Using Public-Private Partnerships To Create A Better Austin
Public-private partnerships are often a necessity for developers. They want to buy land owned by a public entity, they need the tax cuts or they need some other benefit from a partnership to make deals pencil.
While P3s can be harder to arrange, they are being used increasingly often in Austin, and when they are done right, they benefit developers' bottom lines and the public good.
“P3s are not for [the] faint of heart,” said Christine Maguire, redevelopment division manager at the city. “There’s an art and science to have an agreement with accountability and flexibility. These are long-term relationships. They’re not sprints; they’re marathons.”
In the last decade, Austin has been on a P3 tear, with developments and redevelopments such as Waller Creek Conservancy, Green Water, 2nd Street District, Seaholm District and Mueller Airport.
Greg Kiloh, a project manager at the city for the Seaholm and Green Water redevelopments, believes Austin sells more sites for redevelopment as P3s than other cities. Austin has city, county, state and many education-related sites, such as the University of Texas at Austin’s new Dell Medical School, making the city ripe for these partnerships.
The key to success is communicating clearly, Kiloh said. He suggests creating clear deadlines, guiding principles and chains of decision-making for all involved parties.
But great communication falls on deaf ears if involved parties do not share a common vision, Kiloh said.
Maximizing profits is not the primary goal for the public or private entity; it typically can make more by selling the land or redevelopment outright. And through a request for proposals or request for quotes process, developers and public groups agree to create a development that benefits the public good, whether that be through green space, affordable housing or a school.
Take Dell Medical School, for example. In 2012, Travis County voters passed a property tax raise to give the new medical school $35M annually. The school’s vision is to innovate alongside a community to provide not only healthcare, but health. Creating a healthier Austin is baked right into Dell's mission, though the school is a business like every other public university.
Had it not been for the Dell’s location in Austin, it would look like every other medical school, Vice Dean for Strategy and Partnerships Mini Kahlon said.
“We couldn’t achieve our goals without working closely with the community, including [the] county health district, the city, surrounding school districts and many other partners,” Kahlon said.
Having public partners helped Dell achieve its vision, and that commitment to vision is something the city looks for when deciding on a private partner.
“What’s their vision? Do they have ability to perform? Do they get what we want to achieve? How much are they willing to pay for the property? What incentives are they looking for?” Kiloh said.
And though the public partner wants to prioritize social good, balancing profits and public interest is key.
“Every party has to get something out of the partnership,” Kiloh said.
Hear more from Khalon about the Dell Medical School at our Austin’s Healthcare Landscape event on July 27 at the JW Marriott. Get tickets here.