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Public-Private Partnerships – It’s More Than Just the “Deal”
Stephen B. Friedman, FAICP, CRE
Best Practices
• Create a shared vision with public purpose & benefit • Expect public sector role in pro-active predevelopment • Assemble a complete & capable development team • Make a fair deal: “but-for…” • Minimize the public role & cost • Maximize public benefits & impacts • Manage risk • Share success • Be accountable: expect documentation & monitoring
Focus on five areas today…
Today’s Focus Areas
1. Creating a shared vision with public benefit 2. Eliminating hurdles 3. Establishing the public-private partnership 4. Identifying resources 5. Right-sizing & structuring fair deals
1. CREATING A SHARED VISION WITH PUBLIC BENEFIT
Compelling Development Strategy
• Broader Vision: The Region & Community
• The Development Project
The Broader Vision: Participate in Regional, Community & Sub-Area Planning
Q 1. How can the private sector participate without being seen as
self-serving/creating conflicts of interest?
• Involve all stakeholders • Be transparent/open
meetings
• Recuse from clear conflicts • Ongoing participation in
boards & committees
Framing the Successful Project
2. ELIMINATING HURDLES
Policy Alignment Zoning / Act 250 / Parking / Stormwater
Public Facility Location / Anchor & Catalyst
Capital Budget / Infrastructure
?
Relocating Municipal Facilities to Free Development Site
Site Assembly
Demolition
Remediation
Obtaining grants Traffic signals/access
Floodplain realignment Etc.
Coordination of Multiple Government Entities
Site Predevelopment Heavy Lifting by Public Sector Help Get Sites to “Shovel-Ready”
Q 2. Given the Vermont context & Act 250, what are some ways to align land
use policy with development goals?
3. ESTABLISHING THE PUBLIC-PRIVATE PARTNERSHIP • Public seeking developer • Developer seeking assistance
• Financial & organizational capacity
• Business structure • Principals • Confirmable track record
(firm or individual) • Other communities’
references • Balance Sheet
(firm and individuals) • Long-term operating plan
Developer Capacity Important Whether Developer Approaches Locality or Was Solicited
Public Seeking Developer for Public Land
When Developers Approach Localities
• Authority & process on the public side
• Land ownership • Public land to “complete” Site? • Legal processes for negotiated
sale
• Valuation • Process for entitlements &
incentives • Structure • Documentation & monitoring
Public-Private Transactions Require More Than a “Purchase & Sale” Contract
Pre-Application Meeting with Locality Staff
Planning Commission
Approval (Subdivision,
Rezoning)
Design Review (Architecture, Landscaping,
Lighting, Signage)
Financial Review & Incentive
Structuring
Redevelopment Agreement Negotiation
Common Council or Village Board
Approval
Building & Site Development
Permit
Construction Begins
4. IDENTIFYING RESOURCES
Identify Resources
• VT’s Big 6: TIF, NMTC, CDBG, Historic Tax Credits, LIHTC, EB-5
• Public Facilities • Infrastructure Support • Anchor Leasing • Not-for-Profit Facilities & Bonding • Community Improvement Districts • Grants/Foundations • Bond Financing
The Assistance Continuum
• Process Assistance/Entitlements • Infrastructure/Parking • Site Assembly • Public Facility Location/Anchor Lease • Improvement Districts • Philanthropy • Assumption of Extraordinary Costs/Other Gov’t Grants • Financing Tools (“Big 6”) to Reduce Costs/Cost of Capital • Tax Abatements/PILOT • Direct Assistance
Q 3. Are there other Vermont-specific resources?
5. RIGHT-SIZING & STRUCTURING FAIR DEALS
Keys to Right-Sizing & Structuring Fair Deals
• Fiduciary responsibility & the “but-for…” test • Maximize private financing
– Maximize debt – Skin in the game – Risk adjusted returns
Analyzing the Gap – The “But-For…” Test
• Financing Gap in Order to Achieve Market-Competitive Returns on Investment
• Amount Readily Explained by Extraordinary Costs
• Cost of Providing True Public Improvements
• Incentive Deal: Incremental Cost of Locating at Proposed Site or to Compete with Alternative Site
Understanding Public Sector Timing & Risk
Monetization Approaches
• Pay-As-You-Go • Monetizing Future Revenues from Project Itself • Backing Bonds with Other Revenue Pledges • Loan Instead of a Grant • Trigger & Take-Out Bonds
IN SUMMARY…
Successful Public-Private Partnerships….
• Help achieve (realistic) community goals through a shared vision
• Provide community benefit • Can be facilitated by an array of financial & non-financial
public actions • Require different & more complex relationships and
transactions • Must be profitable AND a fair deal to all parties
Resources
• Successful Public/Private Partnerships: From Principles to Practices, Urban Land Institute, 2016, Free PDF: https://uli.org/wp-content/uploads/ULI-Documents/Successful-Public-Private-Partnerships.pdf
• Constructing Effective Public-Private Partnerships, Planning Advisory Service (PAS) Memo, American Planning Association, September/October 2017, Free PDF for attendees of the 2017 Vermont Development Conference: http://whiteandburke.com/wp-content/uploads/2014/12/Constructing-Effective-Public-Private-Partnerships-PASMEMO-2017-09-10_VDC.pdf
Available on Vermont Development Conference Website
https://uli.org/wp-content/uploads/ULI-Documents/Successful-Public-Private-Partnerships.pdfhttps://uli.org/wp-content/uploads/ULI-Documents/Successful-Public-Private-Partnerships.pdfhttps://uli.org/wp-content/uploads/ULI-Documents/Successful-Public-Private-Partnerships.pdfhttp://whiteandburke.com/wp-content/uploads/2014/12/Constructing-Effective-Public-Private-Partnerships-PASMEMO-2017-09-10_VDC.pdfhttp://whiteandburke.com/wp-content/uploads/2014/12/Constructing-Effective-Public-Private-Partnerships-PASMEMO-2017-09-10_VDC.pdf
DISCUSSION
Real Estate Economics Public-Private Partnerships Developer Solicitation Development Management Public Financing Area Plans &
Implementation Fiscal & Economic Impact
221 North LaSalle Street Suite 820 Chicago, IL 60601 (312) 424-4250 www.sbfriedman.com
Development Advisors to the Public and Private Sectors
30
QUESTIONS? SPEAKER
Stephen B. Friedman, FAICP, CRE
President SB Friedman Development Advisors
[email protected] www.sbfriedman.com
mailto:[email protected]://www.sbfriedman.com/
Slide Number 1Best PracticesToday’s Focus Areas1. Compelling Development Strategy The Broader Vision: Participate in Regional, Community & Sub-Area PlanningQ 1. How can the private sector participate without being seen as �self-serving/creating conflicts of interest?�Framing the Successful Project2. Policy AlignmentSlide Number 11Q 2. Given the Vermont context & Act 250, what are some ways to align land use policy with development goals?3. Slide Number 14Public Seeking Developer�for Public LandWhen Developers Approach Localities4. Identify ResourcesThe Assistance ContinuumQ 3. Are there other Vermont-specific resources?5. Keys to Right-Sizing �& Structuring Fair DealsAnalyzing the Gap – The “But-For…” TestUnderstanding Public Sector�Timing & RiskMonetization ApproachesIn Summary…Successful�Public-Private Partnerships….Resources�DiscussionSlide Number 30QUESTIONS?