1 / 51

Principles of Public-Private Partnerships for Real Estate & Economic Development

Principles of Public-Private Partnerships for Real Estate & Economic Development. PREPARED FOR. PREPARED BY. L ELAND C ONSULTING G ROUP Urban Strategists. PRESENTATION OUTLINE. Introduction Real Estate Development: Principles and Process Public-Private Partnerships: How and Why?

brygid
Download Presentation

Principles of Public-Private Partnerships for Real Estate & Economic Development

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Principles of Public-Private Partnerships for Real Estate & Economic Development PREPARED FOR PREPARED BY LELANDCONSULTINGGROUP Urban Strategists

  2. PRESENTATION OUTLINE • Introduction • Real Estate Development: Principles and Process • Public-Private Partnerships: How and Why? • Public-Private Partnership Case Studies: • Otay Mesa • Riverplace • Tualatin Commons

  3. INTRODUCTION Leland Consulting Group: What we do Work with public & private sector real estate executives to solve tough problems and: • Stimulate economic success • Make great urban places • Enhance the human experience

  4. INTRODUCTION Professional Services • Strategic Planning • Market Research/Analysis • Economic and Demographic Forecasting • Land Use Strategies • Development Programming • Negotiations and Deal Structuring • Public-Private Partnerships • Financial Analysis • Regulatory Approvals • Litigation Support • Project Management

  5. DAVE LELAND • 40 years industry experience as • Developer • Consultant • Advisor • Owner • Blend of public and private clients • Geographic focus: west coast,national, international • Counselor of Real Estate (CRE) • Frequent ULI panelist and speaker • Mixed-Use, Smart Growth leader

  6. Real Estate Development: Principles and Process

  7. Developer Experience CommunityGoals Public-Private Partnership Financial Capability Design Excellence Success SUCCESSFUL PROJECTS Successful public-private development projects require a holistic and balanced approach

  8. DEVELOPMENT IS AN ITERATIVE PROCESS Backwards Design Feasibility Implementation A Bit Better Feasibility Design Implementation Best – Iterative, Holistic, and Multidisciplinary Preliminary Feasibility Market Assessment Design Preliminary Financial Analysis Political Evaluation Implementation Financial Feasibility Design Outreach

  9. MARKETS ARE UNFORGIVING • Markets are people & their • Needs • Desires • Ability to pay • Willingness to pay • With choice, positive price – value is essential • People reject places and products that are not responsive to their needs, desires, or budget

  10. MARKETS CHANGE

  11. 21st CENTURY MARKET “WAVES” • Megaregions and Urbanization • Asia, Abundance, Automation • Energy: Carbon Scarcity, Renewal Emergence • Infrastructure Upgrades • Aging population • Public focus: Human Capital, Education, Amenities • Pacific NW Clusters: • High Tech and Clean Tech • Natural Resources • Manufacturing and Trade

  12. RISK MANAGEMENT Development involves risk: • Market, capital, and operating risks • Risk is determined by project type, developer experience and local conditions • Experience is essential • Each component must be successful and complement the others • Exceed the market’s expectations • Public-private partnerships help to mitigate risk Two thirds of mixed-use developments by inexperienced developers fail.

  13. SUCCESSFUL DEVELOPERS WEAR MANY HATS Financial Analyst Lawyer Psychiatrist Real Estate Market Analyst Politician Urban Planner Visionary Architect & Designer Engineer Public Relations Specialist Manager

  14. AVOID THE SILOS • Silos – A Modern Problem • Too manyspecialists, notenough generalists Design Transportation Finance Planning • Planners should understand how investors think. • Lenders should understand the built environment. • Real estate should be part of the planning DNA.

  15. ENGAGING BOTH SIDES • 20th Century:Left brain thinking • 21st Century:Whole brain thinking • For individuals and organizations • Communication is essential

  16. Public-Private Partnerships: Why and How

  17. WHY PUBLIC-PRIVATE PARTNERSHIPS? • Enhance feasibility – projects that otherwise wouldn’t happen • Accelerate investment timeline • Provide greater public benefits • Achieve significant policy goals • Improve quality, scale, or location • Overcome barriers • Financial • Market • Regulatory • Physical • Political

  18. WHY PUBLIC-PRIVATE PARTNERSHIPS? Leverage: • Strategic management of public money • Link public projects to private investment • “Build it and they will come” is not always true… • Spend limited public $$$ where you know it will leverage private investment • Private to public investment ratio of 4:1 or 5:1

  19. WHY PUBLIC-PRIVATE PARTNERSHIPS? Create investment momentum: • Trigger additional private investment • Create an anchor for future projects • Provide an amenity for residents • Strengthen tax base • Create a sense of place

  20. SUCCESSFUL PROJECTS Many parts must simultaneously fit together … The whole is greater than the sum of its parts. Location, Visibility, and Access The Market Timing Design Finance Market Successful Project Design Leadership & Communication Developer Experience & Capability Public Policy & Regulation Financial Capability

  21. PUBLIC-PRIVATE PARTNERSHIPS DEALS Every deal is different! • Financial and non-financial participation • Formal and informal agreements • Use all the tools in your toolbox • One or more public agencies (not just the City)

  22. RESPONSIBILITIES ARE SHARED TASK

  23. TYPICAL PUBLIC SECTOR PARTICIPATION • Expedited permitting • Master planning • Regulatory assistance • Tax abatements • Land assembly • Investment in infrastructure • Streets • Sidewalks • Parks • Parking Tualatin Common

  24. TYPICAL PUBLIC SECTOR PARTICIPATION • Joint marketing • Loans, financing • Tax increment financing • Commitment of SDCs • Community relations • Many, many more…

