Public and private sector entities don't always see eye-to-eye on retail projects. Everything from financing to landscaping can represent points of contention when it comes to retail renovation or construction. Realizing that successful public/private alliances require understanding and communication, public and private groups are reaching out to bridge that gap. “Today, there is such a mutual need to work together,” says Norris Eber, vice president of asset management at Joseph Freed and Associates in Wheeling, Ill. Eber is co-chair of the ICSC Alliance & Local Outreach Task Force.
Both public and private entities are motivated to find ways to work together amid a tougher economic climate. The budget squeeze across government agencies is prompting municipalities to find creative ways to address public projects. “Cities are harnessing the resources of the private sector to help spread the budget impact among both sectors,” says Rick Norment, executive director of The National Council for Public-Private Partnerships in Washington, D.C.
At the same time, developers recognize that city cooperation can be instrumental in dealing with challenges such as land assembly, environmental clean up and demolition. “There are many, many opportunities to do development in the more urban areas, as well as the more difficult brownfield projects,” says Cynthia Stewart, director of local government relations at ICSC, Alexandria, Va.
Private/public alliances often involve complex, time consuming projects. Some alliances can span 20 to 30 years if a long-term financing package is put in place. “For that reason you have to select your partner extremely carefully,” Norment says. The National Council for Public-Private Partnerships identifies several components that are critical to a successful public-private partnership such as public sector involvement, selecting the right partner, establishing a well thought-out plan and communicating with stakeholders.
Fostering understanding
The biggest challenge is making sure partners have a clear understanding of what is expected on both sides. A misstep can send an alliance — and a project — spinning off track. Real estate firms planning an alliance with a public entity need to do their homework and gain an understanding of the community. “Developers can't just do cookie-cutter development because the needs of each community are different,” Stewart says.
One initial step for developers is to analyze the public dynamics of a community such as the strength of the municipal staff or whether or not an election might change the key players, Eber notes. Getting to know community, civic and business leaders can help in paving the way for a successful alliance. Ideally, firms that listen to the needs of the community will find common ground between their own objectives and the city's goals and needs.
Public partners need to clearly define what they have to offer in terms of subsidies and assistance ranging from financial incentives to help in permitting and approvals. “There also has to be a willingness on the part of a community to understand what a developer is trying to do,” says Tony Brown, president of The Pelican Group Inc. in Mobile, Ala. Brown also is a member of the ICSC Alliance & Local Outreach Task Force.
Open communication
Communication is key in establishing and maintaining a successful public/private alliance. Misconceptions can rise quickly without adequate communication. If the public feels they are not getting all of the facts, they can make incorrect assumptions on key issues. “Projects have failed simply over concerns about lost jobs or damage to the environment when that was not the case,” Norment says.
“Step one is for each side to have an open discussion about their needs and wants,” Eber says. Developers are typically looking to make a profit, while cities are motivated by factors such as improving the sales and real estate tax stream. In addition, it is important for those preliminary talks to take place in an informal setting. The last place municipalities and developers want to start that discussion is in the formal public hearing, Eber notes.
An initiative aimed at promoting public/private dialog is the ICSC Alliance Program. The seminars encourage public and private parties to sit down together and have honest discussions about key issues such as incentives, new urbanism and zoning. Those discussions have been instrumental in bridging the gap between public and private parties.
The “friendly forums” gather a variety of players from a local area ranging from economic development agencies, community leagues and public officials to brokers and developers. “It gets people together to talk about issues and do some networking,” Stewart says. ICSC has been operating its alliance meetings for about five years, and typically the association hosts 10 to 12 alliance meetings around the country each year.
One of the biggest pitfalls of a public/private alliance is when parties do not have a clear understanding of the other party's objective. “Obviously, the private sector is looking for the most economically sound deal, whereas the public sector is trying to meet a need of their community,” Stewart says. The Alliance Program is aimed at educating public and private entities on the issues and objectives affecting one another, she adds.
