work on partnership structures at Denver’s Stapleton redevelopment and related projects, and stressed the importance of a flexible entitlement process. George W. Jackson, Jr., of the Detroit Economic Development Corporation (DEDC) described the transformation occurring in Detroit’s inner city, and the creative partnership strategies and structures that were used. David Malmuth of David Malmuth Development related his work in the Los Angeles, San Diego, and New York markets, working on complex projects with the Walt Disney Development Company and others. And Jerold B. Neuman, an attorney with Sheppard Mullin and vice chair of ULI’s Urban Development/Mixed-Use Council (Silver Flight), described his firm’s extensive work in structuring a range of public/private partnerships.
ULI member Betts asked the group about the new environment of budget cuts. How does infrastructure for projects get financed nowadays? The group noted that public financing is not dead, but that it’s critical to demonstrate value for money. “If they say they have no money, they’re probably lying,” joked Malmuth. “It’s really a matter of their priorities, and justifying a public expense as a return on investment.”
Jackson agreed: “Every deal we do now, we say, ‘Here is the return on investment.’ We quantify that.”
What about the market cycle, asked Betts, with cities so financially strapped? How can a project still pencil out? Jackson said that projects have to use creative new combinations of funding sources. “We’ll take donated land, do [tax increment financings], historic tax credits, you name it. I’ll make it work any way I can.” Neuman and Malmuth both agreed that projects have to monetize value in other ways, by addressing other community needs—perhaps needs that would otherwise cost taxpayers more. Developers can then get revenues from accessory features. For example, an affordable housing project might also include market-rate commercial space, which provides an attractive return for the project.
All agreed that a can-do attitude is essential—and often that means not waiting for permission, but seizing the initiative. Jackson noted that the DEDC is a nonprofit—“but we’re unashamedly pro-business, pro-development. We’re advocates of ‘get the deal done.’ We’re with you at City Council. Bottom line, we’ll make it happen.”
Betts asked about the importance of entitlement flexibility and streamlining. It’s absolutely critical, all agreed. Gammon recounted a disastrous mistake by a local jurisdiction, when they introduced a rigid new code without coordinating with the other partners. “It sent us back to square one,” she said. “The public process is broken,” added ULI member Malmuth. “Even in this environment, the entitlement [process] in many places is still a nightmare, where the same 20 people can stop a good project for bad reasons.”
Neuman noted that in any successful partnership, there are two critical groups on the public side: the political leaders who provide commitment and vision, and the staff members whose focus is on negotiation and problem-solving. More attention needs to be paid to the latter, he said. Gammon agreed: “It’s all about building the partnership.”
“The nature of the relationship between the public and private sectors has changed,” Jackson agreed. “We have to improve the decision-making process—who gets to make a decision and when.”