Collaborating for Capital

A few years ago when I was working on a sustainable community project, a colleague warned me to stay clear of public-private partnerships. They’re tricky, he said. They’re complicated. They’re risky. They could fail. Which is precisely what happened to one city when a developer went bankrupt and failed to deliver the shiny new senior center that was part of the deal. 

Now public private partnerships, or 3Ps, are in vogue. I learned about several successful California 3Ps at a meeting of the Public Realm Initiative Council of the Orange County Urban Land Institute. Pete Carmichael, manager of Great Park planning and development for the City of Irvine, gave an update on the Great Park housing development which will include two public schools, a sports park, hiking and bike paths plus other neighborhood amenities. He also discussed his prior role as economic development director for Redondo Beach, where a $250 million 3P was negotiated to give the city’s aging waterfront a facelift. The city is working with a private company on plans to develop a retail marketplace, theater and hotel – provided the developer foots the bill for an estimated $1 million in infrastructure improvements. 

Why the shift? The motivators are many, from stricter California laws requiring sustainable development to the need for new financing mechanisms. Many cities were blindsided back in 2012 when the state stopped local governments from using tax dollars to improve blighted areas. California dissolved Redevelopment Agencies and asked them to repay all debts and obligations, which in some cases meant millions of dollars. Legislators decided those tax dollars would be better spent on core services, especially schools and public safety.

So what’s a city to do?

Larry J. Kosmont, CEO of Kosmont Companies, said 3Ps are getting things done. He gave examples of innovate financing projects that have benefited cities, taxpayers and private developers. For example, a new fire station was built in Oxnard with no upfront costs to the city, while a 3P in the city of La Verne turned a polluted factory site into a retail center.

In order to participate in 3Ps, Kosmont said cities should investigate forming special financing districts to revitalize infrastructure. “The goal of the state is to reduce carbon emissions levels,” Kosmont said. So projects that incorporate sustainability, energy efficiency and resource management “will improve your eligibility for money for sustainable infrastructure.”

While the state is collecting “millions” in cap and trade monies, it also has approved new regional agencies that can use these funds for carbon-reducing infrastructure projects, according to Kosmont. Cities, counties and special districts can join together to form an EIFD, Enhanced Infrastructure Financing District, or a CRIA, Community Reinvestment and Investment Authority. “Today we are using 3Ps to accomplish sustainable infrastructure, energy and resource efficiency, greenhouse gas reductions, regional cooperation and placemaking,” he said. “It’s the nexus of environmental stewardship and economic development.” 

Copyright Sustainable Options 2016