Define the relationship
Public/private alliances do not necessarily involve a financial commitment on behalf of the municipality. Cities can assist private firms in areas such as ordinances, zoning and approvals, Brown notes. Clearly outlining objectives, strategies for achieving goals and individual responsibilities keeps a project running smoothly.
Alliances can go awry if details are not outlined ahead of time. Parties should create a carefully developed plan of what each expects. Oftentimes, this takes the form of a contract that clearly describes the responsibilities of both partners. It is a good idea to not only define responsibilities, but also methods to resolve disputes, Norment adds. Ideally, a neutral third party should assist in developing the framework or contract. It is not unusual for such alliance contracts to be 200 to 300 pages long, Norment says.
Ultimately, alliances require considerable effort from both sides. “Open, honest communication is the foundation of a successful alliance,” Brown says. “If you can mount those two hills, anything can be accomplished.”
Beth Mattson-Tieg is a Minneapolis-based writer.
Daytona Beach, Florida — A high performance city
The city of Daytona Beach is located on the East Coast of Fla., at the junction of I-95 and I-4, approximately 90 miles south of Jacksonville, 50 miles east of Orlando, and 230 miles north of Miami. This central location, with accessibility from the Daytona Beach International Airport, provides convenient access to interstate, national, and international travel.
Affordable real estate and public services combined with a low millage rate makes this area an affordable place to live and work. In excess of $358 million of public and private investments have been made in such areas as “The World's Most Famous Beach”, signifying the community's support toward business expansion.
Though tourism is a large part of the city's economic base, it is only one segment of our overall economic portfolio. An increasing number of national manufacturing firms have made this area their home. Area businesses are increasing activity in the international market, with more than 100 local companies exporting products and services overseas. Our area's high-tech industry is emerging as a diverse center for automotive, medical, and aerospace research and development.
With the advent of The Advance Technology Center coupled with five major colleges and universities, Daytona Beach is surpassing the demands for highly skilled workers by providing a wide range of degree and vocational training to nearly 50,000 students, annually.
Daytona Beach is often overshadowed by its majestic oceanfront, scenic Halifax River, and sub-tropical climate. Yet as serene as the Atlantic breezes, Daytona Beach is quietly becoming A High Performance City for Business and Industry.
Aurora, Illinois — Maintaining record growth in 2001
Despite the economic downturn in 2001, the city of Aurora, Ill., maintained record growth in key indicators of economic development, according to the Aurora Economic Development Commission (AEDC).
“Commercial real estate development during the year 2001 initiated more than 2,833 jobs, the seventh straight year that more than 2,000 new jobs were initiated in Aurora,” says Sherman L. Jenkins, executive director of the AEDC. “In addition, more than $83 million in commercial assessed valuation and $251 million dollars in commercial investment were realized, both are the highest ever recorded in Aurora.”
Housing starts for 2001 numbered 2,045, the sixth straight year that more than 1,000 new housing starts were initiated and the second time in six years that the 2,000 plateau was exceeded. In addition, incremental retail sales tax advanced a record $3.9 million, the third straight year that new retail sales tax has exceeded $1 million dollars. “The first three quarters of 2001 carried Aurora's economic boom while the fourth quarter saw development and investment slow a little,” Jenkins says. “Instead of going 75 miles per hour, economic development activity slowed to 70 miles per hour.”
The City of Aurora is the third largest city (with a population of 142,990) in the state of Ill., behind Rockford, Ill., and Chicago. It is located in four counties: Kane, Kendall, DuPage and Will; positioned 40 miles west of Chicago; and is a diversified city with a balanced combination of industrial, high-tech, retail, service, agricultural, government and cultural sectors. Known as the “City of Lights” because it was the first city in the United States to have electric-powered street lights, Aurora is home to numerous Fortune 500 and 1000 companies such as Weyerhaeuser, 3M, Cardinal Health, METLIFE, Hartford Insurance, Cabot Corporation, Dial Corporation, NICOR and the international headquarters for AAA Chicago Motor Club.