Public partners tend to provide public resources to encourage private investment. One of the easiest to provide is free or low-cost land and existing buildings. Many cities have areas that are ripe for new investment. Public partners also can provide subsidies in a variety of ways; this could include grants, low-interest loans, and second mortgages. Tax abatements are a popular tool used to encourage private investment. For private partners, the real estate tax is often the largest expense to do a project, if this cost is minimized that same project becomes much more viable. Private partners must engage with the public to understand their wants and needs; that goes beyond financial benefits, quality of life should be high in the priority list.
The flow of capital between the parties can happen in a variety of ways. Long-term leases or ground leases is a simple way of maintaining the property as government land but receiving the much-needed funds. Revenue sharing is another method which is often used on infrastructure projects such as toll roads. Tax increment financing is another creative method in which the taxes can step up over time. Bond financing provides a vehicle for private investors to receive returns and the primary private investor can have the necessary support to build the project, for example, a new school.
Affordable/workforce/supportive/senior housing, water supply, energy supply, and parks are just a small list of all the ways in which private parties and public entities can work together to develop cities. All stakeholders involved should work together more to maximize the potential that lays ahead.
