Public-Private Partnerships in Urban Development in the United States



10

partnership connotes relationship since the legal definition of partnership is by no means
applicable.

C. Periods of Public-Private Cooperation in the US

Collaborative approaches have been essential to urban revitalization since the 1950s. Federal
urban programs that foster public-private cooperation in urban development have been the
following: Urban Renewal Program (1949-1974), Community Development Block Grants
(CDBG) as grants to cities for a wide range of development and revitalization uses (since
1974), the terminated Urban Development Action Grants (UDAG) which were provided to
cities to support commercial industrial projects, and Section 108 that provides loan guarantees
for cities. All programs were or are still offered by the Department of Housing and Urban
Development (HUD). Urban renewal is in retrospect strongly associated with downtown
revitalization.

1. Urban Renewal Partnerships

Initially, urban renewal was conceived as housing program but turned “into a major tool for
subsidizing and assisting private-sector commercial and industrial projects in American
cities” (Eisinger, 1988:93). A key aspect of postwar urban renewal was the use of public
resources to support redevelopment of CBDs. The private sector was subsidized by urban
renewal in form of write-downs of land sold or leased to developers. Through HUD
Washington offered grants to city governments to meet the cost of public subsidies in support
of renewal processes. As a result, federal resources were essential to early public-private
partnerships in urban development. The local urban renewal authority might use eminent
domain to purchase a site. It then contracted to have the site physically cleared and prepared
for the sale to a potential developer. Usually the price was considerably lower than the
developer would have to pay in the private market. The difference between the costs for
purchasing and clearing the site for the redevelopment agency and the received sales price for
the site is called ‘write-down’. Furthermore, local governments fostered economic
development by providing infrastructure and granting tax benefits to developers. The private
developers or investors in return promised the purchase of particular land parcels and to built
for example a hotel. General obligation bonds were the most used long-term debt by
municipalities in order to finance redevelopment projects.

In short, urban renewal provided lucrative opportunities for private developers and investors
since developers were provided with public subsidies. The program aimed at public-private
cooperation as it was designed to offer substantial incentives to private developers to build
within the project areas. Kleinberg concluded that urban renewal was “an intergovernmentally
decentralized program federally subsidized to support redevelopment”, while it was also “an
intersectoral program connecting public and private sectors in a government-business
partnership for redevelopment.” (Kleinberg, B., 1995:143) Thus, urban renewal depended
highly upon close cooperation with private developers and investors. Urban renewal focused
considerably on economic goals and therefore can be described as business-oriented approach
to urban revitalization at the expense of social achievements. Additionally, an innovative
institutional approach was launched since local renewal agencies were separated form public
housing agencies in most cities following the viewpoint that urban renewal should have its
first priority on economic revitalization and the reconstruction of downtown and its CBD



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