Public-Private Partnerships in Urban Development in the United States



42

the rehabilitation and expansion of the Los Angeles Central Public Library, which included
restoring a nationally significant historic building, expanding it, returning a parking lot into
public open space, selling land and development rights, issuing tax allocation bonds backed
by a guaranteed payment by the private developer of an amount equal to tax increment. The
CRA built the library for the city, the private developer built two office buildings using
transferred density and public open space on a deck on which the city reserved ownership.

Redevelopment Agencies like the CRA in Los Angeles (CRA/LA) or quasi-public
development corporations like CCDC in San Diego are pertinent to public-private sectors
cooperation in urban development. The CRA/LA describes itself as “partnership arm of the
City of Los Angeles” to “lend a hand to investors willing to take risks for a more vibrant
city”.25

Though public-private partnerships changed over decades, “a new tradition of social-
development partnerships” (Stewman and Tarr, 1982:95) has not developed yet. Downtown-
based economic development partnerships still dominate in the US such as Horton Plaza and
the Ballpark project in San Diego and Bunker Hill in Los Angeles. A new element of public-
private partnerships in urban development, however, is the diversification of the partners. In
the current City Heights project in the City of San Diego, for instance, the private partner of
the city is different than in other projects. Here, a charitable foundation is the private partner
in the public-private partnership. A single person owns the foundation and a developer works
as part of the foundation. The private developer is going to construct a shopping mall directed
by the foundation. Moreover, the city and the foundation are going to work together in a park
development. That is absolutely new for San Diego.

There are several examples of innovative approaches of foundation involvement in public-
private partnerships for economic development and urban revitalization. Foundations are
nonprofit organizations that might have a profound impact on urban revitalization particularly
neighborhood development. Nonprofit organizations and particularly foundations have
increasingly become more important in redevelopment efforts especially in older towns in the
East and Midwest of the US. According to the CED, private foundations use two basic
instruments to contribute to revitalization: “grants” and “program-related investments” (CED,
1982:53). Monetary contributions are common and typically made through company
foundations. For instance, the Mellon Foundation in Pittsburgh, made gifts to the city to foster
redevelopment and was even involved in redevelopment actively. Foundations have also been
pertinent to redevelopment in Minneapolis and Saint Paul (Brandl, J.; Brook; R., 1982:174-
198). Essential are here the Dayton-Hudson Foundation and the McKnight Foundation. The
Dayton-Hudson Foundation is a Minneapolis-based company foundation that first developed
a neighborhood development project and then funded the local community development
corporation. The neighborhood partnership was a rather traditional corporate philanthropic
effort of a foundation. In contrast, the McKnight Foundation was substantially involved in a
partnership extending the traditional role of foundations in urban redevelopment. Instead of
only committing grants to redevelopment projects, the McKnight Foundation invested in an
urban development project. The foundation embarked on a more “aggressive philosophy of
philanthropy” (Brandl, J.; Brook; R., 1982:184). More specifically, the foundation undertook
a program-related investment. That is, instead of a grant, an investment loan made to the
development project and these monies were recouped and returned to the foundation to be
used again (compare: Brandl, J.; Brook; R., 1982:184). Hence the city and the foundation
embarked as partners on a project in that the foundation made significant investments. The
Ford Foundation is also involved in program-related investments through loan guarantees and
funds for enterprises. “A unique organization that departs from the traditional private
foundation model is the Enterprise Foundation” (CED, 1982:54). The foundation owns the
Enterprise Development Corporation. Profits from this corporation are used for housing

25 www.ci.la.ca.us/CRA/glance.htm



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