Public-Private Partnerships in Urban Development in the United States



41

“More generally, the ability, and willingness , to control local governments gives European
national governments a leading role in the development of partnership (Newman, P.;
Verpraet, G., 1999:488). Though the analysis does not explain the widespread partnership
planning in highly centralized Great Britain, it gives useful explanation for the late adoption
of the partnership approach in Germany. In sum, due to different prerequisites of public-
private partnerships in the US and Germany, that makes a comparison very complicated, I
decided to focus my analysis only on urban development partnership approaches in the US.
Partnership approaches have been very important in urban development in the US for a long
time. Though the term public-private partnership first emerged in the 1970s, early examples
of public-private cooperation in urban development goes back to urban renewal. In the new
era of public-private partnerships, however, development partnerships are bigger both in
scope and complexity. The main difference between earlier and new partnership approaches,
however, is due to the departure of the federal government in urban development. Like the
City of San Diego, many local governments began to participate on an equity basis in
development projects. Equity participation means profit and loss sharing in joint ventures.
Though many localities have gained success with revenue-raising methods (e.g., San Diego
with Horton Plaza), risks are considerable high as were described in the Ballpark project in
San Diego.

Development partnerships are considered extremely critical in each case study city. Public-
private partnerships are pertinent to downtown revitalization in particular. Pamela Hamilton
from the Redevelopment Agency in San Diego stated:

“As the redevelopment program started 25 years ago, property ownership in downtown San Diego was diverse
and contradictive to large-scale developments. At this time downtown ownership was characterized by small
parcels mostly hold by trusts and multiple owners. There was no feasible way for development and to make
major projects work. Real estate was mostly underutilized. To counteract this deteriorating situation in
downtown land assembly and revitalization of the area was needed. But the city needed a private partner for
assemblage and modernization of the area. Primarily, downtown really needed private projects such as office and
retail development and not only public projects. This was the only way of salvaging downtown and encouraging
development. The city cannot do that without public-private partnerships.”24

However, taking Santa Ana and San Diego as example, one can observe significant
differences in the urban development strategy used by the cities in efforts to revitalize
downtown. The co-development examples in San Diego describe a highly complex and
sophisticated partnership approach. The city’s involvement in development projects is high
due to equity participation in development projects. While San Diego adopted a role of an
equity partner in urban development, the City of Santa Ana is less involved in joint ventures.
Rather, Santa Ana functions as a ‘gift giver’ in urban development projects. In this way, both
cities illustrate two types of public sector philosophy in urban development: grant giving
versus public investment.

In particular public-private partnerships are facilitated by redevelopment activities based on
provisions of state law. Redevelopment depends very heavily on private sector involvement
since the redevelopment agency facilitates, induces and fosters development but (except in
very limited ways) does not ‘carry out’ redevelopment by actually constructing much. Rather,
it attempts to financially reduce the risk of private investment, create environments in which
the value of private redevelopment investment is protected or enhanced, and bring about
critical masses of investment that ultimately become self-sustaining. Redevelopment is largely
financed by property tax increment, so it is largely financed by its own successful attraction of
real estate development. Several partnership activities can be carried out under redevelopment
law which have been broadly used in the case studies. One interesting redevelopment project
in Los Angeles which illustrate numerous partnership activity in redevelopment very well is

24 Phone interview with Pamela Hamilton on the 17th of December 2000



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