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issuing government because anticipated future revenues from the facility are used to pay back
the bonds. One can conceive a growing injection of private funds into public activities
including financing of public infrastructure and flows of public money into private ventures
on the other hand (Collmann, 1989:5). Moreover, the acquiring of equity positions in private
projects serving no public purpose has being taken by many localities. Collmann speaks about
the growing commingling of private and public funds (Collmann 1989:145).
Due to the active involvement of cities in the real estate market, cities duties of
comprehensive planning weakens in favor of deal making and compromises with developers
and investors. City planning and real estate market have become more intertwined (Fulton,
1987:7). Fulton describes this tack as a “ sophisticated version of urban renewal” since
instead of “subsidizing developers to persuade them to build, as they did in the 1960s and
1970s, cities are demanding a piece of the action for their entrepreneurial efforts (Fulton,
1987:7).” A shortcoming occurs when deal-making and revenue raising are favored and
planners become real estate agents at the expense of sound land-use planning.
One of the fundamental objectives of the public/private marriage may be to spread the risk
and costs of development among a larger number of participants. Shared benefits are to add as
the public sector has embarked on negotiations for public benefits (compare: Sagalyn, 1997).
Another important component of post-urban renewal partnership is its formalization.
Partnerships have achieved formality through contractual agreements, including public
documentation of partnership agreements and specification of the expectations and
responsibilities of each partner.
To conclude, post-urban renewal partnerships are characterized by: (1) sharing development
risk and financial obligation, (2) creative financing techniques with an array of subsidies,
loans, loan guarantees and so forth ass well as complex arrangements of public and private
financing, (3) equity involvement of the public sector in joint development projects, (4)
increased reliance of cities on tax incentives to stimulate private investment, (5) municipal
borrowing through tax-exempt bonds, and (6) entrepreneurial development with private
mavericks and public entrepreneurs. Partnerships for commercial redevelopment, so-called
economic-development partnerships, have dominated like in urban renewal partnerships with
the intention to generate taxes. That trend can best be illustrated by high-rise office
complexes, hotels, and convention centers which have increasingly being built since the
1980s. Instead of employing exclusively federal aid to solve urban problems, solutions now
were sought in partnerships with the private sector that were suited to make the best use of
shrinking funds from state and federal governments. The comparison between earlier
approaches of public-private partnerships in the 1950s and 1960s with the new era of public-
private partnerships beginning in the late 1970s and 1980s has shown that public-private
partnerships have strongly increased and on the other hand have changed significantly in
qualitative terms.
a) Redevelopment and Tax-Increment Financing
Redevelopment has been popular among cities nationwide since the late 1970s since it is a
tool designed to facilitate real estate investment in targeted areas. The roots of redevelopment
clearly lie in the federal urban renewal program (see chapter II.C.1). As redevelopment differs
from state to state, I will focus my analysis on California since my case studies in the
following third chapter are in California as well.
Redevelopment in California is based on the California Community Redevelopment Act,
which was enacted in 1945 and renamed the Community Redevelopment Law (Health and
Safety Code, § 3300 et seq.) in 1951. Most importantly, tax increment financing (TIF) was