1. Public-Private Partnerships for Real Estate & Economic Development
Principles of
Public-Private Partnerships for
Real Estate & Economic Development
PREPARED FOR
PREPARED BY
LELAND CONSULTING GROUP Urban Strategists

2. PRESENTATION OUTLINE Introduction
Real Estate Development: Principles and Process
Public-Private Partnerships: How and Why?
Public-Private Partnership Case Studies:
Otay Mesa
Riverplace
Tualatin Commons

3. Leland Consulting Group: What we do
INTRODUCTION
Leland Consulting Group: What we do
Work with public & private sector real estate executives to solve tough problems and:
Stimulate economic success
Make great urban places
Enhance the human experience

4. INTRODUCTION Professional Services Strategic Planning
Market Research/Analysis
Economic and Demographic Forecasting
Land Use Strategies
Development Programming
Negotiations and Deal Structuring
Public-Private Partnerships
Financial Analysis
Regulatory Approvals
Litigation Support
Project Management

5. DAVE LELAND 40 years industry experience as Developer Consultant
Advisor
Owner
Blend of public and private clients
Geographic focus: west coast, national, international
Counselor of Real Estate (CRE)
Frequent ULI panelist and speaker
Mixed-Use, Smart Growth leader

6. Real Estate Development:
Principles and Process

7. Public-Private Partnership
SUCCESSFUL PROJECTS
Successful public-private development projects require a holistic and balanced approach
Developer Experience
Financial Capability
Design Excellence
Community Goals
Success
Public-Private Partnership

8. DEVELOPMENT IS AN ITERATIVE PROCESS
Backwards
Design
Feasibility
Implementation
A Bit Better
Feasibility
Design
Implementation
Best – Iterative, Holistic, and Multidisciplinary
Preliminary Feasibility
Market Assessment
Design
Preliminary Financial Analysis
Political Evaluation
Implementation
Financial Feasibility
Design
Outreach

9. MARKETS ARE UNFORGIVING
Markets are people & their
Needs
Desires
Ability to pay
Willingness to pay
With choice, positive price – value is essential
People reject places and products that are not responsive to their needs, desires, or budget

10. MARKETS CHANGE

11. 21st CENTURY MARKET “WAVES”
Megaregions and Urbanization
Asia, Abundance, Automation
Energy: Carbon Scarcity, Renewal Emergence
Infrastructure Upgrades
Aging population
Public focus: Human Capital, Education, Amenities
Pacific NW Clusters:
High Tech and Clean Tech
Natural Resources
Manufacturing and Trade

12. RISK MANAGEMENT Development involves risk:
Market, capital, and operating risks
Risk is determined by project type, developer experience and local conditions
Experience is essential
Each component must be successful and complement the others
Exceed the market’s expectations
Public-private partnerships help to mitigate risk
Two thirds of mixed-use developments by inexperienced developers fail.

13. SUCCESSFUL DEVELOPERS WEAR MANY HATS
Financial Analyst
Lawyer
Psychiatrist
Real Estate Market Analyst
Urban Planner
Politician
Visionary
Architect & Designer
Engineer
Public Relations Specialist
Manager

14. Transportation Design Planning Finance AVOID THE SILOS
Silos – A Modern Problem
Too many specialists, not enough generalists
Design
Transportation
Finance
Planning
Planners should understand how investors think.
Lenders should understand the built environment.
Real estate should be part of the planning DNA.

15. ENGAGING BOTH SIDES
20th Century: Left brain thinking
21st Century: Whole brain thinking
For individuals and organizations
Communication is essential

16. Public-Private Partnerships:
Why and How

17. WHY PUBLIC-PRIVATE PARTNERSHIPS?
Enhance feasibility – projects that otherwise wouldn’t happen
Accelerate investment timeline
Provide greater public benefits
Achieve significant policy goals
Improve quality, scale, or location
Overcome barriers
Financial
Market
Regulatory
Physical
Political

18. WHY PUBLIC-PRIVATE PARTNERSHIPS?
Leverage:
Strategic management of public money
Link public projects to private investment
“Build it and they will come” is not always true…
Spend limited public $$$ where you know it will leverage private investment
Private to public investment ratio of 4:1 or 5:1

19. WHY PUBLIC-PRIVATE PARTNERSHIPS?
Create investment momentum:
Trigger additional private investment
Create an anchor for future projects
Provide an amenity for residents
Strengthen tax base
Create a sense of place

20. SUCCESSFUL PROJECTS Many parts must simultaneously fit together …
The whole is greater than the sum of its parts.
Location, Visibility, and Access
The Market
Timing
Design
Finance
Market
Successful Project
Design
Leadership & Communication
Developer Experience & Capability
Public Policy & Regulation
Financial Capability

21. PUBLIC-PRIVATE PARTNERSHIPS DEALS
Every deal is different!
Financial and non-financial participation
Formal and informal agreements
Use all the tools in your toolbox
One or more public agencies (not just the City)

22. RESPONSIBILITIES ARE SHARED
TASK

23. TYPICAL PUBLIC SECTOR PARTICIPATION
Expedited permitting
Master planning
Regulatory assistance
Tax abatements
Land assembly
Investment in infrastructure
Streets
Sidewalks
Parks
Parking
Tualatin Common

24. TYPICAL PUBLIC SECTOR PARTICIPATION
Joint marketing
Loans, financing
Tax increment financing
Commitment of SDCs
Community relations
Many, many more…

