P3 Is Smart in Post-RDA Era
By Carrie Rossenfeld | San Diego
SAN DIEGO-Many in the development community were apprehensive about the ability to complete development transactions after the dissolution of California’s redevelopment agencies, but governing bodies and private developers have been forming successful partnerships to get deals done, according to speakers at ICSC’s Western Conference here yesterday. Panelists said using private-sector capital and expertise for public projects is an efficient use of resources and a great way to improve tight-budgeted communities.
“P3 legislation in California is worth pursuing,” said Tony Canzoneri with Picerne Real Estate Group. And Ken Hira, SVP of Kosmont Cos., added, “There is life after redevelopment. We have to make do with what’s in our toolbox.”
Tax-increment financing is one way municipalities can pay for development, but in some cases, particularly in California, this is not possible. “Private/public partnerships create a revenue stream when tax-increment financing is not an option,” said David Wallace, former mayor of Sugar Land, TX, and CEO/co-founder of Wallace Bajjali Development Partners L.P. “We have to create revenue streams to get projects off the ground.”
Fred Bruning, CEO of CenterCal Properties, added that private companies can create venues that give back to the community via P3. “The city is able to create a great gathering place for the community. We front-ended payment [on one project], which prevented them from needing to use a bond to pay for it. Payback can come via TIF or other methods when money is not available.”
Another method of payment is for the City to donate land to the developer, which can be figured as equity in the project, Canzoneri said. Wallace added that Cities can say to their constituents, “This is what we did to your tax rate because we relied on the private sector, because we used their capital and ingenuity.”
Wallace also said that developers working on projects should reach out to municipalities and make their projects part of the development that they’re doing. However, Canzoneri cautioned that it’s important to have a city staff that shares the developer’s vision in order to make P3 work. “The city manager has to be in sync with the politicians.”