  25. TYPICAL PUBLIC SECTOR PARTICIPATION Financial Incentives • TIF • Tax Credits • Tax Abatement • Zero/Low-Interest Loans • Public-private partnerships • Grants • Façade • TOD • Energy/Green • Density bonuses

  26. WHAT THE PUBLIC SECTOR SEEKS What the Public Sector Seeks from the Private Developer: • Developers who know Mixed-use and Place Making • Know the public scrutiny and won’t back out • Understand public process • Have experience in the type of project desired • Successful track record • Developers Who are Financially Strong • Equity or an equity source in place • Debt sources as well • An open book process

  27. WHAT THE PRIVATE SECTOR SEEKS What the Developer Seeks from the Public Sector: • Strong Political Will • Stable City Council/Planning Commission • Community Support • Community and Business Alignment • Favorable (or at least neutral) media • Public Financial Means • Urban Renewal • Bonding Capacity • Land Control • Other Needed Incentives and Mechanisms

  28. TYPICAL DEAL PROCESS • RFQ – find your partner 2. MOU – establish the deal outline 3. DDA – create the plan, hammer out the details 4. Ongoing management agreements

  29. MEMORANDUM OF UNDERSTANDING (MOU) MOU • Less complex • Early stage • Outline deal points • Due diligence stage • May/may not be legally binding …but politically committing

  30. DEVELOPMENT & DISPOSITION AGREEMENT DDA or DA • Next step after the MOU • Master legal document to structure partnership • Legally binding • Extremely detailed • Roles & responsibilities • Recourse • Many, many deal points…

  31. Public contributions Development and land purchase phasing Purchase price Upside participation Ability to resell property Design standards Timeline Roles and responsibilities Offsite plan Development obligations Performance requirements Remedies for non-performance DDA DEAL POINTS

  32. Land leases Parking leases Easements Building leases Maintenance agreements Marketing agreements OTHER AGREEMENTS Tualatin Commons

  33. COMMUNICATE EARLY AND OFTEN • Understand your partners and key players • Develop a communication strategy • Build public trust through involvement • Be responsive to each other’s needs • Have a common vision

  34. Case Studies:Otay Mesa, Riverplace, Tualatin Commons

  35. OTAY MESA: THE SETTING • High volume border crossing • Huge potential, low investment • 4.9 jobs per acre • New economy • Growth pressures Otay Mesa

  36. OTAY MESA: GOALS • “A moment of opportunity: Looking Back from 2025” • Strengthen the economic base • Diversify employment and investment • Balance land uses • Improve access and mobility • Plan for harmonious relationships between uses • Meet the need for housing • Create complete places

  37. OTAY MESA: PROCESS • Strategic Framework • Stakeholder workshops and coordination • Economic and physical research • Case studies • Otay Mesa Community Plan Update

  38. OTAY MESA: IMPLEMENTATION • Fund SR-11, SR-125, and I-905 projects • Provide additional industrial land, sanctuary in East County • New border crossing • Establish urban office campuses • Develop underutilized land • Attract educational institutions • Expand workforce housing options • Define future role of Brown Field

  39. OTAY MESA: IMPLEMENTATION • Celebrate success! • Cultivate champions • Establish partnerships • Prioritize decisions • Pursue multiple projects and activities • Brand the Mesa

  40. OTAY MESA: OTHER MODELS • Hillsboro, OR • Emeryville, CA • Irvine Business Complex, CA • Brownsville, TX • Las Colinas, Irving, TX • Santa Theresa, NM

  41. RIVERPLACE 12-acre riverfront urban resort in Downtown Portland

  42. RIVERPLACE OWNERSHIP STRUCTURE Weyerhaeuser Portland General Corp. 100% 100% 50% 50% CWDC WRECO Cornerstone Columbia Development Company

  43. RIVERPLACE PRODUCT MIX • Luxury boutique hotel • Condominiums • Apartments • Athletic club • Office building and retail • Multiple restaurants • Entertainment retail • Parking • Marina • Esplanade

  44. RIVERPLACE DETAILS • Goal: Create a residential neighborhood and destination on the waterfront • Deal Structure: • PDC: Site cleanup, land write down, build marina • Cornerstone: Development, Columbia successful bidder

  45. RIVERPLACE Lessons Learned • Market issues • Retail issues • Noise issues between uses • No back door • Triangular site constraints • Inadequate parking • Construction complexity

  46. TUALATIN COMMONS Redevelopment of 19-acre former dog food factory: Tualatin Sherwood Road

  47. TUALATIN COMMONS • Goals based on citizen input: • Strong civic focus; • Pedestrian and vehicular circulation; • Day and night uses; • Strong visual presence at major entrances; • Improved economic climate for downtown businesses; • Convenient and adequate parking; • Links to nearby retail, civic, and recreation uses; • Downtown built for the long term (50+ years); and • Retention of downtown's retail market share.

  48. TUALATIN COMMONS • Located in a floodplain, built a 3.1 acre lake $5 million public, $35 million private • Hotel • Multiple restaurants, limited retail • Condominiums and apartments • Office buildings • Public open space

  49. TUALATIN COMMONS • The “Heart of the City” • Not one developer but many • City responsible for maintenance and planning events for public areas • Emphasis on public art • Marketing • Citizen group “Tualatin Futures”

  50. CASE STUDY CONCLUSIONS • Flexibility and diversity with multiple developers versus one developer • Community support and ownership • Political support • Important to ensure quality on all levels • Understand the market for ALL uses • Anticipate problems before they arise

More Related