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(Barnekov, T.; Boyle, R.; Rich, D., 1989:39) Urban Renewal was a new instrument that
combined the powers of the public sector with the development resources of the private
sector. The success of urban renewal depended upon the partnership between the public and
private sectors. The model for business initiative in urban renewal was the Allegheny
Conference in Pittsburgh. Urban redevelopment partnerships with a combination of private
influence and public resources to rebuild the downtown area became a common model for
US-American cities (Barnekov, T.; Boyle, R.; Rich, D., 1989:42).
2. Post-Urban Renewal Partnerships
Post-urban renewal partnerships increased sharply at the end of the 1970s and 1980s. In
contrast to urban renewal partnerships the scope of public-private partnerships became
broader and more expansive (Lyall, K. C., 1986:9). Public-private partnerships have been
launched as policy tool by the Carter administration in its National Urban Policy in 1978
(Lyall, K. D., 1986:12). The boost of public-private partnerships in urban development at that
time, however, is due to cutbacks in federal monies especially since the Reagan
administration. As a consequence, multisectoral commercial development projects became
more important due to shrinking public budgets and the search for new public revenue
sources. Joint public-private ventures were fostered explicitly by the Reagan Administration.
“In the context of heightened intercity competition for private investment, municipal
governments became entrepreneurial, providing an extensive web of subsidies and incentives
to developers, and often becoming co-developers of risky redevelopment projects” (Levine,
M. V., 1989:12).
Historically, local governments fostered economic development by providing infrastructure
and granting tax benefits. However, a fundamental change in this pattern took place.
Partnerships of public and private entities have undertaken investments for mutual benefit,
and semipublic corporations have acted as initiators and implementers of development
projects. Lyall states that there have been noticeable changes in the structure of public-private
partnerships (Lyall, K. C., 1982:52-53). She argued that the concept of public-private
partnerships has become more “sophisticated” and the projects themselves have become
“more complex financially and managerially and require more flexibility”. Those kind of
partnerships have involved more than an exchange of resources and privileges. Cities even
share the costs and risks in joint development projects. Levine similarly argues that public-
private partnerships “differed from the earlier versions mainly in the expanded scope and
complexity of their activity, and in the increased public resources and power that were made
available to support private development (Levine, M. V., 1989:22).”
Cooperative planning and action extended the arm’s length urban renewal partnerships. “The
arm’s length transaction is pretty much a thing of the past; we are now creating joint ventures
of immense complexity utilizing the assets of both the public and private sectors to make
something happen which neither could do alone” (Millspaugh, M. cited by Lyall, K. C.,
1982:53).
A growing number of municipalities have become active partners in real estate development
since the 1980s. Cities “seek to cash in on their real estate assets, just as private corporations
do. Many become equity partners in real estate ventures- or, by issuing infrastructure bonds,
become ‘silent’ partners” (Fulton, 1987:6). Cities seek to generate profits. By doing so,
however, cities risk controversy and litigation. Local government borrowing for financing
private nonprofit and profit facilities through revenue bonds rose sharply in the 1970s. Thus,
cities have avoided voter approval because this kind of bonds are not guaranteed by the