25. TYPICAL PUBLIC SECTOR PARTICIPATION
Financial Incentives
TIF
Tax Credits
Tax Abatement
Zero/Low-Interest Loans
Public-private partnerships
Grants
Façade
TOD
Energy/Green
Density bonuses

26. WHAT THE PUBLIC SECTOR SEEKS
What the Public Sector Seeks from the Private Developer:
Developers who know Mixed-use and Place Making
Know the public scrutiny and won’t back out
Understand public process
Have experience in the type of project desired
Successful track record
Developers Who are Financially Strong
Equity or an equity source in place
Debt sources as well
An open book process

27. WHAT THE PRIVATE SECTOR SEEKS
What the Developer Seeks from the Public Sector:
Strong Political Will
Stable City Council/Planning Commission
Community Support
Community and Business Alignment
Favorable (or at least neutral) media
Public Financial Means
Urban Renewal
Bonding Capacity
Land Control
Other Needed Incentives and Mechanisms

28. TYPICAL DEAL PROCESS RFQ – find your partner
2. MOU – establish the deal outline
3. DDA – create the plan, hammer out the details
4. Ongoing management agreements

29. MEMORANDUM OF UNDERSTANDING (MOU)
Less complex
Early stage
Outline deal points
Due diligence stage
May/may not be legally binding
…but politically committing

30. DEVELOPMENT & DISPOSITION AGREEMENT
DDA or DA
Next step after the MOU
Master legal document to structure partnership
Legally binding
Extremely detailed
Roles & responsibilities
Recourse
Many, many deal points…

31. DDA DEAL POINTS Public contributions
Development and land purchase phasing
Purchase price
Upside participation
Ability to resell property
Design standards
Timeline
Roles and responsibilities
Offsite plan
Development obligations
Performance requirements
Remedies for non-performance

32. OTHER AGREEMENTS Land leases Parking leases Easements Building leases
Maintenance agreements
Marketing agreements
Tualatin Commons

33. COMMUNICATE EARLY AND OFTEN
Understand your partners and key players
Develop a communication strategy
Build public trust through involvement
Be responsive to each other’s needs
Have a common vision

34. Case Studies: Otay Mesa, Riverplace, Tualatin Commons

35. OTAY MESA: THE SETTING High volume border crossing
Huge potential, low investment
4.9 jobs per acre
New economy
Growth pressures
Otay Mesa

36. OTAY MESA: GOALS “A moment of opportunity: Looking Back from 2025”
Strengthen the economic base
Diversify employment and investment
Balance land uses
Improve access and mobility
Plan for harmonious relationships between uses
Meet the need for housing
Create complete places

37. OTAY MESA: PROCESS
Strategic Framework
Stakeholder workshops and coordination
Economic and physical research
Case studies
Otay Mesa Community Plan Update

38. OTAY MESA: IMPLEMENTATION
Fund SR-11, SR-125, and I-905 projects
Provide additional industrial land, sanctuary in East County
New border crossing
Establish urban office campuses
Develop underutilized land
Attract educational institutions
Expand workforce housing options
Define future role of Brown Field

39. OTAY MESA: IMPLEMENTATION
Celebrate success!
Cultivate champions
Establish partnerships
Prioritize decisions
Pursue multiple projects and activities
Brand the Mesa

40. OTAY MESA: OTHER MODELS
Hillsboro, OR
Emeryville, CA
Irvine Business Complex, CA
Brownsville, TX
Las Colinas, Irving, TX
Santa Theresa, NM

41. RIVERPLACE
12-acre riverfront urban resort in Downtown Portland

42. RIVERPLACE OWNERSHIP STRUCTURE
Weyerhaeuser
Portland General Corp.
100%
100%
50%
50%
WRECO
CWDC
Cornerstone
Columbia
Development
Company

43. RIVERPLACE PRODUCT MIX
Luxury boutique hotel
Condominiums
Apartments
Athletic club
Office building and retail
Multiple restaurants
Entertainment retail
Parking
Marina
Esplanade

44. RIVERPLACE DETAILS
Goal: Create a residential neighborhood and destination on the waterfront
Deal Structure:
PDC: Site cleanup, land write down, build marina
Cornerstone: Development, Columbia successful bidder

45. RIVERPLACE Lessons Learned Market issues Retail issues
Noise issues between uses
No back door
Triangular site constraints
Inadequate parking
Construction complexity

46. TUALATIN COMMONS Redevelopment of 19-acre former dog food factory:
Tualatin Sherwood Road

47. TUALATIN COMMONS Goals based on citizen input: Strong civic focus;
Pedestrian and vehicular circulation;
Day and night uses;
Strong visual presence at major entrances;
Improved economic climate for downtown businesses;
Convenient and adequate parking;
Links to nearby retail, civic, and recreation uses;
Downtown built for the long term (50+ years); and
Retention of downtown's retail market share.

48. TUALATIN COMMONS
Located in a floodplain, built a 3.1 acre lake $5 million public, $35 million private
Hotel
Multiple restaurants, limited retail
Condominiums and apartments
Office buildings
Public open space

49. TUALATIN COMMONS The “Heart of the City” Not one developer but many
City responsible for maintenance and planning events for public areas
Emphasis on public art
Marketing
Citizen group “Tualatin Futures”

50. CASE STUDY CONCLUSIONS
Flexibility and diversity with multiple developers versus one developer
Community support and ownership
Political support
Important to ensure quality on all levels
Understand the market for ALL uses
Anticipate problems before they arise

51. LELAND CONSULTING GROUP
Urban Strategists
Portland • Denver • San Angelo • Mexico