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Public/ Private
Finance and
Development |
“For someone looking for a basic and thorough education on public/private partnerships, its hard to imagine a better source than this book."
Adrian Moore
Vice President
Reason Public Policy Institute
Review of John Stainback's "Public/Private Finance and Development: Methodology, Deal Structuring, Developer Solicitation" |
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John Stainback/SPPRE featured in:
Creating Walkable Places
Compact Mixed-Use Solutions
© 2006 ULI - the Urban Land Institute
Adrienne Schmitz and Jason Scully
ISBN: 978-0-87420-938-9
Available at the ULI Bookstore
Chapter 4
Public Sector Involvement |
Pg. 85
Who Makes Up the Public Sector?
In his comprehensive book on public/private partnerships (PPPs). John Stainback lists the three main categories of public entities that have engaged in partnerships with real estate developers: governments, public school districts, and universities. With the enactment of the Military Housing Privatization Initiative (MHPI), in February 1996, the Department of Defense can be added to this list.
Pg. 90-91
Advantages and Disadvantages of Public Sector Partnerships
Public entities have a number of compelling reasons for wanting to build and promote walkable environments. Most public entities, however, lack the necessary resources or are not permitted by law to engage in certain aspects of real estate development on their own. Typically, the public sector's best hope for building high-quality developments comes from partnering with the private sector. There are compelling advantages for the private sector to work with the private sector, and some disadvantages as well. John Stainback has identified a number of advantages and disadvantages. While no such list can be exhaustive, private developers should carefully consider Stainback's observations before entering into a partnership.
The advantages of PPPs include the following:
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Most major PPPs are created to undertake high-profile, civic-oriented projects that can enhance the developer's image if the project is successful. |
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Government-owned real estate assets that have never been available in the commercial market are made available for development. |
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Many development partnerships include the long-term lease of a development site, eliminating the initial cost of land acquisition. |
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Government and university entities often share project costs with the developer, thereby reducing the private partner's investment. |
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Government and university entities have the ability to enhance cash flow if the pro forma indicates a shortfall. |
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A good public partner will develop a consensus among government participants and voters that facilitates the actions of the private partner. |
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Government entities have the power to streamline the approval process for design, construction, and operation. |
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Government and university entities often share the risks and responsibilities of PPP developments, thereby reducing the private partner's risk and responsibilities. |
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PPPs reduce investment risks. |
The disadvantages of PPPs include the following:
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The private partner must abide by the requirements of the request for qualifications (RFQ), the request for proposals (RFP), and the negotiation process. |
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The traditional process that private developers use to finance, design, and develop a typical project differs significantly from the process required to structure and implement a PPP. |
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The PPP development process can require significantly more time |
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A consensus to proceed with the project is essential. |
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Political instability may undermine a PPP. |
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The expectations of the public partner must be in sync with the local market. |
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To undertake some projects, new legislation must be prepared and approved. |
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