Public-Private Partnerships in Urban Development in the United States



migrated to suburban towns surrounding central cities. This trend was strengthened by state
freeway programs that drew more people to the suburbs and affected the character of central
cities substantially. Moreover, the national economy changed significantly in the 1950s and
1960s and contributed to a fundamental change of the urban economy from one dominated by
industry and manufacturing toward a service-oriented economy base. Central cities were
heavily affected as industry and retail markets began moving to the surrounding suburbs. The
retail picture in downtown areas worsened as suburban regional shopping centers thrived. As
a consequence of decreasing population and employment opportunities central cities began
showing threatening signs of decay. The multifaceted out-migration triggered deteriorating
social and economic conditions in central cities and led to a general urban crisis of US-
American cities. Cities became increasingly dependent on grants and aids as fiscal bases
declined. Cities urgently needed to retain and attract businesses and industry and to lure
shoppers back from the suburbs.

The challenges for cities have been substantial and therefore have caused a number of new
problem solving strategies. The problems and challenges have caused “new directions in
urban management” (Clagget, W. E., in: Fosler, 1982:287) that have triggered public-private
cooperative activities. Thus, the restructuring of the economy constrained public resources
while at the same time encouraging partnerships between the public and private sectors.
Therefore, partnership building can be considered a necessity due to urban economic and
demographic shifts and cutbacks in government funding that hit cities dramatically.

Fiscal distress was unquestionable a substantial factor that have encouraged the surge of
public-private partnerships in the US particularly since the 1970s. As Cummings, Koebel, and
Whitt noticed, “[p]ublic-sector partners do not have the political or financial flexibility to
allow them [private sector partners] to walk away from the negotiation table. If market forces
have driven the downtown into deterioration, local officials do not have access to the money
or the power to finance urban redevelopment by themselves. In order to generate the capital
and political commitment to a major urban development program, the public sector must
forge some type of relationship with private developers, investors, and speculators”
(Cummings; Koebel; Whitt, in: Squires, 1989:216).

Economic decline and the urban crisis also stimulated the formation of public-private
partnerships in urban development in Germany. The
Ruhrgebiet in the State Nordrhein-
Westfalen can be considered an excellent example for the economic-driven theory of public-
private cooperation. The Ruhrgebiet is an old-industrial region that strongly depended on
heavy industries. Due to the deindustrialization beginning in the late 1970s the region has
experienced a dramatic decline. Cities such as Oberhausen, Essen, Bochum, and Duisburg
have suffered in particular since they have increasingly been characterized by brownfields and
derelict buildings even in central city areas.

The public-private partnership model in the US was developed as a policy tool during the
Carter administration. In conjunction with the accelerating urban crisis the Carter
administration, for the first time, "articulated a national urban policy that encouraged public-
private partnerships and targeted federal aid specifically to improve the economic base of
distressed central cities” (Lyall, K. C., in: Fosler; Berger, 1982:52). Thus, the impetus for
partnerships came significantly from the White House as well as state houses throughout the
country. “Since 1978, public-private partnerships have been increasingly seen as legitimate
and effective tools for achieving a number of public purposes. Virtually every major United
States city has had redevelopment programs mounted, at least in part, through successful and
increasingly sophisticated partnerships” (Lyall, K. C., in: Davis, P., 1986:9). In the late 1970s
all levels of government shared the idea that the heightened urban problems could not be
addressed by government alone but only with the support of the private sector. In fact,
President Carter made public-private cooperation the centerpiece of his national urban policy
in 1978.



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