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Panelists tout benefits of growing use of public-private partnerships

Tuesday, July 27, 2021 by Chad Swiatecki

With real estate prices rising and land availability becoming more scarce throughout Central Texas, local governments and public institutions are finding more opportunities to consider public-private partnerships as a way to maximize the use of public land.

While the Mueller and Seaholm developments in Austin are two of the more high-profile projects involving P3 redevelopment in recent years, a panel hosted by Urban Land Institute Austin looked at the many other uses of this deal structure underway or in the planning phase around the area.

The popularity of P3 deals comes in part from the number of public parcels that can be put to higher use. RedLeaf development company partner Rob Shands revealed that there are more than 6,000 parcels in Travis County under public ownership, including half of the land in the central business district.

Shands said there are three common situations that bring about P3 agreements: underused public space that can be developed to create revenue; mission-driven projects to solve issues such as affordable housing shortages; and facility procurements that let private partners build a new building faster and cheaper than a government typically can.

Panel moderator Jeff Nydegger of Winstead PC said the motivation for using public land for redevelopment is evolving away from purely creating the greatest possible economic impact.

“Philsophically we’re starting to see a shift in local governments where traditionally cities would think about economic development simply in terms of job creation, growth and increasing that tax base,” he said. “That is shifting and now is not just an economic development conversation, it’s a community development conversation with a much stronger emphasis on equity, affordability, cultural preservation, arts … there’s a lot of items and sometimes the list can get too long. A lot of people think P3 can be used as a means to really deliver on those community benefits.”

The redevelopment of Cedar Park’s Bell Boulevard was initiated with RedLeaf primarily to reinvigorate an area that Katherine Woerner Caffrey, Cedar Park’s assistant city manager, said had fallen into decline.

“We were deliberate about our musts versus our nice-to-haves. Elected officials change and everyone wants to put their mark on these projects, so you have to decide what are benefits we must have to be successful,” she said. “You can’t change them. We had a short list of musts, and then things where you’re flexible. Having that small handful lets you make progress.”

Jay Brown, chairman of Washington, D.C.-based Hayat Brown, said Travis County will realize long-term benefits from deciding to use a P3 structure for the Republic Tower planned for the 308 Guadalupe Street parking lot.

“There was a lot of pressure on the county to just sell 308 … my team and I said don’t sell it, and take the long view,” he said. “In Austin a long-term ground lease, even if there’s no government use of that building, you keep that asset in the public domain because you’ll never be able to get it back again and you can still put it to highest and best use, while also ensuring that other mission-oriented requirements get done short of having a land covenant.”

Jon Conant, director of public-private partnerships for the Texas Facilities Commission, pointed to the ongoing work on the Capitol Complex project between 16th Street and Martin Luther King Boulevard as a prime example of why private partners can help public agencies do their best work.

“We do a great job of building world-class buildings and have a phenomenal staff that does the property management,” he said. “But we struggle, because our main mission and objective as the state is the services we provide to the constituents and the taxpayers, so we don’t have the same ability to have the programmatic operations as you would in a true asset-based management program. If we can demonstrate over 20, 30, 40 years with performance contracts on these things, it shifts a burden off of the state and onto the entity that can best handle it in the private sector.”

Photo made available through a Creative Commons license.

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